Dáil Éireann debate -
Wednesday, 10 Jun 1931

Vol. 39 No. 1

Financial Resolutions. - Customs and Excise.

Mr. Blythe

I move:

(1) That in lieu of the duties of customs chargeable under Section 16 of the Finance Act, 1924 (No. 27 of 1924), there shall be charged, levied, and paid on all preparations made from or containing cocoa in any form imported into Saorstát Eireann on or after the 6th day of June, 1931, a customs duty at the rate of six and three-fifths pence on the pound, in addition to any duty which may be chargeable in respect of any spirits or saccharin contained in any such preparation but in lieu of any duty which might otherwise be chargeable on any other ingredient contained in any such preparation.

(2) That the provisions of Section 8 of the Finance Act, 1919, shall apply to the duty mentioned in this Resolution with the substitution of the expression "Saorstát Eireann" for the expression "Great Britain and Ireland," and as though preparations made from or containing cocoa in any form were included in the Second Schedule to that Act in the list of goods to which five-sixths of the full rate is made applicable as a preferential rate.

(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).

This Resolution proposes to increase the duty on chocolate confectionery from 6d. to 6 3-5d. per lb or, taking the preferential rate, which is really the operative rate, from 5d. to 5½d. The Resolution is consequential on the increase in the sugar duty by ½d. On a previous occasion the sugar duty was increased by ¼d., but it was not at that time thought necessary to make any change in the duty on confectionery or on chocolate and cocoa preparations. Now, however, that the position, as compared with the position prior to April, 1928, is that the duty on sugar is up by ¾d. per lb., that has decreased the margin of preference which the chocolate manufacturers have. This increase of ½d. does not just exactly restore the protection position as it was prior to 1928, but brings it very near it. There are large classes of chocolate which contain, roughly, 50 per cent. of sugar and 50 per cent. of cocoa. In these cases the margin of protection which the product had in 1925 was 4½d. It is now 4?d. The increase, therefore, by ½d. per lb. will leave them the one-eighth of a penny better off from the point of view of protection than they were in 1925. Other classes of chocolate, however, contain as much as 75 per cent. of sugar and only 25 per cent. of cocoa. In the case of these classes, the effective protection in 1925 was 4¼d. per lb. It is now reduced to 3 11-16d. The increase of ½d. in the duty would still leave them one-sixteenth of a penny worse off than they were in 1925. The other classes will be about one-eighth of a penny better. We simply introduce a figure that, as far as we could do it, restores the position of the chocolate manufacturers in the matter of protection to the position in 1925 and neutralises not merely the effects of the recent increase of ½d. in sugar, but also to a large extent the previous increase of ¼d.

Mr. Flinn

What is the amount of the increased revenue the Minister expects to get from the alteration?

Mr. Blythe

I could not say, but it is very small.

Mr. Flinn

Can the Minister put a figure on it? We are varying a duty and some information should be given.

Mr. Blythe

It would be entirely speculative, because it is really a question whether or not the failure to adjust this duty would increase the imports of foreign-made chocolate. Certain manufacturers here have urged that they would not be able to compete if we did not adjust the duty and that considerable quantities of foreign chocolate would come in. If their contention is correct, we would actually lose duty by this increase. On the other hand, we have not fully accepted their view, but I think it may be taken, having regard to the possibilities on both sides, that there will be scarcely any appreciable change in actual revenue as a result of this.

Mr. Flinn

May I put the question in another form? On the basis of the present imports of chocolate, what would be the effect?

Mr. Blythe

I have not the figures. I think we could not accept that as the exact basis. I think it will affect the imports to some extent.

Mr. Lemass

I should like the Minister to tell us whether the proposal meets the wishes of the manufacturers or whether any representations were made to him to change the basis of the duty from a flat rate per lb, to an ad valorem rate. The flat rate works out of course to afford a much greater protection to the manufacturers of the cheaper classes of chocolate and a much lower rate of protection to the manufacturers of the better class, and it is largely the better class which continues to be imported.

Mr. Blythe

These representations have frequently been made, apart from any effects of the recent increase in the sugar duty, and we have refused them because of the difficulty in administration, and because of the need for extensive sampling of the various consignments, many of which might be small. Generally speaking, we would not be prepared to adopt that basis because of the cost, of difficulties and delays that would be involved in the administration of it. As regards the present increase, I think the chocolate manufacturers would like more, but I think we are giving them sufficient to put them, broadly speaking, in the position in which they were before, and I do not propose to do any more.

Mr. Lemass

Is it not a fact that in the higher grade chocolate the protection afforded by this duty is practically negligible?

Mr. Blythe

It is true it has not been very effective, but I would not say it is negligible. It is true that in certain grades the home manufacturers have not succeeded in getting the market, but it has given a fairly considerable degree of protection, and if they want more, they must make a case before the Tariff Commission. As Minister responsible for the revenue collection I would oppose in the case of this particular article an ad valorem duty. An ad valorem duty was in existence before when chocolates and other sweets were charged on their sugar content, and the difficulty and cost of administration was very considerable. When we put on a flat rate on chocolate and sugar confectionery, it had the effect of producing a saving in staff and expenditure in collection.

Mr. MacEntee

Is the Minister certain that the basis of sugar content was a correct basis to go on and——

Mr. Blythe

I am sorry to interrupt the Deputy, but it was a basis much the same in administration as the ad valorem basis would be, and presented the same difficulties.

Mr. MacEntee

I do not see how that could really be so, because in regard to a number of the higher priced chocolates, the method of packing, and that sort of thing, represents a very considerable factor in the sale value of the chocolates. Does the Minister disregard that altogether? If he does he is giving the foreign competitor a very decided advantage over the home manufacturer, which arises in a number of ways. First of all, as a general rule the foreign manufacturer with a big concern is able to manufacture most of his packing material. The home manufacturer has to buy his packing material, and because he is buying in small quantities, he has to pay higher prices than the foreign manufacturer. I suggest that the Minister should also consider it from this point of view. If the ad valorem basis were adopted, then, not only would the whole of the sugar and chocolate manufacture be taken into consideration, but also the value of the packing in which the chocolate is delivered. If that were done I think a good many of the difficulties in regard to sampling, which the Minister has experienced in administering the duty, would disappear, because so far as the higher grade chocolates are concerned, at any rate they are on more or less established lines and in qualities, the price of which are known not only here, but on the other side of the water, and which in any event could be easily ascertained. If the Minister would consider, so far as packed chocolates, ready for delivery,— and that is the way most of them are sold now—going back to the ad valorem basis, I think he would find these difficulties would disappear.

Mr. T.J. O'Connell

I would like to ask whether we are to take it that this tax is confined entirely to the article that is referred to as chocolate, and which is sold as sweets, because I am just a little bit suspicious about this statement: "preparations made from or containing cocoa in any form." Does that refer to cocoa used as a beverage?

Mr. Blythe

Yes, but it is a small matter.

Mr. O'Connell

I would like to know how small. Will it increase the price of this essential article of food? I say "essential," because it is used in connection with school meals. It is the article almost entirely used as a food in connection with the School Meals Act.

Mr. Lemass

Do they not use Irish-made cocoa?

Mr. O'Connell

I could not tell. I did not know there was Irish-made cocoa.

Mr. Blythe

There is.

Mr. O'Connell

It is the form of this Resolution that I am speaking of—all "preparations made from or containing cocoa in any form." I want to know what the position is. I am rather suspicious about anything that is consequential on the increase of the sugar tax. If it merely affects a luxury article, such as chocolates ordinarily would be, I would not myself be opposed to it. But I want to be clear upon the point.

Mr. Blythe

It will affect cocoa too. But really we made the change because of the effect on the chocolate manufacturers' position. It will go beyond that to the powder cocoa to which Deputy O'Connell referred. However, the increase there is very slight, only a halfpenny in the lb. And there is the home manufactured brands, but I do not think it is worth splitting up the duty and exempting some classes of articles.

Mr. O'Connell

It is on the same principle as the sugar tax.

Resolution put and declared carried.

Resolutions ordered to be reported.

The Dáil went out of Committee.

Resolutions reported.

Mr. Blythe

I would like if the report of the Resolutions could be taken now, because I have the Finance Bill with the printers with these sections in it.

Mr. O'Connell

I would not like to agree to the Report Stage to-day until. I have an opportunity of examining the effect of these taxes. I did not divide the House on the last Resolution because I am not sure what the effect is, because I have not time to examine it.

Mr. Blythe

I do not want to press the matter unduly, but, of course, the Deputy could object, and move an amendment if he wished on the Committee Stage of the Finance Bill itself.

Question—"That the Resolutions, as reported, be agreed to"—put and agreed to.