Hefty increases in taxes on petrol, wine and cigarettes

OLD RELIABLES:OLD RELIABLES turned into sitting ducks as Minister for Finance Brian Lenihan sought to raise much-needed revenue with hefty increases in taxes on petrol, wine and cigarettes.

Petrol goes up eight cent a litre, wine rises by 50 cent a bottle, and the price of a packet of 20 cigarettes also goes up by 50 cent, all from today.

However, the price of diesel remains unchanged, and beer too has been spared a price increase. Duty on low-alcohol beer and cider is being reduced to half the full rate for products with an alcohol content of 2.8 per cent or less.

Health promotion groups expressed disappointment with the level of tax increases on cigarettes, while the AA criticised the fuel increases. Drinks industry groups welcomed the Minister's decision not to increase duty on beer but criticised the increase in wine duty and said the rise in the general VAT rate to 21.5 per cent would also hit consumption.

The increase in petrol tax is expected to yield an extra €22 million in revenue this year and €166 million in 2009.

Motor tax rates are also being increased by up to 5 per cent.There will be no increase in the cost for electric vehicles. These rates will come into effect from January 1st, and are expected to raise an extra €40 million a year.

Ash Ireland welcomed the increase in tax on cigarettes but said it was an opportunity missed. It had sought a €2 increase.

"The increase is welcome and will certainly make a difference," Ash Ireland chairwoman Dr Angie Brown said. "Price is an extremely important device in encouraging smokers to quit and discouraging young people from experimenting with tobacco. I believe the public would generally have accepted a more substantial increase."

Dr Brian Maurer, medical director of the Irish Heart Foundation, said: "We are extremely frustrated by the Government's failure to increase the price of a pack of 20 cigarettes by at least €1."

The AA said the petrol price rises would hurt ordinary motorists and the Government must do more to ensure that people got a fair deal at the pumps and that oil price reductions were passed on.

"It is a disappointment that just when some relief is coming on that front from world markets, more cost has been added in the form of tax," said AA public affairs manager Conor Faughnan.