Hiking the price of a packet of cigarettes will produce no financial gain for the exchequer, Finance Minister Michael Noonan claimed.
He said yesterday he believes many people will quit or switch to products purchased through the black market or from abroad.
Mr Noonan was responding to a question about the gain to the State from increasing the excise on a pack of 20 cigarettes by between 10c and 60c.
He said a 10c price increase would result in a potential yield to the State of €16m and that would rise to €92m if the price increase was 60c.
However, he advised that the estimates were based on an assumption of no change in the behaviour of smokers following the increases.
“I am informed by the Revenue Commissioners that economic research conducted by Revenue has shown that further cigarette price increases, particularly at the higher end of the range, are unlikely to increase excise receipts from the sale of cigarettes,” said Mr Noonan.
“In economic terms, the demand for Irish duty-paid cigarettes has moved to become much more elastic in nature. This implies an increase in price will lead to a proportionately larger decrease in consumption of Irish duty paid cigarettes resulting in an overall decrease in cigarette excise receipts.”
Source: Stephen Rogers, Irish Examiner, 17/06/14
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