Time to Rethink Tobacco Taxes

September 6, 2013 Taxation in Ireland

No smokingDUBLIN – Tobacco products are under fire in Ireland, with calls being raised for a radical overhaul of how cigarettes are taxed in the country.

On September 5th the Irish Cancer Society issued a statement calling for the government to implement new tax measures to simultaneously curb the instance of smoking and to reduce the profit levels of tobacco businesses.

The Society is pushing for the government to raise the tax rate on tobacco products by EUR 0.60, and institute a mandatory annual tax hike equivalent to 5 percent above the national inflation level.

As an additional measure, the Society also suggested a complete overhaul of the regulations for tobacco sales, saying that the government needs to instate a maximum price for cigarettes, with the level being set at less than current prices, but with the difference being made up with new taxes.

The reformed rules would lower tobacco companies’ profit margins to approximately 20 percent, compared to the current level of 55 percent, and would also raise an extra EUR 65 million in taxes per year without affecting the end price for consumers.

As an additional step, the Society called for the government to take greater measures to prevent the smuggling of tobacco, which circumvents anti-smoking policies and reduces tax collections.

Photo by dichohecho