Successive Irish Governments have pursued a high excise strategy in relation to tobacco products. From 2006 to 2012, the average excise duty on cigarettes was raised by 5.3% per annum while inflation remained at an average of 1.6% per annum. It is no surprise that Ireland has been known as a ‘smuggler’s paradise’ as criminals reap the gains of declining consumer purchasing power.
In spite of excise duty increasing 30% from €4.32 in 2006 to €5.25 per pack by 2011, annual excise revenues have been declining over the previous four years despite consumption remaining stable. The estimated excise tax foregone to the non Irish duty paid market over the period was over €1.8 billion representing 21% of the collectable revenues from total market volume.
78% of the price of a pack of cigarettes bought in an Irish shop goes directly to Government in excise and VAT in 2013. In 2011, Revenue published a Report – The Economics of Tobacco – that accepted that taxation increases were no longer a tool to reduce consumption.
Read the full report (The Economics of Tobacco) below: