Dáil Éireann díospóireacht -
Tuesday, 10 Oct 2023

Vol. 1043 No. 5

Financial Resolution No. 3: Tobacco Products Tax

Minister for Enterprise, Trade and Employment (Deputy Simon Coveney)

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 2023, by substituting the following for Schedule 2 to that Act (as amended by section 47 of the Finance Act 2022 (No. 44 of 2022)):

“SCHEDULE 2

RATES OF TOBACCO PRODUCTS TAX

(With effect as on and from 28 September 2022)

Description of Product	Rate of Tax
Cigarettes …. .... .... …. ....	Rate of tax at­— (a) except where paragraph (b) applies, €402.48 per thousand together with an amount equal to 8.85 per cent of the price at which the cigarettes are sold by retail, or (b) €479.37 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 €483.343 per kilogram.
Fine-cut tobacco for the rolling of cigarettes …. .... .... …. .... ....	Rate of tax at €465.003 per kilogram.
Other smoking tobacco …. .... ....	Rate of tax at €335.322 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).

Financial Resolution No. 3 provides for excise duty increases on tobacco products with effect from midnight tonight. The increase amounts to 75 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. The price of a packet of 20 cigarettes in the most popular price category, assuming the full increase is passed through to the final retail price, will increase to €16.75. The excise duty component of this price will be €10.05 and the total tax, inclusive of VAT, will be €13.18, which represents 78.7% of the price of a packet of 20 cigarettes. The pro rata increase on the price of a typical pouch of roll-your-own tobacco will increase by €1.04 to €24.74.

Ireland is committed to a policy of high taxation of tobacco in order to encourage people to quit smoking, particularly younger people. The policy is working. In 2007, 29% of our people were daily smokers. By contrast, Healthy Ireland survey figures for 2022 show that the figure has now fallen to 14%. Increasing tobacco products taxation is a key public health policy measure to continue this downward trend in smoking rates in Ireland and help us to achieve a tobacco-free Ireland post 2025. The increase in tobacco products tax is estimated to yield approximately €68 million to the Exchequer in a full year. I see this resolution as a key part of the Government's policy to encourage people to give up smoking or certainly to encourage them not to start. I will happily take any questions Members may have.

An Leas-Cheann Comhairle

Seven speakers have indicated. I ask for Members' co-operation so everybody gets in.

Deputy Michael McNamara

I welcome the Minister's welcome of questions because I have a couple in that regard. While I do not have a problem with the State's policy of taxing tobacco products and trying to discourage people from smoking, I would question at what point it becomes counterproductive, in that taxing cigarettes just means people are going to smoke imported cigarettes or that there is a far greater incentive to illegally import cigarettes. I have a friend and any time I go abroad he asks me to bring him back 200 cigarettes. I am sure he does the same with lots of other people. The longer I do it, the shorter our relationship will be but that is what people do. I see more and more Spanish warnings on boxes of cigarettes or pouches of tobacco, or Polish or Lithuanian warnings - take your pick of languages. We obviously do not know what proportion of illegally imported cigarettes are coming into Ireland. I presume there is also no record of what proportion of cigarettes smoked in Ireland are from people who legally import them, as I would. Maybe we do. Maybe the Minister is going to contradict me.

Deputy Simon Coveney

I can give the Deputy some estimated numbers on that.

Deputy Michael McNamara

At best, those are estimates. At what point does it become counterproductive? Maybe the 75 cent is merely due to inflation, given how rampant inflation has been.

We say that taxation is working and is stopping people from smoking but how do we know it is the taxation that is stopping people from smoking rather than the Government health warnings? Even unhealthy people like me are conscious of the dangers of smoking now. Knowing what is unhealthy does not necessarily stop me pursuing unhealthy pursuits but at least I am more aware than people in my shoes might have been 20 or 30 years ago as to what is healthy and unhealthy. Education with regard to any drug, be it a legal or an illegal drug, is fundamental. I just wonder about punitive measures such as taxation and where the limits of it are.

Deputy Brendan Smith

Like Deputy McNamara, I speak with particular reference to the possible impact this increase will have on the levels of illicit trade and in parallel, the loss of revenue to the Exchequer. Probably no other Member of this House over the years has tabled as many parliamentary questions and adjournment debates as I have regarding the need to counteract the cross-Border trade in illicit products, be that in fuel, drink products, energy products or whatever. I am absolutely opposed to that and I have seen the gangs that made huge money in illicit trade over the years, including paramilitary organisations and others.

My understanding is that the Revenue Commissioners' own survey on illicit tobacco found that 30% of cigarettes in Ireland in 2022 were non-Irish duty paid. Therefore, they were illicit and-or from travel purchases, as referred to by Deputy McNamara. It has been represented to me also that this cost the Exchequer a staggering €384 million in 2022 alone, which was the highest level ever recorded. Based on Revenue's figures, it is estimated that illicit cigarette sales alone have cost the State €1.25 billion over the last five years. If that is correct, it is an enormous amount of money. It shows the type of rubbish product that is being consumed in this country, coming from illicit trade. My concern is that this 75 cent increase on cigarettes will drive smokers to seek out illegal products, thus aiding this criminal trade.

I want to put on the record of the House, as I have done in the past, that I am personally opposed to smoking and the consumption of tobacco products and wholeheartedly support our public health specialists and other clinicians who are advocating and working towards achieving a tobacco-free Ireland.

Deputy Michael Healy-Rae

It has to be stated publicly that the level of increase in illegal cigarette sales throughout the country is absolutely enormous, and I believe that is a direct result of the 50% or 60% increase in taxes that has been put on tobacco products over recent years. I never voted for those increases. Quite simply, I would love to live in a country and a world where nobody smoked. I do not want to see people smoke but, at the same time, I do not agree with penalising people who do smoke and are addicted, whether they cannot stop smoking or do not want to do so, by increasing the cost of their box of cigarettes by 75 cent. In some cases, the only comfort those people might have in this world, or the only thing they might look forward to, is smoking a cigarette. Again, I am not saying we should encourage it, but we should not penalise those people. They might be living on a fixed or low income and the only thing they cherish might be to sit down, mind their own business and smoke a cigarette or a pipe or roll their own. I do not see why we should sit in high judgment of those people and penalise them with additional taxes. I could not agree with that for a multitude of reasons.

I have given an awful lot of time through the former Southern Health Board and the HSE to dealing with psychiatric services over the years. For many people who suffer from different types of ailments, the one thing they might like doing, contrary as it might seem, is smoking a cigarette, and again I do not see why we should inflict this increase on those people. I do not agree with it. We are not far now from a box of cigarettes costing €20, which would equate to €1 per cigarette, and that would be an awful price for somebody to pay. While some might say it helps discourage people, but is it really what is stopping people smoking? I do not think so. I think they might go without something else to be able to smoke their cigarettes. I do not agree with it for a multitude of reasons.

I again point to the increase in the illicit sale of cigarettes in this country. You do not have to be in Dublin for it. They are for sale in every village, town and city and you do not have to travel far to get them.

Deputy Richard O'Donoghue

I am a reformed smoker. I gave up cigarettes in 1996 and I am glad I did it but, at the same time, I cannot support an increase in the price of cigarettes because it is a personal choice for people themselves to give up. The Minister quoted statistics suggesting the incidence of smoking had dropped in recent years from 29% to 14% and that is probably correct, but I do not think that takes into account the consumption of illegal cigarettes coming into this country or the number of people who have switched to alternatives such as vaping. If we take account those who are now vaping, including younger people, because cigarettes have gone too dear, the percentages would be staggering. On the one hand, the Minister is saying the taxation on cigarettes is stopping people smoking, although I do not agree because if somebody wants to smoke, they will smoke. On the other hand, however, the Government is driving the younger generations to vaping. To get the statistics right, therefore, we need to look at both aspects and see what the Government is doing.

As I said, I am a reformed smoker. I am delighted the percentage of smokers is going down but, again, I believe people themselves will decide to give them up or not, whether their health tells them to give them up, whether they were using them just for their nerves or whatever circumstances they are in. I do not believe raising the price of cigarettes further is beneficial. As I said, I would love for people not to smoke but I would also like to give people the choice not to smoke. Moreover, I would not like others within the circle of someone who is addicted to cigarettes to have to do without something else because of it.

As the Minister noted, smoking is dying out. Increasing the tax on cigarettes is not going to help; all it will do is drive people to the black market, and that will cause its own problems.

Deputy Michael Collins

I will not agree to the proposed increase in the price of cigarettes. Thankfully, I am not a smoker, although some of my family are and I wish to God they were not. Smoking is a relaxant for some people, whether we like that or not, and this increase is just a tax grab for the Government because it is not investing any money back into education to try to get to the root of the problem. It will never fully resolve the issue no matter what it does - I accept that - but in any schools I visit, I do not hear any deep discussion of the dangers of cigarette smoking, with children being brought along and an attempt to educate them.

The Government has a habit of punishing people; that is its way of delivering a message. If you drive a car, you will get punished because the Government will shove up the cost of fuel and make it almost impossible to buy it. Likewise, if you smoke cigarettes, the Government will punish you by increasing the price. What that means, however, for the many people who are in a crisis situation right now, finding it almost impossible to make ends meet, is that there is less food on the table, and it might well be not just their own food. It could well be the food for the rest of the family.

It is a tax grab. As I said, I wish to God people did not smoke and I thank God I do not smoke myself. I do not need cigarettes but I respect those who need the comfort of cigarettes, for whatever reason that might be. Certainly, they are not mischievous or bad reasons. It is maybe just a bad habit they got into years ago. We have not invested any of the taxes we get from cigarettes. Was it €68 million that the Minister said this measure is expected to yield for the Exchequer? Some of that should be funnelled back into the education system to try to dig into the roots of the problem. When I was travelling to the House earlier, I looked twice at a student who had a cigarette in her hand. She must have been no more than 13 or 14 and that would be pushing it. That has to stop.

To give some chance to people and given that so much tax is being collected from tobacco, surely some of that €68 million could be put aside to try to educate children in schools and to show them the dangers of cigarettes. I would consider voting in support of an increase if that money went to something that would help people give up cigarettes. I think the increase is a bit unfair. People are finding it very difficult and I have received a fair few messages today expressing annoyance from people who smoke and are again being hit hard in the pocket today.

What is more, it is just shoving them into the black market. As Deputy McNamara said, when someone is flying into the country, people are always looking for them to get cigarettes for them. It is quite annoying, to be honest, although I do not do much travelling, so it does not worry me. I hear people talking about it quite a lot, however, and the increases are playing into the black market.

Deputy Richard Boyd Barrett

People Before Profit will always oppose this measure, which is a fairly significant increase this year, of 75 cent per packet of cigarettes. We do so because, of course, we completely support the view we need to reduce the number of smokers and the number of people who take up smoking and to encourage people to stop smoking. There is absolutely no question as to how bad it is for your health, but the fact is smokers are addicts and a huge number of people who smoke became addicted many years ago and are being punished with this and with successive increases year in, year out. They are being punished for their addiction and I do not think the right way to deal with addiction is to punish people, yet the Irish Government exceeds most other governments in this punishment.

I was quickly calculating what the increase will mean, and I think it will be an additional €5.25 per week. That is an additional €273 per year. If you smoke one packet of cigarettes per day, it will now cost you €6,100 throughout the year. That is a shocking amount of money, and of course it would be far better if people did not spend that money on smoking and doing such damage to their health. However, for people who are addicted, it is difficult. As others said, some people just like doing it and maybe they should not, but mostly it is an addiction. When you consider the difference in the cost of a packet of cigarettes in countries like Spain, Portugal and Greece, it is pretty stark. It is now €16.75 but it would be approximately €5 in Spain and Portugal. I do not know what it costs in eastern Europe, but all of the illegal stuff is coming from there. There is no doubt that it has led to a massive expansion of people importing cigarettes illegally and the growth of that illicit trade. There are question marks over how it is fuelling that illicit trade. I would also say to the Minister that there must be some question marks over the degree to which the increases have caused the welcome reduction in the number of smokers he has cited. I can only say this anecdotally. I will not say I have read the studies in detail, but it is clear to me that young people these days who are smoking less are doing so because they are aware of the health impacts, rather than the cost of it. If you want to further reduce the number of people who take up smoking, you should put more effort and focus on the public health education side. I think that is what actually works, rather than punishing those with the addiction.

I will say something else, as an observation. I would say the degree to which young people are interested in physical health and fitness - going to the gym and the increase in particular of young women participating in sport - is probably having more influence on discouraging people from smoking. They can see the obvious conflict between smoking and engaging in physical exercise and sports. It is worth mentioning, as a connected point, the struggle many of the local grassroots soccer clubs or sports clubs in my area have to just get basic facilities, particularly for young women engaging in sport and soccer. They still do not have proper changing rooms for young women taking up soccer. We do not have enough pitches. It is an awful struggle to get facilities for boxing clubs and so on. I think you would probably do more to discourage people from smoking by investing more in grassroots sport, and other positive and healthy youth activities, than punishing the reducing number of people who are addicted to cigarettes.

I will oppose this measure and I ask the Government to at least consider those arguments because that is a whack of a hit for people who are fairly helpless in their addiction.

Deputy Danny Healy-Rae

Many years ago I worked with two men. One of them did not smoke and one of them did. The fellow who did not used to always be jarring the other fellow. He said that if God intended him to be a smoking man he would have put a chimney in him. I do not smoke, and I know it is bad for people, but I do not agree with this tax. As has been said about people who are addicted, God how they appreciate their cigarette. They rush outside the door and that is what they look forward to. We are penalising those people. The Minister said we have it down to 14% but that may not allow for illegal cigarettes because there is a lot of them coming into the country. It is unfair to penalise people with this tax. They may leave the table short, or their child short for something. The money the Government is already getting from tax should be more visible in education and in our schools, and more time given to advising young people not to smoke.

I understand the people who are smoking. Many of them started before government warnings about smoking and the way it can damage your health. Tonight I feel for people who have started and who are addicted. It will make it tough on their pocket. Many of these people are social welfare recipients. The extra €12 the Government gave today is welcome. However, much of that will be eroded with the extra 75 cent being charged for cigarettes. Again, I say that the Minister is encouraging the illicit sale of cigarettes. He may be dragging young people to do some other thing. Youngsters being youngsters will try something, and maybe even drugs that will be much worse and do more harm to our society and young population. I worry for parents today and into the future rearing children with all of the problems they face.

I appeal to the Minister to look at this again. It is now almost €1 per cigarette. People who are smoking, particularly the older people, will continue to smoke and something else will suffer because they will not have money in their pocket. I will be opposing this.

Deputy Duncan Smith

I am three and a half years in the Dáil, and the only time we debate tobacco reduction and smoking prevalence is on budget night through the instrument of a taxation measure. The aim is for a tobacco-free Ireland by 2025, which is a smoking prevalence rate of less than 5%. It is a 12-year campaign. We have a smoking prevalence of approximately 18% at the moment - 750,000 people. It is failing on every level. The taxation measures that have been brought in are not bringing the prevalence rates down enough. We are not having this debate through the lens of the health portfolio often enough. There is not a strong enough health-based response to reducing the levels of smoking. That is a fact. We now have the complicating phenomenon of vaping coming in. I know it was announced in the budget that there will be taxation measures on vaping. I suppose that is to be welcomed. However, if it does not come hand in hand with a real health-based policy to target the reduction of smoking and properly tackle vaping, deal with it and not just skirt around the edges of the debate, then we really are at nothing. There is only so long you can go on increasing taxation on cigarettes if the prevalence rate is not going down at the rate needed.

The tobacco-free Ireland policy is failing and this is not doing enough to tackle that.

Deputy Simon Coveney

I thank everybody for taking part in the discussion. Smoking is still the leading cause of preventable death in Ireland. Approximately 4,500 people per year die because of preventable diseases caused by smoking. We have an obligation to use whatever policy and taxation tools we have to encourage young and not-so-young people away from smoking. One of those tools is to make purchasing cigarettes and tobacco more expensive, though it is not the only one.

We have introduced fairly significant legislation, the Public Health (Tobacco Products and Nicotine Inhaling Products) Bill 2023. That will, along with other legislation, make a significant difference in the restrictions on how companies can market product and where it is placed in shops.

There is also support through the HSE to help people get off an addiction. Deputies have rightly pointed to the fact this is an addiction for many people. Sending a clear signal that each year we are likely to make this product more expensive plays a part in ensuring many young people do not look at it as an option because it is too expensive. It also forces people to think about the affordability of, and, therefore, the alternatives to, continuing to smoke. It makes sense to continue to do this, while I recognise many of the points made.

The point on the illicit trade it is very genuine, particularly in the context of cross-Border trade. The 2022 Ipsos MRBI survey on illicit tobacco products, carried out on behalf of Revenue and the national tobacco control office, found that 17% of cigarette packets held by smokers surveyed were classified as illegal and 17% of pouches of roll-your-own tobacco were classified as illegal. The Revenue Commissioners are very conscious of the threat that tobacco smuggling and the illicit trade poses and continue to make tackling the problem a priority.

Last year, for example, Revenue seized 51.6 million cigarettes with a value of €39.5 million. As of 31 August this year, Revenue had seized approximately 45.3 million cigarettes with a value of just under €36 million. Revenue continues to work with An Garda Síochána on being more effective in ending that illicit trade. Clearly, the higher the price, the more attractive the market because of the bigger price differential between product sourced outside of Ireland and a legally purchased packet of cigarettes. We have to continue to examine that in the decisions we make on budget day.

We should be doing many of the things raised here, such as promoting sport and improving sport facilities. We are putting tens of millions of euro into sporting facilities over the next year or so through the sports capital programme. We need to do more of that. The core proposition, while this is a revenue-raising measure and €68 million will come in, is that this policy is a deterrent to smoking and purchasing cigarettes. For that reason, we should support it in this House.

An Leas-Cheann Comhairle

As the time allowed for debate has expired, I must now put the following question in accordance with the order of the Dáil of this day: “That the motion for Financial Resolution No. 3 is hereby agreed to.”

Question put:

The Dáil divided: Tá, 90; Níl, 47; Staon, 0.

Tá

• Bacik, Ivana.
• Berry, Cathal.
• Brophy, Colm.
• Browne, James.
• Bruton, Richard.
• Burke, Colm.
• Burke, Peter.
• Butler, Mary.
• Byrne, Thomas.
• Cahill, Jackie.
• Cannon, Ciarán.
• Carroll MacNeill, Jennifer.
• Chambers, Jack.
• Collins, Niall.
• Costello, Patrick.
• Coveney, Simon.
• Cowen, Barry.
• Creed, Michael.
• Crowe, Cathal.
• Devlin, Cormac.
• Dillon, Alan.
• Donnelly, Stephen.
• Duffy, Francis Noel.
• Durkan, Bernard J.
• Farrell, Alan.
• Feighan, Frankie.
• Fitzpatrick, Peter.
• Flaherty, Joe.
• Flanagan, Charles.
• Fleming, Sean.
• Foley, Norma.
• Griffin, Brendan.
• Harkin, Marian.
• Harris, Simon.
• Haughey, Seán.
• Heydon, Martin.
• Higgins, Emer.
• Hourigan, Neasa.
• Howlin, Brendan.
• Humphreys, Heather.
• Kehoe, Paul.
• Kelly, Alan.
• Lahart, John.
• Lawless, James.
• Leddin, Brian.
• MacSharry, Marc.
• Madigan, Josepha.
• Martin, Catherine.
• Martin, Micheál.
• Matthews, Steven.
• McAuliffe, Paul.
• McConalogue, Charlie.
• McEntee, Helen.
• McGuinness, John.
• McHugh, Joe.
• McNamara, Michael.
• Moynihan, Aindrias.
• Moynihan, Michael.
• Murnane O'Connor, Jennifer.
• Murphy, Verona.
• Naughten, Denis.
• Naughton, Hildegarde.
• Noonan, Malcolm.
• O'Brien, Darragh.
• O'Brien, Joe.
• O'Callaghan, Jim.
• O'Connor, James.
• O'Dea, Willie.
• O'Donnell, Kieran.
• O'Donovan, Patrick.
• O'Dowd, Fergus.
• O'Gorman, Roderic.
• O'Sullivan, Christopher.
• O'Sullivan, Pádraig.
• Ó Cathasaigh, Marc.
• Ó Ríordáin, Aodhán.
• Phelan, John Paul.
• Rabbitte, Anne.
• Richmond, Neale.
• Ring, Michael.
• Ryan, Eamon.
• Shanahan, Matt.
• Sherlock, Sean.
• Smith, Brendan.
• Smith, Duncan.
• Smyth, Niamh.
• Smyth, Ossian.
• Stanton, David.
• Troy, Robert.
• Varadkar, Leo.

Níl

• Andrews, Chris.
• Barry, Mick.
• Boyd Barrett, Richard.
• Brady, John.
• Browne, Martin.
• Buckley, Pat.
• Canney, Seán.
• Carthy, Matt.
• Clarke, Sorca.
• Collins, Joan.
• Collins, Michael.
• Cronin, Réada.
• Crowe, Seán.
• Cullinane, David.
• Daly, Pa.
• Donnelly, Paul.
• Ellis, Dessie.
• Farrell, Mairéad.
• Fitzmaurice, Michael.
• Gould, Thomas.
• Guirke, Johnny.
• Healy-Rae, Danny.
• Healy-Rae, Michael.
• Kenny, Gino.
• Kenny, Martin.
• Kerrane, Claire.
• Mac Lochlainn, Pádraig.
• McGrath, Mattie.
• Mitchell, Denise.
• Munster, Imelda.
• Murphy, Paul.
• Mythen, Johnny.
• Nolan, Carol.
• O'Donoghue, Richard.
• O'Reilly, Louise.
• O'Rourke, Darren.
• Ó Broin, Eoin.
• Ó Murchú, Ruairí.
• Ó Snodaigh, Aengus.
• Pringle, Thomas.
• Quinlivan, Maurice.
• Ryan, Patricia.
• Smith, Bríd.
• Stanley, Brian.
• Tully, Pauline.
• Ward, Mark.
• Wynne, Violet-Anne.

Staon

Tellers: Tá, Deputies Hildegarde Naughton and Cormac Devlin; Níl, Deputies Michael Healy-Rae and Danny Healy-Rae.

Question declared carried.