Budget 2016: Dáil votes to increase duty on cigarettes by 50c

House told statutory agency needed to deal with €1 billion illegal smuggling trade

 

The Government had an overwhelming majority in the first vote on the Budget which was in favour of a 50 cent increase in the price of a pack of 20 cigarettes.

The price increase comes into effect from midnight, setting the retail cost for most brands at €10.50 a packet with excise charges and Vat amounting to €8.37 of the total.

The House was warned the measures would be ineffective without action against criminal gangs involved in smuggling because it was costing an estimated €1 billion in lost cigarette duty revenue.

A call was made for the establishment of a statutory agency specifically to deal with the issue.

Taoiseach Enda Kenny, introducing the measure in the Dáil, said it would result in €8 million for the exchequer this year and €61.4 million in a full year. He said the level of daily smoking had reduced from 24 per cent of the population in 2007 to 19 per cent.

Sinn Féin health spokesman Caoimhghín Ó Caoláin said that in the absence of measures to tackle the illegal trade, the 50c increase “becomes merely a revenue generating measure”. He said it would undoubtedly drive more smokers “into the hands of criminal gangs engaged in the smuggling and sale of contraband and illegal tobacco products”.

He said the Government had to take the illegal tobacco trade “head on” in the strongest possible terms.

Fianna Fáil TD Brendan Smith called for an agency “that will deal in a comprehensive manner with the issues of cigarette smuggling and fuel laundering”.

The Cavan-Monaghan TD complimented the Revenue Commissioners and their officials on the ground who worked in difficult circumstances. “But they need more resources and they need a new statutory agency to co-ordinate their work as well.”

Fianna Fáil health spokesman Billy Kelleher supported the increase but said he believed they could not “consistently and continually just raise the price without ensuring we have the proper support services available to people who are addicted to nicotine”.

He said an integrated plan was needed across the health service involving “a robust assistance scheme to allow people to give up smoking”.

Greater incentive

TDs had to accept there was a huge problem of tobacco smuggling. The more the price is increased “the more we incentivise smuggling and making it more profitable for those in the illicit trade”.

“We need a robust system in dealing with this illicit trade as well.”

He said Retail Ireland estimated the State was losing up to €1 billion in revenue from the illegal trade.

Independent TD Denis Naughten said the funding should be ring-fenced for use in long-term smoking prevention within the health service.

People Before Profit TD Richard Boyd Barrett said he knew smoking was not good and people should be encouraged to give up a very bad and dangerous habit.

But for those on low incomes and already struggling who were addicted to smoking, the increase represented another tax on income. The extra money for pensioners who smoked would be wiped out by it, he added.

Socialist Party TD Joe Higgins said he had first opposed “this bit of annual hypocrisy’’ 18 years ago. It was a punitive tax, particularly on poor people, under the guise of a health initiative.

Nicotine was a dangerous and destructive drug, but increasing the price was not the way to deal with the issue, he added.

Fine Gael TD Jerry Buttimer said the tobacco industry was targeting young people.

Independent TD Finian McGrath said smokers were an easy target. “There is no argument with the health issue, but the economic argument has to be looked at,” he added.

Tánaiste Joan Burton said she favoured measures to cut down smoking among the population to the maximum level.

Anybody who visited hospices, and saw the suffering, pain and difficulties people went through, would certainly feel that smoking for many people caused health problems, she added.

She said she also agreed that the State should be much tougher in efforts to bring an end to cigarette smuggling.