Mr. John McCormack:

The pre-budget submission on which we are working with the Irish Heart Foundation does not stop at this ground-breaking recommendation. We also need to focus on the basics. For example, we do not have a national tobacco strategy, that is, a strategy that incorporates high regular taxation, reduced tobacco industry profits, tough anti-smuggling measures and concerted smoking cessation measures which will greatly reduce the human and economic impact of smoking.

Other countries have shown that one can impose big tax increases on cigarettes and reduce smuggling at the same time where the will and leadership exists.

In the UK, for example, through regular tax increases above the rate of inflation over the last ten years, major brand cigarettes are now more expensive than in Ireland. Packs cost more than €9.30 in the UK at current exchange rates, compared to €9.20 here. During the same period the smuggling rate in the UK has fallen from 21% to 9%, which is less than half the rate in Ireland. The next time that tobacco industry supported groups like retailers against smuggling tell members that increases in taxes hit their funders in the pocket, please remember whose interests they are protecting. We urge the Government to commit to an annual price escalator for tobacco taxes on all tobacco products, including hand-rolled tobacco, of at least 5% above the rate of inflation. This has been proven globally to be the most effective way of reducing smoking rates, especially among teenagers, but it will only be effective if we tackle the illicit market which provides easy access to cheap tobacco and thereby negates the effect of higher prices.

Our template for action is provided by the UK, which had roughly the same smoking and smuggling rates a decade ago as we have now. By combining high regular tax increases, tough anti-smuggling measures and effective stop-smoking strategies, the number of smokers has decreased by 2 million, including a 50% reduction among children, while the illicit market has shrunk from 21% to 9%. For an annual outlay of £300 million, tax revenues have risen by £1.2 billion, while health service savings total £1.7 billion. A crude estimate of what this could achieve in Ireland based on the UK experience suggests that an outlay of €8 million a year would return additional revenue of €130 million to the Exchequer each year.

High smuggling rates must be tackled to cut off the supply of cheap tobacco which is increasing the number of young smokers. We must give Revenue, which has lost hundreds of staff in recent years, and the similarly hard pressed Garda, the manpower and equipment they require, along with tough justice in the courts to deal with smuggling. We must also give greater support to smokers to free them from the grip of addiction. If such co-ordinated action is taken we can effectively tackle the health catastrophe that costs this country one of its citizens roughly every 90 minutes and massively increase tax revenues and cost savings for Ireland’s cash starved health service. We need new thinking about tobacco in Ireland and with this in mind, we ask members to endorse our pre-budget submission.