'€2 cigs price hike makes sense'

A leading economist has said a tax increase of €2 on a packet of cigarettes in the April budget should be seriously considered by the Government.

Jim Power said such an increase would generate up to €420 million in tax revenue in a difficult economic climate.

He rejected arguments that such an increase would push up inflation and wage demands.

Given that inflation in Ireland is currently negative and is set to decline further, adding 0.9% to inflation through a cigarette price increase is not an issue in the current environment, Mr Power said.

He added that a major window of opportunity in terms of significantly increasing the tax on cigarettes should be exploited.

Mr Power said the inability to control the 'black market' in smuggled cigarettes was not a good enough reason not to take a major public health initiative that will reduce the prevalence of smoking and smoking-related illnesses and ultimately decrease the associated health costs.

Jim Power was speaking at the launch of a study on cigarette prices commissioned by the Irish Cancer Society, ASH Ireland and the Irish Heart Foundation.

These groups are pressing the Government to impose a €2 price hike on cigarettes in the Budget, which will be on April 7.

Such a price rise would push up the average cost of a packet of cigarettes to over €10.

[Posted: Thu 12/03/2009]