Tobacco firms profit from Irish price policy

IRISH smokers contribute more per person to cigarette company profits than any other in the EU because of the Government’s minimum price policy.

The country’s policy of fixing a minimum price for cigarettes is a boon for tobacco companies and their profits, the European Commission says.

The policy has been so good to them, the companies have lobbied other governments to adopt the same approach, they say.

But the commission is taking Ireland to the European Court of Justice to force the Government to abolish a fixed minimum price for tobacco.

They say the Government should increase the level of taxes on tobacco — it is just over 79% — and keep increasing it to dissuade people from smoking.

“We see this works in other countries, without helping the companies to maintain profits. The extra taxes could be used to fund anti-smoking campaigns and pay for treating those who suffer ill health from smoking,” said Maria Assimakopoulou for the commission.

However, EU experts say that minimum price-fixing was introduced into France, Belgium, Italy and Austria after intense lobbying by tobacco companies, and Philip Morris in particular, when they saw how advantageous it was to them in Ireland.

Belgium has scrapped it and there has been none of the price wars by the tobacco companies forecast for Ireland, a spokesperson said.

“There is a huge variation in the pre-tax price of cigarettes across the EU as indicated by a study carried out recently and Ireland is the most profitable country for cigarette companies, followed by Sweden and Britain,” he said.

The Department of Health disagrees with the commission’s opinion and is supported by one of the country’s experts in smoking, Professor Luke Clancy.

He says allowing the cigarette companies to sell their products at any price they want will allow them to reduce the cost by up to 20% — the amount they gain from every pack of cigarettes sold in Ireland.

“We have seen this in Spain and elsewhere, where they make one brand a loss leader, slash its price and take the loss to encourage people to smoke more.

“The ability of a tobacco company to reduce its price is not a small thing — you only need to get a person smoking for a very short length of time to get them hooked,” he said.

He insists that while the commission may be legally correct in demanding Ireland abolishes its minimum price strategy, they are not taking the health implications into account.

Tax is just one way of attacking cigarette smoking, said Prof Clancy, while maintaining a minimum price for cigarettes — of €6.79 for 20 — is a way to stop the industry manipulating the market.

He accused the commission of only taking into account the needs of the common market.

“But we are talking here about a lethal toxic substance that kills half the people who use it and reduces the lives of the others by 15 years.

“The EU now has a mandate to take health issues into account and they should listen to Ireland about this and be persuaded,” he said.

The commission plans to have Ireland and Austria in court within the next two years over the issue.