Tuesday, 7 April 2009
Dáil Eireann Debate
|Description of Mineral Oil||Rate of Tax|
€508.79 per 1,000 litres
|Aviation gasoline||€508.79 per 1,000 litres|
Used as a propellant
€409.20 per 1,000 litres
|Used for air navigation||€409.20 per 1,000 litres|
|Used for private pleasure navigation||€409.20 per 1,000 litres|
|Kerosene used other than as a propellant||€00.00|
|Fuel oil||€14.78 per 1,000 litres|
|Other heavy oil||€47.36 per 1,000 litres|
|Liquefied Petroleum Gas:
Used as a propellant
€63.59 per 1,000 litres
|Other liquefied petroleum gas||€00.00|
For business use
€4.18 per tonne
|For other use||€8.36 per tonne|
Resolution No. 3 provides for excise duty increases in tobacco products with effect from midnight tonight. The increase amounts to 25%, inclusive of VAT, on a packet of 20 cigarettes with pro rata increases on other tobacco products.
The price of a packet of 20 cigarettes, as the most popular price category, will increase to around €8.35. The price of cigarettes in the State will continue to be the highest in the EU, for example, some €2 per packet dearer than in the UK and more than twice the average price of the EU as a whole. The overall tax take from a packet of cigarettes following this increase will be €6.67, which is just under 80% of the retail price. The excise duty component is €5.19, which is 2.5 times the average excise duty of €2.07 for the EU as a whole as at 1 January this year. The high price of cigarettes in Ireland reflects the action taken over the years to ensure taxation policy plays a central part in the Government’s strategy to protect public health by discouraging smoking. Given the high levels of taxation and prices compared to other countries, a larger increase in excise duty would not have been appropriate at this stage. Account has been also taken of the fact that it could make Ireland a more attractive location for cigarette smuggling.
The Revenue Commissioners have applied significant resources to tackling all aspects of cigarette and tobacco smuggling and they have engaged the tobacco industry in this matter. This measure is estimated to yield €32 million in 2009 and €45 million in a full year and have a consumer price index, CPI, impact of 0.11%. The increase is expected to reduce cigarette consumption by approximately 0.8% in the next 12 months.
Financial Resolution No. 4 provides with effect from midnight tonight for an increase in mineral oil tax on auto diesel, which, when VAT is included, amounts to 5 cent on a litre. The same increase is applied to jet kerosene for non-business use and to diesel use for private pleasure navigation. This is the first increase to the rate of mineral oil tax on auto diesel since December 2003. Following the increase, auto diesel is expected to be approximately 10 cent per litre cheaper than in Northern Ireland. The expected yield from this increase is approximately €70 million in 2009 and €100 million in a full year. The CPI will increase by approximately 0.4%.
Deputy Simon Coveney: I do not have a difficulty with the proposed measure relating to tobacco, although I am sceptical that this will result in an 8% reduction in the consumption of cigarettes. The evidence is that as the price has increased, there has not been a corresponding reduction and while I hope there is a corresponding increase in the tax take, I have doubts about that as well, as the black market for cigarettes in Ireland is expanding and developing. We have a battle on our hands to combat that illegal industry as people’s incomes come under more pressure. I encourage the Government to ensure the policing measures adopted regarding cigarette smuggling are examined and beefed up.
My reason for being present relates to the excise duty increase on diesel. I accept the Government needs to find money from somewhere and it makes sense to target this area. My problem is that the Government is targeting diesel but not petrol. I understood clearly the rationale in this year’s budget was that a price advantage would be proffered on diesel over petrol on the basis of emissions. Presumably, this was due to the influence of the Green Party. The decision has been reversed. It is a fact that, in equivalent sized engines, diesel produces significantly lower emissions than petrol. The Government made the sensible decision to ensure a price advantage for diesel over petrol to encourage people to buy diesel engines to drive down emissions, to improve the efficiency of engines and so on because diesel was more expensive than petrol in the autumn of last year for supply and demand reasons primarily. Why has the Government reversed this policy? If there is an issue regarding competitiveness and fuel prices north and south of the Border, surely that applies to diesel as well as petrol. The Government’s policy in this year’s budget was correct to give diesel an advantage over petrol from an excise perspective. Why has it reversed this policy?
Deputy Liz McManus: I do not want to oppose the proposed excise increase on cigarettes because price can have an influence on young people and ensure they do not take up smoking. It will not make a difference as a preventative measure for older people. However, money collected in this way should be used to help people to give up smoking since that does not happen currently. I strongly recommend such provision be made, as we will not see a reduction in numbers smoking otherwise. The smoking ban initially led to a reduction in the numbers smoking but then numbers began to increase.
It is extraordinary that an increase in the price of diesel has been proposed in this supplementary budget. What has happened to the Green Party Ministers? They do not attend the House for the Order of Business anymore and they do not appear to have had an influence on the preparation of the budget. I do not know whether they are even interested in what is going on. Fianna Fáil has taken over 100% but anybody with an interest in reducing carbon emissions and being more environmentally friendly would not target diesel for an excise duty increase. Until recently, diesel was more expensive than petrol, which was unprecedented, and we had difficulties in ensuring we could sell the message that we wanted to reduce carbon emissions and people could make a choice to their benefit.
I refer to the reality in my constituency of Wicklow. A public transport service is not available in large tracts of the county. It is not as if people can make a choice to use public transport. That is not an option for thousands of people living in County Wicklow but many commute to Dublin or travel long distances to work elsewhere. These hard working people have been hammered in this budget through increased income and health levies, cutbacks in child care provision and a range of other blows. It will take people a day or two to come to terms with what has been taken from them in this budget. This increase is yet another blow. The Minister can say it amounts to only 5 cent on every litre but that will ensure €100 million is collected in a full year. The ordinary commuter will pay that amount. As it is, the Government takes a sizeable chunk of the cost of petrol, gas and other fuels. It is not as if the State is not taking a good percentage out of every litre bought but, in this instance, in addition to the taxes the Government is imposing on the average working family, it is imposing a tax on them every time they use a diesel engine car, which is unacceptable.
Deputy Aengus Ó Snodaigh: I have no problem with the increase in the cost of cigarettes, as I was hoping the Minister would announce a higher increase. Even though that would not be popular, there is logic to it as it would discourage people from smoking and the money could be used specifically to help the health service.
There is absolutely no logic, however, to the retrograde step of increasing the excise duty on diesel. It is an economically retrograde step for small industries that depend on haulage to keep their markets in the Six Counties and Britain where the sterling-euro exchange rate causes them to struggle. This is an added cost.
This also affects public transport. This budget is already screwing Bus Éireann and Dublin Bus by way of the substantial reduction in the subvention for Córas Iompar Éireann despite its being one of the lowest public transport subventions in the European Union. We have all been lobbied by taxi drivers who are struggling. Most of the taxis in the State run on diesel which is logical. Those drivers are being hammered again by the increase in the cost of diesel. This is the opposite of what the Government should have done. It should intervene to impose a moratorium on taxi plates. The drivers do not have alternative employment but are stuck driving taxis with ever-increasing costs which they will transfer to the public. Taxis are dear enough since the Government recently agreed an increase in taxi charges with the Taxi Regulator even though the unions did not look for that increase. The Minister for Enterprise, Trade and Employment should examine this again. It is not logical and is the wrong road to take.
Deputy Eamon Gilmore: This section of the budget caused me some surprise. Will the Minister for Enterprise, Trade and Employment tell us the expected take from the increases in excise in the budget? I thought there was scope for the Government to do more in this area than it has done because it would raise money immediately and do so more fairly than applying levies that hit the pay packets of working people.
Strong cases have been made on health grounds for increased excises on tobacco and alcohol. The Minister for Finance referred in his statement today to cross-Border smuggling in respect of alcohol, tobacco and, I think, petrol. RTE recently screened a very good documentary about smuggling, particularly of cigarettes which made clear that enforcement is the problem. The customs and excise officers catch some of the smugglers but are not able to bring them to court or when they do the fines are so derisory as to make a joke of the process. If the Government made some serious effort on the enforcement side it would be able to get a higher take in this area.
I agree with my colleagues who have spoken about the bizarre decision to increase the excise on diesel but not on petrol. The Minister rightly spoke today about competitiveness and the need to get costs down in the economy and to do things that will encourage employment. Diesel is employment-related. We live on an island and so have high transport costs but this measure will add to those costs and will have a knock-on effect on employment.
Was the Green Party at the Cabinet table when decisions were made on this budget? I can find some evidence in the statement of the Government’s having taken on board some of the suggestions Fine Gael and the Labour Party made in our respective pre-budget statements. I can find no evidence of anything that is even remotely close to something the Greens might have wished to achieve in this budget. This measure in particular baffles me completely because I would have thought, for the reasons that Deputies Coveney and McManus have stated, that it would have been the reverse.
Deputy Arthur Morgan: I have no problem with the tobacco increases. I would even be tempted to advocate a higher charge because of tobacco’s adverse effect on people’s health and all the consequences. If that happened, however, I would have concerns about the enforcement issues the previous speaker has addressed.
The diesel increase is unfortunate. The Government probably went for a quick fix here on the basis that sticking 5 cent on to a litre would throw up €100 million, without sufficiently considering its impact on competitiveness and businesses across the land. Everybody who stands up here talks about how hard-pressed business is. We all know that is fact, not waffle. Cash turnover, calling in debt and so on are important issues for businesses which were probably never as cash-strapped as now. What products are not transported? Even on a small island such as this transport costs are astronomical. Those who work in the transport sector are still reeling from the major impact of high oil prices in recent years. Now that the oil prices are beginning to return to a manageable margin this excise is a retrograde step.
It is designated as a ‘mineral oil tax’ which raises an interesting question. What if the Government were to introduce a decent tax on our mineral reserves? That would be a more strategic, more far-sighted and profitable application than going after people in the transport business and small companies. The Corrib field is worth at least €10 billion yet the rights to it were given away by people who are no longer here so there is no point harping on about that. Unfortunately, this move is symptomatic of the Government’s propensity to move to the easy option to grab a few bob when a much more strategic approach could and should have been taken. It would have had more merit. This move sets competitiveness back again.
Speaking as a doctor and a non-smoker, I can see the case for increasing excise on tobacco from a health point of view. I am concerned, however, by the Government’s projection that it will raise €32 million from this. I do not think that will happen. There is a law of diminishing returns with taxation. There is a significant amount of cigarette smuggling as we all know. The year on year, monthly returns from tobacco are interesting. Last month was the first in which the year on year return from excise on tobacco went down. That might perhaps be because of a sudden reduction in smoking, for the first time ever, but the likelihood is that it is due to fraud and smuggling. This is one of the many holes in the budget. Revenue from excise on tobacco will fall for several reasons and the Government will have to address that. It will have to come back in its mini-budget in June or September, or whenever it will introduce the next budget——
Deputy Leo Varadkar: ——and address that issue again. The monthly year on year returns from excise on alcohol are falling because of the law of diminishing returns. I will not be two-faced about diesel. My party proposed to increase excise on diesel by more than the Government proposed. However ours was part of an overall package that did not hammer middle-class families through massive increases in taxation, which the Government has done here. That is horrendous. This is a tax and spend budget from the 1980s. The Government is taking €4,000 from the pockets of the average family and €2,500 from the average working person. It is recreating all those problems we had in the 1980s between PAYE workers who pay all the tax and others who can avoid it, and between those who benefit from welfare payments and those who do not.
Deputy Gilmore asked about the influence of the Greens in this budget. It is clear that the PDs’ influence is also missing from this budget because when it formed part of this Government it kept taxes down. The Government is returning to tax and spend socialism and will tax people out of their jobs and onto the dole queues. The mistakes the Government has made are huge. I expect we will have another mini budget in a few months time and if not we will be faced with a much greater economic crisis as a consequence of this budget.
Deputy Emmet Stagg: The Irish people use three general drugs as social drugs of choice in large quantities, namely alcohol, cannabis and cigarettes or tobacco. If the Government wanted to stop people smoking cigarettes, and did not just want to raise revenue, it would put €5 on each packet. That would stop people from smoking. This is simply a revenue raising exercise. As far as I can calculate the Government takes in €1.35 billion per year in cigarette taxes. I am not sure if that is accurate but I did a rough calculation on what the Government gets on this increase, and I know the amount I pay every day for a packet of cigarettes and roughly the revenue the Government takes from that packet. The Government should respect the 1 million smokers in the country and not denigrate them at every turn. They are good cash cows for revenue and should be treated with respect and not as the Government usually treats them in this House.
Deputy Emmet Stagg: I also suggest the Minister consider legalising cannabis and taxing it in the same way as cigarettes. The Government might then be able to meet some of the other costs it has that it has not been able to meet because cannabis is nearly as widely used as tobacco and alcohol, despite the best efforts of the authorities to prevent it.
I thought the excise increase on diesel was a carbon tax when I heard it, but the Green Party reduced the tax one pays to county councils for having a diesel car and Fianna Fáil took it back with this increase. Obviously the Greens were not at the meetings.
Deputy Emmet Stagg: The commuters in my constituency will not be at all pleased that the Greens let them down again by not being present at the meetings where the carbon tax reduction on nice, clean cars was neutralised.
Deputy Seán Barrett: As we are sitting until midnight I fail to see why we are all rushed and have not five minutes to make a contribution. It is ridiculous and is typical of what happens in this House. We are being rushed.
Deputy Seán Barrett: With respect, this is one example of the lack of direction in this budget. We do not know where we are going. The people hit by this are those who commute the most and commercial enterprises. We are driving up costs again. As my colleagues said, we went to the trouble of establishing an Oireachtas Joint Committee on Climate Change and Energy Security. The Greens boasted that they were instrumental in the setting up of this committee, but at every hand’s turn we do the direct opposite to try to deal with the issues at hand. Transport is one of the greatest emitters of CO2. Rather than encouraging people to use diesel instead of petrol we raise the cost. There is no attempt to meet the targets we set for ourselves and which are being set for us. We are going to find ourselves spending hundreds of millions of euro on fines for not meeting our targets.
If this were part of a plan I could understand it, but I wish we would stop wasting our time and not pretend we are trying to do something about CO2? emissions. We should lead by example. An all-party committee went to the trouble of producing a Bill on offshore renewable energy. We launched it nearly two months ago and have not heard a dickie bird since from the Government. An all-party committee produced a piece of legislation to modernise——
Deputy Seán Barrett: I am giving an example of trying to do something, and then seeing these measures that are totally contrary to what we are trying to do introduced in the budget, never mind the problem of increasing costs for industry.
Deputy Thomas P. Broughan: The overall impact of this budget is profoundly deflationary on an economy that is already going down the tubes. Resolution No. 4 on transport will increase the magnitude of that deflationary impact. The tragedy is that we seem to be doing it to bail out the friends of the Tánaiste, her Government and party.
Deputy Thomas P. Broughan: The documents on the banking rackets are profoundly disturbing. They are the most outrageous feature of this outrageous budget. Resolution No. 4 is another whammy for public transport and the transport industry after a series of measures this Government has taken. For example, all last year the Government had the opportunity to do something about the withdrawal by the European Union of the fuel rebate, to negotiate some sort of continuing support for public transport at EU level, and it failed to do that. Here again we have another measure which will make things much more difficult. At the same time in the capital budget we are removing approximately €320 million of spending on transport. The net impact will be a smaller subsidy for public transport. The most sinister phrase in the budget on capital spending is, “in public transport the way ahead will also see some deferrals and rescheduling of other programmes”. This presumably refers to the whole range of public transport initiatives including perhaps, despite the Minister, Deputy Dempsey’s recent speeches, metro north, the interconnector, the western rail corridor, the Navan rail line and so on. Are they all in danger as a result of today’s debacle? I oppose Financial Resolution No. 4.
|Ahern, Bertie.||Ahern, Dermot.|
|Ahern, Michael.||Ahern, Noel.|
|Andrews, Barry.||Andrews, Chris.|
|Ardagh, Seán.||Aylward, Bobby.|
|Blaney, Niall.||Brady, Áine.|
|Brady, Cyprian.||Brady, Johnny.|
|Browne, John.||Byrne, Thomas.|
|Calleary, Dara.||Carey, Pat.|
|Collins, Niall.||Conlon, Margaret.|
|Connick, Seán.||Coughlan, Mary.|
|Cregan, John.||Cuffe, Ciarán.|
|Cullen, Martin.||Curran, John.|
|Dempsey, Noel.||Devins, Jimmy.|
|Dooley, Timmy.||Fahey, Frank.|
|Finneran, Michael.||Fitzpatrick, Michael.|
|Fleming, Seán.||Flynn, Beverley.|
|Gallagher, Pat The Cope.||Gogarty, Paul.|
|Gormley, John.||Grealish, Noel.|
|Hanafin, Mary.||Harney, Mary.|
|Haughey, Seán.||Healy-Rae, Jackie.|
|Hoctor, Máire.||Kelleher, Billy.|
|Kelly, Peter.||Kenneally, Brendan.|
|Kennedy, Michael.||Killeen, Tony.|
|Kirk, Seamus.||Kitt, Michael P.|
|Kitt, Tom.||Lenihan, Conor.|
|Lowry, Michael.||McDaid, James.|
|McEllistrim, Thomas.||McGrath, Mattie.|
|McGrath, Michael.||McGuinness, John.|
|Mansergh, Martin.||Martin, Micheál.|
|Moloney, John.||Moynihan, Michael.|
|Mulcahy, Michael.||Nolan, M. J.|
|Ó Cuív, Éamon.||Ó Fearghaíl, Seán.|
|O’Brien, Darragh.||O’Connor, Charlie.|
|O’Dea, Willie.||O’Flynn, Noel.|
|O’Hanlon, Rory.||O’Keeffe, Batt.|
|O’Keeffe, Edward.||O’Rourke, Mary.|
|O’Sullivan, Christy.||Power, Peter.|
|Power, Seán.||Roche, Dick.|
|Ryan, Eamon.||Sargent, Trevor.|
|Scanlon, Eamon.||Smith, Brendan.|
|Treacy, Noel.||Wallace, Mary.|
|White, Mary Alexandra.||Woods, Michael.|
|Broughan, Thomas P.||Costello, Joe.|
|Ferris, Martin.||Gilmore, Eamon.|
|Higgins, Michael D.||Howlin, Brendan.|
|Lynch, Ciarán.||Lynch, Kathleen.|
|McGrath, Finian.||McManus, Liz.|
|Morgan, Arthur.||Ó Caoláin, Caoimhghín.|
|Ó Snodaigh, Aengus.||O’Shea, Brian.|
|O’Sullivan, Jan.||Quinn, Ruairí.|
|Rabbitte, Pat.||Sherlock, Seán.|
|Shortall, Róisín.||Stagg, Emmet.|
|Tuffy, Joanna.||Upton, Mary.|
|Last Updated: 07/10/2010 13:36:52||Page of 336|