Section 10 deals with the increase in the tax on beer. According to the Budget statement, at the beginning of the year, the Minister for Finance expected to get from the tax on beer £4,819,000. That represented an increase of £1,800,000 over the amount of money obtained through the tax on beer before the war. The present proposal means that on the five months' consumption for this end of the annual period the Minister proposed to raise another £830,000. As has been stated by Deputy O'Higgins last night, and by other speakers when we were dealing with the tax on spirits yesterday evening, this is a tax that hits two classes of people particularly, including the ordinary workers, those people whom Deputy Corry yesterday thought were outside the spirit class and would be unaffected by a tax on spirits. It affects the consumer of beer and stout and the retailers of beer and stout. The position with regard to the country is, where the standard drink is stout, that the pint will now cost 1/1.
Deputy O'Higgins stated yesterday that a man will have to break into the second shilling if he is in the country and takes the standard drink of the country; in order to get one pint of stout he will have to break into the second shilling. The tax there is 6½d. The standard drink in Dublin is porter. You need not break into the second shilling to get a pint of porter. It costs 11d. and the tax is 5¾d.
The point has been made that in the working out of the new taxes a certain amount of discrimination exists between the beer consumer in the country and the beer consumer in Dublin, as the tax operates at the present time. The objection to raising the price of beer and stout has been put in a variety of ways. When the Government came into office they suggested that we should do with very little tea and we could substitute milk and light beer. It is providential for a lot of people that they did not change their taste in accordance with the desire as expressed by the Fianna Fáil Government at that time. If they had to take their beer in the morning and in the evening the cost of living would be raised very considerably.
The Government have indicated in various statements that tobacco was a thing that might be left out of the new cost-of-living figure. I do not know whether porter or stout will be left out of it, too. So far as the general run of workers is concerned, there is a substantial increase in their living costs when such a tax as this is put on a standard article of diet. So great has been the effect on consumption that I have had reports from various parts of the country and they show that there has been a fall of about 40 per cent.; various descriptions have been given of the trade in parts of the country which go to show that the imposition of this tax has been a great shock to consumers.
In 1944 the Minister for Finance, when making his Budget Statement, said that it was only then that the revenue from beer and spirits was recovering from the falling off in the consumption that had taken place when the increased taxation was imposed at the beginning of the war. He says in column 2128 of the report of the 3rd May, 1944:—
"The consumption of the former two items has shown rather marked expansion in the last 12 months, after some hesitancy in some earlier periods when the effect of the heavy increase in taxation was still being felt."
The position of wages generally hardly suggests at the present moment that, this year, or during the year in front of us, the consumption of beer, at any rate, is not going to suffer from the shock which it has just now got. I heard of one case in Cork of a licensed establishment which asked a Dublin establishment if they would take 30 barrels a month from them. Their consumption and sales had gone down so far that they asked a Dublin house to relieve them of the excess barrels to which they were committed. I understand that Guinness have declined to make any transfer of quotas of that kind.
The effect on the consumer is very great, but the effect on the retailers is very, very great too. The Minister indicated that as far as the tax was heavy on the consumer, he might escape it by reducing his consumption, and he is aware that the brewers are able to escape any losses or fall in profits by reducing the specific gravity of beer. The returns of the Revenue Commissioners show that between 1939 and 1946 the average specific gravity of beer has fallen by 13.2 per cent. I think that 1946 was the last figure quoted. I think that as a result of last year's harvest there has been a further reduction in the average specific gravity of beer. The brewers are able to shed their losses in that particular way but the losses which the retailers are likely to face as a result of the tax will be very considerable.
The Minister must be aware that the price paid for such licensed establishments, since the tax was announced, has fallen to a very considerable extent. There has been a substantial capital depreciation in the property held by the owners of licensed premises as a result of this tax.
The Revenue Commissioners invariably challenged the owner of a licensed premises when, in submitting his income-tax accounts, the gross profits were less that 33? per cent. The Revenue Commissioners expect that the average profits will be 33? per cent. This situation has been examined and it has been very clearly indicated from the audited figures that, with the additional tax now in force under Section 10, the gross profits of a licensed establishment are going to be substantially below that percentage.
I think it is generally held, if you take the case of an average licensed house in Dublin or in the country, that two-thirds of the sales are stout and beer. It has been figured out that for bottled Guinness the percentage of gross profit on the turnover pre-war was 42.64 per cent. After the imposition of the present tax, it is calculated that the post-emergency Budget percentage of gross profit on the turnover will only be 36.2. The gross profit on the turnover of draught double-X was pre-war 31.17 per cent. but the post-emergency Budget has reduced it to 23.6 per cent. The gross profit on the turnover in the sale of draught single-X has been reduced from 26.78 per cent. to 19.1 per cent.
The Minister has to take into consideration, as well as the burden placed on the consumers of beer and stout, that this emergency tax is hitting a certain class of establishment in the country that provides a very necessary service. There are something like 12,000 families dependent on the running of licensed establishments and this is hitting them in a very severe way. They are made to bear a substantial reduction in their trade on the one hand and a substantial payment of additional tax on the other.
These are two matters that he ought certainly to have taken into consideration and examined before the tax was put on. We have indicated that we consider these taxes an outrage on the people in the present circumstances. While that is the first case which has to be made in regard to the tax on beer, a very, very strong case can be made to the Minister to review the whole situation and remove the tax off beer if he can remove it off nothing else.