Ms Kathleen O'Meara:

Thank you, Vice Chairman. I am delighted to be present to make a pre-budget submission on behalf of the Irish Cancer Society, which as Ms Loughnane said, we published jointly with the Irish Heart Foundation. Our vision and ambition is nothing less than a future without cancer. That is why we fight tobacco with everything we have got. Smoking is the single biggest preventable cause of cancer in Ireland. Almost one in five of all deaths is attributable to smoking. The Government has estimated that tobacco costs the State between €1 billion and €2 billion every year. That is between 6% and 15% of the entire health budget. In fact, another study puts the economic cost to Ireland of premature mortality caused by smoking at €3.5 billion per year.
High levels of tobacco taxation in Ireland have proven to be an extremely successful health policy. Successive taxation increases have brought smoking rates down to their lowest level, from 31% in 1998 to 21.5% in 2013, yet there is still reluctance on the part of successive Governments to raise the tax on cigarettes and other tobacco products by more than a nominal amount. One of our proposals outlined in the pre-budget submission would increase the amount of taxation coming into the Exchequer every year by up to €77 million. Another addresses the excessive amount of profit tobacco companies make every year. All of that is against the backdrop of the Government’s – and therefore the Department of Finance’s – stated aim of a tobacco-free Ireland by 2025.
We have six recommendations in the pre-budget submission but I will focus on two areas today, namely, taxation and smuggling. The current tax structure on cigarettes is designed to benefit big tobacco manufacturers rather than the State. It is inadvertently doing that. That is because the current tax structure on cigarettes is made up of two categories of excise tax: one specific tax, which is levied on the volume of cigarettes sold, and an ad valoremtax, which is calculated on the price of a packet of cigarettes. We propose an increase in the specific tax rate to the maximum allowable under EU law, which would be 76.5%. That would have the effect of squeezing tobacco manufacturers, increasing the duty received by the Exchequer and ending the practice which has emerged in recent years where smokers can down-trade their cigarette brands rather than quit because cigarette companies are introducing lower price cigarette brands to manipulate the specific versus the ad valoremtax rate.
We also want the Government to end the practice of ad hoc hikes in tobacco tax and commit to an annual price escalator of at least 5% above inflation. That would mean an increase of approximately 50 cent in budget 2015 and would yield €77 million per annum for the Department of Finance.
I am running out of time so I wish to speak briefly on smuggling. First, I wish to nail a myth. The smuggling rate of tobacco in Ireland is falling.