Maurice Quinlivan (Limerick City, Sinn Fein) | Oireachtas source

The Minister and the Taoiseach discuss with one another how tax cuts will be funded and that the levy of excise duty on cigarettes will be increased. The Fine Gael manifesto stated that an annual 5% increase in excise duty on cigarettes would bring in €349 million over the term of a Government. In its manifesto, Fianna Fáil stated that adding 90 cent to the excise duty would bring in an additional €108 million over five years. The programme for Government notes that reductions in personal taxes such as the continued phasing out of USC would be funded largely through, among other things, higher excise duties on cigarettes and increased enforcement and sanctions on their illegal importation and sale.

However, the tax on cigarettes has gone up since 2007 from €2.07 to €3.35, which is a 64% increase in the period, while the excise from cigarettes has actually gone down from €1.192 billion to €1.098 billion. The Revenue Commissioners are very clear on this and I want to quote what they say as follows:

Forecast receipts of tobacco products tax use an elasticity measure to partially reflect the responsiveness (or change in behaviour) of smokers following duty and price changes. Increases in duties are forecast to lead to increases in receipts, albeit recognising that some smokers will consume less and consequently some of the increases in receipts from higher prices are negated. Further cigarette price rises, particularly at the higher end, may not increase Excise receipts and this is indicated through the use of the range of estimates above. To reflect the potential variations in consumption change in smokers, the range above is based on varying the elasticities used in the forecast calculation.