Wednesday, 26 January 1994
Dáil Éireann Debate
(2) THAT the duty of excise on cider and perry imposed by paragraph 8 (2) of the Imposition of Duties (No. 221) (Excise Duties) Order, 1975 (S.I. No. 307 of 1975), shall be charged, levied and paid, as on and from the 27th day of January, 1994, at the several rates specified in the Schedule to this Resolution in lieu of the several rates specified in the Third Schedule to the Finance Act, 1993 (No. 13 of 1993).
(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).
|Description of Cider and Perry||Rate of Duty|
|Still and Sparkling:|
|Of an actual alcoholic strength by volume not exceeding 6% vol||£35.03 per hectolitre|
|Of an actual alcoholic strength by volume exceeding 6% vol but not exceeding 8.5% vol||£151.59 per hectolitre|
|Of an actual alcoholic strength by volume exceeding 8.5% vol but not exceeding 15% vol||£215.01 per hectolitre|
|Of an actual alcoholic strength by volume exceeding 15% vol||£311.97 per hectolitre|
|Of an actual alcoholic strength by volume exceeding 8.5% vol||£430.02 per hectolitre|
This Resolution provides for an excise duty increase on cider and perry from midnight tonight which, when VAT is included, amounts to 3p on a pint or approximately 5p on a litre of ordinary strength cider and perry with a pro rata increase for middle strength products and increases for higher strength products in line with those for wines of the same strength. In regard to cider and perry, there has been an increase in consumption of about 20 per cent during the past four years. The tax portion on cider and perry is about half that on beer. It is interesting to note that about 37 per cent of the cider and perry market has now been taken by imports. The yield from this increase on cider and perry in 1994 will be £0.9 million and in a full year £1.1 million. The CPI effect of this increase is negligible.
Mr. Carey: When speaking about Financial Resolution No. 1 the Taoiseach did not indicate the reason the Government considered it necessary to impose this increase on tobacco. As one who used to indulge in tobacco and cigarettes — the last day on which I smoked was in 1979 I had 100 cigarettes——
Mr. Carey: I availed of the option to give them up for health reasons. Many people such as old age pensioners and widows living alone enjoy the flavour of cigarettes. This huge hike of 8p on a packet of cigarettes will create more poverty. It has been argued that tobacco and cigarettes should be taxed out of existence for health reasons but in that event the Minister for Finance should ban tobacco altogether because it is injurious to health. The Minister would not face the outcry that that would give rise to. People who use tobacco are compulsive and have been using it for years. The Government's approach of continuously increasing tax on tobacco is of no use to anyone.
As Deputy McGahon remarked, the Minister for Finance never acknowledges that there is a huge employment content in the Louth constituency in cigarette manufacturing. A charge of an extra 8p on a packet of cigarettes will depress consumption which, in turn, will lead to job losses in County Louth. The Minister for Finance did not announce special measures to alleviate unemployment in County Louth. From the employment point of view I am opposed to this 8p hike which is unreasonable unless accompanied by some compensatory measures. If tobacco is to be banned for health reasons the Department of Finance must take on board all the cost factors.
In increasing the price of beer, wine, table wine and spirits the Minister adopted a similar attitude. As Deputy Yates explained, the consumption of beer, spirits and wine fell last year. The Minister made a petulant comment about the way licensed vintners were behaving but most of the licensed vintners in my area are not doing well. Allied to the increase in price, the Minister for the Environment is introducing a roads Bill which will further inhibit the consumption of alcohol. Neither the Taoiseach nor the  Department of Finance have indicated what income is expected from beer, wine and spirits or in relation to any of the resolutions from Nos. 1 to 5. It would be interesting to have that figure. In this instance the Department has attacked an area in which consumption has been falling rapidly and that runs contrary to the Department's desire to increase overall taxation every year.
With regard to cider I was taken aback by the Taoiseach's last remark that 37 per cent of cider is imported. Surely that is of concern to the Taoiseach? If 37 per cent of cider is imported surely the people who are losing market share are the people in Clonmel. The Taoiseach should have an interest in what is happening to the local brew.
Mr. Carey: I wish him luck. I would like to see Kentz survive and I would like to see Shannon survive. I am not begrudging. I would also like to see the jobs in the cider industry in Clonmel survive despite what the Deputy thinks about me. However, I challenge the Taoiseach's claim that because 37 per cent of cider now sold here is imported it is valid to put excise duty on this product. That is not a justification. I am very concerned about employment in this company if more and more costs are added. When it comes to costs neither the Taoiseach, the Minister for Finance or the Department have addressed these issues. The Taoiseach dismissed minimal rises in the CPI as if they were not a factor.
Mr. Carey: These are only incidental  small technical details, but of course the direct cost on cider will reduce its sales. How can the Taoiseach justify that? Of course, all these costs are small. It is a bit like this Programme for Economic and Social Progress charade that is going on at present, relating to 1.5 per cent or 2 per cent. We should give it to them without any problem. Why should we worry about margins? Does the Taoiseach know something which I do not know? Are there huge margins in cider production here? Is the company in Clonmel making such huge profits every year that they can absorb this cost or will the charge be placed again on the taxpayer who consumes alcohol? I intend to oppose these resolutions.
Mr. M. McDowell: These resolutions proposed by the Taoiseach are part of an overall budgetary strategy and although some of them are unexceptional, such as the increase in the price of cigarettes, others are the subject of a considerable degree of worry, such as the increase in the price of cider. The Taoiseach has, in a commendably short contribution on this matter which was in tremendous contrast to the verbose and quite excessive contribution of the Minister for Finance this afternoon who made a vast amount out of very little, imparted to this House the information that 37 per cent of cider consumed here is imported which means that 63 per cent of cider is home produced. If that is the case we are slapping an additional tax on a highly labour intensive industry in our community at a time when it is in direct competition with foreign imports for one-third of the market and with other mainly foreign produced beverages for a niche in the market.
Shorn of all the verbiage today's budget needs to be examined by reference to one set of circumstances. This set of excise increases is one tiny element in a mosaic which would best be understood by reference to a man and woman who are married and earning £30,000 or any sum over £25,000. They may be lucky or unlucky enough to own a house worth £100,000. They should be better off by approximately £650 as a result of the  direct changes to the income tax code. However, when one takes away their VHI and mortgage interest relief and ads on their new residential property tax liability that couple, before paying excise duties on petrol and the increased RTE licence fee, will end up with only about £200 more in their pocket.
This exercise in financial wizardry was produced by the man in the golden anorak, as I have referred to him in other places, as a great give-away budget. The House will be interested to know that the employer of that man or woman, whoever is the wage earner, will have to pay, on my calculation, an extra £449 in PRSI by reason of raising the ceiling from £21,000 to £25,000. That couple may feel they will be better off but the total amount of tax on the husband's or wife's income will go up by nearly £500 and the couple will be given almost £200 extra by the State to take home. That is what the budget is all about and it is largely illusory——
Mr. M. McDowell: I am making the point — this has always been done on occasions such as this — that we are dealing with excise increases which are part of a pattern. We have been told that these are little bits of a mosaic but the fact is many ordinary people, not the super rich, will be worse off. What is much more important is that their employer will have to pay through the nose for this so-called relief. I ask the Taoiseach to bear in mind that in the budget he has raised the ceiling for the employer PRSI levy from £21,000 to £25,000, in the process imposing on employers an extra £500 liability. Of this he will snaffle £300 into the Exchequer and when all the dust has settled give £200 back to the couple. If I may say so, this is the politics and economics of Tommy Cooper and of somebody doing a rather poor and rusty trick to try to mystify the public. Those who are not  impressed by the magic can laugh at the pathetic amateurism of it all.
We are not facing today a radical and reforming budget. I suggest that Resolutions Nos. 1 to 5 are part of a rather weak-minded and timid approach to the problems facing this country and Members should reject them for the reason that this was billed as the occasion on which this Government of all the talents, with all the time in the world to think of a new economic strategy, would come up with a budget which would radically reform our taxation system and signal the direction of reform in future years. What we have is a little bit of incrementalism on every front, nothing to set anybody alight, a little bit here and there, a ratcheting up of the taxes on employment and indirect taxes through VAT and this excise duty increase, affecting indigenous employment. Deputy Cox outlined the extent to which expenditure has increased during the past few years and is increasing under this Government. These measures are not being taken to keep public spending stable and to widen the tax base but rather for the purpose of further expenditure by a Government which has lost control of public expenditure.
My own view is that the Government should by all means tax cigarettes and the old faithfuls but it is posing as a Government which has the capacity to put before the people a radical programme for the transformation of our taxation system on work. Today's budget is the most flaccid and weak-minded ever to be presented by a Government with such a majority and faced with such a favourable opening position from the point of view of the Exchequer.
I do not know who is the architect of this budget because so many Deputies on the Government benches went on local and national radio to advertise little titbits to suit and titillate their own constituency voters. Whoever the architect was, the one thing they signally failed to do was to avail of the opportunity to signal the beginning of a process to transform the taxation system.
Earlier today Deputy Cox dealt with  the wider issues. If the Taoiseach is saying that these are necessary underpinnings of the budgetary strategy and is looking for support for the budget on the basis that the overall effect will be proemployment and anti the present draconian tax system, he is asking us in effect to disbelieve our eyes. When confronted with the opportunity for radicalism the budget flinched. I believe the Taoiseach does not deserve support on any, even the most vestigial of insignificant underpinnings of the budgetary strategy and deserves to be opposed. This Government deserves to face opposition at every level in relation to the budgetary strategy that the Minister for Finance has articulated to the House today.
Mr. M. McDowell: I have never heard a lengthier, more waffly budget speech, expanded beyond its fair proportions, delivered by any Minister for Finance. It could have been delivered concisely in half an hour. We did not want to hear all the waffle, the absurd excursions this way and that on a non-philosophy, the explanations for what was not done. This House deserved a pro-jobs pro-enterprise budget and it did not get it. This House deserved a budget which was prodoing something about the unemployed and it did not get it. Instead it got something designed to provide some kind of milieu in which the social partners could negotiate another Programme for Economic and Social Progress to the detriment of our economic welfare. We have got a holding budget, a valueless budget, a reformless budget, for which we have to thank the Fianna Fáil and Labour Parties.
They could be excused for the pathetic efforts they made last year by imposing a 1 per cent levy, because they did not  have enough time to prepare. This time they had every opportunity to show what exactly they thought should be done about the economy and we found that they are bankrupt in terms of economic policies, as most of us always suspected. The time has come for the Opposition parties in this House to unite in condemning this budget as flaccid, over-blown and cowardly when it came to the crunch and lacking in radicalism. It represents a slap in the face for all the people who spent so many years and wasted so many pages writing reports on the system of taxation. It means effectively that nobody is listening to them, that nobody is doing anything about what they propose. We are dealing with a Government which believes that by tiny pins and tucks and incremental changes here and there a huge overhang of taxation, unemployment and enterprise can be tackled. It cannot be done that way, and in that context all these resolutions and the subsequent resolutions this evening should be opposed.
Mr. Gilmore: We are debating the motions on the increases on the “old reliables”, which, of course, are being used to make up the figures in a budget which has probably been the most over-rated in the history of the State. This is the budget which would represent the assault on unemployment and poverty for which we have all been waiting. Instead it reads more like the overdue national lottery allocation and, like all national lottery allocations, the Minister's own constituency does proportionately better than anywhere else.
These increases on the “old reliables” are always represented as the kind of taxes to which nobody can seriously object in these PC times — PC can stand as much now for political cuteness and political cowardice as it does for political correctness. We are not really supposed to oppose these increases because they  are, after all, a tax on a kind of slight immorality, a tax on venial sin. Certainly we are not supposed to drink to excess and we are not to damage our health by smoking but one would think, listening to that type of approach to these taxes, that the pint of beer, the bottle of wine or the cigarette themselves in some way pay the tax. Like all taxes, these taxes are a tax on people. Somebody must pay them, and the people who do are, for example, the woman who goes out to her £60 a week part-time cleaning job and enjoys a cigarette with her colleague or who, having sent her children out to school in the morning, has a cigarette with her mug of coffee, and the old age pensioner who, having collected the very inadequate pension he will end up with after this budget, goes into a pub to have the one or two pints he can afford on a Friday afternoon. These are the people who will end up paying these taxes. The taxes will present no problem to the type of person who will benefit from the enhanced opportunities for investing money in the business expansion scheme but they are, ultimately, a tax on the modest pleasures of poor people.
One of the taxes here is the 10p on the bottle of wine. It is very minor, but it is in marked contrast to the expectations that many people had of the Single Market. Most people thought that, with the arrival of the Single Market, there would be cheap wine. It is ironic that instead of the price of a bottle of wine heading in the direction of EC harmonisation it is going in the opposite direction, assisted now by the 10p that the Minister proposes to add to it.
It is interesting the Minister thinks our tourist industry needs a shot in the arm to the extent that he is providing an additional £5 million to promote it. I am not surprised he should find it necessary to spend an extra £5 million to encourage tourists to come to a country where they are fleeced when they go into a pub, buy a bottle of wine or have a meal in a restaurant. These increases are self-defeating. They are the pathetic sequel to a pathetic budget which lacks imagination, and the extent to which it lacks  imagination is that at the end of the day the figures have to be made up by the most unimaginative thing that any Minister for Finance could do in a budget, that is, turn his attention to taxing cigarette smokers and the person who goes for a pint on a Friday afternoon.
Mr. Ferris: I want to make a few comments about the cider industry which is relevant to my constituency and remind Deputy McDowell that when his party was in Government it singled out cider for an individual tax which did not apply to any other drink at the time. Before the Deputy castigates anybody else he should look at his own party's performance in this area.
The cider industry is extremely important in the south-east, employing some 450 people. Because cider is a by-product of home grown apples the labour content of the product is extensive. Because of the importance of the industry, the Minister for Finance took it on himself to visit Clonmel and discuss with all shades of political opinion and business-people of all descriptions the process in Showerings-Bulmers factory in Clonmel which is a credit to Ireland.
Mr. Ferris: Instead of criticising what it does or does not do we should recognise the value it adds to the product grown in the orchards throughout Ireland, particularly in County Tipperary. When the Minister visited the factory they asked him not to single out this product for specific taxation, as happened in the previous two budgets. This time 12 months ago I protested that this industry had been singled out. All they asked this year was that they be treated the same as anybody else. That is what the Minister did in response to the jibes about having forgotten his visit. He reminded people of what the company and its directors asked for and received.
Mr. Ferris: I would have preferred if it had escaped, but as long as it is not treated differently the company will survive because it is efficient and is expanding and that is welcome. I have heard many criticisms about the cost of drink. Deputy Gilmore stated that wine is much cheaper in Europe than here, but tourists frequently say that this country is much cheaper for many items, including in some cases, drink.
Mr. Ferris: The Deputy might wish to give it to them for nothing. Deputy McDowell suggested that we are using taxation to pay for spending. Of course that is true. If this Government is to create jobs it will have to spend public sector money to become involved in the construction industry and in the other developments Members from all sides of the House have requested it to become involved in. It is being suggested now that such jobs should not be paid for.
Mr. Ferris: Perhaps Deputy McDowell heard a different budget speech from that which the rest of us heard. The majority of people realise that the budget is aimed at low income earners and the unemployed. It will give them an opportunity to return to the workplace. I am sure nobody will begrudge the small increases introduced in the budget. I would have preferred if the cider industry had not  been touched but as long as it is treated equally the company will accept the change.
Mr. Finucane: In order to give people an opportunity to contribute I will confine my remarks to the matter before us. In justifying increases in alcohol in a previous budget, a former Minister of State stated that he could not get into some pubs in Dublin. The Government's attitude in this budget probably reflects his experience. The price increases may be appropriate for pubs in Dublin but the scene is different in rural areas. When debating the Road Traffic Bill a Government spokesman expressed concern about the changes in the drink driving laws and their effects on rural pubs. Those of us who spent Christmas in the country will have seen the impact of those changes and will have heard publicans speak of the change that has taken place in regard to drinking. In that context an increase such as that introduced in the budget is unjustified. Our rate of tax on drink is already the highest in Europe.
There is a lack of concern on the part of the Government reflected not alone in this increase but also in the 8p increase in the price of a packet of 20 cigarettes. For many years we have been advertising the health hazard associated with cigarette  smoking. Every year we have been assailed with data from ASH Ireland encouraging us to penalise tobacco smokers to prevent them from smoking because of the health risks involved. People will make up their own minds about smoking and many enjoy a cigarette. How many of those who are unemployed or on training courses regard a cigarette as a safety valve to keep them sane? The 8p increase on a package of 20 cigarettes is totally unjustified. I understand that a total of £570 million per annum accrues from tobacco smoking and the Exchequer does not reject that money. It is glad to have it. An increase of 8p on a package of 20 cigarettes is punitive in the extreme and illustrates a lack of sensitivity on the part of the Government. Once again it opted for the easy targets.
Mr. Davern: ——I have never suffered much from the malaise of the costs of the legal profession, so I would ask Deputy McDowell not to come sour on me. I am delighted the price of cigarettes has increased; it should have been a higher increase.
The Government has not increased the price of drink for the past five years; it actually decreased it. I heard somebody on the radio this morning ask if anybody had ever heard of the Government reducing taxation. It did so two years when it decreased the VAT on drink from 25 per cent to 21 per cent, but I did not see the result of that decrease in my local pubs. That should have meant a reduction of 1p or 2p on the price of a pint, but it was not passed on to the consumer. The hypocrisy of Deputy McDowell today is somewhat sickening.
Mr. Davern: I am talking about the average fees for a barrister, not specifically about Deputy McDowell. The taxpayers pay for those costs. However, in fairness barristers deserve what they earn because of the hours and the work they put into their job. I am talking about the basic consumer. I would advocate an increase of £5 on the packet of cigarettes.
Mr. Davern: My chest is in a very bad condition because of smoking. I do not approve of smoking, but I have a problem giving it up. I tried on many occasions but failed. I often reflect on the words of an old man who once told me that he would smoke until cigarettes cost £1 a packet but he continued to smoke. I have no objection to increasing the price of drink or cigarettes, but I am glad that cider was not singled out. I appeal to publicans to reduce the price of cider and their profit margins on it. They are screwing the public in that regard.
Some Deputies expressed the view that the increase in the budget related to the price of the product but that is not so. I would advise Deputy Carey that the total tax take on a pint of beer was 48 per cent when we had a Fine Gael Minister for Finance and in 1994 the figure is 9.5 per cent less. I could give the Deputy other examples if time permitted. Deputy Carey, and others, expressed the view that the increase would affect consumption. In 1993 the volume increases in respect of spirits was 5.9 per cent, in respect of wine, 3 per cent and in respect of cider, 27 per cent.
 Regarding Deputy Gilmore's point about EU prices for wine, it is easy in Opposition to demand a zero tax rate on wine as is the case in the EU. Such a measure would represent a £40 million gap in tax revenue and the Deputy might indicate in the next part of the debate from where he would replace that figure of £40 million. His point highlights the hypocrisy of those in Opposition who criticise everything and offer nothing better in return.
The Taoiseach: I would say to Deputy Carey and others concerned about budget measures eating into the income of social welfare recipients that social welfare benefits have increased at a rate higher than the rate of inflation and the increases to which I refer are lower than the rate of inflation.
Regarding questions on property tax and so on, the main point made by Deputies Yates and McDowell was that this is a tax and spend budget. If I give the Deputies a few facts to mull over they might admit that their information in that regard is wrong. The total tax as a percentage of GDP given by a Fine Gael Minister for Finance in 1984 was 32.3 per cent. Deputy Yates said that this Government increases the percentage every year but that is not the case; our percentage tax of GDP this year is 31.1 per cent.
The Taoiseach: This Government has the lowest rate of projected public expenditure for 1994 of any of the 12 members of the EU. Our rate of public expenditure as a percentage of GDP for 1994 is 42 per cent.
The Taoiseach: The truth always hurts. Deputy McDowell questioned the reason for the property tax, the reduction in VHI relief and the reduction in mortgage interest relief. When Deputy McDowell was not a Member of this House and was outside telling Members what to do the Members were asking for the implementation of the recommendations of the Culliton report and other reports. The Commission on Taxation, the European Commission, the IMF, the OECD, Culliton and the NESC all recommended curtailment of the discretionary reliefs and I know that is also the official policy of the Progressive Democrats.
The Taoiseach: I do not know what point the Deputy is seeking to make. A broadening of the tax base also represents  his party's policy. Is the Deputy reneging on his party's policy this evening?
Mr. R. Burke: Before the Taoiseach finishes I thought he might like to comment on Deputy Gilmore's concern for the lady in receipt of a £60 income whose main concern related to the 10p increase on the bottle of wine.
Acting Chairman: As it is 10.45 p.m. I am required to put the following question in accordance with the order of the Dáil of this day: “That Financial Resolutions Nos. 1 to 5, inclusive, are hereby agreed to”. The Dáil divided: Tá, 87; Níl, 57.
Browne, John (Wexford).
Burke, Raphael P.
de Valera, Síle.
Gallagher, Pat the Cope.
Higgins, Michael D.
Hilliard, Colm M.
Kitt, Michael P.
Ó Cuív, Éamon.
Browne, John (Carlow-Kilkenny).
Connor, John. Fitzgerald, Frances.
Harte, Paddy. Higgins, Jim.
De Rossa, Proinsias.
Dukes, Alan M.
Durkan, Bernard J.
Finucane, Michael. McManus, Liz.
Noonan, Michael. (Limerick East).
O'Malley, Desmond J.
Sheehan, P. J.
Tellers: Tá, Deputies Dempsey and Ferris; Níl, Deputies E. Kenny and Boylan.
Question declared carried.
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