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Tax increases on cigarettes - are shopkeepers making a fortune?

  • 11-10-2017 12:49AM
    #1
    Roger_007
    Registered Users, Registered Users 2 Posts: 21,886 ✭✭✭✭Roger_007


    It has become a virtual certainty that the duty on tobacco products is substantially increased in every budget. It is a no-brainer that if you are a seller of tobacco products, you would massively stock up before the budget and make a huge windfall profit afterwards by selling at the new price immediately after the budget on stock that you bought at the old price.
    I was just wondering if this would be regarded as unacceptable profiteering or just a normal perk of the business.
    I used to work part time in a pub and I noticed that stocks would be built up before a budget in anticipation of an increase in duty, (although the increase did not always happen).


«13

Comments

  • #2
    RayM
    Closed Accounts Posts: 7,973 ✭✭✭RayM


    I used to work in a shop that continued to sell them at the old price until stocks had run out. I'm not sure how legal that was, but it went down well with the customers. Most of whom have probably since died from cancer or emphysema.


  • #3
    entropi
    Registered Users, Registered Users 2 Posts: 21,731 ✭✭✭✭entropi


    This and any usual increase on tobacco or alcohol should and would only increase profits for the Government, not any private entity, once the increase comes into effect, right? Buying in bulk beforehand wouldn't make a difference, surely?


  • #4
    Jim Bob Scratcher
    Banned (with Prison Access) Posts: 2,231 ✭✭✭Jim Bob Scratcher


    The Increases fall nicely for those selling on the black market


  • #5
    Nash Freezing Visitor
    Registered Users, Registered Users 2 Posts: 3,249 ✭✭✭ Nash Freezing Visitor


    about 80percent I think is tax - ciggerattes are worthless to retailers


  • #6
    Roger_007
    Registered Users, Registered Users 2 Posts: 21,886 ✭✭✭✭Roger_007


    Renata Squeaking Thinner wrote: »
    about 80percent I think is tax - ciggerattes are worthless to retailers

    Why would any retailer sell any product if it's worthless to them. It's worth a great deal if they can pocket the tax increase that they didn't pay when they bought the product.


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  • #7
    Vic_08
    Registered Users, Registered Users 2 Posts: 3,170 ✭✭✭Vic_08


    Roger_007 wrote: »
    Why would any retailer sell any product if it's worthless to them.

    Because it gets people into the shop where some will buy other stuff with higher margins.


  • #8
    ArchXStanton
    Closed Accounts Posts: 1,912 ✭✭✭ArchXStanton


    Roger_007 wrote: »
    Why would any retailer sell any product if it's worthless to them. It's worth a great deal if they can pocket the tax increase that they didn't pay when they bought the product.

    I used to work in a wholesale,they used to stock them because people wanted them too,in reality they made feck all off them,it was just a case of having them


  • #9
    freshpopcorn
    Registered Users, Registered Users 2 Posts: 33,296 ✭✭✭✭freshpopcorn


    Roger_007 wrote: »
    Why would any retailer sell any product if it's worthless to them. It's worth a great deal if they can pocket the tax increase that they didn't pay when they bought the product.

    Every shop nearly has products similar to this!


  • #10
    howyanow
    Registered Users, Registered Users 2 Posts: 449 ✭✭howyanow


    Cigarettes and Tobacco don't give a good profit margin for retailers so some retailers would look at it as an opportunity to boost margin briefly.other side of it is that cigarettes and Tobacco is expensive stock and a theft risk so some retailers may only slightly increase pre budget order.cigarette lighters is where the retailer will make decent margin


  • #11
    howyanow
    Registered Users, Registered Users 2 Posts: 449 ✭✭howyanow


    entropi wrote: »
    This and any usual increase on tobacco or alcohol should and would only increase profits for the Government, not any private entity, once the increase comes into effect, right? Buying in bulk beforehand wouldn't make a difference, surely?

    No the retailer has an opportunity to benefit as they pay tax on their purchases not on what they sell.


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  • #12
    harry Bailey esq
    Registered Users, Registered Users 2 Posts: 4,814 ✭✭✭harry Bailey esq


    Jim Bob Scratcher wrote: »
    The Increases fall nicely for those selling on the black market

    It sure does. The lads on Moore St usually knock the price of a pouch of snout up in line with the budget though. Win win situation for everyone bar the smokers as usual.


  • #13
    Fr_Dougal
    Registered Users, Registered Users 2 Posts: 9,167 ✭✭✭Fr_Dougal


    For smokers it's much better value now to avoid short breaks in Ireland, pop over to Spain/Holland/Portugal for a weekend. Stock up on smokes, nicer surroundings and better value for accommodation/food etc. Every carton of 200 is a saving of ~€50.


  • #14
    Sue Pa Key Pa
    Closed Accounts Posts: 2,060 ✭✭✭Sue Pa Key Pa


    It is very expensive to insure cigarettes and tobacco, doubt it makes retailers any real money


  • #15
    Cee-Jay-Cee
    Registered Users, Registered Users 2 Posts: 12,234 ✭✭✭✭Cee-Jay-Cee


    I worked in an off licence years ago and we done a stock take once a month. I was told not to bother with the cigarettes when doing the stock take as they made so little on them it wasn’t worth the time or effort. I think there’s only a few % profit on them for the retailer, about 20% for the manufacturer and the rest is excise/tax.


  • #16
    Kimbot
    Moderators, Computer Games Moderators, Social & Fun Moderators Posts: 19,071 Mod ✭✭✭✭Kimbot


    RayM wrote: »
    I used to work in a shop that continued to sell them at the old price until stocks had run out. I'm not sure how legal that was, but it went down well with the customers. Most of whom have probably since died from cancer or emphysema.

    Actually that is what shops are supposed to do, clear the existing stock at the norla price and any newer stock is at the higher price.


  • #17
    BrokenArrows
    Registered Users, Registered Users 2 Posts: 7,548 ✭✭✭BrokenArrows


    Roger_007 wrote: »
    Why would any retailer sell any product if it's worthless to them. It's worth a great deal if they can pocket the tax increase that they didn't pay when they bought the product.

    They still plenty of stuff that doesnt make them money but stock them anyway because people will buy that along with other things.

    Same a shops selling lottery tickets. They dont earn much from it but it brings people into the shop.


  • #18
    TallGlass
    Closed Accounts Posts: 4,906 ✭✭✭TallGlass


    Cee-Jay-Cee wrote: »
    I worked in an off licence years ago and we done a stock take once a month. I was told not to bother with the cigarettes when doing the stock take as they made so little on them it wasn’t worth the time or effort. I think there’s only a few % profit on them for the retailer, about 20% for the manufacturer and the rest is excise/tax.

    That's odd where I worked they where in a cage with high value alcohol. Counted weekly!


  • #19
    Hooks Golf Handicap
    Banned (with Prison Access) Posts: 233 ✭✭Hooks Golf Handicap


    All the whinging that old Mary makes a few extra quid on smokes.
    Meanwhile that tube of Pringles that was €2 last week has gone back up to €3.25 & nobody is out side with their pitchforks.
    Usual Irish begrudgery, nothing more.


  • #20
    Kimbot
    Moderators, Computer Games Moderators, Social & Fun Moderators Posts: 19,071 Mod ✭✭✭✭Kimbot


    Hooks Golf Handicap wrote: »
    All the whinging that old Mary makes a few extra quid on smokes.
    Meanwhile that tube of Pringles that was €2 last week has gone back up to €3.25 & nobody is out side with their pitchforks.
    Usual Irish begrudgery, nothing more.

    Dont get me started on the pringles man, the supposed reason for the price hike is they were 190g now are 200g yet the packets are the same size and weight as before so they are blatantly robbing us :(


  • #21
    howyanow
    Registered Users, Registered Users 2 Posts: 449 ✭✭howyanow


    Cee-Jay-Cee wrote: »
    I worked in an off licence years ago and we done a stock take once a month. I was told not to bother with the cigarettes when doing the stock take as they made so little on them it wasn’t worth the time or effort. I think there’s only a few % profit on them for the retailer, about 20% for the manufacturer and the rest is excise/tax.

    They should have counted the cigarettes weekly as they are high value goods and easy to steal.if one box went missing it could take selling 20 boxes to make up for the loss if one.margin is about 5per cent on them afaik


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  • #22
    BrokenArrows
    Registered Users, Registered Users 2 Posts: 7,548 ✭✭✭BrokenArrows


    howyanow wrote: »
    They should have counted the cigarettes weekly as they are high value goods and easy to steal.if one box went missing it could take selling 20 boxes to make up for the loss if one.margin is about 5per cent on them afaik

    Good point.
    However does the retailer buy from the supplier with the full tax included or is it the retailers responsibility to add on the tax + margin?


  • #23
    elperello
    Registered Users, Registered Users 2, Paid Member Posts: 19,910 ✭✭✭✭elperello


    Retailer buys at wholesale price which includes duty.


  • #24
    thesandeman
    Registered Users, Registered Users 2 Posts: 14,353 ✭✭✭✭thesandeman


    My local garage tried to buy their usual stock two weeks ago but their supplier refused to sell to them until after the budget. By yesterday they had only a few random packs lying around.
    Looks like it was the wholesaler who was making the killing in that case.


  • #25
    etselbbuns
    Banned (with Prison Access) Posts: 2,848 ✭✭✭etselbbuns


    Tesco have reduced JP Blue from €10.10 to €10.00 and Cutters Choice 30G from €15.95 to €15.00
    Why?


  • #26
    McCrack
    Registered Users, Registered Users 2 Posts: 3,017 ✭✭✭McCrack


    Horrible things, government should have put a 5er on a packet.

    Price is a huge motivator to make people stop.


  • #27
    machiavellianme
    Registered Users, Registered Users 2, Paid Member Posts: 14,656 ✭✭✭✭machiavellianme


    McCrack wrote: »
    Horrible things, government should have put a 5er on a packet.

    Price is a huge motivator to make people stop.

    Is it? Try telling that to a smoker. It has nothing to do with price anda lot to do with addiction and perceived stress.

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  • #28
    McCrack
    Registered Users, Registered Users 2 Posts: 3,017 ✭✭✭McCrack


    machiavellianme wrote: »
    Is it? Try telling that to a smoker. It has nothing to do with price anda lot to do with addiction and perceived stress.

    Im talking about motivation to stop and price is a huge motivator, not the only one of course but a big one nonetheless


  • #29
    MadDog76
    Closed Accounts Posts: 5,162 ✭✭✭MadDog76


    McCrack wrote: »
    Horrible things, government should have put a 5er on a packet.

    Price is a huge motivator to make people stop.

    Naive opinion .......... every time the price of cigarettes go up results in more smokers turning to the Black Market, ie. further funding Organised Crime.


  • #30
    CeilingFly
    Closed Accounts Posts: 3,369 ✭✭✭CeilingFly


    A €12 pack of cigs is made up of

    Vat €2.24
    Duty €6.88
    Total Tax €9.12

    Retail margin usually about 60c-80c
    Manufacture's price ex duty is less than €2 - and about 20% of that is marketing, so the cheaper brands and those made in places like China where quality tobacco leaf is not a real concern, can be manufactured for about €1 per pack 20.

    As for shops stocking up to make an extra 50c per pack? - Far far easier ways to make 50c than stock up on a product with a tiny margin and the security issues surrounding it.


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  • #31
    etselbbuns
    Banned (with Prison Access) Posts: 2,848 ✭✭✭etselbbuns


    CeilingFly wrote: »
    A €12 pack of cigs is made up of
    Vat €2.24
    Duty €6.88
    Total Tax €9.12
    My post above points out that Tesco have reduced JP Blue 20s by 1% to €10.
    But why would they do that for something that addicts will buy?


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