Charities want tobacco firms to pay more tax

Health charities have called on the Government to impose stricter regulation on tobacco companies to force them to pay more tax.

Charities want tobacco firms to pay more tax

The proposal is made in a joint pre-budget submission by the Irish Cancer Society and the Irish Heart Foundation.

The charities have also asked the Government to introduce annual tax increases of 5% above inflation on tobacco products — a move the charities claim would lead to a 60c increase on a pack of cigarettes this year.

Chris Macey of the Irish Heart Foundation said it was bizarre that Ireland had regulators for virtually all other sectors but nothing for a product that kills half of its users and creates virtually no employment

“There is no legitimate argument for the status quo because even apart from the health catastrophe of 5,200 people killed by tobacco-related illness a year in Ireland, the tobacco industry is a drain on the nation’s economy.

“It creates virtually no employment and on Department of Health estimates, the taxpayer is subsidising tobacco companies to the tune of almost €6 for every €1 of profit they take out of the country,” he said.

The charities cited research carried out by Robert Branston of the University of Bath which found tobacco firms enjoy profit margins of up to 55% after duties on sales in Ireland.

This is around three times that of food and drinks manufacturers.

The combined profits of the three tobacco firms that control almost the entire Irish market totalled €104m in 2011 from revenues of €226m.

The charities argue that these huge profit margins are being permitted by the Department of Finance despite a Department of Health estimate that smoking-related illness is costing the State €2bn a year, compared to total tobacco tax receipts in 2011 of €1.42bn.

Dr Branston said that by reducing industry profits to normal levels of between 12% to 20%, the State could take up to €65m extra in tax from tobacco companies, without having any impact on the price of cigarettes.

“Tobacco multinationals can continue to charge premium prices and make excessive profits because their products are very cheap to make, are highly addictive and competition in such a highly regulated market is so limited.

“This extreme profitability creates the incentive and ability for tobacco companies to fight tobacco control measures to the detriment of public health,” he said.

Dr Branston said that through a system of regulation, the State could reduce industry profit margins at a reasonable rate.

Kathleen O’Meara of the Irish Cancer Society said that the extra €65m the State could generate through a tobacco industry regulator would pay for measures required to crack down on tobacco smuggling and to help smokers quit more than five times over.

“By combining higher taxes, tough anti-smuggling measures and improved smoking cessation services, we can achieve the win-win of a major reduction in smoking rates and huge extra revenue for the exchequer.”

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