Tuesday, 9 October 2018
Financial Resolutions 2019 - Financial Resolution No. 1: Tobacco Products Tax
(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 10 October 2018, by substituting the following for Schedule 2 to that Act (as amended by section 49 of the Finance Act 2017 (No. 41 of 2017)):
RATES OF TOBACCO PRODUCTS TAX
(With effect as on and from 10 October 2018)
|Description of Product||Rate of Tax|
|Cigarettes .... .... .... .... .... .... .... ....||Rate of tax at—|
(a)except where paragraph (b) applies, €327.10 per thousand together with an amount equal to 9.04 per cent of the price at which the cigarettes are sold by retail, or
(b)€376.82 per thousand in respect of cigarettes sold by retail where the rate of tax would be less than that rate had the rate been calculated in accordance with paragraph (a).
|Cigars .... .... .... .... .... .... .... ....||Rate of tax at €375.058 per kilogram.|
|Fine-cut tobacco for the rolling of cigarettes ....||Rate of tax at €360.827 per kilogram.|
|Other smoking tobacco .... .... .... .... ....||Rate of tax at €260.199 per kilogram.|
(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).Financial Resolution No. 1 provides for excise duty increases on tobacco products with effect from midnight tonight. The increase amounts to 50 cent, inclusive of VAT, on a pack of 20 cigarettes in the most popular price category together with pro rata increases for other tobacco products as well as an additional 25 cent increase on a 30 gram pack of roll-your-own tobacco.
There will also be an increase in the minimum excise duty on a pack of 20 cigarettes to €7.54. This measure will ensure all cigarette packs, regardless of price, will incur at a minimum the excise duty that would be applicable to a pack priced at €11. The price of a pack of 20 cigarettes in the most popular price category, assuming the full increase is passed through to the final retail price, will increase to €12.70. The excise duty component of this price will be €7.69. The total tax inclusive of VAT will be €10.06, which represents 79% of the price of a pack.
Ireland is proudly committed to a policy of high taxation of tobacco in order to encourage people, particularly younger people, to quit smoking. Thankfully, the policy is working. In 2007, some 24% of our people were daily smokers. By contrast, the HSE and Healthy Ireland survey figures for June of this year showed that figure had fallen to 18%. Furthermore, the quantity of cigarettes consumed per smoker also fell in that period. Increasing taxation on tobacco products is a key public health policy measure to continue this downward trend in smoking rates in Ireland and help us achieve our goal of being tobacco free by 2025. In revenue, the increase in tobacco product tax and the minimum excise duty are estimated to contribute €61.8 million in a full year.
I do not smoke and I do not like smoking, but we are tackling this the wrong way. We have continually put up the price budget after budget, but for people who are addicted or find it difficult to stop smoking, and especially for working-class or unemployed families, this price is savage and it puts huge pressure on all aspects of the household budget for food, clothes and general living expenses.
As I said today as part of my budget contribution, we are not touching the whole illicit trade of cigarettes. The Minister mentioned the €7.54 excise duty on a pack of 20 cigarettes and the €61.8 million in revenue that might come in, but the amount of cigarette smuggling across the Border and from outside our shores that is coming in is shocking. We have seen studies about how dangerous smuggled cigarettes are, as they are not regulated and in some cases they are like smoking tar. We are not touching this issue at all. If we are discussing real health worries and issues, the damage those kinds of cigarettes do to people's lungs and general health is shocking. We should broaden our options here and not just put the price up by 20 cent, 50 cent or whatever every year, which has just become a habit now. Rather, we should seriously tackle the smuggling and importation of illegal cigarettes, which do greater damage to health and which do not provide any revenue.
Our alternative budget also proposed to increase the excise by 50 cent and, therefore, we are clear that we support this measure. We are aware of the impact smoking has on people's lives, not just on smokers but non-smokers also through passive smoking. More and more research is carried out every year on the impacts of passive smoking. It is a public health issue and it is in everyone's interest to reduce the number of people who smoke. This is one way of doing it but a varied approach is needed, including a well-funded health system, information programmes and encouraging people who smoke and have a smoking addiction to tackle that addiction.
While we support the increase in excise duty on cigarettes as one measure, and we will not vote against it, we will not support this particular measure tonight because a holistic approach is needed. As a stand-alone measure, this does not address those issues. If someone was able to say, for example, that the €61.8 million which we would get as a result of this was going directly into programmes to try to prevent people from smoking, one could stand over it. However, putting the €61.8 million into a budget which overall does nothing to help society is putting it into a black hole. We will not, therefore, support it nor vote against it.
There is a resolution of this sort virtually every year. As budgets I myself was involved in framing included them, it would be odd if I did not support them. One of the most successful health measures we have taken is against tobacco, in tackling its distribution, sale and visibility, and this has had an enormously positive health effect on our people. The fact that the number of smokers is down to 18% of the population is an extraordinarily positive achievement, but we should obviously strive to go further.
Pricing is clearly a real consideration. People will have to make a real choice about spending the amount of money it now costs to feed an addiction. We need to give a positive incentive to people to quit. The corollary of high prices is continuing a proactive, supportive campaign for smokers because it is an addiction, which means it is difficult for them to quit. Some would argue the addiction is stronger than the addiction to heroin. We must ensure if we are to price people out of the ability to buy cigarettes, we must give them the supports to be able to get off the addiction.
In many estates around our country, people sell imported cigarettes that are not taxed in this jurisdiction. I am much more concerned, however, about the composition of those cigarettes, which might not be purely of a nature that would be bad for one's health. Rather, they might be extraordinarily bad for one's health, given some of the products that are included in these counterfeit cigarettes. I ask the Minister to give us assurance about the supports to combat smuggling that should accompany this measure. If we are to have high prices that will increase, which we have, we must ensure we do not facilitate in any way the smuggling of cigarettes and the provision of counterfeit cigarettes in our estates and on our streets. That means devoting some of the money we accrue from this tax to combatting smuggling and ensuring our customs officials are equipped to do that.
As I have the ear of the Minister, and thus a captive audience, I plead with him and, by extension, the Government to look at the cost of nicotine-replacement therapies, which is exorbitant and which proves to be a disincentive to moving from smoking to therapies such as inhalers, lozenges or gum. If the cost is so prohibitive it acts as a disincentive. I understand it is covered by the general medical services scheme and, on that basis, the pricing mechanism is arguably far too high. There is profiteering going on with the cost of such therapies, and I ask the Minister to look at this issue.
I also support the recommendation. Healthy Ireland carried out an extensive study on young people smoking in 2017, and last year I raised the issues of smoking and body image in young people, particularly regarding the use of social media and apps. In the Joint Committee on Children and Youth Affairs, on which Deputy Sherlock also sits, we had a discussion about social media, apps and everything that revolves around body image. Smoking can often feed into that also and, therefore, I welcome what is proposed today by the Government.
As Deputy Howlin rightly said, this is a long-standing policy of successive Governments whereby taxation plays a role in reducing the number of people smoking and, thankfully, we have seen the evidence of that. My colleague, the Minister of State, Deputy Catherine Byrne, is continuing to pursue that work through the Healthy Ireland agenda.
I reassure Deputies that this is not the entire response of the Government in respect of reducing the number of people smoking. We have a range of supports through the health service. These include the HSE QUIT campaign, a multimedia QUIT campaign service, a specialist counselling staff and, as Deputy Sherlock alluded to, we have nicotine-replacement therapies covered by the GMS. I will take up the point that he raises. I also agree in regard to the issue of smuggling. I am pleased to inform the House that Revenue continues to attach a very high priority to this and seized approximately 32.4 million cigarettes with a value of €19.5 million in 2017. This House has taken a number of measures in recent years in the Finance Act 2012 and the Finance Act 2013 to try to continue to beef up and improve the powers of Revenue in that area. This is a sensible measure and I commend it to the House.