Call for cigarette taxes to be raised after Europe ruling

Anti-smoking group Ash Ireland has called on the Government to increase taxes on cigarettes after the European Court of Justice ruled that Irish legislation which empowers the Government to fix a minimum price for cigarettes violates European law.

In a judgment handed down yesterday, the court found Ireland had breached a directive which sets down rules governing the calculation of excise duty on tobacco products.

The case dates back several years, a period in which requests by the European Commission for information from Dublin sometimes went unheeded. In its ruling, the Luxembourg-based court said Ireland breached its legal obligations under European law by failing to provide data on the legislation to Brussels.

The case arose from proceedings that the European Commission took against Ireland, France and Austria. The commission argued that legislation in all three countries undermined free competition by curtailing the freedom of manufacturers and importers to determine the maximum retail selling prices of their products.

Ireland maintained that there was no prohibition on the imposition of minimum prices and argued that the system of minimum prices was justified under European law by the objective of protecting health and human life.

In addition, Ireland argued that a tax increase could not guarantee “sufficiently high” tobacco prices “because that increase could be absorbed by producers or importers by sacrificing part of their profit margins, or even by selling at a loss”.

The Department of Health yesterday said it was examining the implications of the European Court of Justice ruling, but said the “floor” price was introduced to deter people from smoking and discourage young people from taking up the habit.

Ash spokeswoman Dr Angie Brown said she was extremely concerned by the ruling and called on the Government to ensure prices were kept high.

“Ireland has and is permitted to have a separate tax regime to all other EU countries and it is our view that the Government has every right to apply taxes which ensures that tobacco is sold at current and even higher prices.”

The Irish Cancer Society said the Government must take steps to guard against below-cost selling on cigarettes.

“First, they must continue to maintain high prices by increasing tax on cigarettes and loose tobacco,” head of advocacy with the society Kathleen O’Meara said. “Second, they must bring in legislation immediately to prohibit tobacco manufacturers from selling tobacco products at a loss.”

The ruling was welcomed by tobacco company PJ Carroll which said the minimum price had become irrelevant because of illegal sales.

“Packs of cigarettes are being purchased up and down the country for as little as €3.50 on the black market.”

Rival company John Player said the ruling would have no impact because of illegal cut-price street sales.

Concerns about illegal selling of cigarettes were echoed by Fine Gael justice spokesman Charlie Flanagan, who said the increasing cigarette-smuggling trade was undermining all efforts to reduce smoking.

Cigarettes were replacing cocaine as a major source of criminal income, he added.

“Dissident republicans and gangland criminals are thriving on the back of illicit trade . . . It is now estimated that a quarter of all cigarettes smoked here are illegal.”

Labour Party health spokeswoman Jan O’Sullivan said the ruling was a “prime example of competition law gone mad” and could result in an immediate drop in cigarette prices.

“Competition law is all well and good, but when it starts to get in the way of reasonable measures, which are put in place in the greater public interest, it is clear that something has gone wrong.”

source: irishtimes.com

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