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Dáil Éireann debate -
Wednesday, 15 Jan 1975

Vol. 277 No. 2

Financial Resolutions. - Financial Resolution No. 3: Customs and Excise—Tobacco.

I move:

(1) That the duty of customs on tobacco imposed by section 20 of the Finance Act, 1932 (No. 20 of 1932), shall, as on and from the 16th day of January, 1975, be varied by the addition of the sum of £1.236 to each of the rates of such duty chargeable immediately before that date.

(2) That the duty of excise on tobacco imposed by section 19 of the Finance Act, 1934 (No. 31 of 1934), shall, as on and from the 16th day of January, 1975, be varied by the addition of the sum of £1.236 to each of the rates of such duty chargeable immediately before that date.

(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).

Can the Minister tell us whether what is described as hard plug tobacco is included in this resolution?

This is a hardy annual whenever tobacco is taxed. Yes, it is included but it still continues to enjoy the rebate which is applied to hard plug tobacco. It has that continuing concession.

Would the Minister have available for us the effect of this resolution on say an ounce of hard plug tobacco uncut?

As every smoker of hard-pressed tobacco would know it depends on the moisture content.

It is not a joke.

I am not treating it as such.

It is a serious matter.

I agree and I am glad that a pipe smoker like Deputy Brennan is treating it as such.

I know many people who will not be able to afford to buy it from now on.

The basic rate of customs duty on imported tobacco, the rate on imported leaf containing 10 per cent or more of moisture, is increased from £4.935 per lb. to £6.171 per lb. For hard-pressed and other pipe tobaccos the rebates granted to home manufacturers will continue to apply at the existing rates of £1.1875 per lb. and £0.225 per lb. respectively.

I thank the Minister for that information but can he tell us how much extra under this resolution the poor man will pay for his ounce of tobacco?

The duty increase will advance the duty element by amounts varying from 6.5p to 7.3p per ounce.

Is that the net position for the hard-pressed tobacco allowing for the rebate?

(Dublin Central): The Minister stated that a packet of 20 cigarettes will be increased by 6p. There are various brands of cigarettes which contain different quantities of tobacco. Some packets of cigarettes cost 25p, some 28p and some 33p. Will the manufacturer be entitled to charge this increase of 6p on all brands of cigarettes?

No, the increase in the duty will raise the total tax content of the price of what I might call a packet of 20 standard size cigarettes by 6p.

No, standard size non-tipped, from approximately 24.6p per 20 to 30.6p per 20. In the case of smaller cigarettes, on most filter tipped cigarettes, the increase would be less, in proportion to the amount of tobacco contained in them.

(Dublin Central): How can the Minister say it will not be 6p for all cigarettes?

Because the duty is applied to the tobacco content and as Members know even the filter tip can vary and the length of the cigarette can vary.

Can the Minister tell us what the increases will be on a packet of king size cigarettes, let us say Benson and Hedges, or one of the common brands?

If the king size has the same quantity of tobacco as——

I am not asking that. I am asking what the tax will be on that type of cigarette. Does the Minister not know?

I am not in the position to give the figures.

There is such a thing as doing one's homework.

If I had before me the equipment to measure the quantity of tobacco in all these things it could be done.

The Minister has people beside him to advise him on what the tax increase will be on different types of cigarettes.

There are different varieties of cigarettes of different shapes, sizes, moisture content and so on.

Go and do your homework.

It is obvious from the Minister's reply that he does not know what the tax will be on the ordinary half quarter of hard plug tobacco. He said in his speech that there is to be an increase of 6p on a packet of cigarettes which in old money is 1/2½d, the price of a packet of cigarettes not many years ago. The Minister for Finance traditionally gave a rebate on hard-pressed tobacco. Why did the Minister not do that in this budget? Is it because he did not give this rebate that he will not reply to the question now?

The Deputy obviously did not hear me. I will not say he was not listening. I said there will be rebates granted to home manufacturers of hard-pressed and other pipe tobaccos of £1.1875 per lb. and £0.225 per lb., respectively.

That is the traditional rebate but previous Ministers, when there was an increase in tobacco prices, gave an extra allowance proportionate to the increased tax. The Minister has not given that rebate on this occasion.

On the last two occasions on which the price of tobacco was increased the rebate to which the Deputy refers was not increased so he is wrong in the premise he is advancing.

The Minister is not giving the rebate on hard-pressed tobacco.

(Dublin Central): From a reading of the Minister's speech and of the Financial Resolution it is obvious that a tobacco manufacturer can say that they do not specify that different rates of duty should apply to different types of cigarettes.

My budget speech gave it——

(Dublin Central): The Financial Resolution is here.

The Financial Resolution spells out precisely what is necessary and how it is applied to a certain weight of tobacco.

(Dublin Central): I am talking about packets.

The budget speech gave a general description of the impact of the specific provisions of the Financial Resolutions.

(Dublin Central): Is it not a fact that the manufacturers are entitled to charge 6p on every packet?

No, it will vary according to the tobacco content.

(Dublin Central): That is not in the resolution.

It is. The resolution relates to weights.

The Minister has stated that this is spelled out clearly in the resolution but I do not think it is clear. Financial Resolution No. 3 states:

That the duty of excise on tobacco imposed by section 19 of the Finance Act, 1934 (No. 31 of 1934), shall, as on and from the 16th day of January, 1975, be varied by the addition of the sum of £1.236 to each of the rates of such duty chargeable immediately before that date.

I do not wish to take up the time of the House or to be accused of dealing with trivial matters but, having regard to present day circumstances, one would expect the Minister to find out what would be the result to the consumer with regard to the imposition of this extra cost. When I speak of the consumer I am referring to the poor man sitting in the corner who smokes an ounce of tobacco. That should be the first thing the Minister would do; it is even more important than finding out what revenue he will get. We will have price increases in the year ahead that most people will be unable to meet but yet the Minister is taking from the old age pensioner one of the few pleasures he has in life. At the very least he should work out with a stump of a pencil what it will cost that old man to buy an ounce of tobacco.

I gather from the reply the Minister gave to Deputy Nolan that the rebate will not be increased and that the Minister is relying on the old rebate introduced a considerable number of years ago. That being so, it is obvious that if the duty on tobacco is increased in such a drastic manner as proposed by the Minister the rebate becomes meaningless. Can the Minister tell me if an increase in that rebate will involve some change in this Financial Resolution or, because it is a rebate of taxation rather than an imposition of taxation, is it the case that passing this Financial Resolution will not prevent the Minister increasing the rebate in the Finance Bill?

One could look at it in the Finance Bill.

Would it be possible for the Minister to increase the rebate on hard-pressed tobacco consistent with the terms of this resolution?

I cannot contemplate that it would create any difficulty.

Even though the resolution will be passed today in its present form, is it open to the Minister in the Finance Bill to increase the rebate?

I wish to refer the Minister to the price he gave earlier for a packet of 20 plain cigarettes. The Minister said they were increased from 24p to 30p. For his information I should like to let him know that neither of the prices was correct.

I was talking about the duty element.

The Minister mentioned 24p per packet. Is the present duty content 30p?

The present duty content is 24.6p.

On a packet of cigarettes?

That is correct.

What is the retail price to the consumer?

It ranges from 36p to 38p.

If the Minister wishes we might adjourn the House and allow him to consult with somebody.

I was listening to the interesting conversation Fianna Fáil were having. When they sort out who is their spokesman I will deal with the matter.

The duty on a packet of 20 plain cigarettes is now 30p—on a packet costing 38p.

The price today, as distinct from what it will be tomorrow, is a duty of 24.6p for 20 cigarettes whose cost is 34p. The duty will be 30.6p for 20 cigarettes for a price of about 40p.

Can the Minister tell us what will be the increase on the very many different brands of cigarettes on the market? Who will tell the shopkeeper between now and tomorrow morning? If they want to increase the cost apparently they can do so according to the terms of the Financial Resolution.

That is not so. This tax is charged at the leaf stage before manufacture.

It will be charged as they leave the shop. The Minister knows there can be no control over this matter.

We cannot have a debate about the ethics of Fianna Fáil shopkeepers. I am dealing with the way in which the tax is imposed. It is imposed at the leaf stage before manufacture, before the tobacco is put into the cigarette.

When we consider the 6p increase announced by the Minister and the 2p increase imposed by the manufacturers a short while ago, we realise that the price of a packet of 20 cigarettes has gone up 25 per cent or 30 per cent in the space of a month or six weeks. This is done at a time when the purchasing power of the £ is diminishing daily because of the mismanagement of the Minister and his colleagues, at a time——

The House must debate the resolution.

Surely I am not out of order in referring to the increase in the price of cigarettes and the effect on the economy? Having regard to the present unemployment situation, where there are more than 100,000 people out of work—this figure has probably increased since the Minister read his budget speech— when so many workers are earning less money because there is no over-time——

A detailed discussion regarding taxes should be reserved for the Finance Bill. The Deputy must speak on the resolution.

Has the Minister considered the implications in the increase in the price of cigarettes as a result of the imposition of taxation today? Has he considered its possible effect and how it may adversely affect the employment situation?

I have, and it will not.

Will the Minister face me 12 months from now and say it has not had an effect?

He will, without a blush.

I should like to revert to the point I made earlier about hard-pressed uncut tobacco which, traditionally, successive Ministers for Finance have treated with a certain degree of indulgence for very good reasons. It appears from the information we got earlier from the Minister, and from what was correctly stated by Deputy Nolan, that normally this tobacco is bought in two ounce lots and that the increase on two ounces of that tobacco will range between 13p and 14.6p.

I put it to the Minister that this is a savage increase, particularly for the class of person who traditionally smokes that tobacco. I ask him now, following up what he disclosed to Deputy Haughey about his ability to do something about it now on the rebate, to undertake to the House that he will take steps to ensure that the impact of that 13p to 14.6p per two ounces is very substantially reduced by increasing the rebate.

Deputy Haughey in 1969 introduced a budget which increased the rate of duty on, inter alia, hard plug tobacco and did not make the additional concession which he is now asking me to make.

He did not increase it by that amount.

I am quite certain the increase in the old age pension, awarded in this budget will be more than adequate to cover the increase in the price of hard plug tobacco. If it is not, then I say to the poor pensioner, about whom the Deputies opposite are shedding so many tears, that he will smoke himself to death in a very short time.

Is the Minister saying he will not do anything about this?

I am saying that the rebate remains. I am not interfering with it.

The Minister does not intend to interfere with it? Is that what he is saying?

I am maintaining the rebate.

The differential remains?

Is the Minister saying he does not intend to increase that rebate in the light of the very substantial size of the increase proposed in this resolution?

In the light, among other things, of the substantial increases in welfare payments in the budget I would not be warranted in increasing the margin of advantage which is already enjoyed in respect of those items.

We are now seeing the true image of the Minister for Finance. He thinks old age pensioners will be too well off to deserve consideration by having the rebate increase in a way that has been done by successive Ministers of successive Governments of different parties. We now know the Minister for Finance thinks the old age pensioner is too well off to deserve any further consideration when there is imposed on his two ounces of hard plug tobacco an increase of 13p to 14.6p. All right, that is the privilege of the Minister if he wishes to do so. He has the Deputies there who are apparently prepared to come in and vote for that proposition, but I think it is important that attention should be drawn to the Minister's attitude in this regard. For the reasons which I outlined in regard to the previous resolution, we intend to oppose this resolution. If anybody had any doubt whether we should or should not, the Minister has certainly given us every reason why we should oppose this resolution and we intend to do so.

Could I just add that if there was as much moisture in hard plug tobacco as the tears which are shed on this issue every year, it would not be worth smoking.

The Minister has not grasped the effect of the increase he is imposing.

Question put.
The Dáil divided: Tá, 69; Níl, 64.

  • Barry, Peter.
  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Dick.
  • Burke, Joan T.
  • Burke, Liam.
  • Byrne, Hugh.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Crotty, Kieran.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Dockrell, Henry P.
  • Dockrell, Maurice.
  • Donegan, Patrick S.
  • Donnellan, John.
  • Dunne, Thomas.
  • Enright, Thomas.
  • Esmonde, John G.
  • Finn, Martin.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Governey, Desmond.
  • Griffin, Brendan.
  • Harte, Patrick D.
  • Hegarty, Patrick.
  • Jones, Denis F.
  • Kavanagh, Liam.
  • Keating, Justin.
  • Kelly, John.
  • Kenny, Henry.
  • Kyne, Thomas A.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McDonald, Charles B.
  • McLaughlin, Joseph.
  • McMahon, Larry.
  • Malone, Patrick.
  • Murphy, Michael P.
  • O'Brien, Fergus.
  • O'Connell, John.
  • O'Donnell, Tom.
  • O'Leary, Michael.
  • O'Sullivan, John L.
  • Pattison, Seamus.
  • Reynolds, Patrick J.
  • Ryan, John J.
  • Ryan, Richie.
  • Spring, Dan.
  • Staunton, Myles.
  • Taylor, Frank.
  • Thornley, David.
  • Timmins, Godfrey.
  • Toal, Brendan.
  • Tully, James.
  • White, James.

Níl

  • Allen, Lorcan.
  • Andrews, David.
  • Barrett, Sylvester.
  • Blaney, Neil T.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Breslin, Cormac.
  • Briscoe, Ben.
  • Brosnan, Seán.
  • Browne, Seán.
  • Crowley, Flor.
  • Cunningham, Liam.
  • Daly, Brendan.
  • Davern, Noel.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Fahey, Jackie.
  • Farrell, Joseph.
  • Faulkner, Pádraig.
  • Fitzgerald, Gene.
  • Fitzpatrick, Tom (Dublin Central).
  • French, Seán.
  • Gallagher, Denis.
  • Gibbons, Hugh.
  • Gogan, Richard P.
  • Haughey, Charles.
  • Healy, Augustine A.
  • Hussey, Thomas.
  • Kenneally, William.
  • Lalor Patrick J.
  • Lemass Noel T.
  • Leonard, James.
  • Brugha, Ruairí.
  • Burke, Raphael P.
  • Callanan, John.
  • Calleary, Seán.
  • Carter, Frank.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard.
  • Crinion, Brendan.
  • Cronin, Jerry.
  • Loughnane, William.
  • Lynch, Celia.
  • Lynch, Jack.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Moore, Seán.
  • Murphy, Ciarán.
  • Nolan, Thomas.
  • Noonan, Michael.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Malley, Desmond.
  • Power, Patrick.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Tunney, Jim.
  • Walsh, Seán.
  • Wilson, John P.
  • Wyse, Pearse.
Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.
Question declared carried.
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