October 04 2024
While the UK braces itself for a budget so tight we can already hear the pips squeaking from across the Irish sea, this week saw an Irish budget which was marked more by largesse than any attempt to balance the books.
With an election due either in November or sometime early next year, and a cool, surprise £11 billion burning a hole in the government’s pocket, following the infamous EU judgment forcing Apple to pay more taxes, the government here has predictably decided to spend far and wide.
As it stands, the government plans to spend a tasty £87 billion in 2025, a massive increase on 2024’s £80 billion. But where is all this lovely, lovely money coming from?
Recouped mainly from the Big Tech companies which have made Ireland their European home, corporation tax has contributed almost £25 billion this year and that figure is expected to rise to £30 billion by 2030. That’s not even including the £11 billion from Apple, which was such a bone of contention between the Irish government and its European ‘partners’.
In a legal row which has been waging since 2013, the European Commission accused the Irish of handing Apple ‘illegal state aid’. Since 2016, all the disputed tax revenue has been put in an escrow fund and now that the final, binding legal judgment has decreed that Ireland must accept the tax, there is an extra £11 billion for the government. This is undeniably a tidy sum, but it has made ministers and industry observers worry that Apple might be less inclined to base its affairs here.
The European Commission knows that as well, which is why, under pressure from the Germans and the French who want their own slice of the Apple pie, they were so determined to scupper this long running sweetheart deal between Apple and the pesky Irish.
Good news for them, potentially very bad news for the Irish. Without corporation tax, the economy would be running at a massive deficit. So this was a strange budget, which brought back uncomfortable echoes of the Celtic Tiger era, when the economy was artificially inflated by stamp duty from a property boom. When that market collapsed, it brought the country down with it and dragged us into a recession that lasted a decade but felt like a century.
Now, with only ten companies providing more than 50 per cent of Ireland’s corporation tax, there is the very real fear that if any of them leaves Ireland, or simply collapses, it will create a cascade effect that would return us to the dark days of 2008.
But in the face of such macro problems, it makes sense to focus on the micro and the things that impact us on a day-to-day basis. True to form for this government, they couldn’t resist having another go at smokers.
While there had been talks of a hike in the price of booze, it appears the powerful vintners lobby bent the government’s ear and so a pint won’t go being up in price anytime soon.
But that’s where the good news ends, because unlike the pub trade, the poor old smokers don’t have various Irish politicians and ministers on speed dial.
Minister for finance, Jack Chambers, who like most of today’s blandly healthy politicians is a non-smoker, has blithely decided to increase the price of a packet of fags by a full Euro to €18. That’s the guts of 20 quid for 20 Carroll’s (the finest of all Irish cigarettes).
In an increasingly puritanical Ireland, that massive price hike has attracted little attention. In fact, the only anger has been coming from smokers themselves and organisations such as Forest, who often appear like the last of the Mohicans when it comes to advocating for a smoker’s basic human right to enjoy a fag without being persecuted or penalised by the eternal-health fantasists of the government and their prohibitionist allies.
According to Forest’s spokesman Simon Clark, the new prices are an act of ‘discrimination’ against smokers which will ‘force many deeper into poverty.’
He also pointed out that, ‘smoking is a legitimate habit. This brutal hike in the cost of cigarettes will drive more smokers to the black market and fuel illicit trade… It’s hard to imagine a more punitive or counterproductive measure because the only people who will benefit are the criminal gangs and the illicit traders.’
Even apart from the civil liberties issue, Clark is of course correct to raise the issue of illegality.
The government boasts that revenue from tobacco was down by 17 per cent, or £129 million, from 2022 and they claim this is proof that their war on tobacco is being won, and fewer people are smoking.
They are wrong. They fail to take account of the fact that an estimated 32.9 million packets of illegal cigarettes were sold last year (costing the Exchequer £350 million), so by that metric, their own figures immediately fall apart.
Last year, Irish Retailers Against Smuggling claimed that 33 per cent of Irish smokers were prepared to buy black market cigarettes, with the figure rising to 50 per cent in the 18 to 34 bracket.
In fact, it is virtually impossible to walk down working-class shopping thoroughfares such as Moore Street and Henry Street in Dublin without seeing black market traders hawk their wares. Similarly, if you want to buy a carton of cheap fags, there’s no shortage of pubs where they are readily available, nudge nudge, wink wink, say no more.
So why doesn’t this government crack down on this easily solvable issue? Well, there are two reasons. They are on an ideological mission to be seen to be tough on smoking and the easiest way to achieve that is to simply tax the bejesus out of smokers and pretend that will solve the problem, even though they must surely know this is just making things worse
As for the other reason? Well, its a far more human one – they don’t understand the concept of a black market because they never encounter it.
Our gilded politicians simply don’t shop in places like Moore Street or Henry Street, they prefer rather more salubrious locations, and would never darken the door of the type of establishment where a vaguely dodgy looking geezer might sell you a carton of fags from the bottom of his plastic shopping bag.
Why on earth would they venture into such a den of iniquity when they can do their drinking in the heavily subsidised Dail bar, along with the rest of the right sort of people?
Meanwhile, the ordinary Irish smoker continues to get hosed.
