CSNA: €360 Million Is Not Chump Change
The recent Tax Strategy Group papers from the Department of Finance provided an opportunity to see how alarmed or sanguine the mandarins were with regard to the Annual losses to the Irish Exchequer that are caused by legal and illegal Excise avoidance for Tobacco Products.
In the General Excise Paper, a Section is devoted to Tobacco Products Tax. It references that prevalence of smoking has been a constant 18% for the past 3 years. The paper also provides changes to the rates and Tax Content from 2019 to 2024 , with €3.25 in tax and a further €1.70 Trade increases applied.
The paper states “Traditionally Tobacco Products Tax receipts have remained stable at over a €1 billion per annum, with successive rate increases compensating for reductions in the volumes released for consumption.
However, more recently, receipts have seen a noticeable decline due to the prevalence of illicit tobacco products on the market, high levels of non-Irish duty paid products being brought in legally through Duty Free, market trends towards “big box” cigarettes and the uptake of novel products such as e-cigarettes”.
- In 2021, the total Tax Yield was €1,318m
- In 2022 it was €1,161m
- In 2023 it was €1,005m
‘With no reduction in smoking prevalence, the state has managed to lose over €300 million and retailers have seen sales in their legal outlets decline.
‘While the paper refers in depth to the illicit tobacco market and provides a notional tax loss of over €460 million for smuggled cigarettes and Roll your own, it glides over the record busting 15% of all tobacco consumed in Ireland having been purchased in the UK (Duty Free) or in the EU (Duty -Paid).Using the same calculations that Revenue had applied to the illegal 19% (€463m) it is an astonishing €357 MILLION for the 15% cigarettes and 12% RYO that were brought into the country in 2023. While Revenue and Customs may suggest that this is legal, it is only legal if the products are for the personal consumption of the traveller; we are all aware that this is not observed and that on a commercial and grace and favour basis, many cartons of cigarettes are given to people that are not legally entitled to receive them.
CSNA: Can we have a mature discussion about the propriety of continuing to grant “Allowances” for tobacco products?
Can we accept that the taxation policy of the State to have a very high retail price has the effect of driving smokers to alternative markets, in addition to getting them to Quit?
If tobacco products deserve to be Denormalised as suggested by the Department of Health and the World Health Organisation, then why does the State continue to operate a freedom of movement of goods for tobacco?
‘As long as there are easily accessible markets for tobacco that have retail prices at a fraction of the Irish selling prices, the desired effect of a Tobacco Free Ireland is decades away, as acknowledged recently by the Minister and the HSE.
‘Getting retailers to comply is not difficult, but we only control less that two thirds of the market, a figure that is reducing each year’ said CSNA.
‘We need to prepare for the next Tobacco Products Directive discussions in the EU forums and urge all member states to place restrictions on the freedom of movement on all tobacco products.
