State told it must scrap minimum price on cigarettes

THE Government has been told it must scrap the minimum price it imposes on cigarettes and replace it with increased taxes.

At present, the average pre-tax price of a pack of 20 cigarettes is just €1.36, with VAT and excise duty bringing the price to about €6.26.

But under EU common market rules, the Government cannot interfere with the marketplace and must allow companies decide the price for its own products.

The European Commission has sent Ireland and Italy a letter warning them to scrap the minimum price it imposes on tobacco.

It has already started proceedings against France and Belgium and succeeded in getting judgments against Greece on the same issue.

The minimum price system is favoured by the big tobacco companies as it allows them to protect their profit margins, according to European Taxation Commissioner László Kovács.

“I strongly support member states in their efforts to implement new health policy. However, this must respect community law. Introducing minimum retail prices for cigarettes is against community law and mainly benefits manufacturers who are able to protect their profit margins,” he said.

ASH, the international organisation against tobacco smoking, said it feared the EU move could reduce the cost of cigarettes if the Government does not react.

“The sales of tobacco are directly related to its price and anything that might reduce the price would not be good,” said chairman of ASH Professor Luke Clancy.

The organisation fears tobacco companies would be free to have special promotions on cigarettes, offering them for 50 cent a pack.

This would also affect the State’s tax take on tobacco, which amounts to about €1.43 billion a year and helps to defray some of the costs of ill health brought on by smoking.

For the last two years, Finance Minister Brian Cowan has not increased the taxes on tobacco, to the annoyance of anti-smoking groups. ASH said that as a result, the price of cigarettes was getting cheaper in real terms.