Children's Minister James Reilly is understood to have pressed Finance Minister Michael Noonan to introduce a further 50 cent increase on the price of a pack of cigarettes in Budget 2016, which is announced later today.
Minister Reilly has also called for an increase in the price of roll-your-own tobacco, to bring it more in line with a packet of cigarettes, according to reports.
He estimates that an additional €63 million in revenue could be generated by the increase in price. His calls echo those of lobby group ASH Ireland, which called for similar price increases, as well as a 50-cent 'litter levy' on tobacco products, in its pre-Budget submission.
However, a study published by The Journal at the weekend suggested that Minister Noonan is yet to see any revenue benefits from excise increases in his last three Budgets.
"In the 2012 budget, [Minister Noonan] predicted a €41 million yield from adding 25 cents to a pack of 20, among other measures," The Journal reported. "In reality, there was a €94 million shortfall.
"The following year, a €25 million gain was budgeted for, after a 10-cent increase, but a €33 million shortfall transpired. In the 2014 budget, Noonan predicted a €15 million gain, but another 10-cent hike was followed by a €95 million drop – leaving a cumulative shortfall of €223 million in the lifetime of the government."
On Friday, the Convenience Stores and Newsagents Association (CSNA) warned its members that "each time the Minister obtains approval for a change in excise duties, the wholesale price rises accordingly.
"The Minister applies the increase in a fashion that increase the retail prices by the same amount as the wholesale price. This has the effect of reducing your margin. You pay more for the product, your insurance cover increases, but you earn less in percentage terms. A 50 cent increase (as is widely expected) will reduce your margins by approximately 0.5%."
Minister Noonan is expected to make his Budget speech at around 2pm today.
© 2015 - Checkout Magazine by Stephen Wynne-Jones
