Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

This section deals with the age old issue of excise on cigarettes. When the Minister for Finance makes this proposals on budget day I often wonder whether he is doing so for the purpose of raising money or improving the health outcomes for people in the country. There is a symbiotic relationship between the two.

Section 49 increases the rates of tobacco product tax, which when VAT is included, amounts to 10 cent on a packet of 20 cigarettes with a pro rata increase on other tobacco products and with an additional 50 cent on the 25 gram packet of roll your own tobacco. As a result of the budget increase the price of a packet of 20 cigarettes in the most popular price category has increased to ¤9.90. The excise duty component of this price is ¤5.57. The total tax, inclusive of VAT, is ¤7.31. The excise duty component of this increase is 49 cent. This measure is expected to raise ¤25 million in a year.

It has been a long-standing policy objective of this and the previous Government to use this measure as a means of collecting more tax as well as trying to discourage people from smoking. There is strong evidence that the more expensive the habit gets, the more people will try to break from it. That is notwithstanding the difficulties within the economy concerning the illegal trade, importation and distribution of cigarettes. We keep a close eye on that illegal activity as do the Revenue Commissioners.

Nobody likes to impose additional taxes on people but in the circumstances this manages to hit the objective of increasing revenue in this area while at the same time achieving the long-standing commitment to do what we can to encourage people not to smoke. Happily, in this regard the Department of Finance and the Revenue Commissioners agree with the Department of Health.