Retailers warn cost-of-living crisis is not the right time for further excise increases

Widening the gap between price of duty paid tobacco vs what’s available on the black market coupled with cost-of-living is creating unfair competition and financial loss for legitimate retailers

Any additional excise increases on tobacco products in Budget 2023 will drive hard-pressed consumers to the black market as they grapple with the soaring cost-of-living. That’s according to Retailers Against Smuggling (RAS), who have outlined how Ireland remains a key target for crime gangs taking advantage of a rapidly growing illicit tobacco market.

Commenting on the organisation’s Budget submission to Minister Paschal Donohoe TD, RAS national spokesperson, Benny Gilsenan explained how further excise increases would directly impact both the retail sector and Exchequer.

He said: “RAS members are witnessing first-hand how the skyrocketing cost-of-living is forcing Irish consumers to make radical decisions on how and where they spend hard-earned income. For many, the black market has for the first time become the only realistic option for purchasing high excise items such as alcohol, solid fuel, and tobacco products.

“Year-on-year excise increases on tobacco products in particular have resulted in them becoming an exceptionally lucrative commodity for organised crime gangs. A record year for cigarette and tobacco seizures by Revenue in 2021 shows the extent to which sophisticated criminals are taking advantage of household cost-of-living pressures and rapidly growing demand for the black market in Ireland. A trend which RAS members have seen continue to escalate throughout 2022 as the crisis deepens.”

Mr Gilsenan added: “In the context of spiralling costs and a challenging operational environment ahead, Budget 2023 must avoid any measures which will negatively impact key revenue streams for retailers including an excise hike on tobacco products.”

Enforcement of tobacco allowances for travellers coming into Ireland

RAS has also called on Government to ensure ports and airports are adequately resourced to fully enforce the permitted personal allowances that can be brought into Ireland on non-Irish duty paid products. In 2021, 21% of all cigarette packs and 18% of all roll-your-own tobacco packs held by smokers in Ireland were found to be classified as illegal or non-Irish duty paid according to Revenue’s Tobacco Products Research Survey.

Mr Gilsenan continued: “A full return to international travel this year and the reintroduction of duty-free shopping between the UK and the EU following the end of the Brexit transition period are also having a significant impact on Irish retail tobacco sales. With Ireland ranked as the most expensive country in Europe to purchase duty paid tobacco, consumers are understandably taking advantage of the option to purchase cheaper product outside the State while travelling and bringing it back.

“To protect key revenue streams for both retailers and the Exchequer, it is critical that ports and airports are adequately resourced to ensure the permittable allowances set out by Customs for bringing non-Irish duty paid products into the country are fully enforced. Retailers are concerned that these allowances are being exceeded with individuals bringing in much larger quantities than what is permitted for personal consumption or to pass on to friends and family.”

Download the RAS Pre-Budget Submission 2023 here.