Home > Tax hikes ‘will spur illegal tobacco trade’.

[Irish Examiner] , O'Keeffe, Cormac Tax hikes ‘will spur illegal tobacco trade’. (05 Dec 2012)

External website: http://www.irishexaminer.com/budget/news/tax-hikes...

Raising taxes on cigarettes will boost the illegal trade and reduce revenue to the State, according to a Government report.

The study, carried out by the research branch of Revenue, said about 20% of cigarettes consumed in Ireland are not taxed here.

These cigarettes include those that are produced in or smuggled into Ireland and purchased illegally, and cigarettes that are bought legally in another country and sold here.

The authors said there was some evidence cigarette tax levels “have moved beyond a critical point” at which increases in tax rates leads to lower, rather than higher, tax revenue.

“Further tax [price] rises will reduce smoking somewhat but they will also greatly encourage more untaxed consumption,” it said.

“Increasing the taxation of cigarettes in Ireland no longer carries the combined benefits of better public health and higher revenue for the public finances.

At the very least, these benefits are severely weakened by the substitution of untaxed for taxed consumption.”

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