Independent TD Finian McGrath has branded the 40 cent increase in a packet of cigarettes a 'Nidge Tax', saying that only criminal gangs stand to benefit from the move.
"Don't come along and lecture to us that this is about revenue," McGrath said. "I call this a 'Nidge tax' [named after the character in RTE's Love/Hate] because the criminal gangs are rubbing their hands tonight, because they will make more money from smuggling cigarettes than they will from heroin or cannabis."
McGrath urged the government to "wake up and smell the coffee" when it came to the illicit tobacco issue, saying that "retailers are very worried about this. Criminals are very worried about this."
In a statement, Igor Dzaja, General Manager for JTI Ireland said: “One in four of all cigarettes consumed in Ireland avoid Irish tax, with the Exchequer estimated to be losing €240 million annually at a time when taxpayers are being asked to pay water charges. Sudden and steep tobacco tax increases influence consumers’ choices, leading them to buy cheap, illegal tobacco.
"This move is counterproductive, as the Exchequer risks losing revenue at the expense of illegal trade and criminality in local communities. It will be warmly welcomed by cigarette smugglers who already see Ireland as a lucrative target.”
Mr Dzaja also noted that the Minister has contradicted a statement made earlier this year, in which he said that higher tobacco prices are 'unlikely to increase excise receipts from the sale of cigarettes'.
"“Planned, long-term and balanced tax policies best meet government objectives to raise stable tax revenues," he said. "Today the Minister is ignoring his own advice and is adopting a strategy that is likely to result in serious consequences for the Exchequer and retailers.”