State could net extra €150m by cutting excessive tobacco industry profit

Smoking costs State €1bn a year more than tax take

The Irish Heart Foundation and the Irish Cancer Society will tell the Oireachtas Health Committee tomorrow (Thursday, November 8th) that in Ireland, the tobacco industry is being allowed to earn substantially larger profits than in many other EU countries. Tackling this could net the Government €150 million a year and curb the tobacco industry’s ability to recruit young smokers. Tobacco manufacturers have been earning around €1 more on a pack of major brand cigarettes here than in the UK because the Irish tax take is lower - despite the huge cost burden smoking places on our hard-pressed health services. Last year total cigarette tax take in Ireland was €1.36 billion. But, according to the Department of Health, at current smoking rates tobacco-related illness will cost the State €23 billion over the next 10 years – almost a billion a year more than is received in tax. “Apart from causing 5,200 deaths in Ireland every year, the tobacco industry is costing the taxpayer a fortune and a good way to start recouping some of this money is to transfer their extra profit to the Exchequer,” said Irish Heart Foundation Head of Advocacy, Chris Macey. “To put this into perspective, an extra €150 million could pay for 4,167 extra nurses; 4,853 new primary school teachers; 5,480 new Garda recruits; 7,188 new Special Needs Assistants; 165,000 extra hospital bed days; or 100 new MRI scanners.” The health campaigners will tell the Health Committee at a meeting to discuss their joint pre-Budget submission that the industry has been allowed to grow its profit share in Ireland over a period of time and this profit is being reinvested in marketing and recruiting young smokers. The tobacco industry has increased the price of cigarettes ever year for the last ten years, regardless of whether tax increases or not. This keeps their profits high. “We are in the crazy situation where the tobacco industry makes extraordinary profits on a packet of cigarettes,” said Ms. Kathleen O’Meara, Head of Advocacy and Communications at the Irish Cancer Society. “These profits are then reinvested to undermine Government policies designed to reduce the number of smokers in Ireland. Our proposal would stop the tobacco industry from increasing its profits when the tax-take from tobacco doesn’t come close to covering the cost smoking puts on our health services. We would need a regulator to assess what a realistic level of profit would be for the tobacco industry and the Exchequer would benefit from the balance.” The Irish Cancer Society and the Irish Heart Foundation’s Pre Budget Submission also asks Government to increase the tax on hand-rolled tobacco to bring it in line with normal cigarettes; ensure that the price of cigarettes increases with the inflation rate and; develop an anti-smuggling strategy which the charities estimate could increase Government revenue by €130 million per year. Major brand cigarettes now cost more than €9.30 in the UK compared to €9.20 here following regular tax increases above the rate of inflation over the last decade. In this time the UK smuggling rate has fallen from 21% to 9% - less than half the smoking rate here. “By combining tough anti-smuggling measures with higher taxes and better smoking cessation services, we can achieve the win-win of a major reduction in smoking rates and huge extra revenue for the Exchequer,” said Mr Macey. “The only losers will be the tobacco industry.” The Pre-Budget submission is co-signed by leading Irish organisations that include the Irish Sports Council, National Youth Council of Ireland, the Department of Preventative Medicine and Health Promotion in St. Vincent’s Hospital and the Irish Sudden Infant Death Syndrome Association.