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You reported, last Friday (July 18), the claim by the Irish Cancer Society (ICS) that the rate of tobacco smuggling is falling, and that this should enable the Government to increase tax on cigarettes.
The ICS claims that the illicit trade has fallen by 1%. This is far below the margin of error, for cigarette surveys, of 2.4%, in 2013, as told to the Dáil recently by the Minister for Finance, Michael Noonan, so the ICS claim cannot be substantiated.
The Revenue Commissioners and the Minister for Finance have regularly stated that increased duty on cigarettes will lead to a greater illicit trade.
An in-house Revenue report published in 2011, and available on the Revenue website, concludes: “higher cigarette taxes in Ireland will no longer produce a win-win situation of public health benefits (lower rates of smoking) and benefits to the public finances (higher levels of tax revenue). More likely, it appears that in the Irish market for cigarettes, as it currently stands, a tax increase will reduce revenue, but only have a lesser impact on tobacco consumption by encouraging further substitution away from taxed cigarettes.”
The ICS should take careful note.
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