Tax hikes ‘will spur illegal tobacco trade’
The study, carried out by the research branch of Revenue, said about 20% of cigarettes consumed in Ireland are not taxed here.
These cigarettes include those that are produced in or smuggled into Ireland and purchased illegally, and cigarettes that are bought legally in another country and sold here.
The authors said there was some evidence cigarette tax levels “have moved beyond a critical point” at which increases in tax rates leads to lower, rather than higher, tax revenue.
“Further tax [price] rises will reduce smoking somewhat but they will also greatly encourage more untaxed consumption,” it said.
“Increasing the taxation of cigarettes in Ireland no longer carries the combined benefits of better public health and higher revenue for the public finances.
At the very least, these benefits are severely weakened by the substitution of untaxed for taxed consumption.”
Meanwhile, following an intelligence-led operation, officers from Revenue’s Customs Service yesterday seized one million cigarettes at a commercial unit in north Co Dublin.
The seizure had an estimated retail value of €387,500 and a potential loss to the exchequer of €341,000.
The Brendal brand cigarettes, , manufactured in the Ukraine, arrived via Poland into Dublin Port last week and officers believe that, in an attempt to avoid detection by dogs, the cigarettes were wrapped in black sacks containing spice.
