State is 'losing €1.5m a day' to illegal cigarettes

A tobacco industry lobby group says criminals are winning “hands down” in the Government’s fight against illegal cigarette sales,.

Figures released by the Irish Tobacco Manufacturers Advisory Committee estimate that the Government is losing €1.5 million every day to illegal cigarette sales.

They estimate that while criminals are earning over €640,000 daily from sales of illegal tobacco, the annual loss to the Government in VAT and excise is €580 million.

Compiling the figures from CSO and EU Eurobarometer statistics, the advisory committee estimates that over 1.6 billion cigarettes smoked in Ireland this year will be non-Irish duty paid. By the end of 2012, this will mean a loss to the economy of over €730 million.

The number of cigarettes smoked in Ireland on which duty is not paid to the Irish Government is also increasing, the committee says. Following VAT and excise hikes in last year’s budget which brought the cost of a packet of cigarettes to over €9, the rate of cigarettes on which duty is not paid here rose from 24.5 per cent in 2011 to 28.2 per cent this year.

The committee estimates that of the 28.2 per cent non-Irish duty paid tobacco consumed in Ireland, approximately 18.4 per cent is now illegal. Criminals will net over €230 million this year, or €640,000 a day, from illegal tobacco trade, the group says.

The tobacco lobby group claims that by raising the cost of cigarettes, the Government has neither deterred smoking nor increased revenue.

“The statistics show that currently they are achieving neither, with the predicted tax take from tobacco down by over €80 million and the consumption rate at 29 per cent as it has been for 5 years,” an advisory committee spokesman said.

“Any increase will make this worse and solve nothing.”