Cut duty on cigarettes?

Sleepy

Not going to be popular but does anyone else believe there's the potential to significantly increase revenues from tobacco duties if they were reduced?

I personally buy very few of my cigarettes in Ireland, stocking up when I or non-smoking friends and family go abroad. The black market is thriving and, iirc, duty revenues have been sliding for a few years now.

Anyone else thing a euro off every pack of 20 sold might encourage enough people to buy their cigarettes here / legally again? I'm working off the top of my head here rather than looking at figures but if we could even get back to parity with, or slightly below, the price of a pack of cigarettes in the North, I think we might see increases in this revenue.

Yes, as a smoker for over a decade, I know they're not good for people / cause cancer etc. No, I am not advocating that we seek to increase tobacco consumption, merely that we try to get as much of the duties available from the current level of tobacco consumed in Ireland as possible.

RichardAnd

Interesting idea. I'm not sure it would work as the cut would have to make it worth while to buy fags here so it would have to be a euro or two off a box.

However, I don't see how lowering the price of smokes would be unpopular, a few anti smokers who think tax on fags is there to prevent people smoking might moan but to most, getting their nicotine fix cheaper would be something good I'd imagine.

murphym7

Good idea - it will never happen though, no matter what economic case is made the anti smoking and cancer organisations would go potty. The argument will be drowned out to cries of "what about the Children"

sarumite

RichardAnd wrote: »

However, I don't see how lowering the price of smokes would be unpopular, a few anti smokers who think tax on fags is there to prevent people smoking might moan but to most, getting their nicotine fix cheaper would be something good I'd imagine.

I think it would be a mixed response. Smokers would be happy obvioulsy. Though those who see taxing cigs as a means to pay for the extra health related costs associated with smoking as well other additional cost etc might feel differently. Me personally, I think those that buy their fags illegally would probably still buy their fags illegally.

Ellian

sarumite wrote: »

the extra health related costs associated with smoking

I read an article about five years ago that indicated that smokers actually save the government a fortune. The logic was that most people cost the government more money in the last ten years of their life then they do in the sixty or seventy years that went before. Smokers on the other hand tend to die of heart attacks or lung cancer - which on an actuarial table actually cost very little. I chalked it up as little more than food for thought, and the numbers used were applied to the NHS in the UK, but would be interesting if one had access to a decent set of figures to do a bit of analysis on them.

Dannyboy83

You are correct in that it would increase revenue, but I imagine it's politically infeasible.

When they increase cigarette duty, they can hide behind the moral arguments.
There is no such argument to hide behind when reducing duty.

They can try it on with smuggling, but I don't think it will be accepted.

P.S.
I used to smoke, but when it went up to €8.55, I simply couldn't afford the contraband prices anymore as they track the Irish prices, so it was costing €4.50 to €5 for EE cigarettes.
Reducing the price of Irish cigarettes would take an awful lot of money out of the hands of smugglers as their turnover would plummet.

p.p.s
The Nicorette Inhalers are well worth a shot if you are not able to buy the contraband cigarettes anymore and decide to give up.
It's €14 for a box 18 which is pricey, but you are unable to use more than 6 per day anyway (perhaps there is a market for smuggling NRT?:)

sarumite

Ellian wrote: »

I read an article about five years ago that indicated that smokers actually save the government a fortune. The logic was that most people cost the government more money in the last ten years of their life then they do in the sixty or seventy years that went before. Smokers on the other hand tend to die of heart attacks or lung cancer - which on an actuarial table actually cost very little. I chalked it up as little more than food for thought, and the numbers used were applied to the NHS in the UK, but would be interesting if one had access to a decent set of figures to do a bit of analysis on them.

I actually wasn't thinking about that...but it does sound logical. I was more referring to this which I read last year:



Smokers are costing businesses £2.1billion each year through sickness and time-wasting cigarette breaks, a report has claimed.

Read more: http://www.dailymail.co.uk/news/article-1190911/Smokers-cost-businesses-2-1bn-year-fag-breaks-sickness.html#ixzz14zIEnEYX

Sleepy

sarumite wrote: »

Me personally, I think those that buy their fags illegally would probably still buy their fags illegally.

Many would still buy the Eastern European contraband etc. However, with a lower price differential, the margins for the smugglers would be lower and could encourage them to ply their wares elsewhere or even simply focus their efforts to more profitable markets across the Irish sea. This could eventually have a potential knock-on effect of higher black market prices due to lower supply further erroding the difference between buying a pack of 20 in your local tobacconist and stocking up at the market in Dundalk...

More on my point however, if we could even get below the UK prices for cigarettes it'd help raise revenues as those doing cross-border shopping wouldn't buy cigarettes there (ditto those of us who work in the UK regularly and, while the savings aren't huge, still feel it's worth our while to grab a few packs when we're there).

For example, in the UK, Tesco sell a 5 x 20 pack of my own brand of cigarettes (Marlboro) for £30.30 or roughly €36 (35.7362 at today's xe.com rate). In Ireland, it's €8.55 for a 20 pack in Tesco or €42.75 for the equivalent of the (not available in Ireland) multipack. Sure that's only a little over a fiver of a saving but over a year that's a tidy sum for any smoker near the border or who travels regularly to the UK. Dublin - London being one of the busiest routes in the aviation industry would make that a considerable number.

ASH and their likes can go **** themselves tbh. We're in a position where Irelands economic survival is on the table, political sops need to be a thing of the past.

keithclancy

Cigarettes in Holland are at 4.80 at the moment, they don't raise it by much as they know it will create a black market of Eastern European cigarettes coming in.

macman2010

sarumite has rightly pointed out that the tax goes towards to cost it takes to take care of people with smoking related illnesses. I work in a dedicated hospital unit for smoking illnesses and the cost to run this unit is immense. Chronic smokers in their 40s/50s/60s are loosing toes and even limbs due to poor circulation because of smoking, not to mention the C word.
The same patients are in every week as they continue to ignore our advise to stop and even slip out for a "fag" between treatments.

Even if revenue is maximised by reducing the price of a packet of cigarettes it makes them accessible to more people and this as a country we just cannot afford.

Sleepy

macman2010 wrote: »

sarumite has rightly pointed out that the tax goes towards to cost it takes to take care of people with smoking related illnesses. I work in a dedicated hospital unit for smoking illnesses and the cost to run this unit is immense. Chronic smokers in their 40s/50s/60s are loosing toes and even limbs due to poor circulation because of smoking, not to mention the C word.
The same patients are in every week as they continue to ignore our advise to stop and even slip out for a "fag" between treatments.

Even if revenue is maximised by reducing the price of a packet of cigarettes it makes them accessible to more people and this as a country we just cannot afford.

macman2010, you're missing the point. The duty levels are as high as they are in order to try and make them less accessible. This has failed miserably and only served to line the pockets of the same criminals that traffic harder drugs and, if some quarters are to be believed, sex slaves into this country. Cigarettes are, if anything, more accessible to the young when they can be bought illegally for €3/€4 a pack.

As high duties have resulted in lower collection rates, it makes your unit less affordable to the state. More duties collected (not necessarily more smokers) improves the states ability to pay for health treatement.

sarumite

Sleepy wrote: »

Many would still buy the Eastern European contraband etc. However, with a lower price differential, the margins for the smugglers would be lower and could encourage them to ply their wares elsewhere or even simply focus their efforts to more profitable markets across the Irish sea. This could eventually have a potential knock-on effect of higher black market prices due to lower supply further erroding the difference between buying a pack of 20 in your local tobacconist and stocking up at the market in Dundalk...

More on my point however, if we could even get below the UK prices for cigarettes it'd help raise revenues as those doing cross-border shopping wouldn't buy cigarettes there (ditto those of us who work in the UK regularly and, while the savings aren't huge, still feel it's worth our while to grab a few packs when we're there).

For example, in the UK, Tesco sell a 5 x 20 pack of my own brand of cigarettes (Marlboro) for £30.30 or roughly €36 (35.7362 at today's xe.com rate). In Ireland, it's €8.55 for a 20 pack in Tesco or €42.75 for the equivalent of the (not available in Ireland) multipack. Sure that's only a little over a fiver of a saving but over a year that's a tidy sum for any smoker near the border or who travels regularly to the UK. Dublin - London being one of the busiest routes in the aviation industry would make that a considerable number.

ASH and their likes can go **** themselves tbh. We're in a position where Irelands economic survival is on the table, political sops need to be a thing of the past.

I can see the logic....though I wonder what percentage of fags bought in Ireland are from the North or people going to the UK. I was living in Galway up until recently, and tbh most people either bought theirs illegally or in the shops. The problem imo isn't people buying fags from the North or the UK but the cheap duty free smuggled cigs. I am not one of the rabid anti-smoking crowd, I just don't think it would have the desired effect as they would still be considerably more expensive than the smuggled fags.

Dannyboy83

This article is rather long, so I've extracted some of the main points.
Definitely worth reading, and just shows what an epidemic it has become.

http://www.irishtimes.com/newspaper/weekend/2010/0220/1224264861986.html


Just a few short years ago, Ireland was a world leader in the war against smoking, but today we hold a more dubious distinction, as the European “capital” of cigarette smuggling.
============
Six years ago, the workplace smoking ban was introduced amid predictions that smoking would become a habit of the past. For a while, the smoking rate dipped from 29 per cent to 23 per cent of the population. Today, though, smuggling is a booming racket costing the Exchequer at least €400 million a year and smoking prevalence is back up at 29 per cent.

Last year, Ireland recorded the largest single seizure of smuggled cigarettes made in the EU. Increasingly, this country is seen as both a destination and a trans-shipment point for counterfeit and contraband tobacco.
==============

The illegal cigarette trade is now one of the most profitable forms of crime and is the number-one method of defrauding EU taxpayers, according to the Commission’s Anti-Fraud Office (Olaf). As lucrative as the drugs trade, it is increasingly favoured because the penalties for being caught are far lighter. Last year, there were 163 convictions for cigarette smuggling, though only 14 resulted in a prison sentence. The average fine was just over €500.
==
Last year, the value of smuggled cigarettes seized by customs was more than €218 million, up 60 per cent on the previous year. Almost 60 per cent of this total related to counterfeit cigarettes and the rest was contraband, ie, genuine cigarettes illegally imported from countries where the tax and the overall price of a packet is much lower than in Ireland. “Eighteen months ago I would have said this was primarily an urban phenomenon,” says Vincent Jennings, of the Convenience Stores and Newsagents Association, “but now we’re getting reports of illicit selling in every town in Ireland.”
==

Smuggling takes many forms and operates on many different levels, which is partly why the authorities are struggling to deal with the problem. Small-time smugglers bring back bag-loads of contraband cigarettes from the Canaries or eastern Europe and sell them on to subsidise their travel (the importation of up to 200 cigarettes is permitted from outside the EU for personal use). The financial temptation is stark: in Ireland, €6.71 of the €8.37 you spend on a pack of 20 cigarettes goes to the State in the form of duty and taxes; while in countries such as Russia and the Ukraine, a pack costs as little as 50c.
==

But often what looks like harmless DIY smuggling is criminally planned and vast in scale. Last year, astonished customs officers, swooping on one flight from eastern Europe to Dublin, uncovered an attempt by 35 of the passengers to bring in more than 500,000 cigarettes. Once they knew they were going to be checked, the passengers fled without collecting their loads.
==

The turning point for the cigarette industry came in November 2008, when two large seizures turned up large quantities of John Player Blue, a brand specific to Ireland.


“Up to then, we thought we were safe, because Ireland is such a small market,” says Deirdre Healy. “We were shocked to find that Irish products were being counterfeited.”

==
At €8.55, Ireland has one of the highest average counter prices for a pack of 20 cigarettes in the EU. The same pack costs €3.45 in Spain, and the gap between Irish and Spanish prices has more than doubled in a decade.
==

The Minister for Finance, Brian Lenihan, last year estimated the loss to the Exchequer at about €380 million, though the Irish Tobacco Manufacturers Advisory Committee (Itmac), which represents the big three companies – JTI, John Player Sons, and PJ Carroll – puts the damage at almost double this figure.

sarumite

Dannyboy83 wrote: »

This article is rather long, so I've extracted some of the main points.
Definitely worth reading, and just shows what an epidemic it has become.

Its makes some salient point....Though I while not being a major anti-smoking advocate, I wouldn't want to promote it either and I certainly wouldn't want to see Ireland have similar levels of smokers as spain has. There has to be a sweet spot between low enough so established smokers buy legally but high enough to avoid new smokers.

macman2010

Sleepy wrote: »

macman2010, you're missing the point. The duty levels are as high as they are in order to try and make them less accessible. This has failed miserably and only served to line the pockets of the same criminals that traffic harder drugs and, if some quarters are to be believed, sex slaves into this country. Cigarettes are, if anything, more accessible to the young when they can be bought illegally for €3/€4 a pack.

As high duties have resulted in lower collection rates, it makes your unit less affordable to the state. More duties collected (not necessarily more smokers) improves the states ability to pay for health treatement.

Sleepy, what if the government were to reduce the duty and the price of a packet of 20 was €4.
Then we would have criminals selling a packet of 20 for €2 and hence more accessible to teenagers etc.
Equally if they were €20 in the shops the trafficers would be charging €10. The black market will always exist as long as the demand is there.
Reducing the duty (or may not) may increase the revenue intake immediately but we should be looking at this as a long term solution.

It was be fair to say any parent would not like their children taking up this habit.

Dannyboy83

macman2010 wrote: »

Sleepy, what if the government were to reduce the duty and the price of a packet of 20 was €4.
Then we would have criminals selling a packet of 20 for €2 and hence more accessible to teenagers etc.

Fortunately, it doesn't work like this.

It's approximately €0.50 for a box of cigarettes in Russia. (people will smoke these only as a last resort, they're harder to smuggle and there are more people to pay in the chain)
It's approximately €2.50 for a box of cigarettes in Spain.
It's approximately €3 for a box of cigarettes in Poland/Lithuania.

If Irish cigarettes sell for €8.55, contraband will sell for between €4.50 and €5, giving a 50% profit for the person putting down the capital, and 50% for the mule. (Russian cigarettes will sell for €2.50 usually cause they taste of nail varnish)
The fact that the profits are so high, means a vastly smaller quantity of cigarettes can be shipped for the same profit, yielding much more capital for the next round. Money is redirected into drugs, guns and more cigarettes.

If Irish cigarettes sell for €4, there is a sub 25% profit in total on the contraband (buy for €2.50, sell for €3) .
That's 10-12.5% for the money guy and 10-12.5% for the mule.
To make any significant return, a vastly larger quantity of cigarettes needs to be shipped, and the shipping costs make it impossible.
It simply isn't lucrative enough.

And in the case of Russian cigarettes, people will only smoke these cigarettes as a last resort.
If Irish cigarettes were reduced to €4 tomorrow, smuggling would collapse overnight and the start up funds for criminal activities in Ireland would dry up extremely quickly.
It's likely excise would take a hit at first, but you have to remember that it is no longer rational for immigrants to buy cigarettes from abroad in this scenario, aswell as natives, so the whole smuggling ring collapses and excise revenues will stabilise, money/time wasted by customs on cigarette smuggling is redirected into drug smuggling.

It's Michael O Leary style vs. Irish gov style
i.e. greater throughput/lesser charge yields more than lesser throughput/higher charge

Equally if they were €20 in the shops the trafficers would be charging €10. The black market will always exist as long as the demand is there.

Traffickers couldn't charge €10, cigarettes are about €6.45 in the North.
There is a cut off point.
Excise revenue would simply collapse if prices rose to €20 as 99 in 100 cigarettes consumed would be illegal.

mrgaa1

So as just a thought why not ban smoking COMPLETELY? If you have cigarettes on you they are barred. Anyone found smoking or reported to be smoking will be charged and fined accordingly.
Would this then not lead to better life styles for people thus meaning less monies to be spent on health and other services.
No counterfeit products and no issue with raising/decreasing taxes on cigarettes.
BTW its only a suggestion.

Dannyboy83

mrgaa1 wrote: »

So as just a thought why not ban smoking COMPLETELY? If you have cigarettes on you they are barred. Anyone found smoking or reported to be smoking will be charged and fined accordingly.
Would this then not lead to better life styles for people thus meaning less monies to be spent on health and other services.
No counterfeit products and no issue with raising/decreasing taxes on cigarettes.
BTW its only a suggestion.

Because 29% of the population do it.

It becomes impossible to enforce and incredibly lucrative for gangsters.
You've just made a new Al Capone.

(Plus, regardless of what lies the Irish Gov say, the revenue now is far more important than the health consequences later)

StupidLikeAFox

There is also the point that you have to go to some effort to source illegal cigs. If you lower the price then people can just walk into the shop and immediately save money, and they also become more accessible to people in an instant.

If you are already buying illegal cigarettes you are going to keep buying them illegaly, because you already have a source and your still saving money.

gizmo555

Ellian wrote: »

I read an article about five years ago that indicated that smokers actually save the government a fortune.

You're probably thinking of the report produced by consultants Arthur D Little for Philip Morris to show the Czech government how smoking related deaths were a nett financial gain for the state.

I have to say that when my father died at the age of 58 from smoking-induced lung cancer, my family was not exactly filled with pride that he had done his patriotic duty . . .

lmimmfn

i buy as much contraband as possible and depending on the exchange rate spend cash up north buying cigs( hasnt been soo good of late though ).

Tbh though with the impacts of the next 4 years budget i will be giving up soon( its not the only reason of course, been planning it for a while but it adds a lot of weight to it ).

Basically if you smoke 20 a day and buy in ireland then thats 265.05Euro( after you pay tax ) a month. Most of the cuts coming up can be negated by simply giving up cigs and you can still enjoy the same lifestyle even with these upcoming budget cuts.

Thats my plan anyway, any additional taxes i have to pay will be recovered by spending a lot less across the board and its pretty much what i have done in the past 2 budgets( spending about 300euro less a month now ). Having said that excluding petrol( which i have to spend to get to work ), bills( esb, gas, basic sky and broadband ), ill be spending about 60euro a week in 4 years lol.

If the government had any cop on they would reduce the price of a pack of cigs to about 6 euro, it would seriously hit the contraband market but also loads from up north would be coming down here to buy cigs

Fags are Evil

No prizes for guessing how I feel about this proposal. :pac:

Dannyboy83

lmimmfn wrote: »

i buy as much contraband as possible and depending on the exchange rate spend cash up north buying cigs( hasnt been soo good of late though ).

Tbh though with the impacts of the next 4 years budget i will be giving up soon( its not the only reason of course, been planning it for a while but it adds a lot of weight to it ).

Basically if you smoke 20 a day and buy in ireland then thats 265.05Euro( after you pay tax ) a month. Most of the cuts coming up can be negated by simply giving up cigs and you can still enjoy the same lifestyle even with these upcoming budget cuts.

Thats my plan anyway, any additional taxes i have to pay will be recovered by spending a lot less across the board and its pretty much what i have done in the past 2 budgets( spending about 300euro less a month now ). Having said that excluding petrol( which i have to spend to get to work ), bills( esb, gas, basic sky and broadband ), ill be spending about 60euro a week in 4 years lol.

If the government had any cop on they would reduce the price of a pack of cigs to about 6 euro, it would seriously hit the contraband market but also loads from up north would be coming down here to buy cigs

Thats an increase of €3,180 for you- after tax -
I don't know about you, but I haven't had a pay rise for a while now........that made up for it and then some

Here is a free quitting diary; they'll post it you to you:
https://www.nicorette.ie/ActiveStopDiary/Default.aspx

If I can quit the evil weed, anyone can quit it.
Good luck

Le King

It's actually a very good idea to raise revenue. Since the mass immigration to Ireland these Europeans have brought cheap cigarettes with them. They sell between €3-5 a packet a saving of €3.55 per packet minimum. I know lot's of people who stock up on cigarettes when travelling from mainland Spain etc. The price should be reduced to around €5 a box. The Government have conned themselves out of money by this heavy duty as about 85% of my friends who smoke buy them of the Polish/Slovakians etc.

This needs to be looked at. We all know cigarettes kill you etc. But the Government are playing a silly game by making the market uncompetitive. You won't find a single European buying a packet of smokes over here. The price is totally ridiculous and uncompetitive. Why should we give our money to another countries Government? Unfortunately that's what I'm doing atm as I simply couldn't afford to smoke in Ireland. I make a saving of ~€30 a week now that I buy them off the Slovakians.

lmimmfn

Dannyboy83 wrote: »

Thats an increase of €3,180 for you- after tax -
I don't know about you, but I haven't had a pay rise for a while now........that made up for it and then some

Here is a free quitting diary; they'll post it you to you:
https://www.nicorette.ie/ActiveStopDiary/Default.aspx

If I can quit the evil weed, anyone can quit it.
Good luck

yeah, its a serious amount of cash with you add it all up. Same here, no pay rise in years and have to work more hours for the same, and i doubt we're all going to be rolling in it in 4 years time haha.

Thanks for the link,ordered , we have a new kid too, kinda helping with the giving up smoking thing, so no better time for me tbh.

syklops

gizmo555 wrote: »

You're probably thinking of the report produced by consultants Arthur D Little for Philip Morris to show the Czech government how smoking related deaths were a nett financial gain for the state.

I have to say that when my father died at the age of 58 from smoking-induced lung cancer, my family was not exactly filled with pride that he had done his patriotic duty . . .

That explains why Philip Morris have been going mad marketing their cigarettes here for the past few months. I got a lovely gas-powered lighter from them for buying just one pack of Philip Morris cigarettes. You know one of those lighters that will light in a hurricane? The flame comes out like a jet engine. Really nice.

That said in the past 3 months I have lost 2 relatives to lung cancer, and even though a pack of cigarettes only costs about 3 euros here(Camel lights), over the course of a month that is still 90 Euro which literally went up in smoke(I was a 20 a day smoker). Add to that that up until a fortnight ago my take home pay was about 1000 euro, so my smoking bill was just under 10% of my salary.

I am off them nearly 2 months now and my wallet thanks me for it.

On the issue on contraband cigarettes, while 29% of the population may be smokers, I would say twice that figure are involved in even small ways in illegal smuggling. The letter of the law says that the cigarettes you bring in are for your own consumption, which means my mother is guilty of bringing cigarettes that were bought abroad and giving them to someone else. So is my 82 year old Aunt who bought cigarettes in Spain and gave them to the woman from home help.

Its not just criminal gangs or evil Eastern Europeans, everyone is involved. The massive profits which are to be made are too tempting.

For example,.the average cost of flights home from the Czech republic, after taxes and charges, is about 90 euros return, if I book well in advance. If I buy 3 cartons of Camel Lights(10 packs per carton), that is 30 packets in total, it will cost me about 3 euro a pack or a total of 90 euro. If I then sell them for 6 euro in Ireland, which would not be too difficult, I would make 180 euro, a profit of 90 which would pay for my flights. If I smuggled an extra carton along, I'd have an extra 30 quid to go to the pub with too. That is very tempting for many people. Especially people who are under strain financially.

keithclancy

syklops wrote: »

That explains why Philip Morris have been going mad marketing their cigarettes here for the past few months. I got a lovely gas-powered lighter from them for buying just one pack of Philip Morris cigarettes. You know one of those lighters that will light in a hurricane? The flame comes out like a jet engine. Really nice.

That said in the past 3 months I have lost 2 relatives to lung cancer, and even though a pack of cigarettes only costs about 3 euros here(Camel lights), over the course of a month that is still 90 Euro which literally went up in smoke(I was a 20 a day smoker). Add to that that up until a fortnight ago my take home pay was about 1000 euro, so my smoking bill was just under 10% of my salary.

I am off them nearly 2 months now and my wallet thanks me for it.

On the issue on contraband cigarettes, while 29% of the population may be smokers, I would say twice that figure are involved in even small ways in illegal smuggling. The letter of the law says that the cigarettes you bring in are for your own consumption, which means my mother is guilty of bringing cigarettes that were bought abroad and giving them to someone else. So is my 82 year old Aunt who bought cigarettes in Spain and gave them to the woman from home help.

Its not just criminal gangs or evil Eastern Europeans, everyone is involved. The massive profits which are to be made are too tempting.

For example,.the average cost of flights home from the Czech republic, after taxes and charges, is about 90 euros return, if I book well in advance. If I buy 3 cartons of Camel Lights(10 packs per carton), that is 30 packets in total, it will cost me about 3 euro a pack or a total of 90 euro. If I then sell them for 6 euro in Ireland, which would not be too difficult, I would make 180 euro, a profit of 90 which would pay for my flights. If I smuggled an extra carton along, I'd have an extra 30 quid to go to the pub with too. That is very tempting for many people. Especially people who are under strain financially.

I was in the Czech Republic in Febuary, a pack of cigarattes was around 4.50, selling at 6 euro a box, you'd only make 45 euros profit .

dixiefly

I would go with the carrot and stick.

As you suggest reduce duty on cigarettes by €1.

Impose a €1000 fine on anyone found handling smuggled cigarettes. A few fines would reduce the black market guys. Include more checks at airports and impose fines for smugglings them there too.

syklops

keithclancy wrote: »

I was in the Czech Republic in Febuary, a pack of cigarattes was around 4.50, selling at 6 euro a box, you'd only make 45 euros profit .

Camel lights are 75 CZK which on todays exchange rate is 3.05 euros. Marlboro lights are 82 CZK which is 3.32 euro. What were you buying that they cost 4.50?

OMD

Sleepy wrote: »

Not going to be popular but does anyone else believe there's the potential to significantly increase revenues from tobacco duties if they were reduced?

I personally buy very few of my cigarettes in Ireland, stocking up when I or non-smoking friends and family go abroad. The black market is thriving and, iirc, duty revenues have been sliding for a few years now.

Anyone else thing a euro off every pack of 20 sold might encourage enough people to buy their cigarettes here / legally again? I'm working off the top of my head here rather than looking at figures but if we could even get back to parity with, or slightly below, the price of a pack of cigarettes in the North, I think we might see increases in this revenue.

Yes, as a smoker for over a decade, I know they're not good for people / cause cancer etc. No, I am not advocating that we seek to increase tobacco consumption, merely that we try to get as much of the duties available from the current level of tobacco consumed in Ireland as possible.

The problem with this logic is that the majority of cigarettes are not sold on the black market. So for example if the government reduced the price of cigs by 25%, then the only way they could break even is if the retail sales of fags increased by 33%.

I cannot see any possible way that reducing the tax could be done in such a way as to increase retails sales sufficiently. On the other hand raising the price by €1 will increase revenue for the state, unless 16% of people who currently buy their fags in shops change to the black market.

The obvious solution is raise the price.

Dannyboy83

OMD wrote: »

The problem with this logic is that the majority of cigarettes are not sold on the black market.

Your argument is flawed because your fundamental point is wrong.
It's estimated that 33% of all cigarettes consumed in Ireland are illegal, costing the state at least €750 million per year.
And that figure is still growing.

http://archives.tcm.ie/irishexaminer/2009/07/25/story97270.asp
July 25, 2009 :
Last year it was estimated that one-in-five cigarettes smoked in Ireland were illegal. Mr Redmond said this year it had risen to one-in-four and was heading to more than one-in-three.

http://www.irishtimes.com/newspaper/ireland/2010/0222/1224264939181.html
About 25 per cent of cigarettes consumers here are imported illegally, compared to 6 per cent in Norway, 3 per cent in France, 2 per cent in Spain and 1 per cent in New Zealand.

OMD

Dannyboy83 wrote: »

Your argument is flawed because your fundamental point is wrong.
It's estimated that 33% of all cigarettes consumed in Ireland are illegal, costing the state at least €750 million per year.
And that figure is still growing.

Which was exactly my point. If you reduced the cost of cigs by 25% would all those buying cigs on the black market or abroad stop doing so? I think the answer is no. Unless all of them (assuming the figure is 33%) changed over to buying in the shops then the state would loose out.

Dannyboy83

OMD wrote: »

Which was exactly my point. If you reduced the cost of cigs by 25% would all those buying cigs on the black market or abroad stop doing so? I think the answer is no. Unless all of them (assuming the figure is 33%) changed over to buying in the shops then the state would loose out.

25% lost to smuggling=€750,000,000
Current take from cigarettes= €2,250,000,000
Potential Total take from cigarettes= €3,000,000,000

€8.55 for a box of cigarettes.
Reduce the cost by 50% to €4.30
(Now the entire smuggling market will collapse)

Revenue from cigarettes= €1,500,000,000

So the state is losing out on €750m in direct excise receipts compared to when charging double that price.

Then you have to take into account, that the country next door charges at least €6.45 for a box, so Irish sales will skyrocket;)
This is where the profits lie.

The risk of course is that countries such as Poland would cut their excise in half.

keithclancy

syklops wrote: »

Camel lights are 75 CZK which on todays exchange rate is 3.05 euros. Marlboro lights are 82 CZK which is 3.32 euro. What were you buying that they cost 4.50?

Jebus your right
http://www.expats.cz/prague/article/prague-relocation/cost-of-living/

3.15 a box, could have sworn they were more.

syklops

OMD wrote: »

Which was exactly my point. If you reduced the cost of cigs by 25% would all those buying cigs on the black market or abroad stop doing so? I think the answer is no. Unless all of them (assuming the figure is 33%) changed over to buying in the shops then the state would loose out.

As far as I know black market cigarettes are about 6 euros a packet(Can anyone give a real figure). The much cheaper ones are generally counterfeit, and not as nice to smoke.

A legitimate packet costs 8.55?(I may need clarification, its a long time since I bought them).

If the cost of a pack was reduced by 25%, they would now cost about 6.42, so 40 cent more than a black market one. Over the course of a week, buying illegal cigarettes saves you 2.80(7 packs). In most peoples eyes 2.80 is not enough of a saving for them to go to the farmers market early on Sunday morning to get the cigarettes off the slovak in the white van. Even in recessionary times, most people literally wont get out of bed for 2.80. Sure you cant even get a cup of tea in Statoil for that.

Compare that to the saving of buying smuggled cigarettes now? Over the course of a week, again 7 packs, the difference is 2.55 per day, or a total of 17.85. I think most people will go out of their way for almost an extra 18 euros in their pocket.

OMD

syklops wrote: »

Compare that to the saving of buying smuggled cigarettes now? Over the course of a week, again 7 packs, the difference is 2.55 per day, or a total of 17.85. I think most people will go out of their way for almost an extra 18 euros in their pocket.

You might think that but you would be wrong. The majority of people do not buy cigs on the black market. About 75% of all cigs are sold in shops.

syklops

keithclancy wrote: »

Jebus your right
http://www.expats.cz/prague/article/prague-relocation/cost-of-living/

3.15 a box, could have sworn they were more.

You maybe got stung by the currency exchange. The prices in Prague airport are ridiculous. They make Dublin Airport look reasonable.

OMD

Dannyboy83 wrote: »

25% lost to smuggling=€750,000,000
Current take from cigarettes= €2,250,000,000
Potential Total take from cigarettes= €3,000,000,000

€8.55 for a box of cigarettes.
Reduce the cost by 50% to €4.30
(Now the entire smuggling market will collapse)

Revenue from cigarettes= €1,500,000,000

So the state is losing out on €750m in direct excise receipts compared to when charging double that price.

Then you have to take into account, that the country next door charges at least €6.45 for a box, so Irish sales will skyrocket;)
This is where the profits lie.

The risk of course is that countries such as Poland would cut their excise in half.

Your figures are basically flawed in that you assume the entire cost of cigs is tax. It is not. Allowing for that, The state would more likely loose out 1 billion a year.

Even if we accepted the €750 million (whicvh I don't) that means you think British people will come here and buy 4,000,000,000 cigs every year (for us simply to break even)! They will not

deelite

I'm a John Player Blue Smoker - 8.50 per pack. When I go into buy them I probably pick up a newspaper / magazine / lotto ticket and a few sweets for the kids - probably 20.00 euro spent in the local newsagent.

If a friend buys them abroad I get them for 40.00 per 200.

If the cost of smokes were lowered I would be spending more money in the local shops.

OMD

deelite wrote: »

I'm a John Player Blue Smoker - 8.50 per pack. When I go into buy them I probably pick up a newspaper / magazine / lotto ticket and a few sweets for the kids - probably 20.00 euro spent in the local newsagent.

If a friend buys them abroad I get them for 40.00 per 200.

If the cost of smokes were lowered I would be spending more money in the local shops.

And if you buy them from your friend, what do you do with this €20 that you didn't spend on "newspaper/magazine/lotto ticket/sweets? Do you just throw it away? Unless you throw it away then you spend it somewhere.

syklops

OMD wrote: »

You might think that but you would be wrong. The majority of people do not buy cigs on the black market. About 75% of all cigs are sold in shops.

To what exactly are you referring to when you say "you might think that but you are wrong"? The figures I have calculated are correct. Dannyboy83 has said that approximately 33% of the cigarettes bought(and smoked) in Ireland are done so illegally. I would agree with that number.

OMD

syklops wrote: »

To what exactly are you referring to when you say "you might think that but you are wrong"? The figures I have calculated are correct. Dannyboy83 has said that approximately 33% of the cigarettes bought(and smoked) in Ireland are done so illegally. I would agree with that number.

You said you think
"most people will go out of their way for almost an extra 18 euros in their pocket"
33% is not most people. (By the way 25% is the more accepted figure)

Dannyboy83

OMD wrote: »

You said you think
"most people will go out of their way for almost an extra 18 euros in their pocket"
33% is not most people. (By the way 25% is the more accepted figure)

This is an interesting point actually.

The reason 66% of people continue to smoke Irish cigarettes, is due to
A) Lack of contacts
successful crackdowns by customs, particularly from EE

Given the chance tho, the overwhelming majority of people will buy contraband rather than support the state, as such a colossal amount of the actual cost of cigarettes is duty (about 85% iirc, actually looking for specific figures atm)

They are losing the war against smuggling as the profits are so lucrative, that 66% will dwindle to 33% very rapidly in the next lean 7 years.

keithclancy

syklops wrote: »

You maybe got stung by the currency exchange. The prices in Prague airport are ridiculous. They make Dublin Airport look reasonable.

Nah, looked back on my online banking and I paid 6.22 for two packs

syklops

OMD wrote: »

You said you think
"most people will go out of their way for almost an extra 18 euros in their pocket"
33% is not most people. (By the way 25% is the more accepted figure)

That was a very small part of my post. And I would stand by my statement in that most people WOULD go a little extra for an extra 18 euros. I didn't say they do.

syklops

keithclancy wrote: »

Nah, looked back on my online banking and I paid 6.22 for two packs

Which is 3.11 per pack. Even for an amateur smuggler, who 'smuggles' the amount of cigarettes they are allowed bring in, but sells them, instead of using them for their own consumption, there is a terrific profit to be made.

Dannyboy83

syklops wrote: »

Which is 3.11 per pack. Even for an amateur smuggler, who 'smuggles' the amount of cigarettes they are allowed bring in, but sells them, instead of using them for their own consumption, there is a terrific profit to be made.

Especially if you are converting it back to Koruna/Zloty/Litas!!

The average wage in Lithuania for example is approx €300/1000Litas per month.

You can make near enough to 50% of your monthly income - tax free- by smuggling 5-6 sleeves of cigarettes to Ireland.
If you get caught, no repercussions.

Irish people would need to start smuggling heroin to see those kind of profits.

Mister men

Would make a hell of a lot of sense so i expect our government to not consider it.

keithclancy

syklops wrote: »

Which is 3.11 per pack. Even for an amateur smuggler, who 'smuggles' the amount of cigarettes they are allowed bring in, but sells them, instead of using them for their own consumption, there is a terrific profit to be made.

Not really, I live in Holland .. as I said its 4.80 a pack

Permabear

This post has been deleted.

OMD

donegalfella wrote: »

This post has been deleted.

The increase in our rate is more due to the age of our population.