Dáil Éireann debate -
Tuesday, 14 Jun 1966

Vol. 223 No. 3

Financial Resolution No. 2: Customs and Excise—Tobacco.

Mr. J. Lynch

I move:

(1) That there shall be charged, levied and paid on tobacco imported on or after the 15th day of June, 1966, a duty of customs at the following rates, that is to say:

(a) for every 1b. of unmanufactured tobacco containing 10 per cent or more by weight of moisture —3s 5d,

(b) for every lb. of unmanufactured tobacco containing less than 10 per cent by weight of moisture —3s 9½d,

(c) for every lb. of manufactured tobacco—4s 1?d.

(2) That—

(a) this paragraph applies to manufactured tobacco which was manufactured in, and consigned from, the United Kingdom and was manufactured therein from materials other than materials falling within Tariff Heading number 24.02 in the Schedule to the Imposition of Duties (No. 128) (Customs Duties and Form of Customs Tariff) Order, 1962 (S.I. No. 163 of 1962),

(b) the customs duty on tobacco mentioned in paragraph 1 of this Resolution shall, as on and from the 1st day of July, 1966, be charged, levied and paid on manufactured tobacco to which this paragraph applies at the rate of 3s 5d for every lb. of manufactured tobacco in lieu of the rate chargeable under paragraph 1 of this Resolution,

(c) the provisions of section 8 of the Finance Act, 1919, shall not apply to the duty imposed by this paragraph,

(d) in this paragraph "the United Kingdom" means Great Britain, Northern Ireland, the Isle of Man and the Channel Islands.

(3) That there shall, as on and from the 15th day of June, 1966, be charged, levied and paid on tobacco which is grown in the State a duty of excise at the following rates, that it to say:

(a) for every lb. of unmanufactured tobacco containing 10 per cent or more by weight of moisture—3s 5d,

(b) for every lb. of unmanufactured tobacco containing less than 10 per cent by weight of moisture—3s 9½d,

(c) for every lb. of Cavendish or Negrohead manufactured in bond—3s 5d.

(4) That as respects unmanufactured tobacco delivered from a bonded warehouse to a licensed manufacturer of tobacco on or after the 15th day of June, 1966, the Revenue Commissioners may, subject to compliance by the manufacturers with such conditions for securing payment of the duty as they may think fit to impose, permit the manufacturer to defer payment of the duty charged under paragraph 1 or 3 of this Resolution on the tobacco to a day not later than the last day of the month succeeding the month in which the tobacco is so delivered.

(5) That subject to the provisions of paragraph 6 of this Resolution, there shall be charged, levied and paid on all stocks of tobacco of every description which at five o'clock in the afternoon of the 14th day of June, 1966, are in the ownership or possession of a licensed manufacturer of tobacco and in any place in the State other than a bonded warehouse, a duty of excise, payable by the manufacturer, at the following rate, that is to say:

(a) so far as the stocks consist of unmanufactured tobacco, 3s 5d for every pound weight of the stocks, and

(b) so far as the stocks consist of tobacco (including snuff) other than unmanufactured tobacco, 3s 5d for every pound weight of unmanufactured tobacco from which, in the opinion of the Revenue Commissioners, the stocks were derived.

(6) That the duty imposed by paragraph 5 of this Resolution shall not be chargeable on any manufactured tobacco (including cigarettes, cigars and snuff other than offal snuff) as to which it is shown to the satisfaction of the Revenue Commissioners that it was at 5 o'clock in the afternoon of the 14th day of June, 1966, fully prepared for sale by retail and that either—

(i) it was not the product of any operation carried out by any manufacturer in whose ownership or possession it was at that time; or

(ii) it was at that time held as retail stock in premises used for selling tobacco by retail; or

(iii) it was at that time in transit from seller to buyer under a contract of sale:

Provided that no tobacco shall be deemed for the purposes of this paragraph to have been fully prepared for sale by retail if, according to the ordinary course of business of the person in whose ownership or possession it was or to whom it was in transit, it had still to be subjected to some further process (other than packing) before being sold by him.

(7) That every licensed manufacturer of tobacco shall not later than the 21st day of June, 1966, make a return to the Revenue Commissioners in a form approved by them giving such information as they may thereby require and, in particular, showing the quantities by weight of tobacco of every description in his ownership or possession at five o'clock in the afternoon of the 14th day of June, 1966, in any place in the State other than a bonded warehouse.

(8) That every licensed manufacturer of tobacco shall—

(a) produce, if so required, to any officer of Customs and Excise the trade books and all accounts and documents belonging to or in the possession of such manufacturer which are necessary for verifying the return made in pursuance of paragraph (7) of this Resolution, and

(b) render all reasonable assistance to such officer in the taking of an account of the tobacco which was in the ownership or possession of such manufacturer at five o'clock in the afternoon of the 14th day of June, 1966.

(9) That every licensed manufacturer of tobacco shall, immediately upon making the return required by paragraph (7) of this Resolution or on the 21st day of June, 1966, whichever is the earlier, pay to the Revenue Commissioners the full amount of the duty mentioned in this Resolution on any tobacco which was in his ownership or possession at five o'clock in the afternoon of the 14th day of June, 1966, and was chargeable with the said duty, and the Revenue Commissioners may, if they think fit, defer the payment of the duty to a day not later than the 31st day of December, 1966, upon the manufacturer giving security by bond or otherwise to their satisfaction that such duty will be paid.

(10) That every manufacturer required by paragraph (7) of this Resolution to make such return as is mentioned in that paragraph who either fails to make such a return or makes a return which is incomplete, false or misleading in any material respect or fails or refuses to do anything which he is required by paragraph (8) of this Resolution to do shall be guilty of an offence under the statutes relating to duties of excise and shall for every such offence incur an excise penalty of fifty pounds, and all tobacco in relation to which such offence was committed shall be forfeited.

(11) That where drawback is payable in respect of tobacco on which the excise duty provided for by paragraph (5) of this Resolution has been paid, such drawback shall, to the extent of the duty paid in pursuance of the said paragraph (5) as determined by the Revenue Commissioners, be a drawback of excise.

(12) That the duties imposed by this Resolution shall be in addition to and not in substitution for any other duties chargeable in respect of tobacco.

(13) That section 24 of the Finance Act, 1933 (No. 15 of 1933), shall not apply in relation to the duties imposed by this Resolution.

(14) 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).

Mr. Sweetman

Is this not much longer than the usual tobacco motion? Surely the usual tobacco motion does not have 14 parts?

Mr. J. Lynch

It is the same length.

Mr. Sweetman

Is it the same length? It may be——

Mr. J. Lynch

There is one difference, that the duty on stocks is involved here, even though it has been in other Finance Bills before—the duty on stocks of manufactured tobacco.

Mr. Sweetman

Is in, or is not in?

Mr. J. Lynch

It is in.

Mr. Sweetman

Unless the typesetting is different, it never takes quite as long as this.

The Taoiseach

They are all in the equivalent Budget Resolution of last March.

Mr. Sweetman

Were there 14 headings in that?

The Taoiseach

Thirteen.

Mr. Sweetman

There are 14 here. That is my point. There is one extra and I want to know what it is. Surely the Ranks of Tuscany can tell me that?

The Taoiseach

No. 12: it is an additional relief.

Mr. Sweetman

I do not understand. The existing Resolution already has force under the Provisional Collection of Taxes Act and this is the Resolution for the addition. In the ordinary course, for as long as I can remember, at Budget time the Resolution on tobacco is in a Resolution for an increase. It is the Resolution for the total duty and this is different to that extent, that this is only to increase part of it.

The Taoiseach

Exactly.

Mr. Sweetman

Is that the difference? Do we, for example, have paragraph 13, and what does it mean?

Mr. J. Lynch

It refers to section 24 of the Finance Act, 1933, which provides for payment of customs drawback on imported goods. There are special provisions in relation to payment of drawback on tobacco and therefore it is necessary to show that section 24 will not apply to the additional duties imposed in this Resolution.

Mr. Sweetman

Why? Are we not going to get back the ordinary drawback on these increases in duty? We always get them.

Mr. J. Lynch

Yes.

Mr. Sweetman

I thought the Minister said we were not going to get them. I thought he said that paragraph 13 meant we were not going to get them.

Mr. J. Lynch

I did not say that. There are specific provisions relating to drawback on tobacco and therefore——

Mr. Sweetman

Where?

Mr. J. Lynch

——it is necessary to provide that section 24 of the 1933 Act will not apply in this case.

Mr. Corish

Could the Minister say if the twopence imposed on cigarettes is a rounded figure for the sake of handiness and if it is a rounded figure, has it been rounded upwards or downwards?

Mr. J. Lynch

It is a complete figure. Of course there will be the turnover tax element which will be 1 9/10d——

Mr. Corish

With the turnover tax, what will be the price of 20 cigarettes?

Mr. J. Lynch

The effective rate of tax increase is 1 9/10d plus 1/10 of a penny from turnover tax, making a total of 2d.

Mr. Cosgrave

Will this apply to tipped or untipped cigarettes?

Mr. J. Lynch

To both.

Mr. Sweetman

How can you have the same applying to both when there is less tobacco in non-tipped cigarettes?

Mr. J. Lynch

This is the difficulty that arose on the occasion of the Budget as well and the tobacco manufacturers——

(Interruptions.)

Mr. J. Lynch

Is Deputy Dillon speaking?

Mr. Dillon

I thought I was.

Mr. J. Lynch

I was answering a question.

Dr. O'Connell

How much will be available to the tobacco manufacturers?

Mr. Dillon

I will give way to the Minister to answer a question but not to my colleague to ask a question.

An Ceann Comhairle

I will call on Deputy Dillon.

Mr. Dillon

I think you are all gone stark, staring mad. When the Budget of this year was discussed——

An Ceann Comhairle

Deputy Dillon on Resolution No. 2, on tobacco alone.

Mr. Dillon

I am glad you called for order, Sir. When the Budget was before this House, the Minister for Finance and the Minister for Industry and Commerce intervened to say that substantial as the burdens were, they were compensated for by the fact that the cost of living had remained stable. They pointed out that the cost of living last May was 180 and that looking at the February figure, it had only gone up by one point. Within a week of that reassurance, the cost of living figure for the month of May was produced and we discovered that the cost of living had gone up by four points. Does anybody realise that these increases that are being voted by these Financial Resolutions are going to increase the cost of living still further? Have you all gone daft? You have landed yourselves in this appalling mess by the perennial turn of the spiral that began with the ever-accursed turnover tax. I remember that when we contested North-East Dublin our addresses on television were concluded by showing a tiny figure, representative of the turnover tax, and with the subscriptions to it "Watch me grow".

An Leas-Cheann Comhairle

The Deputy is aware that we are discussing Financial Resolution No. 2 which relates only to tobacco?

Mr. Dillon

Tobacco constitutes part of the cost of living. God knows why, but it does.

An Leas-Cheann Comhairle

We cannot have a general debate on a Resolution dealing with tobacco.

Mr. Dillon

In heaven's name, why?

An Leas-Cheann Comhairle

The Resolution deals only with tobacco and the turnover tax does not come into it.

Mr. Dillon

Either this House can wind up or we can discuss what effects a Financial Resolution is going to have on the cost of living. That is the only concern I have. It is not going to kill me to pay twopence per packet of cigarettes but in so far as the cost of living is still further affected by these Financial Resolutions, we are going to get back into exactly the same spiral as that with which we have been desperately struggling and which finally forced us to pass legislation in this House last week forbidding men to picket. I voted for it, but remember we only voted for it because we were forced to the point where we felt that the existence of society itself was at stake.

That has its roots in the Financial Resolutions passed in this House ten weeks ago. It is this House raised the cost of living. It is this House that created a situation in which people's weekly wages shrank in their hands. It was this House created a situation in which people went out to try to redress the losses their families experienced through the increase in the cost of living, 70 per cent of which was precipitated by the direct action of the Government as passed in the teeth of our opposition in Dáil Éireann and this Financial Resolution is another nail in the coffin of this country.

I want to say deliberately, Sir, that I am 34 years in this House and I often felt that the Government of the time were doing desperately foolish things, but, as I walked into the division lobby, my anxiety was: Get the so-and-so's out and we will put it right. It was the first time in my life when I walked into that lobby today to vote against that Resolution that I felt a weight of depression on me that I have never known before. What shocked me is that none of you realise this country has its back to the wall.

Mark the character of these Financial Resolutions. They are designed to yield cash at the earliest possible moment and the reason is that we have left ourselves no room for manoeuvring. The Minister waltzes in here with a Resolution on petrol and tobacco. Not a month ago the Minister put a tax on tobacco. Now, would not any rational Minister for Finance, faced with the knowledge with which he is faced, when the revenue has literally failed, say: "I will have to come back in the autumn and redress the situation with a supplementary Budget"? If the situation was not utterly desperate should the Minister for Finance not say to the Government: "Let us wait until the autumn; let us see how the revenue is running; let us see if any element of buoyancy will come back to the revenue when the strikes are over; let us see if my last Resolution, affecting tobacco and spirits, petrol, and other things, has brought us nearer to the point of diminishing returns"?

I would have said, if I were Minister for Finance, to the Government, "Let us carry whatever debts have accumulated into the autumn and then we will get a clearer picture and in the meantime we will turn the matter over in our minds." But, within three months—about ten weeks—of a Budget imposing a tax on tobacco, we are called back to this House to increase the taxation on petrol and tobacco and we are called back—I want to warn Deputies—at a time when this country never stood in greater economic peril than it does today. I think the Government are trying to negotiate a loan of £5 million in London to pay their costs and they cannot get it. I believe the reason these Resolutions are brought in today, and not in October, is to raise the money to pay the bills. Remember, in the memory of none of us since this State was founded have we ever found ourselves in the position that we had to impose taxation on an emergency basis and raise the revenue necessary to carry on the State. We have always had reserves behind us which enabled us to hold our hand and review the position, never acting in panic.

God be good to the memory of Bill Norton. I remember the agony he went through in 1956 before we put the levies on, and it was only when conviction was carried to his mind and to Deputy Corish's mind, when we had to choose the alternative between temporary levies and protracted mass unemployment and emigration, that they took the grave courageous decision to protect the working man of this country from that disaster and within 12 months the situation was retrieved. How did we stand then when we took that decision at that time? We owed the joint stock banks of this country not a penny. The general reserve of the Central Bank was intact. There was not a penny, as far as I know, of the currency reserves invested in Irish security and we did not owe a penny abroad. We kept all that—Deputy Norton knew it was there: Deputy Corish knew it was there—because we said that when you move into an emergency position, an unforeseen emergency may superimpose itself on the emergency and we must keep that.

An Leas-Cheann Comhairle

Deputy Dillon is getting away from the Financial Resolution.

Mr. Dillon

Today none of these facts is true. We owe the banks £60 million. We owe Germany £7 million which we have already spent. The general reserve of the Central Bank is gone and spent and I do not know what proportion of the currency reserve is in Irish securities. We stand now, for the first time in my experience, or in the experience of any person in this House, in the horrible position that we have our backs to the wall and partly because these fellows who constitute the Government today have not the courage of the members of the Government of 1956 to keep a reserve in hands to protect our people.

When the bad winter came with the heavy losses experienced by the agricultural community, we had to go to their assistance but we had not the reserve. If that happened to us in 1956 because we had men who understood their work, we had in our hands the wherewithal to relieve that superimposed distress.

An Leas-Cheann Comhairle

This might be relevant in the general debate but it is not relevant to the Resolution.

Mr. Dillon

I warn that when you put a tax on tobacco you increase the cost of living. I warn that the whole economic structure of this country, and I have the authority of the Minister for Finance and the Minister for Industry and Commerce not ten weeks old, depends on maintaining stability of the cost of living. When I see Deputies prancing through the lobby now, it seems to me that by our own act we are giving the screw another twist. We will be asked to discuss another Resolution after this which will contribute to precisely the same end. You may say petrol will be carried at a cost. I do not think it can.

An Leas-Cheann Comhairle

We are not discussing the petrol tax on this Resolution. We are discussing the tobacco tax.

Mr. Dillon

Yes, and that increases the cost of living, and I shall go on talking about the cost of living. I have a right to talk about it.

An Leas-Cheann Comhairle

As far as the tobacco taxation is concerned, yes. Anything else will be irrelevant. I understand the general debate will take place on the Money Resolution. The Deputy is taking advantage now to discuss the whole matter.

Mr. Dillon

By our act we are increasing the cost of living. I am reminding the House that the justification of the Budget we passed ten weeks ago was that the cost of living had at last reached stability and we could look forward to maintaining that state. I think I have a right to ask whether you have all gone daft. Having voted for that Budget ten weeks ago, do you now calmly come forward and ask us to pour petrol on the flame of the fire you started, having assured us that the very survival of the nation depended on the quenching of the conflagration? I hope Deputies will wake up in time because I think the country is in real danger and it is the first time in my public life that I ever thought that.

Dr. O'Connell

There is one question I want to ask the Minister.

Mr. Sweetman

Could I not get an answer to my question? Otherwise he might try to conclude the debate.

Mr. J. Lynch

That is all in the nature of Committee Stage.

Mr. Sweetman

I was caught that way before and I do not want to be caught today.

Mr. J. Lynch

Paragraph (c) provides that section 8 of the Finance Act, 1919, that is, the section providing for preferential rates of duty on tobacco, shall not apply to paragraph (b). Paragraph (b) provides that duty in the case of United Kingdom products shall be 3/5d per lb. It derives from the Free Trade Area Agreement.

Mr. Sweetman

Is the hardpressed plug relief here? I thought the Minister said it was the same as before.

Mr. J. Lynch

The same as in the Budget. There is no relief.

Mr. Sweetman

That is a different cup of tea. I am glad I discovered that by way of question.

Dr. O'Connell

Can we be assured that all the extra amount paid by the consumer will go direct to the Exchequer, and none to the tobacco manufacturers?

Mr. J. Lynch

I was about to answer Deputy O'Connell when Deputy Dillon started his speech. In the Budget I introduced on 9th March, there was provision for an increase of 2d per 20 ordinary standard-type cigarettes. That meant that the increase on tipped cigarettes should have been less, there not being the same content of tobacco in the tipped cigarettes as in the standard cigarettes. Because of the difficulty of there being no farthings in circulation, and because the manufacturers would therefore have difficulty in adjusting prices, they decided instead to increase the quality and standard of the tipped cigarettes, mainly by putting more tobacco in them. That was done following the increase in the Budget on 9th March.

Since then there have been certain increases in the costs of tobacco manufacturers. The full 2d on the standard type cigarettes will go to the Exchequer but there will be a small margin on the tipped cigarettes which will be in favour of the manufacturers. That small margin is now being permitted to be retained by the manufacturers in order to cover their increased costs.

Mr. Sweetman

Even the machine dislikes the Budget.

Dr. O'Connell

The Minister says there was an improvement in the quality of tipped cigarettes. No announcement was made to this effect by the manufacturers. This is the first time the public were made aware of the fact that there has been an improvement in the quality of tipped cigarettes. There was no statement about that. The Minister was questioned on this matter in March and he thought we were stupid when we brought forward that question. He could not see any difference between tipped and ordinary cigarettes.

Mr. O'Leary

Can the Minister say have any calculations been made of what will be the amount per annum of the margin to which he referred?

Mr. J. Lynch

I should have said the margin will affect — or perhaps benefit is a better word—retailers as well as manufacturers.

Mr. O'Leary

What would it be at the manufacturers' level? Can the Minister give us any idea at this stage?

Mr. J. Lynch

I cannot give the Deputy a figure for that.

Mr. P. Belton

What is the amount of the extra profit for retailers?

Mr. J. Lynch

I cannot give an answer to that question.

Mr. P. Belton

When we were discussing this on the Budget, we could not get an answer from the Minister. We could not get an answer over the past two months as to what was happening to the extra profit on tipped cigarettes. What will happen in the future? Are we to be told the difference now? Will the manufacturers get more profit? Will they put in more tobacco or more water, or will they take out more water?

Mr. J. Lynch

I have told the Deputy already.

Mr. P. Belton

Surely there will be a greater profit on tipped cigarettes to the manufacturers?

Mr. J. Lynch

I told the House that on the last occasion they improved the quality of tipped cigarettes. On this occasion they are maintaining the quality and in order to cover their increased cost, the manufacurers and retailers will be permitted to retain the slight advantage they will get by maintaining the 2d increase on the packet of 20 cigarettes.

Mr. O'Leary

Were these matters raised between the Minister's Department and the manufacturers?

Mr. J. Lynch

This matter was raised between the Department of Industry and Commerce and the manufacturers.

Mr. O'Leary

Had the Minister given sympathetic consideration to the manufacturers and indicated that the matter would be considered in any future Budget?

Mr. J. Lynch

I do not follow the Deputy.

Mr. O'Leary

The Minister says there were discussions with the manufacturers about their problems. Had he given any indication to the manufacturers that certain alleviations would be forthcoming in this Budget we are discussing here today?

Mr. J. Lynch

No.

Mr. Corish

When the Minister announces in his Budget proposals that 2d will go on a packet of cigarettes, is there no method by which the Exchequer could get every single half-penny of that increase? In Budgets down through the years, when extra taxation was put on tobacco, cigarette and tobacco manufacturers always seemed to get a little cut. I cannot put a figure on it.

Mr. J. Lynch

I explained to the House on the last occasion that the duty on tobacco is taken at the leaf tobacco stage as it emerges from bond.

Dr. O'Connell

Could that not be altered?

Mr. J. Lynch

It could be altered by putting the tax on the packet, but it would be difficult.

Mr. Corish

As much as we dislike the Minister's proposal, if the House is going to pass it, we should like him to get all of it.

Mr. T.J. Fitzpatrick

(Cavan): When this matter was discussed at some length on an earlier Budget that might now be described as a Presidential Election Campaign Budget, we raised the point of the difference between tipped cigarettes and ordinary cigarettes and on that occasion the Minister tried to confuse us. He told us there was no difference and that we did not know what we were talking about.

Mr. J. Lynch

That is not true.

Mr. T.J. Fitzpatrick

(Cavan): That is my clear recollection.

Mr. J. Lynch

If the Deputy makes assertions like that, he should back them up by quoting me.

Mr. T.J. Fitzpatrick

(Cavan): The Minister can deny it if he likes. The whole thing ended in a bottle of smoke. We were not able to get any explanation from the Minister as to what benefit the increase of 2d per packet of 20 cigarettes would give to the vendors and manufacturers of tipped cigarettes. The Minister now concedes that there is some benefit to be derived by the manufacturers and retailers of tipped cigarettes, but he says it is not possible for him to tell the House what the manufacturers or retailers will gain. Could he tell the House what they will gain between the two of them, what the gross gain to the manufacturers and vendors between them is?

Mr. J. Lynch

This is a matter for the trade to arrange between themselves.

Mr. T.J. Fitzpatrick

(Cavan): With all due respect, I am not asking the Minister that. I am asking him to say what the advantage to the manufacturers and the retailers is, not what the benefit to each of them is but what the benefit between the two of them is. That should be clear enough.

Mr. Sweetman

Could I ask the Minister a few questions? Firstly, why is there the difference in the rate of duty between manufactured tobacco and unmanufactured tobacco? Surely we should try to ensure, in so far as we can, that people do their mixing of tobacco here instead of making it a penal tax for manufacturers of tobacco. Secondly, can the Minister tell me what is the estimated proportion consumed of tipped cigarettes to untipped cigarettes? Thirdly, can the Minister tell me, after this Resolution has become operative, what will the percentage of revenue on tobacco be to the total tax revenue? Will it be somewhere about 20 per cent? Fourthly, on paragraph (9) of this Resolution with regard to stocks on hands, what is it estimated that paragraph will bring in?

Mr. J. Lynch

I do not know if I can answer all these questions offhand. With regard to the last question, the estimate would be £100,000. The first question was why there is a higher duty on manufactured tobacco as against non-manufactured tobacco. That is for the protection of the manufacturers here. Could the Deputy repeat the next question?

Mr. Sweetman

The proportion of tipped to non-tipped cigarettes—I am sure the Minister has got an estimate for that.

Mr. J. Lynch

I have a very rough estimate. It is about one-thirtieth to one-third untipped. The proportion of tax revenue is about £41 million now. The percentage is certainly less than one-sixth.

Mr. Cosgrave

Arising out of the Minister's comments on tipped and untipped cigarettes, in view of the suggestion on health grounds that the smoking of tipped cigarette should be encouraged, does the Minister consider it desirable that the effective tax rate on tipped cigarettes should be higher than on untipped? That is the way it operates at present.

Mr. J. Lynch

It does in this instance but the quality was improved on the last occasion that there was an increase. After the last Budget, the smokers of untipped cigarettes got better value than the smokers of tipped cigarettes. It is true on this occasion that the retail traders get a benefit from the increase in the duty.

Mr. T.J. Fitzpatrick

(Cavan): Could the Minister tell us what this is per packet?

Mr. J. Lynch

The difference is a fraction of a penny.

Mr. Ryan

Will there be a further variation in the weight or quantity of tobacco taxed?

Mr. J. Lynch

There will not be this time.

Mr. Ryan

I share with Deputy Corish the wonder that we cannot be more precise and that the House cannot be properly advised as to the real effect of the Financial Resolution on tobacco. We can have the one-twentieth of a penny with regard to hydrocarbon oil but when we come to something like tobacco, we are unable to break the pennies into notional quantities. The Minister said something today that was completely in conflict with what was said by his predecessor. He said there were no farthings in circulation. It is on the records of this House that there are over ten million farthings. Senator Dr. Ryan waxed most indignant, as indeed did also the present Minister when he was Minister for Industry and Commerce, and said that the turnover tax was workable because of the farthings in circulation. He was indignant when it was pointed out to him that although there were ten million in circulation, they are not readily available to ordinary people. Today we are given the reason for the kind of activity that has been going on for the past year, that they are not in circulation. This is typical of the conflicting arguments which have been put forward by this Government with regard to changing circumstances.

The Minister in his disclosure was less than frank today. When we complain about this again and again, the Minister and his colleagues get very annoyed. If the Minister wants specific examples, I can give him plenty of them. When the increase was put on tobacco recently, the tobacco manufacturers had the greatest difficulty in notifying the retail trade as to the consequence of this increase. I informed the Minister that the tobacco manufacturers made three different drafts of the circular to the retail trade and on each occasion after submitting them, they had to scrap those drafts and revise them. The trade experienced the longest delay in its history between the time of the Budget and the notification from the tobacco manufacturers of the consequences of the increase in prices. That is not fair to traders. A certain amount of criticism has been made today on the question of profits on the part of retailers and manufacturers. It is not wrong to say that profit is a legitimate factor in the economy.

Mr. Dillon

Hear, hear.

Mr. Ryan

We must realise that whenever increased taxation is imposed on commodities such as tobacco, the retailer must get some kind of marginal increase in his profits. If you increase the cost of a commodity, you increase the price to wholesalers and retailers. The retailer must be allowed a percentage profit on his turnover.

Mr. Dillon

Hear, hear.

Mr. Ryan

That is a perfectly simple exercise for anybody to use. If we were only to maintain the extremely small profit margin, there would have to be some kind of adjustment made so that the retailer could continue to enjoy the same margin or the same percentage of profits. I do not believe any person is so far removed from commonsense and commercial activity as not to know that as far as the retail trader is concerned, he must operate on a percentage margin profit. It is a perfectly respectable thing and I do not think it desirable that we should say otherwise. Otherwise, you are making of the small huckster shop down the country nothing more than an institution for the collection of taxes without reward.

These things are not said in justification of the ruthless, flatfooted approach to taxation indicated in the Minister's second Budget speech today. One wonders if budgeting is the correct term to apply to this financial activity, because budgeting implies a sense of balance, a weighing up of the consequences of one's actions. This has not been done by the Government when they came in in a state of panic 70 days after the most savage original Budget in the history of the country. We had the highest taxation ever imposed in a single instalment earlier this year and now, 70 days later, we make a bad job even worse. This is a deplorable state of affairs and that is the reason why we shall vote against all these Resolutions.

Mr. O'Hara

May I ask the Minister why it is that on this occasion as previously he has included hardpressed tobacco in these duties? It is a hawk-like act——

Mr. O'Leary

A lapwing.

Mr. O'Hara

——to swoop on the labouring man, the road worker and in particular, the old age pensioner. We know that is the tobacco used most commonly by those people who will now feel the pinch. I am aware that it is not relevant to discuss other things here but I should like to point out that when the inter-Party Government were in power, they considered these matters and excluded this tobacco. It is hawk-like on the part of the Minister to descend on those people as he has done.

Mr. O'Leary

On paragraph 6, does the Minister think that the celerity with which he dispatched his announcement allowed the manufacturers time to complete contracts of sale before 5 o'clock? The Minister finished well before a quarter to five.

Mr. O.J. Flanagan

I take this opportunity of inquiring from the Minister whether the Government considered, when they were thinking of this increased taxation on tobacco and cigarettes, that there are many thousands of people in this country who regard a smoke as being as essential as a meal and whether any proper consideration was given to the importance of making available cigarettes and tobacco to old people whose incomes are very limited and who find it impossible to obtain the smoke to which they have been accustomed at a reasonable price. I think the time has arrived when the Government must ask themselves if they are not killing the goose that lays the golden egg.

Surely the Minister for Finance must know that since his Government commenced their attacks on tobacco and cigarettes, thousands have given up smoking. Since the Budget 70 days ago, hundreds were added and as a result of this imposition, many hundreds will renew their resolutions and further resolutions will be made by further people. The fewer people who consume tobacco and cigarettes, the less of those commodities that will be sold, the less that will be manufactured and consequently the smaller the return for the revenue.

I see at the back of this something that is very evil and ill-conceived politically. It is involved in the margin of profit that will be available to the manufacturers of tipped cigarettes. I should like to ask the Minister to be honest and to tell the House why, if he imposes a tax of 2d a packet on cigarettes, there is not some machinery available, with all the resources of the Revenue Commissioners and the financial experts behind us, to ensure that when a tax of 2d per packet is imposed, the Revenue will benefit by the full 2d. Are there loopholes in this, and if so, for what purpose are they left there?

As a result of this, I hope Fianna Fáil at a later stage will not walk on the stepping stones they have always walked on and go again to the cigarette manufacturers and say: "Stump up now for Fianna Fáil funds. We have made a handsome present to you in the framing of the Budget." Fianna Fáil have been far too long in office through such ill-conceived methods. I am quite sure that if there is a margin of profit as a result of this imposition on tobacco and cigarettes, for political purposes, Fianna Fáil will make certain appeals and raids on the generosity of the cigarette manufacturers. The Minister has told us he cannot seal these loopholes but I put it to him that they are left there deliberately to swell the political funds of Fianna Fáil.

Through this loophole, it is in the power of the Fianna Fáil Government to say to the cigarette manufacturers: "We have left you a handsome profit as a result of the Budget and if we remain in office after the next election, we shall leave you another handsome profit. What about forking out £5,000 or £6,000?" We all know that Fianna Fáil are quite capable of doing that and that they have been 100 per cent successful in it. While they are forgetting the poor old people who love a smoke, the people to whom a smoke is as essential as a meal, while they sacrifice them, they are guilty of introducing this dangerous motion for the purpose of swelling the Party fund of Fianna Fáil.

I think it is disgraceful, evilly-disposed and wrong. These Resolutions have been conceived with the intention of raking in money for the funds of Fianna Fáil. By this cute concoction, they have deprived the old age pensioner and the worker of their smoke, and I am convinced there is not a smoker in Ireland, whether he was for Fianna Fáil three weeks ago in the Presidential election, who does not now see he was tricked and who will not resolve to put this Government out of office as speedily as possible so that a Government may be elected who will not leave room for suspicion. As a result of this tax on tobacco, certain profits are being made available to the manufacturers of tipped cigarettes. I can assure Members of this House that there is a reason for that, that the reason is bad and ill-conceived, and is for the purpose of putting the gun to the foreheads of the manufacturers for funds for the Fianna Fáil Party.

Mr. O'Leary

I suppose it is a good job for the Government's present financial plight that cigarette smoking is more or less a habit because if it were simply a matter of rational choice, then the smokers of Ireland—if there is such a body—would surely tonight lay down their last butt because this Government certainly have discriminated unmercifully against the people who smoke tobacco in the recent period. In our calculations, it is 70 days since the last Budget but, in that time, we have seen cigarettes again singled out for further taxation to help the Government in their present financial straits.

If we are to be asked to vote on particular Financial Resolutions, more information should be supplied on the question in each case. If the Government are asking individual Deputies to give their considered support, then we should have more information about the possible breakdowns in the Financial Resolution. It is just not good enough to require practically legal training to separate the actual clauses of a Resolution and ask what each, in fact, means; to actually have to ferret out the information from the Minister as to whether the benefits of a particular measure will go to the manufacturer or to the consumer. It is time we had a more clearly etched Financial Resolution.

It is a great pity that the tax on plug tobacco, which is mainly the smoke of the older citizen, should be lumped in with the rest of the tobacco taxes and not at least given some favourable consideration or exception. We should also consider that most of the plug tobacco belongs to old brands and some exception could have been made in that case. God knows we shed enough crocodile tears on behalf of the old age pensioners without imposing extra taxation on something of tangible use to them. I have the feeling that the smoking of plug tobacco cannot be as extensive as cigarette smoking and certainly we could have made an exception in that case.

It is regrettable also, in the case of cigarette smoking, that tipped cigarettes should have to bear the same heavy imposition as the others because we would in fact wish, for people who do smoke cigarettes, that they smoke tipped. There is, of course, the rather mysterious arrangement whereby manufacturers will get some undisclosed sum from the general Exchequer charge. The Minister is not aware of the actual sum it will mean in one year. I do not think that all these manufacturers will secure the benefits accruing to the manufacturers of tipped cigarettes, but one's suspicions are aroused by the fact that this kind of arrangement could exist between different manufacturers of cigarettes. The Minister did finish his speech in admirably short time and there is an uneasy feeling that it may have allowed certain people to actually overcome some of the provisions in paragraph 6 and include contracts on all sales today. I should like the Minister to assure me now that certain people in our country could not anticipate the actual provisions of the Financial Resolution and make admirable profits on what we do here.

Mr. Reynolds

Is the Minister satisfied that all manufacturers of tipped cigarettes improved the quality of their cigarettes since the last Budget? The Minister clearly stated that tipped cigarettes had improved since the last Budget but I should like to know if he is satisfied that all manufacturers have improved the quality of their cigarettes.

Mr. Lindsay

Is there any test applied in that regard?

Mr. J. Lynch

I was answering questions earlier on to the best of my ability and I found I was only stimulating more comment. I do not mind how long the debate goes on but I want to be put in the position that when I get up next I can reply.

Mr. Lindsay

Once upon a time we had a Government. As each Government succeeded another—some were good and some were bad but the feature of good Government was that they made their provision at the beginning of each financial year for their financial requirements for that year. They availed themselves of all the expert advice available to them and made their plans accordingly. Supplementary Budgets are notoriously an attribute of bad governments and governments whose harsh measures are ultimately and, sometimes within a very short time, rejected by the people. The last time we had a Supplementary Budget of any note was in 1952 which resulted in the change of Government, subsequently, in 1954. I am not suggesting that the time in between the imposition of these duties and the fall of this Government should be that long.

This year we had an imposition put on tobacco on the 9th March, which was the Budgetary time chosen before what used to be the end of the financial year. Now, as Deputy Oliver J. Flanagan says, 70 days later we have a further imposition on tobacco.

Mr. James Tully

Surely it is more than 70 days from the 9th March to the 14th June?

Mr. Lindsay

——from the beginning of what should be the financial year. In any event, what I want to know from the Minister and the Government now is this—will the tobacco-using people of this country, whether they smoke pipes, cigarettes or chew tobacco, be asked between this and the 31st March next to foot another imposition on tobacco; or even between now and Christmas? Is this the last imposition for this year on tobacco?

Mr. Norton

Do not make an unfair demand on the Minister.

Mr. S. Dunne

Like Deputy Lindsay, I am interested to know if this is, for this year, the end of taxation. There has been a good deal of talk concerning the probability of an autumn Budget. In the context of the Resolution we are discussing, it is appropriate to repeat what Deputy Lindsay has asked and that is—does the Minister see any prospect that today's performance will be repeated before the year is out because if there is even the remotest possibility of that it is a sure indication that the words of Deputy Dillon are only too true. There has been created in the public mind the idea—created in fact by the words of the Minister and others on the occasion of the introduction of the normal Budget earlier in the year—that he would, if he felt it necessary, come back, it was assumed in the autumn, for further moneys. Is this a kind of interim move between the Budget of March and the autumn Budget which is to come? Can we regard this as a mid-summer Budget with all the connotation which that adjective suggests because, coming so quickly after the Budget proper, it reflects a sad condition in the economy and one on which the House is entitled to be enlightened?

Mr. J. Lynch

I said in my statement today that I hoped the increased taxation I proposed today would be sufficient to cover the expenditure likely to be met during the current year. In that event, there would be no further supplementary Budgets and I certainly do not want to come before the House again this year to propose new or increased taxation.

Deputy O'Leary referred to the stocks held by manufacturers. As I explained, it is at the stage of the release of the leaf from bond that the duty becomes payable. Manufacturers have to take leaf out of bond in the ordinary course of their manufacturing business and, therefore, at a certain stage, having taken out the leaf and having been assessed to tax for a quantity of tobacco manufactured and unmanufactured in their possession, the imposition of increased duty would enhance the value of that tobacco and therefore to the extent that they have stocks on hand, having been released from bond, these stocks must necessarily bear the increased tax. To that extent they would make a handsome profit in respect of the quantity of stocks they have in hand. I can assure Deputy O'Leary that I have not contrived in any way, by fixing 5 o'clock as the time this evening at which this new duty will be put on stocks, to give any of these manufacturers any bonus. There is no question whatever of that. I do not know to what extent there was an implication in his rather innocently worded question against me, especially when he referred to the expedition with which I finished my speech.

The question of hardpressed tobacco has been raised on a number of occasions and I have told the House that the great bulk of pipe tobacco smoked is in fact hardpressed. It represents 80 per cent, and I repeat that for about the fiftieth time. Although hardpressed tobacco will carry an increase equivalent to the increase of 2d per 20 cigarettes, it will still have a very favourable differential in price compared with flake tobacco—which is 20 per cent of the pipe tobacco smoked —of upwards of one shilling. Nobody can ever say exactly what the differential is because the prices of both hardpressed and flake tobaccos vary but, roughly speaking, there is a differential in favour of hardpressed tobacco at the retail level of about one shilling.

In reply to Deputy Flanagan, I want to say that I do not know if I should take his allegation seriously because in the same speech he said that I was using the tax on tobacco in order to gain political favour, financial or otherwise, on the one hand, and on the other hand, he accused me of turning people who might have voted Fianna Fáil in the Presidential election against Fianna Fáil. It is very difficult to take Deputy Flanagan seriously at any time but when he contradicts himself twice in one speech on the Financial Resolution, it is sufficient to say nothing and just pass on. But in so far as there is any imputation against my honesty, I shall let the country judge.

Mr. James Tully

Political honesty, which is a different thing.

Mr. J. Lynch

I have only one meaning for the word "honesty".

Mr. James Tully

I thought the Minister's Party had two meanings for it.

Mr. J. Lynch

I can only endorse what Deputy Ryan said about the profit motive being important in ordinary commercial life. It is becoming important even in Soviet Russia. Apparently, they have realised now that it gives some stimulus to production and economic advance and for that reason they are encouraging profit motives. But as the total prices of commodities increase, there is usually a marginally increased profit for the retailer and, indeed, for the manufacturer. That has been permitted in this case because manufacturers and retailers have, I understand, demonstrated to the satisfaction of the Department of Industry and Commerce that increased costs justify some little increased margin for them and, to the extent that the margin will be available in the sale of tipped cigarettes, the retailers and manufacturers will be able to take advantage of that. As to what proportion the increased profit will be, I am afraid I am not in a position to say.

Question put.

The Committee divided: Tá, 71; Níl, 59.

Tá

• Aiken, Frank.
• Allen, Lorcan.
• Andrews, David.
• Blaney, Neil T.
• Boland, Kevin.
• Booth, Lionel.
• Boylan, Terence.
• Brady, Philip.
• Brennan, Joseph.
• Brennan, Paudge.
• Breslin, Cormac.
• Briscoe, Ben.
• Burke, Patrick J.
• Calleary, Phelim A.
• Carter, Frank.
• Carty, Michael.
• Childers, Erskine.
• Clohessy, Patrick.
• Colley, George.
• Collins, James J.
• Corry, Martin J.
• Cotter, Edward.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Crowley, Honor M.
• Cunningham, Liam.
• Davern, Don.
• de Valera, Vivion.
• Dowling, Joe.
• Egan, Nicholas.
• Fahey, John.
• Fanning, John.
• Faulkner, Pádraig.
• O'Connor, Timothy.
• O'Malley, Donogh.
• Fitzpatrick, Thomas J. (Dublin South-Central).
• Flanagan, Seán.
• Foley, Desmond.
• Gallagher, James.
• Geoghegan, John.
• Gibbons, Hugh.
• Gibbons, James M.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Hillery, Patrick J.
• Hilliard, Michael.
• Kenneally, William.
• Kennedy, James J.
• Kitt, Michael F.
• Lalor, Patrick J.
• Lemass, Noel T.
• Lemass, Seán.
• Lenihan, Brian.
• Lenihan, Patrick.
• Lynch, Celia.
• Lynch, Jack.
• McEllistrim, Thomas.
• MacEntee, Seán.
• Meaney, Tom.
• Millar, Anthony G.
• Molloy, Robert.
• Mooney, Patrick.
• Moore, Seán.
• Moran, Michael.
• Nolan, Thomas.
• Ó Briain, Donnchadh.
• Ó Ceallaigh, Seán.
• Smith, Patrick.
• Wyse, Pearse.

Níl

• Barrett, Stephen D.
• Barry, Richard.
• Belton, Luke.
• Belton, Paddy.
• Burke, Joan T.
• Byrne, Patrick.
• Casey, Seán.
• Clinton, Mark A.
• Cluskey, Frank.
• Collins, Seán.
• Connor, Patrick.
• Coogan, Fintan.
• Corish, Brendan.
• Cosgrave, Liam.
• Costello, Declan.
• Costello, John A.
• Coughlan, Stephen.
• Crotty, Patrick J.
• Desmond, Eileen.
• Dillon, James M.
• Dockrell, Henry P.
• Dockrell, Maurice E.
• Donegan, Patrick S.
• Dunne, Seán.
• Dunne, Thomas.
• Esmonde, Sir Anthony C.
• Everett, James.
• Farrelly, Denis.
• Fitzpatrick, Thomas J. (Cavan).
• Flanagan, Oliver J.
• Governey, Desmond.
• Harte, Patrick D.
• Hogan, Patrick (South Tipperary).
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Kenny, Henry.
• Kyne, Thomas A.
• Larkin, Denis.
• L'Estrange, Gerald.
• Lindsay, Patrick J.
• McAuliffe, Patrick.
• McLaughlin, Joseph.
• Murphy, Michael P.
• Murphy, William.
• Norton, Patrick.
• O'Connell, John F.
• O'Donnell, Patrick.
• O'Donnell, Tom.
• O'Hara, Thomas.
• O'Higgins, Michael J.
• O'Higgins, Thomas F.K.
• O'Leary, Michael.
• Pattison, Séamus.
• Reynolds, Patrick J.
• Ryan, Richie.
• Spring, Dan.
• Sweetman, Gerard.
• Treacy, Seán.
• Tully, James.

Tellers:— Tá: Deputies Carty and G eoghegan; Níl: Deputies L'Estrange and T. Dunne.

Question declared carried.