THEY’RE CALLED THE old reliables, and with good reason.
Excise duties on tobacco, petrol and alcohol have always been a mainstay of budget day. For three main reasons, their effect is obvious, they kick in straight away, and the increases are resistant to change in behaviour, meaning they’re a dependable indirect form of taxation.
But how reliable are they? Well, six successive Governments feel increasing the excise duty on cigarettes is a pretty safe bet considering they’ve done it in 19 of the last 25 budgets.
The biggest increase on cigarettes came in 2000 and 2003 when Charlie McCreevy hiked the price of a pack of 20 by 63c* and 50c respectively.
Adding up all the hikes on cigarettes between 1990 and last year, the Government have added an extra €4 onto the the price of a standard 20 packed of cigarettes since 1990.
That figure is merely the total increase in excise duties, it takes account for the euro switch over in 2001 but does not include inflation or changes to VAT.
Excise duty on cigarettes has increased by 45c over the course of the last three budgets while the period between 2007-2010 saw an increase of €1.05.
Of course, governments argue that the excise increases in both cigarettes and petrol are about more than just revenue raising. They’re about changing habits, and in the case of cigarettes in particular, there’s broad support for the measures even if they penalise smokers financially.
As summed up by Brian Cowen when announcing a 30c per pack hike in 2008:
This increase serves to underline the desire of us all to curtail the consumption of tobacco in the interests of improved public health. I believe this measure should be welcomed generally.
Despite being considered part of the old reliables, petrol and diesel increases are a little less clear cut in how their excise has increased. This is because different years have seen different levies on different types of fuel. In the early 1990s for example, Minsters for Finance were cutting the excise duty on unleaded cars to steer people towards more environmentally friendly fuels.
Over the last 20 budgets though excise duty on petrol has been raised 12 times, usually by between 2c to 5c per litre. There have been no increases over the last to years, likely because the four years previous saw four successive excise hikes on petrol totalling 17.6c a litre.