Expensive tobacco “cannot increase tax yield”

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Raising the cost of cigarettes in the budget may not result in higher taxes, as smokers turn to cheaper tobacco products from other countries, as well as e-cigarettes, have warned. revenue commissioners.

the strategy document prepared by the Ministry of Finance examines the impact of adding additional taxes on cigarette packs or roll-your-own tobacco (RYO).

He said: “The tax commissioners have expressed the view that increases in excise duties cannot lead to increased yields, as rising cigarette prices in Ireland could reduce demand due to greater incentives to buy cigarettes. duty-free non-Irish tobacco products as well as substitutes for other products, such as electronic cigarettes.

According to the newspaper, Revenue seized around 48.2 million cigarettes worth around 32.8 million euros in 2020.

This marked a huge increase from the 13.4 million cigarettes seized worth € 8.6 million in 2019.

In addition, Revenue seized 7,189 kg of tobacco worth approximately € 4.2 million in 2020, up from the 3,557 kg seized worth € 2 million in the year. former.

Regarding alcohol, the document notes that “the current pandemic has had contrasting impacts on the on and off (license) professions”.

“While the non-commerce trade has been closed for long periods of time and now operates under Covid restrictions, the non-commerce trade has benefited from the increase in alcohol sales. “

It says it remains to be seen what effect the introduction of the minimum unit price will have on price differences across the border.

An analysis of the non-trade price differences between Northern Ireland and the Republic shows that cans of beer, bottles of wine, whiskey and vodka are all cheaper in the North.

“While the price increase will translate into marginal increases in VAT on some products, it is likely that a significant price differential between this state and the North could lead to an increase in cross-border trade, undermining tax levies on alcohol sales. “

The return of Duty Free between Great Britain and Ireland following Brexit has had little effect so far, thanks to Covid.


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