Bertie Ahern (Dublin Central, Fianna Fail)

We did not opt for a greater increase in excise duty because such increases have a major impact on the consumer price index. It is for this reason that the Minister for Finance asked the social partners to consider whether tobacco products should be removed from the goods included in the CPI. He has made this point on more than one occasion, as have I. The impact on the CPI of this increase is 1.46%. Statistics prove that an increase in the excise duty on tobacco products leads to a reduction in the numbers who smoke.

Tax will account for 80% of the price of 20 cigarettes, which seems sufficient. If tobacco becomes too expensive, smugglers will take advantage, as happens in many jurisdictions. We must try to strike the correct balance. The Minister did not increase the excise duty on tobacco products for several years. The price of cigarettes in this State is the second highest in the EU, after the United Kingdom. The overall tax take on a packet of 20 cigarettes, including excise duty and VAT, will be €5.50 after this increase. That is fair.

I understand the Minister was not inclined towards this increase but he listened carefully to the public health arguments. A major campaign was conducted by all the interested organisations, including ASH, which always makes its case at this time of year, the Irish Cancer Society and others. Members on all sides of the House were bombarded with representations from these groups. They passionately believe that the tax element is useful in discouraging smokers. Cigarette prices have increased in the past ten years at a significantly higher rate than the increase in the CPI. The tax-inclusive price of a packet of 20 cigarettes has increased by 80% while the CPI has increased by less than 40%.

Deputy Ring put forward the side of the argument on this issue that is no longer easy to make. There was a time, as Deputy Rabbitte said, when this issue was always the subject of lively debate in this House. There are arguments on both sides but we all agree on the health aspect of it. Fiscal policy is part of the overall health strategy aimed at discouraging smoking.

There are elements other than increased pricing in the health strategy. These include increasing controls on the sale of cigarettes; more prominent health warnings on packets; a prohibition on tobacco advertising and sponsorship of events, including GAA events; a restriction on smoking in public areas and workplaces; and health education programmes as well as actions by health professionals. Increases in tobacco duty have been introduced to ensure tax policy plays a central part in the overall strategy. After today's increase, the price of a packet of 20 cigarettes will be €7.05.

Deputy Mulcahy can be assured rigorous efforts are made to combat tobacco smuggling. This is evidenced from the growing number of seizures and prosecutions made as a result of these efforts. In 2006, until 24 November, 14,044 seizures were made, yielding 46 million cigarettes with a retail value of €14.6 million. That shows the extent of smuggling. Of that figure, 11,974 were made from postal consignments and 1,907 were made in airport seizures, giving a combined retail value of €8.3 million. Seizures at sea ports numbered 163 with a retail value of €6.3 million. To date, 120 prosecutions have been instituted, resulting in fines of €52,675.

Several Members spoke of striking a balance between taxes and price. If the tax was increased by 90%, it would be a huge encouragement to the smuggling brigade. The actual tobacco content and the excise content per thousand cigarettes for the UK is €239.16 while Ireland's is slightly lower at €214.04. Next in the table is France with a much lower figure of €160. In Eastern Europe, Latvia stands at €15.60, Lithuania, €21.90 and Estonia, €33.87. There is an enormous divergence between their figures and ours. One can see the incentive for smuggling as there are large amounts of money involved.

We must hope the other campaigns, such as health promotion, will convince people that smoking is dangerous and is a killer. Large numbers of young people still take up smoking. Price is an important issue and hopefully today's increase will have some impact on young people smoking. A recent survey conducted by the Office of Tobacco Control for the 12 month-period until June 2006 showed a decrease in smoking. Some 24% of the population now smokes compared to 27% three years ago and 31% eight years ago. That is a fair reduction. The same survey gave a breakdown of smokers by age group: 18% of 15 to 18-year-olds; 33% of 19 to 35-year-olds, the dominant group; 22% of 36 to 70-year-olds; and 11% of people over 70 years of age smoke. Deputy Ring can say to his friends who smoke that if they want to reach 70 years of age and over, not smoking will increase their chances. Like all of us, he will want to keep his friends as long as he can.

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