Tobacco tax may rise after ruling

THE Government may have to hike taxes on cigarettes and tobacco following a finding by a senior legal expert that their policies are against EU rules.

For over 20 years, vendors here haven’t been able to sell cigarettes for less than a minimum price – this has been set at 3% below a nationwide average sale price.

The European Commission says this contravenes the EU’s rules on competition in the single internal market and has taken the State to court.

The initial legal opinion by the court’s advocate general, Juliane Kokott, agrees and says that if Ireland wants to keep tobacco prices high, it should increase taxes.

The State argued that not setting minimum and maximum prices would lead to price competition and cheaper cigarettes coming onto the market.

Setting price levels also means it is complying with the World Health Organisation’s recommendation that price and tax measures are an effective way of reducing tobacco consumption, especially by young people.

The advocate general agrees that protecting young people is particularly important especially given that smoking is the biggest cause of preventable death in the EU. But she adds that this can be best achieved by increasing the tax on tobacco.

Prof Kokott said if tobacco companies try to absorb the tax increase and not pass it onto the consumer, the Government should further increase the tax until it really affects their profits.

The Department of Health said it was studying the opinion but would not respond until after the court rules.

The full ruling is not due out for some months but in 80% of cases the court follows the opinion of the advocate general.