Illegal cigarette sellers are big winners in Budget 2025

October 01 2024

Government has decided to reward criminal gangs at the expense of legitimate retailers

Retailers Against Smuggling is extremely disappointed with the Government’s decision to increase excise on tobacco in Budget 2025. RAS believes this excessive excise increase represents a big win for illegal tobacco sellers and represents a further blow to legitimate Irish retailers. Government is continuing to ignore the increasing levels of illicit tobacco products in Ireland, with Revenue finding that the last two consecutive years had the highest level of illicit cigarettes on record, which is clearly being fuelled by excessive excise hikes. 

In 2023, 19 per cent of cigarette packs held by smokers were illegal, and an additional 15 per cent were legal but non-Irish duty paid (duty-free purchased). This is the highest level of illegality and excise evasion recorded in this series of Revenue surveys since commenced in 2009.   

Earlier this year, in its pre-budget submission, Retailers Against Smuggling (RAS) called on the Minister for Finance Jack Chambers TD and his Department to introduce tough and effective Budget measures that will curb the current level of smuggled goods entering the country and protect the industry.   

According to RAS, excise increases are driving the trends towards illicit market activity when it comes to cigarettes.  With prices on the black market reportedly as low €5-6, the latest excise increase threatens the business of local retailers, which has already drastically shrunk in recent years. With criminal gangs increasingly being linked to illicit cigarette sales, this excise increase rewards criminal gangs ahead of the interests of legitimate retailers. 

By increasing the excise duty on tobacco by one euro, once again, the government has effectively thrown fuel on the fire, further driving consumers towards the illegal market and threatens the income of legitimate retailers.  

Retailers Against Smuggling say the organisation is also extremely disappointed that once again the Department of Finance has decided to ignore warnings made in its own Tax Strategy Group papers of major tax losses from illegal cigarette trade. A review by RAS on the excise revenue received in the six years 2017-2022, shows that ahead of each budget, the Tax Strategy Group paper estimated over the six years that there would be cumulative additional receipts totaling €350 million. But, in reality, the actual revenue in that period fell from €1.397 million to €1.005 million, a €392 million shortfall. 

It is especially disheartening considering that earlier this year, the former Minister for Finance Michael McGrath acknowledged in response to a parliamentary question that raising excise duties might be contributing to the growth of the black market. Yet, despite this recognition, the Government has chosen a course that will further worsen the situation and the losses to both legitimate retailers and the Exchequer.  

In addition, the significant decrease in inflation acknowledged by Minister Chambers in his budget speech from 10% in 2023 to below 2% in 2024 was ignored when it comes to excise duty.