Cantillon: shops stockpiling cigarettes boost tax take

Trying to form a full view of the real economy from monthly tax returns is akin to taking on a jigsaw without all the pieces. Only a partial picture is possible but it can be telling nonetheless.

Take excise duties, which are running €114 million ahead of target for the first quarter of the year at €1.52 billion.

On a year-on-year basis the haul is ahead by €344 million, by far the biggest single advance in any tax bracket since 2015.

That’s a big vehicle registration tax inflow from a good many new cars you might think, and you’d be correct. But there is more.

In its information note on the figures, the Department of Finance cites “tobacco receipts” as a contributory factor. The explanation is presumed to have its roots in retailers building up their tobacco stocks before the mandatory introduction of plain cigarette packs in May.

Despite some lack of clarity over the fate of legal challenges to the new law, it appears that retailers are taking the opportunity now to buy up branded packs before the ban officially takes force. Stocks acquired before the ban comes into force can still be sold.

Once those stocks expire, the only cigarettes for sale will be in plain packs dominated by rather scary photographs of tobacco-related illness – the aim being to dissuade smokers.

It’s no surprise, therefore, that retailers are acting now to prolong business from the more attractive-looking branded packs.

This would appear to herald good news for the Revenue, although tobacco-industry types still argue that plain packs will increase the prevalence of contraband and decrease tax payments from the legitimate trade.