A €1 tobacco tax increase in the Budget will drive more customers away from local shops and towards the black market, a group representing small retailers has warned.
Retailers Against Smuggling (RAS), which represents more than 3,000 small and medium-sized retailers nationwide, accused the Government of “blatantly” ignoring warnings about the impact of further increases.
The group said higher prices would encourage more smokers to buy cheaper tobacco abroad, through duty-free outlets or from illegal sellers, putting additional pressure on Irish shops.
RAS national spokesperson Benny Gilsenan said some packets would now cost more than €20 and argued that the widening price gap would make it harder for retailers to retain customers.
“The Government was warned exactly what would happen, and they’ve gone ahead with another tobacco tax increase anyway,” he said.
“More than half of tobacco consumers are already buying some or all of their tobacco outside Ireland. Surely that tells you something.
“Now they are putting another €1 on a packet, with some packets set to cost more than €20. The more you put up the price here, the more people will look elsewhere.”
Gilsenan claimed cigarettes bought overseas, in duty-free shops or through illegal channels could cost a fraction of Irish prices, in some cases around a quarter or a fifth.
He also said the Tánaiste had acknowledged that higher tobacco taxes could push people towards the black market.
“That is an enormous incentive for people to look outside the State,” he said.
The retailers’ group argued that the increase would compound existing pressures on businesses facing rising running costs. It also accused the Government of failing to adequately tackle illegal tobacco sales.
“Retailers are already struggling with the soaring cost of running a business,” Gilsenan said.
“Now we are being told to compete with people selling cigarettes for a fraction of the price, while the Government has failed to properly tackle the black market.”
Gilsenan said RAS had presented its concerns to the Government before the Budget but believed those warnings had been disregarded.
“They are putting the price of legal cigarettes up again, pushing more customers away from Irish shops and making life easier for criminals,” he said.
“We warned them this was coming. They had all the figures in front of them.
“They chose to ignore the warning, and it is retailers, taxpayers and communities who will end up paying for it.”