Tax Strategy report encouraging Budget 2017 excise increase is direct win for smuggling criminals

21 July 2016

Retailers Against Smuggling (RAS) Spokesperson Benny Gilsenan expressed his frustration and disappointment following the publication of the Tax Strategy Group report (TSG) today which suggested it may be prudent to raise the Minimum Excise Duty in Budget 2017: “despite the TSG highlighting that 12% of cigarettes in Ireland are illicit and that we have a huge problem with tobacco product smuggling, the Government are being advised to continue to raise the price of cigarettes which will only impact legitimate retailers and the poorer in our society”. The Healthy Ireland Survey (October 2015) found that smoking levels are higher amongst those living in the most deprived areas and in lower social classes. Therefore increases in excise tax on cigarettes directly affects the poor and marginalised in society and in turn leads to the diversion of smokers to the illegal cigarette market.

Over the period 1994 to 2015, Tobacco Products Tax fell from contributing 4.3% of Exchequer tax revenue to 2.4% despite excise on tobacco products increasing in 20 of the last 24 budgets. Benny continued “It is clear to me that the Government will not take into consideration the direct impact this is having on legitimate tax paying retailers and those less off in our society and are playing into the hands of the criminal who sell packs on the street for €4-5 undercutting retailers by a whopping 50%”.

The TSG noted that the amount of illicit cigarettes seized by Revenue has been on the increase since 2012 and that this “is a clear indication of the significant level of both small-scale and bulk smuggling activity”. Benny concluded “until such time as smuggling has been brought under control in Ireland (under 5% of all product sold), there should be no further increases on tobacco excise”.

Retailers Against Smuggling (RAS) represents over 3,000 retailers, working to generate widespread awareness of tobacco and fuel smuggling in Ireland, its cost to retailers, how it is affecting their local economy and how legitimate retailers are disadvantaged because of smuggling by organised criminal gangs on both sides of the border.