'Govt must restart tobacco tax hikes'

A new report says hiking taxes on tobacco in the next and subsequent Budgets could help thousands of people to live longer.

It also claims that flawed analysis by the Government on the impact of tobacco tax on cigarette smuggling has cost the taxpayer up to €200 million over the last two years, which calls into question recent Budget decisions not to increase the price of tobacco.

A study carried out for the Irish Heart Foundation (IIHF) shows that a €1 tax increase on a packet of 20 cigarettes in the next Budget would bring in €68 million in extra receipts and a further €28 million in indirect public finance benefits.

The IHF says this directly contradicts claims that further tobacco tax increases would actually reduce net tax take because of the tobacco smuggling issue.

The Foundation points that this flawed analysis by the Government and Revenue Commissioners led to no increase in tobacco prices in the last two Budgets.

The IHF has called on Finance Minister Michael Noonan to institute a new policy of regular tax increases above inflation starting with a €1 hike in the forthcoming Budget.

These tobacco tax increases would also result in some 30,000 people quitting smoking in Ireland, the IHF claims.

Given that roughly one in two smokers ultimately die from the habit, this single action would help up to 15,000 people countrywide to live longer, it said.

“This report proves that a tobacco tax increase is a Budget no brainer – it will save lives on a huge scale and bring in significant extra income that will help reduce pressure on the public finances,” said IHF Chief Executive, Michael O’Shea.