Dáil Éireann debate -
Tuesday, 10 Oct 2017

Vol. 960 No. 1

Financial Resolution No. 1: Tobacco Products Tax

Minister for Health (Deputy Simon Harris)

I move:

(1) THAT for the purposes of the tax charged by virtue of section 72 of the Finance Act 2005 (No. 5 of 2005), that Act be amended, with effect as on and from 11 October 2017, by substituting the following for Schedule 2 to that Act (as amended by section 36 of the Finance Act 2016 (No. 18 of 2016)):

"SCHEDULE 2

RATES OF TOBACCO PRODUCTS TAX

(With effect as on and from 11 October 2017)

Description of Product	Rate of Tax
Cigarettes …. .... .... ….	Rate of tax at­- (a) except where paragraph (b) applies, €309.04 per thousand together with an amount equal to 9.04 per cent of the price at which the cigarettes are sold by retail, or (b) €344.07 per thousand in respect of cigarettes sold by retail where the rate of tax would be less than that rate had the rate been calculated in accordance with paragraph (a).
Cigars .... .... .... ….	Rate of tax at €355.238 per kilogram.
Fine-cut tobacco for the rolling of cigarettes ....	Rate of tax at €335.342 per kilogram.
Other smoking tobacco .... …. .... …. .... ….	Rate of tax at €246.449 per kilogram.

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

An Leas-Cheann Comhairle

I draw Members' attention to the fact that we have just agreed there will be 30 minutes for each resolution. A number of Members would like to contribute but the House has decided that I have to put the question after 30 minutes. I ask all who want to contribute to take into consideration that there are only 30 minutes.

Deputy Simon Harris

I am pleased to move this financial resolution, which provides for excise duty increases on tobacco products with effect from midnight tonight. The increase amounts to 50 cent, inclusive of VAT, on a pack of 20 cigarettes in the most popular price category together with pro rata increases for other tobacco products as well as an additional 25 cent increase on a 30g pack of "roll your own" tobacco. The price of a pack of 20 cigarettes in the most popular price category, assuming the full increase is passed through to the final retail price, will increase to €12. The excise duty component of this price will be €7.27 and the total tax, inclusive of VAT, will be €9.51, which represents 79.3% of the price of a pack. Ireland is committed to a policy of high taxation of tobacco to encourage people to quit smoking, particularly younger people. The policy is working. In 2007, 24% of our people were daily smokers. By contrast, the HSE and Healthy Ireland survey figures for June of this year show that this figure has fallen to 17.6%. Furthermore, the quantity of cigarettes consumed per smoker has also fallen in that period.

Increasing taxation on tobacco products is a key public health policy measure which has been supported by successive Governments to continue this downward trend in smoking rates in Ireland and to help us achieve a tobacco-free Ireland by 2025. With regard to revenue raising, the increase in excise duty on tobacco products is estimated to contribute €63.8 million in a full year.

Deputy Dara Calleary

We will, of course, support this proposal but it is important that the Government invests heavily in our customs infrastructure to ensure tobacco smuggling does not increase as a result of this measure. I acknowledge the presence of former Minister of State at the Department of Health, Deputy Marcella Corcoran Kennedy, who had responsibility for health promotion. She highlighted the issue of people taking up smoking in their teenage years. We have to ask, given all the evidence that is available, why we are not communicating with that segment of the population as to the dangers of tobacco. If we can stamp out smoking at that age, it will not become a problem later. While we support the financial resolution, we would like to see investment in infrastructure by the Minister to ensure this is not a charter for smugglers.

Deputy Jonathan O'Brien

My comments will be similar to Deputy Calleary's. We have this debate every year on the financial resolution but perhaps we could have a wider debate on smoking and its effects because there is no doubt that it is a serious factor in a number of deaths every year. We should at least treat it as a health policy but, unfortunately, we debate this every year as part of the budget package.

As the Minister pointed out, since 2007, the rate of tobacco excise has almost doubled, yet the revenue raised has dropped.

I believe the Minister's figures are dishonest regarding what is being proposed today. The Minister says it will bring in €64 million but according to the Revenue Commissioners it is as likely to cost the State €40 million because the more that is charged, the smaller the number of people who will smoke. That is a positive and progressive policy, but the Minister's figures are a little dishonest. In our budget submission we put it down as cost neutral. We support the policy direction in that anything that reduces the number of people who are smoking is to be welcomed, but the Minister's figures are dishonest regarding what will be the potential revenue as a result of this.

Deputy Sean Sherlock

I support the resolution without question. I wish to speak briefly on the issue of smoking cessation and public health policy in that regard, particularly with regard to the cost of nicotine replacement therapies. In his annual consideration of matters relating to the rates of tax on tobacco products, will the Minister give consideration to the cost of nicotine replacement therapies? There is a myriad of products sold in pharmacies at exorbitant prices. I do not know if the pharmacies are price takers from the pharmaceutical sector in this regard but the products available are extremely costly. It has been argued that one is replacing one addiction with another. I ask the Government to consider further examination of the sheer cost people incur when they are trying to give up smoking by moving to nicotine replacement therapies. The cost of those therapies should be examined as a matter of urgency.

Deputy Declan Breathnach

If it were many years ago Members from Dundalk would be shouting from the rooftops at increases in tobacco prices. We must support this resolution on the basis of health but heavy smokers will obviously bear the brunt of it. I agree with Deputy Calleary on the need to strengthen revenue in the face of tobacco smuggling and the illicit trade that will no doubt occur as a result of a further increase in the price of tobacco. I am from an area where the largest seizures in the illicit trade in tobacco in this country have occurred. I am aware of the major efforts being made by retailers against smuggling and in trying to get a balance between price and ensuring that their trade continues to exist. They will certainly be perturbed at the rise in the price, but we are all aware of the reasons for it. I echo the comments on the health aspects and I draw the Minister's attention to the practice of vaping. The jury is out on that but obviously that must be explored from a health point of view.

Deputy Richard Boyd Barrett

We have traditionally opposed the increase in the duty on cigarettes. I wish to stress that this is not because we do not think it is important to reduce the level of smoking, because that is extremely important, but because we remain to be convinced that price increases are the major reason there is some reduction in the smoking level. They have some impact but I do not believe they are the main reason. Frankly, better education of young people on the health aspects has had far more impact. I welcome the more graphic health warnings on the packaging, which removes the glamour that was associated with smoking in the past. The fact that there is no longer advertising of tobacco products has contributed very significantly. Again, that removes the glamour associated with smoking in the past. All of that has probably contributed more.

However, for those who are victims of the past promotion of smoking and who developed addiction, this will be an excessive financial burden that will more than wipe out the small increases in social welfare or the small reductions in tax of approximately €5 per week. The increases will be wiped out for people who are addicted to a toxic substance. They will lose out as a result. Those people need help and support in ending their addiction, but I do not believe that many lifelong smokers will give up smoking as a result of this. However, they will be impacted by the extra financial burden. We will not call a vote on this but we wish to signal, as we have in the past, that we believe this is not the way to proceed.

I wish to add a final point which is relevant not just to cigarettes but also to sugar consumption and other products where one could argue there is a health case for reduced use. We would be far better off imposing levies on the profits of the alcohol, sugar or tobacco industries and using that money to increase expenditure on health, particularly in the areas where the costs to the health service are increasing as a result of smoking, obesity or the negative health impacts of alcohol. We should go for the profits of the companies that profit from this rather than the consumers.

We wish to indicate our opposition to this measure but we will not force the House to divide on it.

Deputy Mattie McGrath

I am glad to speak on this resolution and I will support it. I realise it is difficult for people who need the fix of a cigarette and are addicted to smoking. I do not know how they manage given the current price of cigarettes. At some stage we will have to examine this because it will not continue to be an easy touch to get money from this area. Cigarettes will reach a price where people will not be able to afford them. It is important to cut down on the rate of tobacco consumption, but we cannot keep piling tax onto some unfortunate families where perhaps two in the family smoke. I do not know how they can afford it. I have supported this course in previous budgets so I will do so now, but it will reach a stage where it will have to be capped. We cannot just continue to hit it. There have been changes to the packaging and so forth in an attempt to make people safer and we always thought that the price would do that, but it has not had the impact we thought it would have. We have to examine the deeper reasons that people have such a longing and need. In this case, however, I support the resolution.

Deputy Bernard J. Durkan

As a reformed smoker, I probably should comment on this resolution. Smoking has been proved beyond doubt to be bad for people's health. The evidence has been there for a long time. I do not agree with Deputy Boyd Barrett that we should go after the producers. There would be no need to produce if there were no consumers. Consumers, unfortunately, become the victims in two ways, for reasons of their own health. I often ask myself why I stopped smoking. I do not know the reason, and I smoked for 27 years. However, in the world in which we live there is far more information and education available to explain the reasons people should not smoke or not smoke in families or in front of children. I support the resolution. It is important that we are constant and that we have a single, consistent voice to indicate to all and sundry that smoking is not good for our health, we should not do it and we should try our best to stop it.

Deputy Danny Healy-Rae

I cannot support this increase in the price of cigarettes.

I am aware of the seriousness of smoking and the adverse effects it has had on many great friends of mine who died from lung cancer and so forth. However, this increase is highly unfair and will hit hard those who are addicted to cigarettes and smokers with serious mental health issues such as depression who live for a cigarette. Some of these people would buy a packet of cigarettes before they would buy food.

We need to educate youngsters more and ask parents to educate their children by advising them, if they find them smoking, of how serious it will be or what it could mean for them down the line.

I am sorry I cannot support the financial resolution. I see the Minister's point of view in that he is trying to price people out of smoking. However, the increase will mean that the €5 increase in social welfare payments will be wiped out for many people who buy a packet of fags every day. The Minister will have to go about this in a different way.

Deputy Michael Harty

I support the financial resolution. I would go further and argue that a 50 cent increase in the price of a packet of cigarettes is not enough and the increase should have been at least €1 per packet. This should be a public health rather than a revenue raising issue. Deputy Marcella Corcoran Kennedy took a strong position on the issue of reducing risk taking activity when she was a Minister of State in the Department of Health. Smoking is a major risk-taking activity. Deputy Danny Healy-Rae spoke of friends who died as a result of smoking. Having observed patients dying of smoking-related diseases such as heart and chronic lung disease or having limbs amputated, I am aware of the serious consequences of smoking. We must concentrate on this area and on educating young people about smoking. The smell of smoke from teenagers' clothing is a much more important issue for them than the health effects of smoking because they believe they are invincible. We must try to educate people from a young age.

A delegation from Moldova attended a meeting of the Joint Committee on Health in the early summer of last year. The smoking rate in that country is 37%, whereas the rate here is 21%. The delegation travelled here specifically to find out what measures we had taken to reduce the number of smokers and its members were very impressed with the reduction we have achieved in smoking rates.

I would also go a little further than the Minister by ring-fencing revenue raised through this measure for use in addressing health issues, rather than have it flow into the general taxation coffers. The Sláintecare report refers to establishing a national health fund in which revenue from so-called sin taxes, for example, taxes on tobacco, would be ring-fenced to deliver health services, rather than being put into general revenue coffers. I support the financial resolution.

Deputy Peter Fitzpatrick

I welcome the 50 cent increase in the price of a packet of cigarettes. I speak to many people who smoke and the majority of them do not want to smoke. We must do something to tackle the issue, for example, providing nicotine patches. Every family has been affected by cancer. My father died from the disease and every second smoker will die as a result of smoking. Deputies will have seen a fantastic anti-smoking campaign on television in recent years featuring a man from Dublin who was dying of cancer and members of his family. He died a few months after the film was made.

We keep talking about educating people. Many smokers have been smoking for 20, 30 or 40 years. We need to get older people to quit smoking because if children see their mum or dad smoking or, for that matter, drinking all the time, they come to believe that smoking and drinking are part of our culture. We must take serious action on cigarettes.

The 50 cent increase in a packet of cigarettes will probably result in an increase in smuggling in Border areas. We must clamp down on smuggling. At least we know the ingredients used in cigarettes sold here, whereas cigarettes being smuggled across the Border are often from Third World countries.

We should focus on educating people who have been smoking for a long time in the hope that it will have an effect on their children.

Deputy Tony McLoughlin

I support the financial resolution. Deputy Harty described the effects of smoking on his patients. I have seen its effects on the families of people who are suffering from lung cancer and other ailments as a result of smoking.

I hope the introduction of plain packaging will have an effect, particularly on young people. It is worrying to see so many young people taking up smoking. I congratulate and compliment my colleague, Deputy Corcoran Kennedy, who, throughout her period in office, highlighted the need to resist the temptation to smoke. I hope the higher price of cigarettes will encourage people to give up smoking. People have many alternatives available to them. It is regrettable to see the devastation smoking-related diseases cause to families and individuals. I hope this measure will help in some small way.

Deputy Tom Neville

I share the sentiments expressed by Deputy McLoughlin on the role of Deputy Corcoran Kennedy in bringing this issue to the fore during her period as Minister of State. I smoked for about ten years but gave up cigarettes some time ago. I started smoking at 13 or 14 years of age because I was bored at school but it subsequently developed into a habit. We need to be conscious of the reasons young people smoke and educate ourselves about the reasons the rate of smoking is starting to increase again.

The introduction of the smoking ban in 2004 hit home because it caused people to break from the habitual behaviour in which they engaged when socialising. The ban and the increase in price had a significant effect on smoking rates.

A multifaceted approach is needed to combating smoking. I am worried about the reasons young people are taking up smoking. I am particularly concerned about the issue of body image and body consciousness and the myth that smoking keeps one thin. We need to do more research on this issue and nip it in the bud.

Deputy Robert Troy

I mentioned to my colleague, Deputy Calleary, that while I do not have a difficulty with the increase in the price of cigarettes, the amount of illegal tobacco entering the State is a major issue, particularly in Border counties. The problem is also moving further south. Raising the price of a packet of cigarettes forces people to look for alternative sources of tobacco. People are hooked on cigarettes for whatever reason and are forced to support an illegal and illicit trade. What are the Government's options or plans to tackle the illegal trade in tobacco? While it is all very well to continuously increase the price of tobacco based on the indisputable fact that to do so is good for public health, a significant number of people are buying tobacco from illegal sources. What is the Government doing to clamp down on this practice?

An Leas-Cheann Comhairle

I thank Deputies for their co-operation. The Minister has several minutes to respond and conclude the debate.

Minister for Health (Deputy Simon Harris)

I thank Deputies Calleary, Jonathan O'Brien, Sherlock, Breathnach, Boyd Barrett, Mattie McGrath, Danny Healy-Rae, Harty, Fitzpatrick, McLoughlin, Neville and Troy for contributing on this financial resolution debate. I will try to respond to a number of the points that were raised. As the Minister for Health, the Deputies will not find anyone in the House more eager or enthusiastic to have a debate on the wider issues relating to smoking and tobacco from a public health policy point of view. My colleague, the Minister of State with responsibility for health promotion, Deputy Catherine Byrne, and I would welcome such a debate. I hope that, when the House comes to having a wider debate on alcohol from a public health perspective, there will be such an appetite as well, given that we must get serious about that issue if we want to tackle it.

The Deputies who suggested that this is not just about the price, but also about public health measures, were correct. If our only measure to tackle tobacco and smoking levels was to increase the price, it would be wholly inadequate. That is not the case. I wish to be the first to acknowledge that this country, on a cross-party basis and due to successive Governments' efforts, has made real progress on this public health agenda in recent years.

High taxation has an important role to play, but there has been a range of health initiatives. In 2004, we had the ban on tobacco advertising and sponsorship and the smoking ban. In 2007, we had a prohibition on the sale of cigarettes in packs of fewer than 20. In 2009, we had a ban on advertising and the display of tobacco products in all retail outlets. In 2013, we had the new combined text and picture health warnings to which Deputy Boyd Barrett referred. We have the Tobacco Free Ireland policy, which includes a number of policy and legislative proposals aimed at reducing the prevalence of smoking. The aim is to have a tobacco-free Ireland by 2025. There are more than 60 recommendations, all aimed at denormalising smoking in society so that less than 5% of the population is smoking by 2020. As part of Tobacco Free Ireland, my colleague and friend, Deputy Corcoran Kennedy in her time as Minister of State with responsibility for health promotion, led the introduction of standardised plain packaging for all tobacco products. This was a progressive measure that will make a difference, for which I congratulate her. Since 30 September, tobacco manufactured for retail in Ireland must comply with these requirements. Relatively recently, we also launched a QUIT campaign. Many Deputies will have come across the "I Will Survive" ad on television and radio.

A number of Deputies referred to the consumption of, and trade in, illicit tobacco. This is an issue for people around the country, in particular Deputies living in Border counties. I assure the House that cracking down on tobacco smuggling remains a high priority for the Government. The illicit trade undermines legitimate businesses, drains resources from our Exchequer and undermines our public health strategy.

In 2016, Ipsos MRBI conducted a survey on behalf of the Revenue Commissioners and the National Tobacco Control Office. This showed that the percentage of illicit cigarettes had been on a downward trend from 15% of the total consumed in 2010 to 10% in 2016. Last year, Revenue seized approximately 44.5 million cigarettes with a value of €23.5 million. The high level of seizures in recent years reflects the ongoing enforcement action by the Revenue Commissioners.

The House has also taken a number of legislative actions to support the Revenue Commissioners. The Finance Act 2012 clarified the legal basis for Revenue officers to open and examine the content of postal and courier packets. The Finance Act 2013 introduced a new offence and forfeiture measures relating to the illicit production of tobacco. The Finance (No. 2) Act 2013 provided that a person suspected of an offence of dealing in, or with, unstamped tobacco products must provide information to a Revenue officer or a garda and may be required to present any tobacco product concerned for examination. The powers that the House has given the Revenue Commissioners and An Garda Síochána, working together and with international agencies like Europol, continue to make a difference in the crackdown on the illicit trade. That is important.

I noted Deputy Jonathan O'Brien's comments on whether this measure would accrue the figure in question. His party had a different figure - I respect its right in that regard - in its budget proposals, but the Department of Finance informs me that, in recent years, the additional tax revenue forecasts using the same price elasticity used for this year's forecast were realised and that the projections that we made last year for 2017 point to a similar positive outcome. In this regard, Revenue has indicated that a large volume of tobacco products are being cleared from warehouses and that an increase in receipts is expected for the remaining months of this year. Current estimates from Revenue are that tobacco receipts will meet this year's forecast by year end. While I take the Deputy's points, the Government is satisfied that the forecast is solid. If there is a more dramatic shift in the level of consumption than is evident currently, it would be welcome from an overall health and well-being perspective, but the forecast model for this and last year does not tend to show that.

Deputy Sherlock raised the issue of nicotine replacement therapies. I accept that a cost is associated with them. We want to do everything that we can to support people who make the decision to quit. Nicotine replacement therapies and other evidence-based cessation medications are available on the General Medical Services, GMS, scheme to patients with medical cards with the minimal prescription charge. We are reducing prescription charges in the budget. Obviously, how much that costs the GMS every year varies depending on how many GMS smokers seek and receive this support from their GPs to quit, but it is important that this information be out there.

All in all, this is a positive measure for the health of our nation as we continue to work together to reach our aspiration of making this country tobacco free by 2025.

An Leas-Cheann Comhairle

I thank Members for observing the 30-minute slot.

Question, "That Financial Resolution No. 1 be agreed to", put and declared carried.