This section provides for the repeal and amendment of certain enactments specified in Part II of the First Schedule. I would like some guidance as to whether it would be in order to deal with the actual enactments as specified in Part II of the First Schedule on the section.
Finance Bill, 1975: Committee Stage (Resumed).
Question again proposed: "That section 34 stand part of the Bill."
They can be discussed on the Schedule.
Can they be discussed now in conjunction with the section?
We cannot have repetition. They can be discussed now but that will mean they cannot be discussed again on the Schedule.
I would prefer to discuss them now because the section is pretty meaningless if we do not refer to what it is doing.
I have no objection.
Can the Minister tell us what is the meaning and effect of the amendment in Part II and the repeal in Part III of the Schedule?
This section is the founding section which affects the amendments specified in Part II of the First Schedule. The first five of the six amendments specified in that part are textual amendments rendered necessary by the abolition of sur-tax and the introduction of the higher rates of income tax to replace sur-tax.
I wonder are we talking about the same thing. I think I have made a mistake. I am referring to Part II of the Second Schedule. I think the Minister has an amendment down to Part I of the First Schedule. Have we dealt with that yet, Sir? I was looking at Part II of the Second Schedule instead of Part II of the First Schedule. In the light of that my suggestion about discussing the Schedule at this stage may not be as worthwhile as it was.
It might be as well to dispose of this section and take up the matter on the Schedule.
Yes.
Question put and agreed to.
SECTION 35.
Question proposed: "That section 35 stand part of the Bill."
The effect of this section is to increase the customs and excise duty on beer by £11.128 per standard barrel or the equivalent of 2.81p. on the pint of average gravity. The resultant increase in revenue in the current financial year would amount to approximately £15 million or £17 million in a full year.
Is the Minister's estimate based on assumed increase in the consumption of beer?
I am not certain. The Revenue Commissioners usually make an examination of the pattern of consumption and if there is an increase make some allowance for new resolutions but it has always been found that the resolutions to abstain are seldom observed and that revenue continues accordingly to grow.
This is true but certain economic factors may affect consumption.
Up or down?
It has been alleged recently that in certain continental European countries the effect of decreased economic activity has been to reduce the consumption of alcohol but that the effect of the same economic decrease in Britain and in this country has been to increase the consumption of alcohol. Can the Minister throw any light on that suggestion?
The pattern of consumption for several years past has been on the increase and even in years when the percentage increase was greater than is envisaged this year consumption grew rather than diminished. There could, of course, be a variation in the nature of the alcohol consumed. There might be a switch from spirits to beer or beer to spirits in certain circumstances but in preparing their figures the Revenue Commissioners assume that the pattern of behaviour will be somewhat similar to previous years and they tend to under-estimate rather than to over-estimate consumption. If there is an increase in consumption, the revenue will be correspondingly greater.
We may assume, then, that the estimated yield assumes some increase in consumption in 1975.
No. I understand that the figures assumed are based on static consumption. Normally, the practice is for a temporary reduction in consumption but this levels off to what the main static or marginal increase has been down through the years.
Question put and agreed to.
SECTION 36.
Question proposed: "That section 36 stand part of the Bill."
This section increases the main rates of customs and excise duties on spirits by £4.282 on the proof gallon. As a result, the present duty element on a glass of spirits will be increased by 4.68p.
Can the Minister indicate what will be the estimated yield from the increased taxation on spirits and whether the estimation is based on an assumed increase in consumption?
It is expected that the yield will increase by £6.2 million in the current financial year or by about £7 million in a full year. Bearing in mind many factors, this assessment is based on a possible marginal reduction in the amount consumed.
(Dublin Central): I understood that in the Treaty of Rome, if not by way of article, at least in name, there was provision for the harmonisation of duties throughout the EEC countries. Is there any indication that this will come about?
The situation there remains fluid. The general intention is to harmonise the rates but the Community are a long way off doing so. Spirits are the subject of a draft council directive which is still under discussion in the Community. The aim of this directive is to harmonise the structure of the fiscal duty on spirits on a Community-wide basis but it does not relate to the level of duty. While the Community have harmonisation of the levels of fiscal duty as an objective to be achieved at some date in the future, there is, as yet no firm commitment to this end. Until such time as there is a commitment, member states are at liberty to vary the fiscal rates in any way they consider to be appropriate to their circumstances.
(Dublin Central): Can the Minister give any indication as to the level of duty on a proof gallon in Ireland compared with the rate in the UK?
Any figures we have might not take account of adjustments in the recent budget in Britain but while I have not the precise figure here I can assure the Deputy that the rate in Britain now is higher than the rate here.
Question put and agreed to.
SECTION 37.
I move amendment No. 21:
To add a new subsection as follows:
"(3) The rebate of duty on hard-pressed pipe tobacco shall, as on and from the 16th day of January, 1975, be increased by the sum of £1.236 per lb.".
I was in some difficulty in drafting this amendment because I did not have available the appropriate figures in regard to the rebate on hard-pressed pipe tobacco but the Minister will recall that in the discussion here on budget day it was urged very strongly from this side of the House that, as has been the case on a number of occasions in the past, provision be made for adjustment of the rebate of duty on hard-pressed pipe tobacco. On that occasion I thought the Minister indicated that he was considering this but he does not appear to have done anything about it.
The increases in duty on tobacco, as proposed in section 37, like the increase in duty on beer and spirits, is unprecedented. It is much higher than anything that has ever been applied before. Consequently, to maintain the rebate on hard-pressed pipe tobacco at its present level is to erode very substantially the position of those whom the rebate was intended to benefit. Consumers of this tobacco are not all old-age pensioners but many of them are and it was on that basis that the rebate was applied and adjusted from time to time.
I trust that the Minister would agree that an increase in the rebate is necessary, having regard to the various substantial increases in duty being imposed by this section. If this amendment does not apply an appropriate increase to the rebate, I should have no objection to hearing the Minister on what the figure should be. The object of putting down the amendment was to ascertain whether the Minister agreed in principle that the rebate should be increased and that, if he so agreed, the question of the amount of increase should be a matter for discussion. It is important that the Minister accepts the necessity for increasing the rebate in the context of the huge increase in duty on tobacco that is imposed by this section and that he should accept also that failure to adjust the rebate is eroding seriously the position of those whom the rebate is intended to assist.
Every time there is an adjustment in the rate of excise duty on cigarettes and tobacco one can be sure that somebody in the Dáil will suck the greatest amount of juice out of hard-pressed pipe tobacco. In fairness to Deputy Colley, I remember speeches similar to his being made here in the years 1966 to 1969 when the rate of duty was increased but when there was no corresponding increase in the rate of rebate for this commodity.
The rebate for hard-pressed pipe tobacco—this is the official title for plug tobacco—was introduced in the Finance Act, 1940 and its purpose was to reduce the cost of that type of tobacco. In earlier years the rate of rebate was increased at the same time as the rate of duty was increased but since 1965 there has been no change in the rate of rebate. Apparently, my predecessors did not consider there was any good case for doing so. The position is that hard-pressed tobacco is not consumed now by any class in particular and that to provide a new rebate—the old one is still in existence—would be granting a concession to people who do not merit any greater support from the Exchequer than is merited by other members of the community.
The production of plug tobacco forms a large proportion of tobacco manufactured by the three licensed tobacco manufacturers who are in business in a small way. As the House knows the small manufacturers get another rebate. It is the rebate on tobacco leaf received by licensed manufacturers. That is intended to help the small manufacturers and it does, and correspondingly or consequentially, it helps the consumer. The rate of rebate applicable to the first 50,000 lbs. of leaf tobacco received in any one year was increased from £0.225 to £0.45 per lb. It was increased by the Finance Act, 1974, so, as recently as last year we gave an improvement in the rate of rebate for the manufacturers of plug tobacco. In the circumstances I would not consider that I would be justified in making any further adjustment.
The Minister said that the same reasons did not apply today as applied when this rebate was introduced. I do not see any difference. Hard-pressed plug tobacco is still smoked by people in the old age and lower income groups. There are not many people in the higher income group who buy a half-quarter of plug tobacco. This is still the favourite smoke of old people and people in the lower income groups. The Minister has wrong information if he says this does not apply now, because it certainly does. The old age pensioner has his half-quarter of plug. I appeal to the Minister to consider this amendment very seriously.
The best way to help such an old age pensioner is by generously increasing the rate of old age pension rather than by fiddling around with the revenue laws.
It is putting up the cost of living.
The Minister referred to previous occasions on which the duty on tobacco was increased when the rebate was not increased, but the position is not really comparable because the increase he is now imposing is quite unprecedented. I do not think he will find anything remotely close to the increase in duty which he is proposing now. To the extent that it is such a large increase, it is eroding the position of those who benefit from the rebate.
Furthermore, to talk about the rebate to the smaller manufacturers is simply clouding the issue. It is of value to smaller Irish manufacturers of tobacco but it is not of value in any remotely direct way to those who smoke hard-pressed tobacco. What Deputy Callanan said is correct. From his observation and from my observation it is true that, by and large, the people who smoke this are usually older people and people who are not well off. There are exceptions to this but by and large that is true.
If the Minister is right in saying, as I understood him to say, that it is not one class of the community who now smoke this tobacco, and also that one should not be using the revenue laws to assist people in the poorer sections of the community, logically he should be abolishing the rebate altogether. He is not doing that. He is maintaining it as it is. I suggest the fact that he is maintaining it is clear evidence that he recognises that the sections of the community mainly benefiting from this provision are the poorer and in most cases the older sections of the community.
I have not got the figures available as to what the cost to the Exchequer would be but I would suggest that stepping up the rebate at least in proportion to the increase in the duty could not be excessively expensive on the Exchequer and would be acknowledging the value of the rebate if it is to have any value at all. If there is any substance in what the Minister has said, he should be abolishing the rebate.
I will follow the lead of my predecessors since 1966.
It might be better if the Minister had followed that lead as regards increasing the duty. Then we might not have the same problems.
This is not the biggest percentage increase.
It is the biggest increase by far.
Amendment put.
The Committee divid ed: Tá, 50; Níl, 56.
Tá
- Andrews, David.
- Barrett, Sylvester.
- Brady, Philip A.
- Brennan, Joseph.
- Breslin, Cormac.
- Briscoe, Ben.
- Browne, Seán.
- Brugha, Ruairí.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Flanagan, Seán.
- Gallagher, Denis.
- Geoghegan-Quinn, Máire.
- Gogan, Richard P.
- Haughey, Charles.
- Healy, Augustine A.
- Hussey, Thomas.
- Kenneally, William.
- Lalor, Patrick J.
- Lemass, Noel T.
- Leonard, James.
- Lynch, Celia.
- Lynch, Jack.
- McEllistrim, Thomas.
- Carter, Frank.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard.
- Daly, Brendan.
- Davern, Noel.
- Dowling, Joe.
- Farrell, Joseph.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzpatrick, Tom. (Dublin Central).
- MacSharry, Ray.
- Molloy, Robert.
- Moore, Seán.
- Murphy, Ciarán.
- Noonan, Michael.
- O'Connor, Timothy.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Patrick.
- Smith, Patrick.
- Timmons, Eugene.
- Walsh, Seán.
- Wilson, John P.
- Blaney, Neil T.
Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.
- 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.
- Governey, Desmond.
- Griffin, Brendan.
- Hegarty, Patrick.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Keating, Justin.
- Kelly, John.
- Kenny, Henry.
- Kyne, Thomas A.
- L'Estrange, Gerald.
- Lynch, Gerard.
- McLaughlin, Joseph.
- McMahon, Larry.
- Malone, Patrick.
- Murphy, Michael P.
- Corish, Brendan.
- Cosgrave, Liam.
- Costello, Declan.
- Crotty, Kieran.
- Cruise-O'Brien, Conor.
- Desmond, Barry.
- Desmond, Eileen.
- Dockrell, Henry P.
- Dockrell, Maurice.
- Donegan, Patrick S.
- Donnellan, John.
- Enright, Thomas.
- Esmonde, John G.
- Finn, Martin.
- Fitzpatrick, Tom (Cavan).
- Gilhawley, Eugene.
- O'Brien, Fergus.
- O'Connell, John.
- O'Donnell, Tom.
- O'Leary, Michael.
- O'Sullivan, John L.
- Pattison, Seamus.
- Ryan, John J.
- Ryan, Richie.
- Staunton, Myles
- Taylor, Frank.
- Timmins, Godfrey.
- Toal, Brendan.
- Tully, James.
- White, James.
Tellers: Tá: Deputies Kelly and B. Desmond; Níl: Deputies Lalor and Browne.
Amendment declared lost.
|
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.Costello, Declan.Crotty, Kieran.Cruise-O'Brien, Conor.Desmond, Barry.Dockrell, Henry P.Dockrell, Maurice.Donegan, Patrick S.Donnellan, John.Enright, Thomas.Esmonde, John G.Finn, Martin. |
Fitzpatrick, Tom. (Cavan).Gilhawley, Eugene.Governey, Desmond.Griffin, Brendan.Hogan O'Higgins, Brigid.Jones, Denis F.Keating, Justin.Kelly, John.Kenny, Henry.Kyne, Thomas A.L'Estrange, Gerald.Lynch, Gerard.McLaughlin, Joseph.McMahon, Larry.Malone, Patrick.O'Brien, Fergus.O'Connell, John.O'Donnell, Tom.O'Leary, Michael.Pattison, Seamus.Ryan, John J.Ryan, Richie.Staunton, Myles.Taylor, Frank.Timmins, Godfrey.Toal, Brendan.Tully, James.White, James. |
Section put and agreed to.
SECTION 38.
Question proposed: "That section 38 stand part of the Bill."
This section is to increase the customs duty on imported wine and also the excise duty on Irish wine by £0.562 per gallon. The resultant increase in revenue is estimated at £900,000 in a full year and £800,000 in the current year. These figures include the addition of VAT.
Why, in view of the level of duty now reached on wine, is it still thought advisable to apply the duty to a bottle of wine, irrespective of the value, in other words, that it is not an ad valorem duty? I can understand that if the duty is at a relatively low level administratively it might not be worthwhile applying on an ad valorem basis but I think it is now reaching a level where it seems, on the face of it, to be unjustifiable, to apply the same amount of duty to a cheap bottle of wine as to a very expensive one. I assume the reasoning behind this is purely administrative but I will be glad to hear what the Minister has to say on that topic.
The alcoholic content is not related to price or what the market thinks is a good or a bad wine. The tax is measured by the strength of the wine and not by its fashion, its bouquet, colouring or any of the other items which may well determine what is the price which the market is prepared to pay for a particular wine.
(Dublin Central): Would the Minister agree that we are reaching a situation where the sales of wine are increasing every year? Indeed, with the different qualities of wine which are sold some scheme will have to be devised where different duties will have to be put on. It is unfair that the same duty, which the Minister is applying here, should apply to the very cheap bottle of wine, selling at 65p to 70p, as to a bottle of champagne selling at probably £7.50. I know, from an administrative point of view, this is probably difficult but I think the Revenue Commissioners will have to find a device, as the sale of wine expands, of charging duty according to the price and the quality of the wine.
The 10p increase here can be substantial on a very cheap wine but it is an infinitesimal sum when you take into consideration a bottle of champagne or a bottle of some of the very costly wines. I have seen recently a sale in a shop on Stephen's Green where a bottle of wine was sold in the region of £25 and £30. Surely there is a justification for more duty to be put on wine of that nature than on the very cheap wine which the average household is only able to buy. Would the Minister, in the future, try to devise some scheme whereby the duty can be assessed according to the quality and the cost of the wine?
I can sympathise with the argument the Deputy advances. There is a difference in the rate of duty chargeable on different kinds of wine although the difference is not as great as the difference in the ordinary retail price. There is a higher rate of duty on sparkling wines so, therefore, champagne pays a higher rate of duty than still wine. I accept that the Deputy argues that the difference in price on the bottle, as far as quantity is concerned, may vary as much as £5 and up to £20 for the very rare old wines.
The rate of duty depends on the alcoholic strength, as I mentioned, not on its quality. It depends also on whether the wine is a still wine or a sparkling wine, whether it is wine of fresh grapes or other wine or is imported in cask or in bottle. The vast bulk of imported wine consists of still wine made from fresh grapes of an alcoholic strength not exceeding 42 degrees proof spirit and imported in cask. I will certainly look at the argument which has been advanced and see if there is a possibility of changing the rules. From what I have seen of the operation to date, I do not think that it is one which offers any easy solutions. There is, incidentally, also in this field, a draft Council directive still under discussion in the EEC so maybe that will enforce some arrangement on us.
To some extent the argument put forward has been met by VAT, which collects more in relation to the price but I do not recollect at the moment what rate of VAT is applied to wine.
It is 6.75.
One can see, in the kind of case mentioned by Deputy Fitzpatrick, that although one is collecting more duty on the VAT on an expensive bottle of wine or an expensive bottle of champagne still at that rate it is not in proportion at all. The effect of what we are doing in this section is to impose a much greater duty proportionately on the cheaper wines than on the dearer ones. The Minister has accepted the proposition that that is undesirable. I think Deputy Fitzpatrick is right to urge him to have a look at the situation and see if a better system can be devised.
I could say in defence of the present system that it is one means by which consumption of foreign goods can be discouraged, which is not forbidden by any international obligations we have.
Will the Minister elaborate a little further on that?
Obviously, if ordinary table wine carried no duty at all there might be more of it consumed than Irish manufactured beer. If wine is carrying a rate of duty which operates as a disincentive to very high consumption of cheap wine, it obviously operates to the advantage of Irish produced drinks.
(Dublin Central): We have not any comparable drink.
We have the wine of Dublin.
Would the Minister care to apply that reasoning to duty on tea, which is imported?
I would prefer if we could produce our own tea. A great man recommended that we should all drink light Irish beer and eat honey.
Yes, but, unfortunately, we have not achieved that situation and, therefore, the Minister is faced with the practical difficulty of applying his logic to tea as well as wine.
Question put and agreed to.
SECTION 39.
Question proposed: "That section 29 stand part of the Bill."
This section increases the customs and excise duty on table waters by 02.57p a gallon.
Has the Minister received any representation in relation to this matter from table water manufacturers? I ask this because in the past I had representations, not only when I was Minister but before that, from certain manufacturers of table waters who at that time were operating on a very small tight margin. Certainly some increases in overheads to them could have put some of them out of business. I do not know what their current situation is but if it is anything similar this increased duty could bring about some closures and unemployment. Has the Minister received representations in this regard or has he had information on their present position?
One letter was received from a small firm complaining about the increase but the House will see how insignificant the duty is in relation to the prices charged for table waters in a moment. The excise duty content of a half-pint bottle of table waters is now .62p. Table waters are commonly sold in bottles capable of holding either one-third of a pint or a half-pint and are now on sale at prices up to 15p or 20p. It will be seen that the duty in relation to the prices charged and the overall profit position is insignificant.
May we take it that the Minister is satisfied that the imposition of this additional duty will not cause any unemployment in that industry?
Yes. One extra fine day in summer would evaporate any additional burden this might create. We have had a number of fine days already and I feel sure that last weekend will help in a good way.
Question put and agreed to.
SECTION 40.
Question proposed: "That section 40 stand part of the Bill."
The effect of this section is to increase the rate of betting duty from 15 per cent chargeable under section 40 of the Value-Added Tax Act, 1972, to 20 per cent with effect from 20th January, 1975. It is estimated that the increase in the yield of betting duty will amount to £1.3 million in the current financial year and virtually the same in a full year.
I should like to preface my remarks on this section by saying that I am not a betting man. I am not by any means an authority on the effect of what is involved here.
The Deputy is only a gambler.
I have received representations about this matter from people who appear to know what is involved. If what I have been told is correct, it would seem that there is a serious matter involved. It seems that the Minister's statement on this matter on budget day conveyed that there was going to be an increase in duty, not only in off-course betting but in on-course betting. Subsequently, as a result of, I understand, strenuous representations not only to the Minister for Finance but to the Taoiseach, the proposed increase in duty in on-course betting was dropped.
No. It is a separate Act.
Is the Minister proceeding with it?
Yes. It will be a separate Act. It is not part of the Finance Act. It will come under the Racing Board Act.
When will it be introduced and what date will it be operative from?
Shortly.
Is it operating at the moment?
No.
(Dublin Central): Will it be a 10 per cent on betting offices?
No, we are dealing now with the off-course betting. The other deals with on-course betting which will enable the Racing Board to collect up to 10 per cent, subject to ministerial approval. The present legislation in that area allows a ceiling of 5 per cent but the new legislation will enable a ceiling of 10 per cent.
From what the Minister has stated it appears that legislation will be introduced to allow an increase in the duty on on-course betting but that it may or may not be implemented. Certainly, it will not operate as from 20th January last as the off-course increased duty does. It has been put to me that the person who will suffer as a result of this increase is the man who puts on a small bet with a bookmaker off-course. It has also been put to me that the increase involved is substantial. I have been told that those who bet on the course very often bet more substantially and heavily and it is clear from what the Minister has said that they will not be dealt with in the same way since the increase in duty does not apply at present. It has been put to me that they may not be subjected to the increase announced as a possibility in the budget speech.
I have also been told that those who put on large bets off course are seldom charged the duty they should be charged even at present. It has been pointed out to me that such people will not put on bets with bookies who charge the increased duty. I have been told that the effect of this section is to penalise the person who puts on a small bet off course. If that is so, I do not think it is justified. The Minister ought to attempt to justify what is happening in this Bill in relation to the enforcement of the duty, if it is to be enforced, on large and small bets and also by comparison with the situation where people are betting on-course. The comparisons add up to a discrimination against the person who puts on small bets off course.
I understand the Deputy to suggest that because some people are committing an offence under the law as it stands that we should not increase the rate of duty. I cannot go along with that.
I said it should be equally enforced.
If that is the Deputy's argument, I share his view and he may be assured that the Revenue Commissioners are alert to the possibility of the law being breached and in so far as it is possible to do so, they will vigorously enforce the law.
(Dublin Central): Could the Minister give any indication of what are the duties in the Six Counties?
It is 7½ per cent.
As against 20 per cent proposed in this section.
I am glad the Minister made it clear what is the duty in Northern Ireland and Great Britain. Whether or not the Minister is aware of it, there are certain bookmakers in Belfast who have a large clientele in the Republic of Ireland. One of the effects of this foolish proposal to increase the tax on off-course betting to the penal rate of 20 per cent has been to increase the clientele of bookmakers in Northern Ireland and Britain. Because such clients of bookmakers in Northern Ireland and Britain are not resident either in Northern Ireland or in Britain, in practice they do not pay any tax. Therefore, the effect of this penal proposal has been to cause a lot of bets which would have been struck in the Republic, up to now—presumably duty being payable on some of them at least—to be struck either in Northern Ireland or in Great Britain. Whether or not duty is paid there is irrelevant so far as our Exchequer is concerned because, even if it is paid in Northern Ireland or in Britain, certainly we do not get any of it.
I wonder is the Minister aware of the realities of the situation in relation to this type of betting? Most of the betting which takes place in bookies' offices, over the counter, throughout the country is of very small amounts indeed—25p or so is probably the average. In fact, most bookmakers have a rule that they will not take more than approximately £10 anyway from somebody who comes in casually unless it is laid several hours before the race in question because they want to lay it on. But the arrangements are different for very large punters. There the arrangements are such that, in many cases, they do not pay tax. This may be as a result of their availing of facilities very widely available to them from Belfast or Britain, or for other reasons. Nonetheless, the sort of man who is in the habit of having £500 or £1,000 on a horse, off the course, in practice, will not usually be paying tax to the Exchequer here, whatever tax he may or may not pay to some other Exchequer.
Therefore, the net effect of this is to discriminate against the small punter, the person who is less well-off and who will make small bets only. It has been forecast—and I think events will bear it out—that, as a result of the imposition of this penal rate of tax, which must be the highest in the world on off-course betting, there will be unemployment amongst bookmakers' staffs in the various offices, of which there are a lot throughout the country; also that people who are not licensed bookmakers at all will be encouraged to set themselves up in publichouses and other places as de facto bookmakers prepared to take bets from friends or members of the public generally frequenting such publichouses or other places. Apart from the loss of revenue caused by unlicensed bookmakers accepting bets from the public at large, there is the other factor which is, if anything, more important; that is, that the punters and the public generally have no protection of any kind if that unofficial or unlicensed bookmaker decides to default in his obligations, because he has never applied to the district court for a certificate, or to the Garda, nor has he ever applied to the Revenue Commissioners for a licence.
Although it is a little early yet, so far as one can judge, the results forecast appear to have been borne out by subsequent events. Whether or not the Minister is aware, or whether or not he wants to admit it, I am telling him now that a large proportion of the big bets struck in this country, off the course, are struck with bookmakers outside the Republic with a consequential very heavy loss to our revenue. A few such bets in any one day would equal, in amount, all the little bets struck all over the country of a few shillings at a time. It is really the large bets which are important from the Exchequer's point of view. The Minister would be well advised to take precisely the opposite course to the one he has taken; in other words, to reduce the level of taxation to a reasonable rate, when he would get at least some and, hopefully most, of those bets at present struck outside the jurisdiction and the resultant revenue. The differential between the British and Northern Ireland rate and the new Republic of Ireland one is so enormous it is perfectly obvious that a high proportion of bets of any size or significance are being struck outside the country for that reason.
I put it bluntly to the Minister that if he were to reduce considerably the rate of tax on these bets he would reap far more revenue. Our rate of tax, at 20 per cent, as opposed to the Northern Ireland one of 7½ per cent, is getting on to three times as much. In such circumstances the Minister cannot seriously expect—whatever about the small bets—that substantial bets by consistent punters will be struck in this country, with licensed bookmakers, paying 20 per cent taxation on them. In practice it is not the bigger people with the bigger bets who are penalised in this respect, rather it is the smaller people putting small bets. Naturally, I have no way of forecasting what will be the revenue from this duty in 1975 but I would venture to think—even though the rate of tax is increased substantially—the revenue probably will not show any increase, for the reasons I have indicated.
When speaking on the section earlier, I understand the Minister referred to his proposal to increase the on-course levy—which, of course, is not a tax payable to the Exchequer at all but is payable to the Racing Board in relation to horse racing and to Bord na gCon in relation to greyhound racing—and amend the relevant Act or Acts to allow a levy of 10 per cent to be collected in relation to those. Unless he proposes to change the rules as to where that levy goes, none of it will go to the Exchequer. I can say to the Minister with some certainty now that if he does force the Racing Board and Bord na gCon to increase their levies to 10 per cent, he will do immeasurable harm to the Irish horse racing and greyhound racing industries. I understand that both the Racing Board and Bord na gCon have made it clear they do not want such increases, that they would prefer that the existing situation obtained. I do not suppose this arises directly out of the proposals in this section but it is bound up with them to the extent that in his budget speech the Minister indicated his intention to double the levy on on-course betting. He back-tracked on that afterwards when it was pointed out to him that the Racing Board did not want that and that it would have a disastrous effect on the industry. It was also pointed out to him that it would probably have the effect of reducing the income of the Racing Board rather than increasing it. In another measure the Minister is now apparently proposing to allow the levy to be increased to 10 per cent, without making it compulsory. Provided he leaves it to the discretion of the Racing Board as to whether they want it increased, I suppose there is no great objection to that proposal but if the Minister at a future time wanted to twist the arm of the Racing Board to increase the sum to 10 per cent, I think it would be better if the legislation was not passed.
In the normal way the revenue from levy of the Racing Board will increase from year to year, even if it is only because of the inflationary factor. With inflation running at 25 per cent under this Government, in the normal course of events 25 per cent more money will be expended in betting and, on the face of it, there should be a 25 per cent increase in the levy collected by the Racing Board. It may be that because of the present severe economic conditions people will tend to cut down on their betting and, therefore, the income of the Racing Board will not increase at the same rate as inflation but there does not seem any justification for the proposal to give the Racing Board power to charge 10 per cent and from my information it appears they do not want that power. I do not think they can make public statements that are critical of the Minister, even though he does not know anything about their difficulties, but it has been privately indicated that the Racing Board do not want this because they realise what damage it could do.
With regard to the duty that is proposed in this section, in my opinion, and in the opinion of many others, this increase will not increase the amount of duty. It will drive a still larger number of people to put their bets in Northern Ireland or with unlicensed bookmakers and that is undesirable from the point of view of the Exchequer and from the point of view of the protection of the public. If anything goes wrong or if there is a dispute in relation to a bet they will not have protection. They will not be able to go to the Garda or the district court to object to the renewal of a licence, as they can do if they are betting with a bona fide licensed bookmaker in the Republic.
It is fair to say the licensing system for bookmakers has worked well and the percentage of defaults or disputes that go as far as the courts or the Garda is very small. The obtaining of a licence by a bookmaker here in nearly all cases is a guarantee that he is a reasonable, honourable and solvent person with whom one can safely do business. If it is a question of dealing with people outside the jurisdiction or with those who do not have a licence, in the event of a dispute there is no guarantee that the matter can be cleared up to everyone's satisfaction. Of course, in itself a bet is a void transaction and cannot be sued upon in the Courts because, for technical reasons in the law of contract it is regarded as an illegal contract. Therefore, the only protection the individual punter has is to be able to complain to the Garda or the district court in the event of a default.
Because of the proposals of the Minister, he has driven much of the substantial betting money out of the country. As well as losing money to the Exchequer which he could get if he did not impose this penal rate of taxation, he is also putting the ordinary public into the difficult position in that many of them are forced to bet with people outside the jurisdiction or with unlicensed bookmakers within the jurisdiction. As a result, they have no protection in the event of a dispute.
I had hoped Fianna Fáil had given up the practice in which they engaged in some months ago of making wild allegations that have no basis. For a time they improved but Deputy O'Malley's return to the House has seen a return to the same despicable practice. The facts happen to be against him. It is another case of the truths being clouded by untruths; it is another instance of reckless allegations being made irrespective of the truth.
The facts are against Deputy O'Malley. The estimated increase in revenue of £1.3 million on the basis of what has occurred since January last will be justified and that is what matters. We are concerned with collecting revenue to meet necessary State expenses. Betting is an appropriate activity to charge with a small tax. All I have done is to increase by one-third the tax of 15 per cent that was deemed to be a fit and proper tax by the people who have been so liberal with their criticisms here today. What I have done is not unreasonable in the circumstances when it will produce a significant increase in revenue.
With regard to on-course betting, this has nothing to do with the Finance Act because it does not contribute to the Exchequer. Contrary to what was alleged by Members opposite, people interested in racing were anxious that the income of the Racing Board would increase so that, among other things, the prizes offered would increase and thus ensure that the best bloodstock in the world would run in Irish races. It is a matter for the Racing Board to determine the appropriate charge for on-course betting. The legislation, when it is introduced, will be in the same form as previous legislation. It will simply provide a permissive ceiling and it will be a matter for the board to ask the Minister to approve whatever rate they consider necessary to meet the best interests of the industry. Under the law this is the responsibility of the Racing Board.
We might as well have on record that in the Minister's usual patronising attack on me, or indeed on anyone who dares to criticise his gracious majesty, he did not contradict one syllable of what I said in spite of his pained and patronising tone. He said the estimate made, apparently by the revenue, was £1.3 million and he had no reason to believe that money would not be got. He does not know if that additional money will be got in by the end of 1975. He could not know——
We have the weekly returns from bookmakers. They do not show the reductions the Deputy is alleging, or any reductions.
I made the point that I thought this additional tax would not bring in any increased revenue. That is the view of many people who know a lot more about this business than does the Minister. I still believe that is the case and nothing the Minister has said has contradicted it. The Chair will recall my pointing out to the Minister that there were very substantial sums of money going out of the country in bets every day. I know it.
Is the Deputy owning up?
I have never had a bet outside this country. It is regrettable that this should be happening. The Minister in his reply never even referred to this. He does not care. He never referred to the difficulty he has created for many people who are now forced to bet either outside the country or with unlicensed bookmakers and the dangers they run in dealing with people who are not subject to the licensing arrangements here and to the supervision of the Garda and the courts here. None of this was answered. The Minister could not care less about this any more than about anything else. I object to this high and mighty tone that is put on by the Minister who alleges that what I or Deputy Colley or anyone else on this side says is untrue and not in accordance with the facts and then gives out a load of patronising rubbish which does not contradict one syllable that was said by anyone who spoke here. Everything I said earlier stands and is true and now proved to be true because the Minister has not been in a position to contradict one word of it. He is, therefore, prepared to stand over the situation that large sums of money are going out of the country every day in bets, no duty is being collected by the Exchequer and if people outside the country or unlicensed people inside the country default on those bets the public have no protection. They have been driven to that situation by the increase in the tax to the figure at which it now stands.
It is hard to blame someone who wants to back a horse and finds that in order to put a £1 on the horse he must put £1.20 for placing his bet inside the country. It is particularly galling when in Northern Ireland, even with tax, they only have to pay £1.7½. It is very questionable if British tax is paid on the bets that go to Northern Ireland. I do not know what the arrangements there are but it may be that some bookmakers feel they are not obliged to return them because the bets are taken on the telephone from people outside the jurisdiction. I am not expressing any judgment on that. Anyway it is totally irrelevant to us whether the British Exchequer or the Northern Ireland Exchequer gets this 7½p on the £1. What is relevant to us is that we get nothing.
We are getting nothing on the big bets but the small man who goes in with his 50p or his £1 and bets across the counter has to pay tax. The big fellow does not. This is not a matter that interests the Minister. Apart from the loss to the Exchequer, this is a capital outflow, for the most part in larger bets, which at the end of the year amounts to a sum of some significance, probably quite a few million pounds, which would stay at home if the Minister for Finance did not have such a mental block about all this.
(Dublin Central): I should like to support what Deputy O'Malley and Deputy Colley have said. I believe the Minister is making a mistake in having too much of a gap between tax in Northern Ireland and tax here. I know that last year a representative of a company which was sending 3,000 or 4,000 circulars to England drove to Newry to post them. It was illegal but it was done. The same thing can happen here. I am not a gambling man. Punchestown once a year is my total experience of betting. However, there are people who go to race meetings practically every week. It would be very unwise for the big punter at present to place his bets here in SP offices. If he places a bet of £100 and wins at five to one the tax will be £120. If he places his bet by telephone in Northern Ireland he will pay roughly £46 tax, a saving of £74. He would be a very foolish punter if he did not avail of that opportunity and open a credit account with a bookmaker in Northern Ireland.
I do not believe this will be a paying proposition. I do not believe the Revenue Commissioners will benefit by this increase because the big punter will not place his bets with Irish bookmakers. Of course, the small punter who has not the facilities available to him will still place his bets here. He cannot ring up a Northern Ireland bookmaker to place a five shillings each way bet or a treble. It would not be accepted. Therefore, the person who will be hit here is the average working man who has a flutter on a horse every Saturday. The professional punter will not place his bets with an Irish bookmaker or SP office. He would not stay in business at all if he did so.
The Minister would be wise to have another look at this because it will encourage a flow of money out of the country. Deputy O'Malley mentioned the tote. From the punter's point of view it may be said that, perhaps, they do not require it and would not pass it on but there is the question of whether this would be unfair to the on-course bookmaker. The bookmakers have to live and they give employment. This would place the tote in a much more advantageous position than the bookmakers on the course. We are moving too far away from the amount of tax only a hundred miles away. The Minister must consider whether this will be a paying proposition or not.
The case being made by Deputies on this side is a fairly clear one. On another Bill in this House the Minister saw fit not to apply tax to the bloodstock industry for reasons which he thought best suited to the industry and to the economy in the context of that industry. In relation to betting tax, there was already in existence a tax which was double that in the northern part of the country but this is being increased now by one-third. In terms of the competition in which we must engage the Minister is placing at a greater disadvantage people in this part of the country who are interested in betting vis-à-vis those in the North. That is not a wise policy. I am not saying that our rates of tax in every respect should be the same as those in the other part of the country but the ease with which anybody from this part of the country could place bets outside the State and the advantage to them in the event of wins should make it obvious to the Minister that at least he should endeavour to keep the ratio nearer to a competitive level.
I join with the other Deputies from this side of the House in calling on the Minister to have second thoughts on this measure. I wonder whether it is possible for a Minister for Finance to become so involved in dealing with millions of pounds that he becomes totally out of touch with people such as small punters who on a Saturday afternoon will speculate about 25p on a few horses and then get much pleasure from seeing how they run. On a 25p bet a punter must now pay 5p tax. I have talked with some of the people who are affected by this tax and they consider it to be very severe but there is the wider and more important question of the tax resulting in money going out of the country. Perhaps the Minister is not aware of the pleasure for thousands of people in placing a small bet on a Saturday afternoon.
Deputy O'Malley stated correctly that the effect of the increase as proposed in this section is virtually to bring the duty on off-course betting to three times the rate which applies in the North. The Minister will recall that on a previous occasion he was very concerned about a differential in duty as between this part of the country and the North, so concerned that he imposed an additional tax of 15p per gallon on petrol. He will recall how eloquent he was in relation to that topic. If he believed a word of what he said then, he must be concerned now with the effect of making the differential so great in relation to betting tax and, consequently, he must be concerned with the real danger outlined by Deputy O'Malley—the loss of a considerable amount of revenue.
It would be far more appropriate for the Minister to show his concern in regard to this possibility than to react in the very tetchy way he reacted to Deputy O'Malley and without contradicting any of the arguments put forward by the Deputy. Apart from that aspect, I am very concerned with another aspect to which I adverted earlier, that is the question of how the Minister proposes to justify the imposition of this additional taxation on the punter who places his bet in an SP office as against what he proposes to do in the case of somebody placing a bet on the course. There is considerable discrimination here. I adverted to this earlier but the Minister did not attempt to reply to what I said.
As has been pointed out, the great bulk of those who bet in SP offices are small punters. Some of the reasons for this have been adverted to. The Minister proposes to increase the tax on their bets to 20 per cent. Presumably, very few of them will have any way of avoiding liability for that tax. Those who bet on the course very often invest substantial amounts but one finds there is no date prescribed for the commencement of any increase in levy on their bets, whereas the man placing his bet in an SP office has been liable for the increased duty since January 20th last. That is the first point that alerts one to the difference in approach. Then, one finds that in regard to the on-course betting levy, it will be necessary to introduce new legislation. We all know how long that is likely to take, especially having regard to the approach of this Government to the whole legislative pro-programme and to the bringing forward of legislation. Even when this legislation is introduced and passed through both Houses of the Oireachtas the Minister says it will be an enabling measure. Therefore, we may take it that there is a distinct possibility that there will be no increase in the duty on on-course betting but that if there is an increase it will not operate for a very considerable time —possibly for at least a year after the date of the coming into operation of the new levy on off-course betting.
There is considerable discrimination in the way the Minister is approaching one form of betting as against another. It is possible that that difference in approach is justifiable. I have asked the Minister for any such justification but he has not attempted to offer any. I am asking him again if he will justify it.
There always has been a difference in the treatment of off-course and on-course betting. A person who goes to the races and pays an admission fee has gone to a considerable amount of inconvenience, whereas off-course betting is arranged more easily. I gather that is the reason both forms of betting have been treated differently.
The Minister acknowledges the possibility that there will be no increase at all in the duty on on-course betting while he has applied a quite substantial increase from 20th January on off-course betting. Does he think the factors he has mentioned as justifiying a difference in approach, justify that difference in approach?
The financial resolution on the day of the budget brought this off-course duty into operation. As I said on the day of the budget, legislation is needed to amend the authority which the Racing Board have to fix the levy appropriate to on-course betting.
Surely the Minister will agree that, in dealing with off-course betting at shop level, he is dealing with the poorer sections of the community. Well-off people can afford to go racing and bet on the tracks. Even people on social welfare tend to have a little flutter in the offices, and even old age pensioners. This is victimising the small punter, the less well-off punter, by having a bigger rake-off of taxation at betting shop level.
If the victimisation argument is valid it applied before any changes were made this year where the rate in the off-course betting was three times higher than on on-course betting.
Would the Minister not agree that the bigger punters who bet on the course very often do not pay any tax whereas the small punter has no escape? I am not saying it is right that they should not, but it does happen.
It strikes me that an argument is being advanced here that because a tiny minority break the law we should not have any laws at all. The practices which the Opposition have spent so much time in advertising might lead people to believe that they were legitimate. They are serious revenue offences for which people can be brought before the courts, convicted and fined. Nobody should be under any illusion whatsoever with regard to the seriousness of the activity of the kind which Deputies opposite have been so ready to advertise. If such practices exist, they existed before this year's Finance Bill. They existed for a variety of reasons not the least of which has been mentioned in this House on other occasions. I heard the argument advanced in this House that in cases they arose because bookmakers in Ireland would not be in a position to accept some of the bets offered because they were so big. From time to time people have been found to be engaging in those practices and they have suffered as a consequence by being fined. Anybody who runs this risk will have no cause whatsoever for complaint if and when caught and deservedly punished.
The tiny minority are the big punters.
Whether we like it or not—we might say it is a foolish way of spending their money; but they have been at it down through the years and they will continue to do it —the poorer sections in every town put a few shillings on all the big races. You do not see wealthy people outside bookies' offices. They go to the racecourse to do their betting. Some of the poorer sections never see a racecourse and they put on their few shillings each way every week. Apparently there is discrimination between the amount of tax that will be collected from them and the amount of tax collected on the course.
In view of the apparently blatant discrimination involved against the small punter in this section and the Minister's refusal to reconsider the matter I would ask the Leas-Cheann Comhairle to put the question.
Question put.
The Committee divided: Tá, 61; Nil, 53.
Tá
- Andrews, David.
- Barrett, Sylvester.
- Brady, Philip A.
- Brennan, Joseph.
- Breslin, Cormac.
- Briscoe, Ben.
- Browne, Seán.
- Brugha, Ruairí.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Carter, Frank.
- Colley, George.
- Collins, Edward.
- Connolly, Gerard.
- Cronin, Jerry.
- Crowley, Flor.
- Daly, Brendan.
- Davern, Noel.
- de Valera, Vivion.
- Dowling, Joe.
- Farrell, Joseph.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzpatrick, Tom (Dublin Central).
- Flanagan, Seán.
- Gallagher, Denis.
- Geoghegan-Quinn, Máire.
- Gogan, Richard P.
- Haughey, Charles.
- Healy, Augustine A.
- Hussey, Thomas.
- Kenneally, William.
- Lalor, Patrick J.
- Lemass, Noel T.
- Leonard, James.
- Lynch, Celia.
- Lynch, Jack.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Molloy, Robert.
- Moore, Seán.
- Murphy, Ciarán.
- Noonan, Michael.
- O'Connor, Timothy.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Patrick.
- Smith, Patrick.
- Timmons, Eugene.
- Walsh, Seán.
- Wilson, John P.
Níl
Question declared carried.
Debate adjourned.