The Government's ambition to remove tobacco prices from inflation figures, which would allow for sharply increased taxes on tobacco in future, has been rejected by trade union leaders.
In his Budget speech, Minister for Finance Brian Cowen increased the price of 20 cigarettes by 50 cent - a move that will raise €112 million in extra excise duties for the exchequer.
The excise rise, the first during Mr Cowen's term as Minister for Finance, will add 0.3% to inflation figures, a Department of Finance spokesman said last night.
Calling for talks with the social partners, he said the removal of tobacco from the basket of goods used to compute changes in the Consumer Price Index (CPI) would "be helpful".
The Central Statistics Office compiles two consumer price indices, one including tobacco and the other which does not, although the one including tobacco is the one used in pay talks.
However, the Government's ambition was dealt a quick rebuff by prominent trade union leaders, including the general secretary of the country's largest union, Jack O'Connor of Siptu.
"The index is compiled to reflect the cost of living across society. There is no basis for a change like that. That will not see the light of day," Mr O'Connor declared. He said he had "no difficulty" with the increase in tobacco excise duties, but he added: "That is a different thing to amending the Consumer Price Index."
The general secretary of Impact, Peter McLoone, was equally opposed, and said that trade unions were not happy that mortgage interest rates wee not included in inflation figures currently.
"I would say that if they want to talk about one element that goes into making up the CPI, then they will have to talk about other elements as well, such as mortgages," he told The Irish Times.
The Government had raised this issue before, without success, he said. "We wanted mortgages included. Finance would not agree to that, so it degenerated into a row and left it at that."
However, the Office of Tobacco Control strongly supported Mr Cowen's aims.
"We would very much welcome his statement, and would call on all the social partners to agree. This is a health issue. And we will do all we can to support the Minister. We will sit down with the unions and present the evidence to them," a spokesman said yesterday.
Six thousand people die annually in Ireland due to tobacco-related diseases, with 1,500 people succumbing to lung cancer, according to Irish Cancer Society figures.
In November 2001, the then minister for health Micheál Martin said successive governments' "fear of inflation" had held them back from increasing tobacco excises dramatically.
"We can no longer delude ourselves. We must exclude cigarettes from the considerations we address in central wage bargaining. We must price cigarettes out of the reach of the children those cigarettes will kill," Mr Martin said then.
Taoiseach Bertie Ahern, speaking on Wednesday night in the Dáil, said the 50 cent increase for a packet of 20 would reduce consumption by 2 per cent, but he warned that draconian increases would encourage smuggling.
