Duty Free Exemption to be reviewed in 2013 – BREEN.

July 16th, 2009 - Pat Breen

Speaking during the debate on the Public Health (Tobacco)(Amendment) Bill 2009, The Minister of State at the Dept of Health with responsibility for Older People and Health Promotion Minister Aine Brady has promised to review Section 4 of the Bill in 2013 which grants an exemption to the Duty Free Industry from the recently introduced ban on the advertising of tobacco products.

The Duty Free Industry there is currently in discussions with the UK Government when a similar exemption is expected to come into effect in 2013. The concern is that if the exemption is extended beyond this date in the UK that the Irish Duty Free Industry would be seriously disadvantaged.

Responding to Minister Brady, Deputy Breen said that he was “pleased the Minister would revisit this measure. As someone from County Clare, in which Shannon Airport is located, I welcome the recognition in this Bill that the duty free industry will be exempted from the ban until December 2013″ He said it was important that we “continue to monitor developments in the United Kingdom. A similar exemption is being sought by duty-free operators there and one must consider what will happen if the United Kingdom’s Government extends this exemption beyond 2013.”

Fine Gael’s Deputy Spokesperson on Foreign Affairs and Clare T.D. Pat Breen T.D. speaking during last Friday’s debate highlighted the challenges facing the Irish Duty Free Industry when he said ” that the sale of Duty free products now make a significant contribution to the commercial revenues at the three main airports at Shannon, Cork and Dublin Airport . He said that “the income stream from landing fees, etc, is a lot less than heretofore, as airlines seek to cut costs.” and that “any reduction in sales of Duty Free at the Airports could have a serious impact on jobs.”

Deputy Breen said that the “the industry already has faced many threats to it business” and in particular he said that “the adoption of global aviation security regulations on liquids” posed initial difficulties for the Industry which have since being resolved. “At one point”, he said ” were one to buy duty free in Shannon Airport before travelling to London Heathrow or London Gatwich to catch a long-haul flight, such liquor would be confiscated in the United Kingdom unless the purchase was put into one’s checked-in baggage.”

As well as confirming her commitment to review the exemption ban for the Duty Sector in 2013, Minister Brady also outlined how the current legislation would apply in Duty Free Shops here which as she said will “mean significant changes in the Airport Duty Free Sector”. While Duty Free Shops will be permitted to have “on permanent display a pictorial list of tobacco products sold”, she did point out that significant changes would be made in the Airport Duty Free Sector “with self-service abolished and tobacco products will be required to be kept in a closed container.”

Public Health (Tobacco)(Amendment) Bill 2009

Friday, 10th July 2009.

Deputy Pat Breen T.D.

I welcome the opportunity to contribute to the debate on this important Bill. Like previous speakers, I am of the view that more time should have been devoted to this legislation. It is sad that, as with other Bills this week, a guillotine is being applied in respect of it.
In general, Fine Gael supports the Bill. Deputy Reilly tabled several amendments in respect of the penalty for offences committed under the Public Health (Tobacco) Act, most notably those relating to the sale of cigarettes to people under the age of 18. The latter are covered in sections 3 and 5.
I thank the Minister of State, Deputy Áine Brady, for keeping Members updated on progress relating to the drafting of the Bill. I also thank her officials for providing us with copies of it last week.
There are numerous people who each day try to break the grip nicotine has upon them. Smoking is a difficult habit to break and it is widely accepted that it is extremely bad for one’s health. It is estimated that each year approximately 6,500 people here die as a result of smoking-related diseases. Some 1,600 people die from lung cancer. There are approximately 1 million smokers in this country and half of these will die as a result of smoking-related illnesses. Some 90% of lung cancers are caused by smoking and it costs approximately €1 billion per year to provide health services for smokers. In spite of all the campaigns to try to stop people from smoking, when the Department of Health and Children published the results of the third national survey of lifestyle, attitudes and nutrition in April 2008, it was revealed that there was a slight increase in the percentage of smokers since 2002, with 29% admitting to being a smoker in 2007 compared to 2002, even though the 2007 figure represented a drop from the 1998 percentage of 33%. The former Minister of State, Deputy Wallace, referred to the number of young people who still smoke, particularly females. I agree with her and this is evident at all social outlets, which is a pity. The introduction of the workplace ban on smoking in 2004, which initially met with some resistance, has been a great success both for smokers and for non-smokers like myself, who also were affected by smoking. The ban was successful, which was partially due to the high percentage of people who complied with it. For instance, last year 97% of workplaces were compliant, which is the highest level since the introduction of the ban in 2004 according to the Office of Tobacco Control’s annual report. Consequently, when Ireland became the first country in the EU to remove all tobacco advertising from retail outlets as of 1 July, it was no surprise that when one entered shops on that Wednesday morning, all cigarettes were out of view. We are a law-abiding society and the majority of retailers complied with the law.

Retailers estimate it will cost them approximately €5,500 each to reconfigure their shops to comply with this legislation. They have referred to a similar development in Canada in which no link was found between the implementation of a similar ban and a reduction in the rates of smoking among youths. However, it is a good idea to prevent cigarettes from being visible on entry to a shop and it will deter some people from buying them. While one could argue against this measure by citing the example of drugs, which people are not deterred from using by the lack of advertising, it is important to be proactive and to make every effort to stamp out smoking, particularly among young people. Most contributors to this debate have spoken about the damage to young people’s health.
It will be interesting to ascertain whether this ban will be effective in inducing young people to stop smoking. I believe the introduction of more stringent penalties to stop the sale of cigarettes to young people, particularly those under the age of 18, would be more effective. We must also declare war on the illegal importation of cigarettes and this is an extremely important issue. In 2008 alone, Revenue seized 134 million illegal cigarettes, 38 million of which were seized at our airports and a further 90 million at the ports. The value of such seizures was approximately €152 million, which is a great deal of money. However, it is estimated that another 826 million cigarettes went undetected by the Customs and Excise. While a great quantity of cigarettes still are being imported, one must commend the Customs and Excise. It is now in possession of new X-ray equipment with which to spot such contraband in containers. The Leas-Cheann Comhairle will be familiar with this issue from his own constituency of Wexford. Unless the illegal sale of cigarettes is tackled, Members will not witness any significant reduction in the number of young people smoking. Moreover, there is also the important issue of the excise duty lost to the Exchequer. Revenue estimates the amount lost last year because of cigarette smuggling was approximately €54 million, which is a great deal of money.
As someone from County Clare, in which Shannon Airport is located, I welcome the recognition in this Bill that the duty free industry will be exempted from the ban until December 2013. Otherwise, the duty free industry in Ireland would have been at a serious disadvantage to its counterparts in the United Kingdom, where a similar ban will not be introduced until 2013. The sale of duty free products contributes significantly to commercial revenues at the three main airports at Dublin, Shannon and Cork, which are run by the Dublin Airport Authority. The income stream from landing fees, etc., is a lot less than heretofore, as airlines seek to cut costs. As the airline industry is no different from any other sector at present, getting revenue from commercial activities has become very important for the airports. Any reduction in the sales of duty free at the airports could have a serious impact on jobs. The industry already has faced many threats to its business. The industry in Ireland was also particularly threatened by the adoption of global aviation security regulations on liquids. Particular difficulties for Irish airports arose in respect of transfer passengers, who initially were not allowed to buy duty free at their point of departure. At one point, were one to buy duty free in Shannon Airport before travelling to London Heathrow or London Gatwick to catch a long-haul flight, such liquor would be confiscated in the United Kingdom unless the purchase was put into one’s checked-in luggage.
Time is limited at every airport and if passengers do not purchase their cigarettes at Shannon, Dublin or Cork airports, they will buy them at their next point of departure, which in many cases is a hub airport in the United Kingdom. The procedures that are place at our airports for the purchase of duty-free goods are strictly enforced and controlled and are regularly inspected by Revenue. As one must produce one’s boarding card and passport to purchase duty-free cigarettes, the sale to minors is not an issue and in any event, cigarettes are sold in cartons of 200s at such outlets.
I welcome the Minister of State’s commitment to re-examine the position in respect of duty-free shops if the position in the United Kingdom changes. That is a positive development and we should continue to monitor developments in the United Kingdom. A similar exemption is being sought by duty-free operators there and one must consider what will happen if the United Kingdom’s Government extends this exemption beyond 2013. I am pleased the Minister has stated she will revisit this measure.
While most of the parties will support this Bill, I note Deputy Reilly has tabled some amendments to it. I was pleased to have an opportunity to speak on this.

Minister Aine Brady (Minister of State at the Dept of Health and Children).

Dail Text re Section 4 of the Bill.

Section 4 provides an exemption from the advertising ban for airport duty free retail outlets. They will be permitted to have on permanent display a pictorial list of tobacco products sold but will be required to conform to other significant changes in how they do business. Self-service will be abolished and tobacco products will be required to be kept in a closed container, meaning significant changes in the airport duty free sector. I intend to review this exemption towards the end of 2013. Section 4 also provides an exemption from the advertising ban for specialist tobacconist shops.