Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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231. To ask the Minister for Finance if he will consider the recommendation in Tobacco Free Ireland to introduce a levy on the tobacco industry; the discussions his Department has had with the Department of Health on this; and if he will make a statement on the matter. [19339/17]

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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232. To ask the Minister for Finance if his Department has undertaken research on the recommendation in Tobacco Free Ireland to introduce a levy on the tobacco industry; and if he will make a statement on the matter. [19340/17]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 231 and 232 together.

I am aware of the proposal to introduce a levy on the tobacco industry which was included as a recommendation in the Department of Health's Tobacco Free Ireland. The proposal was included in my Department's Tax Strategy Group papers of 2015 which form a basis for the discussions of the Tax Strategy Group. As discussed in that paper, a levy of this type, on presumably the profits of tobacco companies, is not without complications and may have impacts on other areas of the economy.

In Ireland, profits of companies are taxed through corporation tax. To levy the profits of tobacco companies would complicate this. Ireland's corporate tax rate of 12.5% on trading income is akin to a brand and is an important part of the Government's strategy of creating an enterprise friendly environment to attract jobs and investment to Ireland. One of the main features of the rate is its simplicity and the fact that it applies to a broad base. The suggested levy would involve complexity and could undermine the attractiveness of Ireland's corporate tax offering.

When a tobacco industry levy was proposed in the UK in 2015, the British Treasury concluded, on foot of a public consultation, that the impact of a tobacco industry levy would be passed on to the consumer. The Chancellor of the Exchequer announced in his Summer Budget 2015 that he would not be pursuing the proposal.

As outlined in the Programme for a Partnership Government, this Government is committed to making Ireland tobacco free by 2025. The Government has agreed that pricing is a key means of reducing tobacco consumption. I have increased the price on a packet of cigarettes cumulatively by €1.40 over my last three budgets, raising revenue and contributing to the continued decline of smoking prevalence. Ireland continues to impose excise duty on tobacco which is among the highest in the EU.