Ireland - cigarette tax abandoned over smuggling fears..

April 14, 2009 - The Irish (Ireland) government backed away from a €2 (1.85GBP, 2.66USD) hike in the cost of a pack of cigarettes because it would have led to a massive increase in smuggling and a loss of revenue potentially climbing from a current loss of €500m (664,250,828.98USD)to €1bn (1,328,480,331.51USD) a year, it is understood.

Tobacco industry sources say that Ireland is already losing at least €500m a year as a result of the highest cigarette prices in the EU. The industry estimates, and the figures have not been challenged, that 20 percent of all cigarettes smoked in Ireland are smuggled. Latest trends show that counterfeits of popular brands, manufactured illicitly in China, are flowing into the country by the container load.
A single container of these cigarettes can net the smugglers up to €1m and represent an even bigger loss in revenue to the Government.

Only Norway has higher prices, at around €10 (8.90GBP, 13.29USD) per pack, and it is estimated that over 40 percent of cigarettes smoked there are smuggled, creating the country's organized crime groups.

Since the last big hike in cigarette prices, there has been a major increase in smuggling and in seizures by customs. They are also bringing large quantities into the country from the Canary Islands, where a carton of cigarettes costs only around €12 (15.95USD) compared with €83 (110.29USD) in Ireland.

Tobacco Atlas: Cigarettes are the world’s most widely smuggled legal consumer product. In 2006, contraband cigarettes accounted for 11 percent of global cigarette sales, or about 600 billion cigarettes.

Reference: Cigarette tax abandoned over smuggling fears by JIM CUSACK, Independent.ie, 4/12/2009.

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