Paschal Donohoe (Dublin Central, Fine Gael)
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As I was discussing illicit cigarettes, the question of how they are calculated crossed my mind as well. I am informed that it is done by MRBI polling work, in conjunction with the HSE, which obtains an understanding of the kind of products citizens are consuming. Deputy Doherty said that we need to look at this issue in a different way in future budgets and I agree. In the course of my decision to move excise on cigarettes this year, the debate I had on the subject took longer than in previous years because I am aware that in a no-deal Brexit or a pronounced movement in the value of sterling, the issues we are discussing could become a lot more serious quite quickly. I took some time before making a decision on this matter and two things motivated me to make it. The first was the relative stability of the yield this year as compared to last year, when we ended up a long way off in our forecast. The second were the health outcomes which, I believe, justify an increase in the price point.

The Deputy asked when the higher price point would, in itself, become counterproductive and act as an incentive to other behaviour that undermines our ability to get the yield we are looking for. We are in a better place this year than we were in previous years so I have a bit more confidence about my decision than I had in September. We should look at this matter more intensively next year in the tax strategy group, TSG, papers. Revenue does not have a price point in mind and nor does the Department of Finance. They have not given me a point beyond which we should not move but they have said a point could be reached at which there is a diminishing marginal tax yield. There is no indication that we have got to that point this year but it is possible in coming years so we should see if we can do any analysis of the issue. The key information will depend on where we end up with Brexit on 31 January. There are two issues here. The first is duty-free cigarettes in our jurisdiction and in the UK, which will completely change the situation, though there will be maximum amounts for people travelling to Ireland from a third country. The second is that the opportunities for illegal behaviour could be different if Brexit happens, because of the price points for these products. Revenue tells me that, at the end of this September, it had seized 11.1 million cigarettes and 2,600 kg of tobacco, including a particular seizure this year of 2.7 million cigarettes. Much is happening in this area and once we are clearer on what form Brexit is going to take, which should be the case on 31 January 2020, we will have an idea of the work we need to do this time next year.