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Increasing the cost of cigarettes in the Budget may not lead to an increased tax take as smokers turn to cheaper tobacco products from other countries, as well as e-cigrarettes, the Revenue Commissioners have warned.

A strategy paper prepared by the Department of Finance looks at the impact of adding extra taxes to packets of cigarettes or roll-your-own (RYO) tobacco.

It says: “The Revenue Commissioners have expressed a view that increases in excise may not lead to increased yields, as higher cigarette prices in Ireland could reduce demand due to greater incentives to purchase non-Irish duty paid tobacco products [...]