Noonan targets cigarettes for big tax rise as he prepares Budget

SMOKERS could be hit with a major tax rise in the Budget next month, pushing the cost above €10 for a packet of 20 cigarettes.

Finance Minister Michael Noonan told reporters at Fine Gael’s think-in in Adare, Co. Limerick that a hike in the price of tobacco was a strong possibility.

‘We may raise some taxes, obviously on health grounds,’ Mr Noonan declared.

‘There’s always an interest in raising duty on tobacco. We won’t rule it out completely.’

One pack in every four consumed in Ireland is smuggled, hitting Exchequer revenue, industry sources say. The problem is expected to discussed at a meeting of the British Irish Parliamentary Association next month. Mr Noonan also predicted that Ireland would have a balanced budget, with no more international borrowing, within three years.

He hailed growth figures of 6.7 per cent in the first half this year as ‘very significant’.

‘The consequences of that is that the debt in terms of percentage of GDP will fall below 100 per cent. We didn’t think we would get there for another 12 months or more,’ Mr Noonan said.

It would mean Ireland was not an outlier any more among EU economies with a debt equivalent to 123 per cent GDP. The deficit was coming down significantly, he said.

‘What we want to do is balance the budget so that we run the country on the basis of the taxes we collect.

‘That would mean we are no longer relying on borrowing and we are not adding to the debt by borrowing more.

‘We are in striking distance of that target now. By 2018 we should be running the country on what we collect.’

Mr Noonan said there was a great opportunity now to ‘finally get away from boom and bust policies which destroyed the country’. The focus would be on sustained growth in all parts of the economy, he said.

Two years ago the growth was a Dublin phenomenon, he said, but it had spread widely across the country now. ‘What the party want to achieve in our next period in government, is to have the growing economy inside the door of every household, so that it is felt by every family in the country.

‘That is the translation of securing economic growth, to make it personal and make it family-centric.’

Mr Noonan was giving nothing away on the Budget next month, except to indicate that the first moves to make childcare more affordable would be undertaken.

He also added that work would continue on reducing taxes ‘to make sure that work pays and that it pays significantly more than welfare.’