Ms Kathleen O'Meara:

Deputy Ó Caoláin asked about the tobacco regulator, how tax increases benefit the industry and smuggling. With regard to a tobacco regulator, we have models of regulation in other sectors such as the energy, aviation and taxi regulators. There is market failure in the tobacco market and there are excessive profits. Three companies sell 90% of all legal products. It must be recognised that there is market failure and excessive profits. An office of tobacco regulation should be created, which would intervene, cap the price, take the excessive profit and give it to the State. This is set out in great detail in our submission. This basically amounts to an intervention by a regulator in a market that is failing to curb profits and return them to the Exchequer against a background of recognising that those excessive profits are generated by an industry, half of whose consumers die as a result of using the product. From a public health perspective, that is the model we propose.

With regard to tobacco tax increases, one must examine the tobacco tax structure, which is set out in graphics in our submission. In 2010 the European Court of Justice ruled that minimum pricing was illegal. We have minimum pricing here. Since then there has been a trend of introducing lower end tobacco into the market at €6 or €7 a pack and then there is the high end of €9 a packet or 32 cigarettes in a pack of Benson & Hedges for €10. In view of the current tobacco structure, the tobacco industry is allowed to make increases on premium cigarettes and well known brands while keeping low end cigarettes cheap. We have a nice graphic on page 10 of our submission. This means that the industry benefits as a result because the tax is levied on the volume of cigarettes sold and the ad valorem tax is levied on the price. Companies are using that structure to increase their profits. Cigarettes are cheap to produce and profits are high. A small increase, therefore, will produce a major profit but it will not affect consumption.

The Government introduces a small increase in the budget in response probably to lobbying by ourselves and so on. Every year for the past ten years, the industry has also introduced a small increase, which means their profits have increased. Consumers do not notice because all they hear is there has been a budget increase and at midnight the price of cigarettes will go up. They might see a 10 cent or 15 cent increase on television but they do not realise they are paying 20 cent or 25 cent more. The tax increase is absorbed and because it is not a high increase, consumption is not affected. The WHO agrees with our argument that high increases will hit consumption.

The smuggling figure of 87% comes from Revenue; it is not ours. The example we quote is 3.1 billion packets of cigarettes were supplied to Andorra in a single year.

That would be equivalent to every Andorran citizen smoking seven packets a day. So many of these cigarettes ended up in Ireland. I think members of the committee have got it in one. I do not need to say anything more about that.

Regarding young people-----