JUST over three quarters of the price of a packet of cigarettes goes directly to the Exchequer. It means the Government gets £2.19 per packet of 20 cigarettes retailing at £2.88.
The remaining money is divided between the retailer, who gets 23p and the manufacturer, who gets 46p or 16 per cent gross on the product before paying wage or material costs.
Ireland has the third highest tax regime in Europe for cigarettes, after Denmark and Finland. The lowest is in Spain, where a packet of cigarettes costs about 65p.
Smokers bought cigarettes worth around £850 million last year, of which £650 million went in taxes.
Cigarettes make up between 5 and 6 per cent of total Exchequer tax revenue, according to the Irish Tobacco Manufacturers Advisory Committee, which represents the tobacco industry.
It is therefore not surprising that cigarettes are seen as an easy target for raising revenue. The recent 10p rise in cigarette prices will net the Exchequer an extra £25 million in one year.
Raising such revenue involves selling a lot of cigarettes approximately 5.8 billion per annum. However, smoking is on the decline. In the 1970s just over 40 per cent of the adult population were smokers, now the figure has dropped to 28 per cent.
ITMAC attributes the decline to two factors public health campaigns on the risks associated with smoking and the steady increase in cigarette prices, which it says have always outstripped inflation.
The number of people employed in the industry has also fallen, from 1,100 in 1990 to 780 today. The decline in employment is partly attributable to greater efficiencies in the industry.
Three firms manufacture cigarettes in Ireland Player Wills, Gallaher and P.J. Carroll. Around 95 per cent of all cigarettes sold here are produced in Ireland.
ITMAC says the cigarette industry employs 2,500 people indirectly through manufacturing products allied to cigarettes, and distribution.
The committee also argues that the guidelines on cigarette advertising and where one can smoke are among the most stringent, if not the most stringent, in Europe.
An ITMAC spokesman said Ireland "shouldn't go any further ahead of the EU" in introducing legislation on tobacco, "if manufacturing is to continue in Ireland"
He added that such tactics would not stop people smoking and if manufacturing ceased people would buy imported products.