59. Deputy Noel McCarthy asked the Tánaiste and Minister for Finance if he has considered the findings of the recent survey (details supplied) which found the associated notional tax loss to the Exchequer stands at approximately €645m per annum; if he accepts that further increases in tobacco excise may risk stagnating revenues by driving more consumers towards illicit and non-Irish duty paid tobacco products; and if he will make a statement on the matter. [40515/26]

Tánaiste and Minister for Finance: Smoking is the leading cause of preventable death in Ireland and remains one of the biggest avoidable health risks in Irish society. This situation is a significant public health concern for successive Governments who have committed to reducing the prevalence of smoking, particularly among younger people. A key element of the Government’s multifaceted policy approach to achieve this is our commitment to high taxation of tobacco. A high tax strategy is endorsed by the World Health Organisation as being the most effective measure for reducing tobacco consumption. Successive Ministers for Finance have introduced annual tax changes to raise the price of tobacco, with the clear objective of lowering the level and uptake of smoking in Ireland. This approach was strongly supported by the Commission on Taxation and Welfare in the report of its comprehensive review of Ireland’s tax and social welfare systems which recognised tobacco tax as a behavioural tax directed at supporting public health and explicitly endorsed “using tobacco taxation to fight tobacco consumption”.

For some years now, Ireland’s taxation of tobacco products is amongst the highest in the EU. I am conscious that while tax increases have been one of the tools successfully used to disincentivise smoking, continued tax increases can, over time, also displace some demand towards smuggled products or those which have been taxed in other jurisdictions at lower rates.

The annual Tobacco Survey - which is commissioned jointly by the Revenue Commissioners and the Health Service Executive’s National Tobacco Control Office - estimates the volume of non-Irish duty-paid cigarettes and roll-your-own (RYO) tobacco consumed in Ireland. The most recent cigarette survey conducted by Ipsos B&A found that 38% of cigarette packs surveyed did not have Irish duty paid on them. The survey indicates that the proportion of illegal cigarette packs was 28%, (up from 26% in 2024) and that 10% of the packs were legal, non-Irish duty paid. The notional loss to the Exchequer on 28% or 45.9 million illegal cigarette packs is approximately €648 million (Excise and VAT). This is a notional loss as it assumes that the illegal cigarettes consumed displaced the equivalent full tax paid quantity of cigarettes, which is unlikely to be the case.

The 2025 RYO survey found that 45% of RYO packs surveyed were not subject to Irish duty. The survey indicates that the proportion of illegal RYO packs was 37%, (up from 36% in 2024), with 8% being legal, non-Irish duty paid.

For several years Tobacco Products Tax (TPT) annual receipts remained fairly stable at over €1 billion per annum, with successive annual rate increases offsetting the impact of reductions in the volume of tobacco products released for consumption. However, in the last few years, there has been a downward trend in the level of tax receipts.

This downward trend in receipts, coupled with the upward trend in the consumption here of products that have not been subject to Irish duty is relevant when considering future rate decisions. These dynamics, together with underlying shifts in product consumption patterns both owing to the impact of anti-smoking policy and to market trends towards tobacco alternatives, are now making it more difficult than ever before to accurately project the tax yield into the future and, in particular, the likely yield impact arising in rate change scenarios. Therefore, caution is now needed in relying on any such projections from the past as it is no longer clear that higher rates will, of themselves, contribute to steady or higher overall returns.

In its role as the national tax and customs administration, Revenue robustly targets the illicit tobacco trade using a range of measures to identify and target the smuggling, supply or sale of illicit tobacco products in the State and, where possible, prosecuting those involved. Revenue monitors trends in the illicit tobacco trade on an ongoing basis and adjusts its actions and redeploys its resources on an agile, risk-focussed basis.

For example, in December 2025, Revenue introduced stricter controls regarding the movement of duty-paid tobacco products into the country from other EU Member States by private individuals. These regulations were introduced to help ensure that excise duty reliefs for personal use are not abused and increase the effectiveness of tobacco taxation, which is important as a lever of Ireland’s public health policy.

Recognising that the smuggling of tobacco products has a transnational and cross-border dimension, in addition to working closely with An Garda Síochána, Revenue also works closely with its counterparts in other jurisdictions including colleagues in Northern Ireland through the Cross Border Joint Agency Task Force (JATF) and international bodies including OLAF (the EU’s anti-fraud agency), Europol and the World Customs Organisation.

Revenue’s commitment to targeting the illicit tobacco trade is evident in the quantity of tobacco products seized by their enforcement teams and number of convictions secured in respect of tobacco related offences. Details of such activity is available in their 2025 Annual Report which was recently published and is available at the following: www.revenue.ie/en/corporate/press-office/annual-report/2025/ar-2025.pdf

Revenue welcomes and follows up on information from businesses or members of the public in relation to shadow economy activities and the supply of illegal tobacco products. Anyone with suspicions of illegal activity can contact Revenue in confidence on the free phone number 1800 295 295.