Ireland: Cigarette Price Increase Will Stimulate Illegal Trade -- NFRN

Source from:  Businessandleadership.com‎  12/07/2012

The National Federation of Retail Newsagents (NFRN) has said the 10pc price increase on a pack of 20 cigarettes and 50c on a 25 gram of tobacco will damage the business of newsagents across the country.

NFRN Ireland president Joe Sweeney said cigarettes account for up to 30pc of newsagents' turnover and taxation measures such as this will lead to job losses and no extra Revenue income.

"Increasing the sale price for legitimate outlets will further stimulate the buoyant illegal trade and reduce Revenue income. It will cause further job losses and closures of small stores.

"Price increases will do nothing to reduce smoking when illegal cigarettes costing less than one third of legal products are brazenly sold in markets, on streets and from door to door. Without a massive clampdown on the illegal trade through increased penalties and greater enforcement the government's price increase is nothing but tokenistic 'feel good' nonsense."

A Revenue study published last year stated that further increases in excise duty will not lead to a decrease in smoking and will not increase revenues, he noted. It said: "Ireland has moved beyond the optimum point regarding the effectiveness of taxation to reduce cigarette consumption. This implies that further increases in taxes may not lead to further increases in tax revenue."

The report shows that Ireland's tax on cigarettes is already among the highest in Europe and that the price of a pack of cigarettes in Ireland is double the EU average.

"Price increases make smokers move their business from the legal to the illegal trade. In some areas the problem is now endemic. A survey this summer found that almost 45pc of cigarettes smoked in Waterford are illegal. The national average is approaching 30pc," said Sweeney. Enditem