It’s estimated that the notional loss to the Exchequer on 32.9 million illegal packs is €422m
The figure is the highest level since tax authorities began tracking smokers’ sources with regular surveys in 2009.
A survey by Ipsos MRBI last year found that 19pc of packs held by smokers were illegal, smuggled tobacco. An additional 15pc were legal but non-Irish duty paid, meaning they had been bought abroad and brought into Ireland under rules that allow for importation for personal use.
Strikingly, the Revenue survey suggests almost none of the cigarettes being smuggled into Ireland are counterfeit. Its survey instead found that 99pc of illegal packs held by smokers were normal commercial brands that had been bought outside the country and smuggled in.
While no one buying contraband tobacco products can be sure what they are getting, it does suggest that in the main tobacco companies are not suffering as a result of the illegal trade, but may be making sales in other jurisdictions that are ultimately for consumption here.
The survey found that 1pc of illegal cigarette packs were what are known as “illicit whites”, a term to describe non-big brand cigarettes produced legally in one country with the primary objective of smuggling them to be traded illegally in higher tax countries, including Ireland.
Revenue estimates that the notional loss to the Exchequer on what it estimates are 32.9 million illegal cigarette packs smoked here in a year is €422m.
Vincent Jennings of the Convenience Stores and Newsagents Association (CSNA), which represents tobacconists, said the Exchequer and retailers are the big losers and the trend is moving sharply against legitimate operators.
Legal imports by individuals are the biggest driver of the increase in non-duty paid supplies, he said.
Customs and excise guidelines suggest consumers can carry 800 cigarettes with them into Ireland for personal use from elsewhere in the EU, but there is no legal upper limit if that is challenged. It is illegal to sell tobacco without a permit, however.
“It was a growing problem and it exploded after the pandemic as people started to travel again,” Mr Jennings said.
The Exchequer is making no money on a third of cigarettes smoked here but has to carry the full healthcare costs, he said. Mr Jennings added that hikes in duty, including an increase of 75 cent last October on a packet of cigarettes, has pushed the price of a pack of 20 to €16.75, increasing the incentive to buy abroad.
“We need to have a conversation about the money we are losing,” he said.
The survey showed that last year, 15pc of packs held by smokers were legal non-duty paid imports. The figure for 2021 was 8pc and just 6pc in 2009.
The trend for rolling tobacco is similar. The survey found 32pc of packs held by smokers were either illegal imports or legal non-duty paid imports.
The share of illegal packs has increased from 15pc in 2009 to 20pc last year, but the share of legal non-duty paid imports has jumped from 2pc to 12pc over the same period.