Budget

Each year ASH Ireland makes a formal submission to the Minister for Finance in relation to the Budget.

The World Bank has indicated that price is a key factor in tobacco usage. High prices therefore deter people from smoking, and discourage young people from taking up the habit.

By European standards, Ireland currently has high tobacco prices and it is crucial that prices remain high and are increased annually above the rate of inflation.

OVERVIEW

1. INCREASE IN TOBACCO PRICE

ASH Ireland, with the support of many different organisations - and the entire health sector - urges Minister Lenihan to put an additional 50 cents on the price of a pack of 20 cigarettes and a pack of ‘roll your own’ tobacco in the December 2010 Budget. Price increase is the most effective means of encouraging smokers to quit and discouraging young people from starting. This level of increase will also generate funding of over €100M for the exchequer and will be supported by non-smokers and many smokers who wish to quit

2. 50-CENT LITTER LEVY ON TOBACCO PACKS

ASH Ireland has already made a submission to Minister John Gormley and to the Working Group on a new National Waste Policy, proposing that a 50 cent levy be placed on the tobacco industry for each pack of cigarettes sold in this jurisdiction. This levy would pay for the extensive tobacco waste problem - our main urban waste. We urge that this proposal is developed and included in the budget statement, as it can provide an additional €100m per annum in justifiable taxes for the Government.

3. FURTHER INVESTMENT AGAINST SMUGGLING

Roughly one in five cigarettes smoked in this jurisdiction is non-Irish duty paid and this costs the exchequer some €400m per annum and as a consequence smoking prevalence will continue to increase because of the availability of cheap cigarettes to young people and smokers. ASH Ireland proposes that an additional €5m be invested annually over the next five years in the fight against tobacco smuggling, commencing in 2011. This criminal activity must be tackled and our Customs and Excise Department needs additional personnel, electronic and sniffer dog support to block what is fast becoming a national scandal.

4. €2M SUPPORT FOR SMOKING CESSATION

In the context of a significant price increase the Government must provide additional resources and support to smokers who wish to stop smoking. We propose that an additional €2m per annum be made available for this purpose - commencing in January 2011. The Government must continue to invest in clearly defined, evidence-based preventive health measures - and assisting people to quit smoking can have massive health and cost benefits in the years ahead. The government must continue to invest in clearly defined, evidence based, preventative health measures, which by assisting people to quit will have major health and cost benefits in the years ahead. Treating nicotine dependence has been proven to be highly cost effective.

Proposal 1. A price increase of 50 cents per pack of twenty cigarettes and pack of ‘roll you own’ tobacco

(a) General

ASH Ireland now urges the Minister for Finance to place a significant increase in taxation on tobacco products in the 2010 Budget Statement. This includes packs of ‘roll your own’ tobacco.

Price increase is internationally accepted as the most effective means of encouraging smokers to quit and discouraging young people from taking up smoking.

As indicated last year - research shows that smoking levels are on the increase and may now be close to 31% of the population. After so much success post the introduction of the smoking ban, with prevalence down to close to 26%, it would be a tragedy if we lost the battle against the scourge of nicotine addiction within Irish society. The Government has set a “Tobacco Free Society” as one of its key health objectives – and yet by refusing to significantly increase tobacco prices – the government is in fact encouraging smokers and young people to smoke. In real terms tobacco is cheaper than four years ago and this is a real and dangerous incentive for smokers and young people who experiment with tobacco.

In 2006 the Central Statistics Office identified an increase in the spend on tobacco and this must be and should be of concern to the Government. The 2007 Slán survey and other related information shows an increase in smoking prevalence and this must be addressed.

If this pattern continues to take hold - and there is a very significant drive from vested interests to ensure that it does - then all of the recent ground gained in the fight against nicotine addiction could be lost – and this would be disastrous medically, socially and politically. Surely this present government would not wish to see the excellent work of previous governments on tobacco related issues unravel.

(b) Proposal – 50 cents increase

ASH Ireland proposes that a 50 cents increase be placed on a pack of 20 cigarettes and related products, including the pack of ‘roll your own’ tobacco, in the forthcoming budget statement. This will take the pack of cigarettes from €8.40 to €8.90 approx – a figure, which is guaranteed to have a significant impact on smoking prevalence in Ireland. This 50 cents increase in tax on the pack of ‘roll your own’ tobacco will bring taxation on this product in line with the pack of cigarettes in tax terms.

(c) Benefits to the State

The introduction of a workplace-smoking ban demonstrates clearly how strong leadership at Government level can change the way we live – for the better. Acute health benefits of the workplace legislation have already been identified and remain potentially enormous in the long term, in terms of the nation’s health and our overall spends on tobacco related diseases. A significant price increase must now complement the workplace smoking legislation and will undoubtedly reduce the number of smokers in Ireland. Price increases will assist smokers to quit and encourage delay in young people starting to smoke, while also increasing revenue take. Price is accepted by all tobacco control experts as the most potent weapon in the war against tobacco and therefore should be used to support the Government’s policy of creating a Tobacco Free Society. The fears of an increase in smuggling resulting from a price hike in the order of 50 cents are unjustified and are baseless.

(d) Revenue

If you consider placing an appropriately large tax on cigarettes, the potential increase in excise would be substantial because of price elasticity. This will allow important flexibility in regard to expenditure on health promotion and especially in targeting our young people, and smokers, with health messages to reduce our levels of nicotine addiction. In the long term as smoking levels decrease, the direct income from tobacco will of course decrease, however the savings in health expenditure will more than compensate for this. A 50 cent increase on a pack of cigarettes and pack of roll your own tobacco can deliver up to €110m in revenue to the Government.

(e) Health Spend on Tobacco Disease

Research shows (British Medical Journal 4/2004) that between 6% and 15% of healthcare costs in developed countries can be attributed to treating tobacco related disease. This amounts to some €1-2 BILLION in this jurisdiction. If we can reduce smoking prevalence we not just improve the nation’s health we also create additional funding for expenditure on health in other areas.

(f) “A Strategy For Cancer Control in Ireland”

Recommendation 4 of the promoting health section of the above document states: “Excise duty on cigarettes should be substantially increased each year above the rate of inflation. To this end the National Cancer Forum should produce a pre-Budget submission to the Minister for Finance each year in order to continue advocating for price increases on tobacco.

Evidence shows that the most effective measure against smoking in the short term consists of sharp price increases. There is a strong social gradient evident in smoking patterns in both adults and teenagers in with the highest rates among lower socio-economic groups. Children and those in the lower socio-economic groups are most sensitive to price increases.”

(g) Inflation /CPI

We ask you and the Government not to shy away from appropriate health legislation because of the potential impact on the Consumer Price Index (CPI). As inflation is not an issue at this time this is an ideal opportunity for government to introduce a significant price increase in tobacco products. The tobacco industry regularly increases its prices – so it seems to deliver mixed messages on this issue. It’s fine for the industry to increase prices - but for the Government to do so increases smuggling.

Proposal 2. A government waste levy on a pack of twenty cigarettes and on packs of ‘roll your own tobacco’

(a) Our main urban waste is tobacco litter. The cost of clean up and the ongoing damage to our environment is immense. On the ‘polluter pays principle’ we propose that the Irish tobacco industry pays for this clean up and for the negative impact on the environment.

(b) In the business press we read of ‘growth in sales and increased profits for the tobacco industry’ and yet the Government pays for the waste management on behalf of this immensely profitable sector. The industry itself should be asked to pay this 50 cent levy directly. This will provide an additional €100m in taxes for the Government.

Proposal 3. An additional €5m investment annually in anti-tobacco smuggling activity

(a) The State is losing over €400m per annum on revenue foregone to smuggled cigarettes. Roughly one in five cigarettes smoked in this jurisdiction is ‘non-Irish duty paid’.

(b) Smuggling is a criminal matter, which should be tackled as such. Smuggling of cigarettes is at its highest in countries where cigarettes are cheapest. The tobacco industry will always play the smuggling card when governments consider price increase. The tobacco industry has been found to be linked to smuggling in both and Hong Kong and has made a €1·2 billion settlement with EU agencies to avoid litigation on this issue.

(c) Our Customs and Excise and other agencies are doing excellent work in the fight against the smugglers – but they need more resources. Additional personnel, equipment, sniffer dogs and intelligence assistance are urgently required. Since the 2009 budget statement, when additional resources were promised by the Minister, the only additional resource provided is an additional x-ray machine, which was already in the pipeline. This response is insufficient.

(d) The experience of other jurisdictions, where tobacco smuggling has been tackled head on, has been hugely positive. In the UK a massive effort was made against the smugglers in 2004 and as a result an additional €1bill euro annually has been delivered to the exchequer, with smuggled tobacco reduced by one third.

(e) Spain has reduced smuggling from 16% to 2% since the early 1990s with a vigorous anti-smuggling effort, while the Spanish government also increased the price of cigarettes by 30% over this time.

(f) Smuggling rates in New Zealand are 1%. This remarkable outcome has been achieved by increasing tobacco control funding by 40% in a three-year period leading up to 2000. At the same time the New Zealand government increased tobacco prices by 40%.

(g) The Government must now invest in:

(i) Additional staff to specifically tackle smuggling.

(ii) Additional technology for use at ports and airports, and must also increase penalties for those found to be implicated in smuggling at all levels. This should include on the spot fines and confiscations. Penalties must be at a level which amount to real and effective deterrents.

Proposal 4. An additional €2m in 2011 for the purpose of assisting smokers to quit smoking

Justification

If the Government increases the price of tobacco - as recommended – then it should also assist smokers with cessation of the habit. This assistance can be offered through the HSE to smokers willing to quit. The HSE can fund a range of cessation therapies for a given period for each smoker (depending on means) who wishes to quit – and the availability of real support and assistance from the Government would in our view be a considerable asset in the fight against present smoking prevalence.

Effective treatments exist for the treatment of Tobacco Dependence and there are cessation services to deliver these treatment. However they are poorly developed and currently starved of resources.