Retailers Against Smuggling welcome budget 2025 tax strategy paper
Thirty-seven percent of 1,000 respondents to a recent Irish Thinks survey admitted to being open to buying goods or services from illicit sources
Print25 July 2024
Retailers Against Smuggling (RAS) welcomed a publication by the Tax Strategy Group of the Budget 2025 Tax Strategy Papers.
In the Tax Strategy Group’s paper on General Excise, it is recognised that, despite rate increases to Tobacco Products Tax (TPT) in successive budgets, there has been a noticeable decline in receipts while smoking prevalence remains the same.
The forecasting of tobacco tax returns has become increasingly difficult due to the alarming rate at which illicit trade and smuggling of non-Irish duty paid products is taking place.
The Tax Strategy Group warns that “the notable increases in the volume of products being consumed outside the scope of Irish excise duty raises concerns that price increases may be creating greater incentive for black market activity.”
Black market activity
RAS has welcomed the admission by the Tax Strategy Group that excessive excise duty is likely increasing black market activity, which may help explain the tsunami of cigarette smuggling which Ireland is currently facing.
The connection between hikes in excise duty on tobacco products and increases in black market activity is verified by the level of seizures of illegal cigarettes in the first six months of this year.
Major seizures
In 2023, a total of 31 major seizures came to the value of €58 million, at a loss of €45 million to the exchequer.
So far, in the first half of this year alone, there have been 27 major seizures, worth a total value of around €53 million and a loss to the exchequer of €40 million.
The latest Illegal Tobacco Products Research Survey from 2023 indicates that more than one third of cigarette packs consumed in the State are illicit or non-duty paid.
Notable increases in the volume of products being consumed outside the scope of Irish excise duty should raise concerns within Government that price increases are serving to drive more consumers to the black market and are making Ireland a target destination for criminal gangs selling illicit products.
Illicit trading
Price increases across the economy are playing a major role in the normalisation of illicit trade activity, with 37% of 1,000 respondents to a recent Irish Thinks survey admitting to being open to buying goods or services from illicit sources, if the price was substantially lower than the legal market value.
RAS believes these trends should be a key consideration in the context of Budget 2025. RAS also contends that with tobacco receipts regularly exceeding €1 billion annually, it is not unreasonable that more of this revenue should be spent on enforcement with a view to protecting the revenue source.
In its 2025 pre-budget submission, RAS is calling on the Government to:
- Reduce/freeze consumer taxes including tobacco excise
- Increase funding for detection and enforcement of smuggling
- Amend the Finance Act to prosecute all suspected smugglers at Circuit Court level or higher
Read more: Cost-of-living crisis will push consumers to the black market, Retailers Against Smuggling warns
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