Taxes won’t make us quit fags. We’ll just smuggle them

16 Jan

A copy of my Evening Herald column from December 28th 2011 

I suspect most of us will be glad to see the back of 2011. As we prepare for its successor we will do so in the hope it will be better and with the traditional list of good intentions for 2012.

There are many things I hope to have the discipline and self will to both do and not to do in the year ahead. Fortunately, one of those things is not giving up cigarettes as I have never had that particular nasty habit.

I don’t smoke. I have tried it a few times, but I have never taken to it. Maybe this helps explain why I have never understood its allure. Sadly, I have seen the damage they can cause close up.

Just under ten months ago my Dad, Fergus, died following a four year battle with lung cancer. He had fought it bravely, but eventually his heart gave out. Not helped by the fact he spent decades smoking 40 a day, un-tipped ones at that.

I have an uncle who still smokes despite the damage it has already done to his health. I have a favourite aunt and various other relatives and friends who I would dearly love to see quit cigarettes.

Clearly, I am not unique in any of this, but I make the point as a background to why I think the recent increase in tobacco duty was a bad idea.

I was chatting with my Mum just before Michael Noonan rose to give his Budget speech. The wanted to see an increase in tobacco duty as she felt it might deter others from going through what my Dad had endured and also help stop her brother from continuing to smoke.

While she was happy with the Budget increase, I fear her hope that increasing the price of a packet of cigarettes by 5c, 10c or 50c will reduce the amount my uncle (or anyone else) smokes will not be realised.

I wish it would, but logic and factual analysis makes it increasingly clear that it won’t.

This is not just me picking conclusions out of thin air. It is the conclusion reached by the Revenue Commissioners’ Economics of Tobacco .report published last February.

It estimated that about 20% of cigarettes consumed inIrelandare not taxed here, ie, they come into the market illegally via smuggling. It also says this figure is rising. Some suggest their estimate is conservative and is probably somewhere nearer a third.

Whatever the precise figure, there are two things we know. We have the highest excise on tobacco products inEuropeand we have increasing levels of black market sales of smuggled tobacco.

The relationship between these two facts is so blindingly obvious that even the Department of Finance has been moved to admit it

Replying to a Dáil question last October, the Junior Minister for Public Expenditure & Reform stated that “The average price of a packet of cigarettes here is €8.65, whereas inHungary it is €2.06… raising tax on tobacco products further would simply encourage the illicit trade..”

So why go and do precisely that? Why indulge in a gesture that not only flies in the face of the facts, but also only serves to benefit the lowest in our society.
Some 218 million smuggled cigarettes were seized in 2009. This includes the 120m intercepted at Greenore Port, Co Louth: the largest ever seizure in the EU. But  we still only seize a fraction of the illicit trade. Countless millions of cigarettes, including fake illegally produced ones with prohibitively high tar contents, are making it on to the streets.

This smuggling is funding the activities of criminal and dissident terrorist gangs to the tune of probably €3million plus per week.

Meanwhile the Government loses about half a billion Euros a year in lost taxes that could be used to fund treatments that might actually combat nicotine addiction.

The sad truth is that there is no one simple action government can take to stop people from smoking: this includes plain packaging (a topic I will return to).

The sooner we grow up and acknowledge this fact the sooner we will start to really address the problem.

Twitter: @dsmooney

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