Peter Fitzpatrick (Louth, Fine Gael) | Oireachtas source

I welcome the opportunity to discuss this Bill. An arrangement between the Department and the Irish Tobacco Manufacturers' Advisory Committee, ITMAC, was in place for more than 30 years whereby a weighted average price was calculated. This was based on sales volumes data and retail prices to year end each year.

Maintaining high cigarette prices to deter smoking for reasons of health protection is a key part of tobacco-related public health policy. One measure in place to achieve this is minimum pricing of cigarettes. Existing Irish legislation requires that the retail price of cigarettes be at least 97% of a weighted average based on sales of each brand the previous year and the recommended retail price.

The European Court of Justice ruled in March 2010 that by imposing minimum retail prices for cigarettes, Ireland has failed to fulfil its obligation under Article 9(1) of the Council Directive 95/59/EC and indicated that infringement proceedings would be initiated by the Commission unless Ireland took steps to comply with the European Court of Justice judgment. As a consequence of that judgment, Ireland can no longer set a mandatory pricing level below which cigarette prices cannot be lowered, as this would be restricting the freedom of industry to make effective use of competitive advantage. As a result of the European Court of Justice ruling, the Department informed the tobacco industry that the practice of setting floor prices for cigarettes each year would cease. In addition, Ireland advised the Commission that new regulations would be introduced to remedy the infringement. The Commission is anxious that the legislation be amended as soon as possible and a commitment has been given to it to our achieving this as soon as possible. In the interim the draft regulations referred to were signed by the Minister in December 2012.

The Bill also sets out revised ministerial powers in regard to sales and promotion of tobacco products. The aim of these provisions is to ensure that tobacco products will not be available at a reduced price or for free where a person purchases another tobacco product or any other product or services. While the European Court of Justice has ruled that companies must be free to set their own prices, governments are allowed to levy whatever level of taxes they desire. The ruling does not stop countries from banning the sale of below-cost tobacco products.

More than one in four of the Irish adult population smokes. The Health Service Executive reports that smoking is responsible for more than 5,000 deaths each year and half of all long-term smokers will die prematurely due to a smoking-related disease. In addition, there is concern about the financial cost such as the treatment of smoking-related illnesses. For example, in 2008 smoking was responsible for 36,000 hospital admissions, costing €280 million.

As a result of those concerns measures to control the sale and promotion of tobacco products, including a system to maintain high prices, are common elements of public health policies throughout the world. Irish cigarette prices are the most expensive in the European Union and Ireland has the highest tax content of cigarette prices in Europe. For example, in January 2013, the retail price of a packet of cigarettes in the most popular price category is €9.30. The tax content, including excise duty and VAT, is €7.31 and the proportion of tax is 79%.

The World Health Organisation states that "increasing the price of tobacco through higher taxes is the single most effective way to encourage tobacco users to quit and prevent children from starting to smoke." Dr. Angie Brown, spokesperson for Action on Smoking and Health, ASH, highlighted the importance of price as an influence on buyers' behaviour. Price is well established as the most important measure in encouraging smokers to quit and discouraging young people from starting to smoke. We must always bear that in mind when legislating on tobacco prices.

Smoking kills 7,000 people each year and costs the Exchequer over €1 billion in treating tobacco-related illnesses and diseases. We must ensure these alarming statistics do not increase. I encourage people to stop smoking as it can seriously damage one's health. Most families have witnessed this, including mine.

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