Taxpayers lose nearly a billion to black market tobacco

Retailers Against Smuggling (RAS) has called for urgent action to be taken to combat black market tobacco as the Tax Strategy Group (TSG) Papers for 2026 admit that the prevalence of illicit and non-Irish duty paid tobacco illustrate that increases to excise duties ‘may not lead to increased revenue’, reinforcing that excise increases are fuelling a booming black market, rather than reducing smoking rates. 

The papers follow on from Revenue’s recently published Illegal Tobacco Products Research Survey 2024- independently conducted by Ipsos MRBI- which revealed a staggering total loss of roughly €934 million in taxpayer money to illegal tobacco products last year alone. 

The TSG publication, which sets out options for tax policy changes, acknowledged that annual figures show the excise on tobacco products, which has increased by steadily increased by €3.75 since 2019, is having the opposite of its intended effect– pushing consumers to purchase illicit or non-duty paid tobacco, while the revenue generated by Tobacco Product Tax falls year on year. 

Despite intentions to increase revenue to the Exchequer through increased Tobacco Product Taxation, figures show that TPT revenue has in fact plummeted from €1.32 billion in 2020, to just €976 million in 2023- a loss of €342 million to the taxpayer. Even more concerning, the TSG Papers note that three quarters of this yield was collected prior to the Budget 2025 excise increase. Meanwhile, Revenue statistics show the value of tobacco seizures doubled between 2023 and 2024, to €130 million. 

The TSG papers also call-out and discuss RAS’ pre-budget submission, which highlights this trend of tax loss in comparison to excise increase, and submits that a freeze on excise and improved detection and enforcement of illicit trade is the best option to increase TPT revenue and to put money back into taxpayer pockets. 

Reference is made to the stark Revenue Commissioner survey published this April, which revealed a whopping 37% spike in illicit market cigarettes. These accounted for 26% of all cigarettes in circulation in 2024 compared to 19% in 2023, and were worth over €590 million in lost taxes. RAS estimates that a further €249 million was lost on the survey’s reported 11% travel purchases of cigarettes in 2024. No Irish excise or VAT has been paid on any of these cigarettes and Retailers Against Smuggling is concerned that many of these ‘legal’ cigarettes are being brought in breach of duty free and travel allowances. RAS estimates that a further €95 million was lost in taxes on RYO Tobacco in 2024, bringing the total taxpayer losses on tobacco products to an astounding €934 million in one year alone.1 

RAS National Spokesperson Benny Gilsenan stated: 

“As admitted by the Government in the latest Tax Strategy Group Papers, it is clear that increasing excise on tobacco products is not only having no effect on smoking rates– with €934 million in lost taxes on tobacco products, the scale of Ireland’s untaxed tobacco market is staggering – and it’s taking business away from legitimate Irish retailers. 

“Continuous increases in excise are driving people to purchase the cigarettes from the black market or abroad, and we are seeing less money from the Tobacco Products Tax every year it is increased. It has become clear it is no longer a financially viable approach, and it is time for the Government to focus on tackling illicit trade, rather than taking measures which affect legitimate retailers and the taxpayer.” 

In its pre-budget submission, Retailers Against Smuggling are calling on the Government to: