Retail News May Tobacco

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60|Retail News|May 2014|www.retailnews.ie

Tobacco

Taking On the Illicit Trade Ireland’s illegal tobacco trade is flourishing despite efforts to combat it, according to JTI Ireland’s Illicit Tobacco Trade Review 2013. WHEN it comes to illicit tobacco, criminals are earning profits equal to 1,000 times the fines imposed by Irish courts, according to JTI Ireland Ltd’s new report into the illegal trade of tobacco products in Ireland. The review, which examines the illegal trade in the current economic environment, estimates that non-duty paid tobacco is costing the exchequer €250m and the retail trade €450m annually. Ireland has one of the highest rates of illegal tobacco trade in Europe and one in four cigarettes consumed are not taxed. Combating this is a key business priority for JTI. “We are committed to fighting this highly damaging and unregulated trade,” stresses John Freda, General Manager of JTI Ireland. “This is costing retailers and the taxpayer hundreds of millions, and continues to fuel crime in communities across Ireland.” Non Irish Duty Paid Tobacco In 2013, the joint industry Empty Pack Survey (EPS) indicated that the level of non Irish duty paid (NIDP) tobacco in Ireland was at 28.3%, a marginal increase on the 28.2% recorded in 2012. This is in line with trends over the past three years, which have shown a

consistent gradual increase. Non Irish duty paid products are made up of illegal tobacco products sold in Ireland and legal cross border purchases. Revenue’s latest estimate puts the level of NIDP tobacco products consumed in Ireland at 19%. Industry estimates, which take account of the growth of the roll your own (RYO) segment, estimate that the Irish Exchequer fails to collect duty on nearly one in four of all cigarettes consumed in the State. “Every country with high tobacco

taxes has an illegal tobacco problem,” Gerard Moran, Assistant Secretary, Revenue Commissioners, told the Oireachtas Health Committee Hearing in January of this year. “Ireland, which has exceptionally high tobacco taxes and tobacco prices, has a significant problem.” Cigarettes in Ireland remain the most expensive within the Eurozone region, with a premium average price of €9.50 per 20-stick premium pack compared to €3.40 in Poland (as of February 2014). Ireland has the highest tobacco prices among the Eurozone member states, with 80% of the retail selling price of every packet of cigarettes sold in the legitimate retail trade going to the Exchequer in VAT and excise. Revenue Seizes The Opportunity In 2013, the Revenue Customs Service, having made 6,888 seizures, confiscated a total of 40.8m cigarettes, with a retail value of approximately €18.9m, and 4,203kg of loose tobacco worth approximately €1.7m. More than 60% of cigarettes seized in 2013 by the Revenue Customs Service were illegal whites. These illegal cigarettes are manufactured by small indigenous tobacco companies


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