Written answers
Thursday, 21 July 2011
Department of Finance
Fiscal Policy
7:00 pm
Damien English (Meath West, Fine Gael)
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Question 85: To ask the Minister for Finance his views on the Irish Revenue Commission report published in February 2011 entitled Economics of Tobacco which stated on page 29 that a tax increase on cigarettes would reduce revenue but only have a lesser impact on tobacco consumption by encouraging further substitution away from taxed cigarettes; and if he will make a statement on the matter. [22056/11]
Michael Noonan (Limerick City, Fine Gael)
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The report referred to is an econometric analysis, carried out by the Revenue Commissioners, on the market for cigarettes in Ireland. It suggests, based on this analysis, that Ireland has moved beyond the optimum point regarding the effectiveness of taxation to reduce cigarette consumption. The research suggests that higher cigarette taxes in Ireland would no longer produce a win-win situation of public health benefits (lower rates of smoking) and benefits to the public finances (higher levels of tax revenue). More likely, it appears that in the Irish market for cigarettes as it currently stands, a tax increase could reduce revenue but only have a lesser impact on tobacco consumption by encouraging further substitution away from taxed cigarettes. The findings of the report which, given our already high levels of excise on cigarettes, at least questions the usefulness of further increases in excise rates as a means of reducing overall cigarette consumption will be considered, along with other relevant factors and issues, when the taxation of cigarettes is being examined in the context of the annual budget.
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