Call for removal of VAT from nicotine patches

NICOTINE PATCHES should be made VAT-free in the upcoming budget, according to the Office of Tobacco Control (OTC).

Chief executive Eamon Rossi said VAT on nicotine replacement therapy (NRT) patches should drop from 21 per cent to zero, while the price of cigarettes should go up by at least €1.

In its pre-budget submission to the Department of Finance, the OTC also calls for the creation of an annual €5 million "Tobacco Fund" to pay for smoking cessation projects.

"These are three very simple and transparent measures the Government can take which have been proven internationally to make a difference and reduce smoking rates," Mr Rossi said.

Patches, which are subject to 21 per cent VAT, are the most popular form of NRT in Ireland and account for almost 83 per cent of all such products sold. VAT is not charged on oral NRT products such as nicotine gum, inhalers and lozenges.

A 10-week course of nicotine patches costs about €250. NRT is available free for medical cardholders, but the majority of smokers must pay for products.

The OTC also recommends an increase of a minimum of €1 on 20-packs of cigarettes, arguing that any increase needs to be significantly above wage inflation to be effective.

Using CSO statistics, it calculates that putting €1 on cigarettes would represent a 13.4 per cent increase in the current cost of a pack of 20 (€7.45). This would mean a real price increase of 9 per cent (67 cent) plus 4.4 per cent inflation (33 cent).

The OTC wants a corresponding increase on "roll-your-own" pouch tobacco.

Meanwhile, a percentage of the increased yield in tobacco excise duty should be channelled into a Tobacco Fund, the OTC argues. This would be similar to the Environmental Fund that has been financed by plastic bag levy receipts.

The money, up to a value of €5 million every year, should be earmarked for investment in public information campaigns and enhanced smoking cessation services. These should target disadvantaged and youth audiences.

The OTC notes there was a precedent for this type of measure in budget 2000, when the revenue equivalent to that year's tax increase on cigarettes was used to help fund the cost of health provision in the State. However, the OTC says its latest proposal would focus funds specifically on tobacco addiction.

"It's a carrot and stick approach. The stick will be that the price of cigarettes will go up. The carrot is that the cost of nicotine patches will go down, and we can use the Tobacco Fund for cessation services for people who haven't managed to kick the habit," Mr Rossi said.

On the issue of taking cigarettes out of the Consumer Price Index, Mr Rossi said the OTC had last year welcomed the Government's invitation to the social partners to seek consensus on the matter.

"I would be hopeful that the dialogue will continue at the highest level. We would hope that public health will win out in the end."

It is understood that there is unlikely to be any change on this issue in the upcoming budget.