Dáil Éireann debate -
Wednesday, 28 Jan 1976

Vol. 287 No. 4

Financial Resolutions. - Financial Resolution No. 1: Excise—Beer.

Minister for Finance (Mr. R. Ryan)

I move:

(1) That in this Resolution "the Order of 1975" means the Imposition of Duties (No. 221) (Excise Duties) Order, 1975 (S.I. No. 307 of 1975).

(2) That the duty of excise on beer imposed by paragraph 7 (1) of the Order of 1975 shall be charged, levied and paid, as on and from the 29th day of January, 1976, at the rate of £60.595 for, in the case of all beer brewed within the State, every thirty-six gallons of worts of a specific gravity of 1,055 degrees, and, in the case of all imported beer, every thirty-six gallons of beer of which the worts were before fermentation of a specific gravity of 1,055 degrees in lieu of the rate mentioned in the said paragraph 7 (1).

(3) That the drawback on beer provided for in paragraph 7 (3) of the Order of 1975 shall, as on and from the 29th day of January, 1976, be calculated according to the original specific gravity of the beer at the rate of £60.608 on every thirty-six gallons of beer of which the original specific gravity was 1,055 degrees in lieu of the rate mentioned in the said paragraph 7 (3).

(4) 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. Haughey

I want to ask the Minister for Finance about this resolution. It seems to me that its effect is to increase the retail price of beer by 5p a pint. I want the Minister to confirm that the corresponding increase in the price of a glass of whiskey is 5p. A rough calculation seems to indicate that the increased rate of duty he is now imposing on beer is twice the increased rate on spirits. I should like the Minister to indicate if that is so.

Secondly, what is the philosophy, the thinking, behind that approach? Spirits are traditionally the drink of the better-off classes. They are being let off lightly and the duty on beer is being increased by twice the amount of the increase on spirits. Beer is the stable drink of the ordinary working man. It seems to me that this is a complete reversal of budgetary tradition here. Normally if it was necessary to increase the duty on drink of any sort, Ministers for Finance put a far heavier imposition on spirits, because of the capacity of people who drink spirits to pay, than on beer, the drink of the ordinary working-class person. On a quick calculation it seems to me that the increase which the Minister is putting on beer is twice the increase he is putting on spirits. That does not seem to me to make sense. Perhaps the Minister would explain if I am right and, if so, what is his approach?

Mr. R. Ryan

In stating the amounts of money the Deputy is correct but he well knows the reason why. He sees that a duty of 5p on beer produces revenue of £19 million whereas a duty of 5p on whiskey produces only £7 million. He might say: "Why not put 10p on whiskey?" Even an increase of 10p on whiskey would not yield £14 million. It is estimated to yield in or about £12 million or £13 million. If you try to take money off beer and load it onto spirits, the amount you have to put on spirits becomes so prohibitive that you quickly reach the point of diminishing revenue rather than increasing revenue.

These increases have been very carefully tailored to a point at which there is unlikely to be a reduction in consumption and, therefore, the greatest possible revenue return. It is not a simple matter to switch from the popular drink to the unpopular. If the Deputy's argument is to be carried to its logical conclusion, then all the additions on alcohol should be put on wine. The Deputy knows well that the net effect of that would probably be that you would kill the consumption of wine and end up with a negligible return in revenue. The figures have been very carefully balanced to ensure that in relation to the drinking habits of the community, and the amount spent by the community, the greatest possible revenue will materialise with the least possible personal disadvantage.

Mr. T.J. Fitzpatrick

(Dublin Central): I support what Deputy Haughey said. This is the first time since I came into this House that I have ever seen any Minister for Finance take this course. Up to eight or ten years ago the emphasis was always placed on additional taxation on spirits and lesser taxation on beer. In latter years the taxation was about equal. If 2p or 3p went on beer a proportionate amount would go on spirits. Here we have a most unusual situation where the Minister has come down heavily on the section of the community who are least capable of paying. I am speaking of old-age pensioners, the unemployed and people like that. They partake more of beer than of spirits.

The Minister is placing double the amount of taxation on the unit as it is bought, the pint or the half glass of whiskey. He is placing twice as much increased taxation on beer as he is on spirits. Before this year is out, the Minister will see a considerable decline in the consumption of beer. Just imagine the effect an increase of five new pennies will have at this time. This is bound to create a downturn in consumption. I cannot understand the Minister introducing this type of taxation. There is no doubt that the people he is hitting are the old age pensioners, the unemployed, people in the lower income bracket. If they were compensated by the additional moneys the Minister is giving to social welfare, I could understand it but with the meagre increase in social welfare and the restrictions he is introducing to deprive some people of social welfare benefit, I believe this taxation is most undesirable.

Mr. Haughey

There is another matter to which Deputy Colley has adverted in his statement. It is not clear from the Minister's budget statement what precisely is the position in regard to the new rate of VAT on beer. I just mention beer because we are dealing with that in the resolution, but it applies to spirits, petrol and so on. In one part of the Minister's statement he says:

... The new 10 per cent rate of VAT will apply from 1st March, 1976, to the increased prices for spirits, beer, tobacco, wine and petrol arising from the proposed excise changes which I shall come to presently....

In another part of it he says:

... When VAT at the present rate is included, the retail price of a glass of spirits will increase by 5p....

Then he says about beer:

... When VAT at the present rate is included, the retail price of a pint of beer of average gravity will increase by 5p....

In one case he is indicating that when VAT at the present rate is included there will be a 5p increase and in another case he says that the new 10 per cent will apply on the new prices after the excise changes have been made.

Mr. O'Kennedy

Which does it mean?

Mr. J. Gibbons

He does not know.

Mr. R. Ryan

Poor Deputy Gibbons, he always has our pity.

Mr. J. Gibbons

I cannot hear the Minister.

Mr. R. Ryan

It is often very hard to hear Deputy Gibbons, too, but we know he is seldom trying to be helpful. The position is, as the budget statement says, that the excise increases will take effect from tonight and VAT at the current rate will, of course, be chargeable on the price which results from that increase. The VAT rate which rises from 6.75 to 10 per cent will not take place, as the budget states, until 1st March, but the other increases take effect from tonight.

Mr. Haughey

The net effect is that the 5p will come into effect immediately and on 1st March there will be a further increase?

Mr. R. Ryan

A further increase of VAT to 10 per cent.

Mr. Haughey

That is the sneakiest sleight of hand I have ever come across.

(Interruptions.)

Mr. R. Ryan

Are the Deputies opposite suggesting we should put the total increase on now, even before——

Mr. O'Kennedy

Tell the truth.

Mr. J. Gibbons

Do not be bluffing.

An Ceann Comhairle

Order.

Mr. R. Ryan

I understand it is now the proposal of the Opposition that the total increase should operate from tonight even though the VAT rate——

Mr. J. Gibbons

Tell us about the increases now?

Mr. R. Ryan

The Opposition were more concerned with conversing with one another than with listening to the statement and they did not hear what I said. I would now invite them to read the script.

Mr. Andrews

The Minister deliberately misled the House.

Mr. Tunney

This query arises from what is before us in the budget statement. I would ask the Minister to indicate in respect of the price of petrol——

An Ceann Comhairle

We are dealing with Resolution No. 1, which relates specifically to beer.

Mr. Haughey

It is the same principle.

Mr. Tunney

In one page of the Minister's speech it is described as being increased by 10p and in another page we are told——

An Ceann Comhairle

Is the Deputy dealing with Resolution No. 1?

Mr. Tunney

I am dealing with Resolution No. 1 and I am trying to discover what I should say to Seán Citizen for whom the Minister told me I should have regard. What will be the price of a gallon of petrol——

An Ceann Comhairle

The Chair proposes to deal with the Financial Resolutions seriatim and we are now dealing with excise on beer.

Mr. J. Gibbons

Could the Minister say by what sum the price of spirits and beer are being increased by the effect of this budget? It is not clear from the Minister's statement. It is suggested in one part of the speech that beer will be increased by an old shilling a pint, which seems extraordinarily large, and in the case of spirits by a different sum, by 3p a glass.

Mr. Haughey

It is the same.

Mr. J. Gibbons

By a shilling a glass. In another part of the Minister's speech there is what I suspect to be a deliberately ambiguous statement relating to the changes that are being made in the rate of value-added tax that is being charged on these commodities. Will the Minister tell us by what net amount are the prices of beer and spirits being increased by the effect of this budget today?

Mr. R. Ryan

As I said earlier, if the Opposition had remained silent in the course of the budget debate they would have heard all these figures being clearly explained, but I am only too glad to be helpful to them notwithstanding their lack of courtesy.

(Interruptions.)

An Ceann Comhairle

If Deputies seek information they ought to listen to it when it is being given.

Mr. C. Murphy

We have enough of the preamble.

An Ceann Comhairle

Would the Minister be allowed to speak?

Mr. S. Flanagan

We are being insulted every time the Minister stands up. We are giving him an opportunity of saying what the situation is in regard to VAT.

An Ceann Comhairle

Please allow the Minister to speak.

Mr. S. Flanagan

I shall continue to interrupt if the Minister insults the Members on this side of the House every time he gets on his feet.

An Ceann Comhairle

The Minister is proceeding to give the information to the House.

Mr. S. Flanagan

Every time a reasonable question was asked the Minister took the opportunity of gratuitously insulting us collectively—

Mr. J. Gibbons

He is an ignorant little fellow.

(Interruptions.)

Mr. Andrews

Resign.

Mr. R. Ryan

The relevance of these remarks to Resolution No. 1 is not clear to me. I shall now deal with the questions, and if the Deputies opposite want a civil answer, I suggest they put their questions in a civil way. The result of Financial Resolution No. 1 is that with effect from tonight the retail price of a pint of beer rises from 28p to 33p. The excise content rises from 10.62p to 15.30p. The consequent increase in VAT as a result of the increase in the price is .32p. Another Financial Resolution, in accordance with what was said in the budget, which increases the rate of VAT from 6.75 to 10 per cent with effect from March, means, subject to the appropriate order being made, the price of a pint of beer will be then 34p, the excise content 15.30p and the VAT content 3.09p.

Mr. Haughey

The ultimate effect of this piece of trickery is that it goes up by 5p tomorrow and it goes up to 6p on 1st March? Is that the position?

Mr. R. Ryan

And we are not prepared to accept the Opposition's suggestion that the total increase would take place tonight.

(Interruptions.)

Mr. T.J. Fitzpatrick

(Dublin Central): What is the percentage increase in VAT on the 28p unit?

Mr. R. Ryan

At the current rate, VAT on the retail price is 1.77p. The consequence of the increase in price will be that the VAT element is increased by .32p to 2.09p.

Mr. Haughey

I want to suggest that for his reputation it would have been far better for the Minister to have come clean with the House and to have said in reference to the pint of beer "Tomorrow it goes up by 5p as a result of the impositions I am putting on and on the 1st of March by another 1p. Altogether I am putting 6p on the pint of beer". For his own sake it would have been far better to have said that openly and honestly and not try this little bit of skullduggery in which we found the Minister out.

Mr. R. Ryan

Nothing could have been clearer. If the Deputies had listened instead of talking to one another they would have understood, but of course they were not interested in hearing.

(Interruptions.)

An Ceann Comhairle

Order.

Mr. T.J. Fitzpatrick

(Dublin Central): How many pence in excise duty does the Minister take out of the price of a pint of stout?

Mr. R. Ryan

I have already given these figures to the Deputy. I have told him that the retail price of the pint at 33p includes an excise content of 15.3p and a VAT content of 2.09p.

Question put.

The Dáil divided: Tá, 69; Níl, 65.

Tá

• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Byrne, Hugh.
• Clinton, Mark A.
• Cluskey, Frank.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Corish, Brendan.
• Cosgrave, Liam.
• Costello, Declan.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Maurice.
• Donegan, Patrick S.
• Donnellan, John.
• Enright, Thomas.
• Esmonde, John G.
• Finn, Martin.
• FitzGerald, Garret.
• Fitzpatrick, Tom (Cavan).
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Patrick.
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Kavanagh, Liam.
• Keating, Justin.
• Kelly, John.
• Kenny, Enda.
• 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.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Cunningham, Liam.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• Fahey, Jackie.
• Farrell, Joseph.
• Fitzgerald, Gene.
• Fitzpatrick, Tom (Dublin Central).
• Flanagan, Seán.
• French, Seán.
• Gallagher, Denis.
• Geoghegan-Quinn, Maire.
• Gibbons, Hugh.
• Gibbons, James.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Herbert, Michael.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael P.
• Lalor, Patrick J.
• Lemass, Noel T.
• Leonard, James.
• 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.
• 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 Healy.

Question declared carried.