The Government has been asked to raise the price of a packet of cigarettes by 60 cent in the next Budget and introduce a new regulation system to reduce tobacco industry profits.
In a pre-budget submission today, the Irish Cancer Society and the Irish heart Foundation said the proposals would make multinational cigarette companies pay more towards the economic cost of smoking-related illness.
The charities called on the Government to introduce annual tax increases on tobacco products of 5 per cent above inflation and also introduce a national anti-smuggling strategy. They said expenditure on anti-smuggling operations such as enforcement and supply chain control should be increased by around €8 million a year.
They also called for a cap on the maximum cost of a packet of cigarettes which is lower than the current price when the tax and duties are not added. The Government would then increase tax on the tobacco to off-set the difference.
The charities claim profits from the three main tobacco firms in Ireland total €104 million from revenues of €226 million. They say this profit margin of about 55 per cent is being permitted by the Department of Finance despite a Department of Health estimate that smoking-related illness costs the State almost €2 billion a year.
The charities pointed to research by economist Dr Robert Branston which shows that by reducing industry profits to between 12 and 20 per cent, the State could take in up to €65 million extra in tax from tobacco companies.
Speaking at the submission launch yesterday Dr Branston said a new agency should be set up to regulate the industry. He said the cigarette companies should meet the cost of regulating the industry.
A spokesman for the Irish Heart Foundation said it was "bizarre" that there was no tobacco regulator in Ireland when industries like broadcasting and taxis do have regulators. "It's crazier still that an industry that ultimately kills half its customers is then allowed to make supernormal profits because of market failures that the State can address," Chris Macey said.
Mr Macey rejected the argument that increased tobacco taxation would lead to higher rates of smuggling. He said since 2001 the UK reduced its smuggling rate from 21 per cent to 9 per cent while increasing taxation to a rate that makes cigarettes more expensive there than in Ireland.
