THE OLD RELIABLES:THE OMISSION of old reliables such as drink and cigarettes from the array of tax increases announced in the Budget represents a major lobbying victory for the alcohol and tobacco industries.
Alcohol manufacturers successfully argued that increasing duty on beer, wine and spirits would cost jobs and lead to more cross-Border shopping. Cigarette manufacturers claimed that higher tobacco prices would lead to even more smuggling of contraband and counterfeit product.
Whatever the truth – and the health lobby has come up with plenty of counter-arguments – this is the first time in years that neither cigarettes nor alcohol have been hit for higher taxes in the Budget. The fact they were spared is all the more remarkable given the level of cuts in other areas.
Meanwhile, a four cent a litre increase in the duty on petrol will push prices up to almost €1.40, an all-time high according to the Automobile Association. Diesel is going up two cent a litre.
The Irish Heart Foundation accused the Government of “kowtowing” to the tobacco industry. “We are extremely disappointed with the decision not to increase the tax on tobacco products and put the health of our nation first. Mr Lenihan has fallen for the false allegation that higher prices will increase smuggling,” said its chief executive, Michael O’Shea.
The tobacco industry has organised a major lobbying campaign over the past year to highlight smuggling and its effects on exchequer revenues.
Alcohol Action Ireland described the decision to leave alcohol taxes unchanged as incomprehensible, and said duty was reduced in last year’s budget.
“When are we going to get real about the true costs of alcohol harm to this country?” asked its director, Fiona Ryan. “We are paying an estimated €3.7 billion a year in alcohol-related harm. Yet the one initiative which the World Health Organisation says is among the most effective in reducing alcohol-related harm, is the one initiative the Government refuses to actually implement.”
The AA said the increase in fuel taxation was disappointing but not surprising. The motorist was being treated as a cash cow by a Government short of money, said its spokesman, Conor Faughnan.