Enda Kenny (Mayo, Fine Gael)

I move:

(1) THAT for the purposes of the tax charged by virtue of section 72 of the Finance Act 2005 (No. 5 of 2005), that Act be amended, with effect as on and from 7 December 2011, by substituting the following for Schedule 2 to that Act (as amended by section 16 of the Finance Act 2009 (No. 12 of 2009)):

"SCHEDULE 2

Rates of Tobacco Products Tax (With effect as on and from 7 December 2011)

".

(2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

This resolution provides for excise duty increases on tobacco products with effect from midnight tonight. The increase amounts to 25 cent, inclusive of 21% VAT, on a pack of 20 cigarettes with pro rata increases on other tobacco products. The price of a pack of 20 cigarettes in the most popular price category will increase to €8.90. The excise duty component of this price will be €5.45 and the total tax, inclusive of current VAT, will be €7.00. An additional impact will arise from the VAT increase on 1 January.

Ireland has the dearest cigarettes in the EU, which reflects the long-standing commitment by successive Governments to using taxation as an instrument to discourage consumption. This latest increase will ensure that tobacco tax continues to play that important role. Unfortunately, the high prices and taxes also make Ireland an attractive location for cigarette smugglers. The Revenue Commissioners are involved in a major programme of enforcement action against the illicit trade and have achieved notable successes in seizing illegal products and in bringing people involved in this criminality before the courts. This intensive work will continue and will have to look in particular to preventing a situation of further substitution away from taxed cigarettes by consumers.

This measure is estimated to yield €41 million in a full year.

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