Tobacco excise increase fails to stem spiralling black-market activity – Budget 2022

Retailers Against Smuggling (RAS) has expressed its apprehension over how yet another excise increase on tobacco is set to further fuel a rapidly growing black market. The group was reacting to Budget 2022 announced by the Minister for Finance, Paschal Donohoe TD which included an increase of 50c on tobacco, bringing the cost of an average packet of 20 cigarettes to €15.00.

Commenting on the direct impact to legitimate registered retailers, National Spokesperson for Retailers Against Smuggling, Benny Gilsenan said: “It’s very disappointing to see an excise increase in Budget 2022 which will inevitably make it even harder for retailers like myself to compete against the rapidly growing black market in Ireland. Ireland continues to be a key target for tobacco smugglers as a result of having one of the highest rates of duty on tobacco products in the EU, resulting in unfair competition for Irish retailers.

“We fully expect that this latest excise increase will drive more Irish smokers to the black market with criminal gangs exploiting the demand for illicit tobacco products. This will inevitably lead to a growth in large-scale smuggling activity and ant smuggling. Ultimately this means retailers will continue to suffer not only through the loss of the legal purchase of cigarettes but also any additional purchases that person might make when they are in the store. It is regrettable that the Minister Donohoe has ignored the warning made by both retailers and the Department of Finance Tax Strategy Group that an excise increase could encourage more smokers to source products outside of the State.”

To date this year, Revenue has announced 49 major tobacco seizures, including the seizure of over 40 million cigarettes, with an estimated retail value of under €49m representing a potential loss to the exchequer of over €39m.

Mr Gilsenan concluded: “The detection and seizure of illegal tobacco products must remain a priority for Irish authorities, with increased awareness of the elaborate means criminal gangs are utilising to transport these huge volumes. In the context of excise goods, there needs to be greater focus on rendering existing enforcement regulations more robust by introducing attachment orders to violations, thereby providing the means to the State to recoup losses to the Exchequer driven by smuggling.”