€1.5m daily lost on illegal cigarettes

“Criminals are winning hands down” in the Government's fight against illegal cigarette sales, a tobacco industry lobby group says.

It says that budget tax hikes on cigarettes will only serve to drive up criminal activity.

Figures released by the Irish Tobacco Manufacturers Advisory Committee (ITMAC) estimates that the Government is losing €1.5 million every day to illegal cigarette sales.

They estimate that while criminals are earning over €640,000 daily from sales of illegal tobacco, the annual loss to the Government in VAT and excise is €580 million.

Compiling the figures from CSO and EU Eurobarometer statistics, ITMAC estimates that over 1.6 billion cigarettes smoked in Ireland this year will be non-Irish duty paid. It says that by the end of 2012, this will mean a loss to the economy of over €730 million.

The number of cigarettes smoked in Ireland on which duty is not paid to the Government is also increasing according to ITMAC. Following VAT and excise hikes in last year's budget which brought the cost of a packet of cigarettes to over €9, the rate of cigarettes on which duty is not paid here rose from 24.5 per cent in 2011 to 28.2 per cent this year.

ITMAC estimates that of the 28.2 per cent non-Irish duty paid tobacco consumed in Ireland; approximately 18.4 per cent is now illegal. Criminals will net over €230 million this year or €640,000 day from illegal tobacco trade, the group says.

With days to go before the budget, the tobacco lobby group claims that by raising the cost of cigarettes, the government has neither deterred smoking nor increased revenue.