Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

The Revenue Commissioners' ready reckoner provides for a range within which an increase in excise on tobacco may result in increased or reduced revenues. This reflects the possibility that an increase in the price of cigarettes could result in a disproportionate change in consumer behaviour. The Minister for Finance has made no secret of the fact that in recent years increases in excise duty on tobacco have been testing the boundaries of diminishing returns. To date, however, the revenues from tobacco have been holding up and the increases provided for in recent years using the same price elasticity used for the 2017 forecast have been realised and the projections for 2016 point to a similar outcome. It must be pointed out that increases in tobacco excise, as well as raising revenues, are designed to meet the health objective of reducing smoking prevalence. On this basis, any reduction in excise receipts is more than compensated by the health benefits and the consequent savings that will arise in the health sector.