Dáil Éireann debate -
Tuesday, 21 Jul 1981

Vol. 329 No. 5

Financial Resolutions, 1981 (Resumed): - Financial Resolution No. 4: Excise— Tobacco Products.

The Taoiseach

I move:

(1) That in this Resolution "cigarettes", "cigars", "cavendish or negrohead", "hard pressed tobacco", "other pipe tobacco", "smoking tobacco", "chewing tobacco" and "tobacco products" have the same meanings as they have in the Finance (Excise Duty on Tobacco Products) Act, 1977 (No. 32 of 1977), as amended by the Imposition of Duties (No. 243) (Excise Duty on Tobacco Products) Order, 1979 (S.I. No. 296 of 1979).

(2) That the duty of excise on tobacco products imposed by section 2 of the Finance (Excise Duty on Tobacco Products) Act, 1977, shall be charged, levied and paid, as on and from the 22nd day of July, 1981, at the several rates specified in the Schedule to this Resolution in lieu of the several rates specified in the Second Schedule to the Finance Act, 1981 (No. 16 of 1981).

(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).

SCHEDULE

RATES OF EXCISE DUTY ON TOBACCO PRODUCTS

Description of Product	Rate of Duty
Cigarettes	£16.80 per thousand together with an amount equal to 22.1 per cent. of the price at which the cigarettes are sold by retail.
Cigars	£30.699 per kilogram
Cavendish or negrohead	£31.022 per kilogram
Hard pressed tobacco	£19.840 per kilogram
Other pipe tobacco	£24.938 per kilogram
Other smoking or chewing tobacco	£25.906 per kilogram

In effect this will raise the excise duty on tobacco products by the equivalent of 3.6p per packet of 20 cigarettes in the most popular priced category. This will attract an additional payment of .4p in VAT at the 10 per cent rate, making a total tax increase of 4p. In the case of pipe tobacco, the increase in the duty element will be in the region of 3p to 5p on the 25 gram pack depending on the type of tobacco. The resultant increase in revenue including the VAT in the current financial year will amount to approximately £5.4 million or in a full year £13.1 million. The increase in the duty will raise the total tax content of a packet of 20 cigarettes in the most popular priced category by 4p, that is from 57.3p for 20 to 61.3p for 20. Because part of the excise duty is ad valorem, based on the retail selling price, the duty content of the price of a packet of cigarettes in price categories higher or lower than the most popular price category will be relatively higher or lower.

Mr. Nolan

The Taoiseach referred to increases, generally speaking, in the price of cigarettes and tobacco. In the budget speech the Minister said that the overall increase, that is the duty on tobacco plus the 50 per cent increase in VAT, would represent approximately 8p increase in the price of 20 cigarettes, but when one considers that manufacturers, wholesalers and retailers of cigarettes, to carry stocks, have to borrow more money to keep those stocks, it is only natural that shortly they will look for a certain increase in the price to compensate for their losses. We can expect as we would in the case of beer, spirits and so on, that we could be looking to a round figure on 1 September or possibly in October of 10p on a packet of 10 cigarettes.

The Taoiseach said that the rise in the price would be 3p or something like that per ounce of tobacco.

The Taoiseach

It will range from 3p to 5p.

Mr. Nolan

Tobacco, particularly hard pressed tobacco is sold in two ounce lots commonly known as a half quarter of tobacco. The hard pressed tobacco is generally smoked by the poorer sections, old age pensioners and lower paid workers. In other years the Minister for Finance when introducing his budget sometimes gave a special rebate in relation to the two ounces of hard pressed tobacco because this affected the poorer sections. We normally compare 20 cigarettes to the two ounces of tobacco. A person either smokes 20 cigarettes or two ounces of tobacco. Will the Taoiseach inform the House, as far as hard pressed tobacco is concerned the exact increase by which the cost will go up inclusive of the 50 per cent increase in VAT plus the duty now imposed. I also appeal to the Taoiseach and the Minister to consider giving a rebate on the hard pressed tobacco for the reasons stated.

The Taoiseach

There is an excise duty differential in favour of the pipe tobacco as compared with cigarettes but it is difficult to measure this accurately due to the fundamental difference in the way tax is levied on cigarettes as compared with other tobacco products. This is part of the effect of our EEC membership which affects the method of levying duties on cigarettes. I am not quite sure about the Deputy's question because there is a range of variation depending on the type of tobacco.

Mr. Nolan

Will the Taoiseach just say what will be the increase in the price of two ounces of hard pressed tobacco?

The Taoiseach

It is measured by grammes and not by ounces and I hesitate to convert grammes to ounces on my feet lest I mislead the Deputy. It ranges from 3p to 5p for 25 grammes of tobacco. There are 28 grammes to the ounce which would give roughly between 5½p and 6p to 11p for two ounces.

Mr. Nolan

About 6p for two ounces of tobacco.

The Taoiseach

It is from 3p to 5p for 25 grammes so it is obviously fractionally above that per ounce. It would be fractionally above the range of 6p to 10p for two ounces.

Mr. Nolan

Therefore the two ounces of hard pressed tobacco including the 50 per cent increase on VAT will be increased by 12p.

The Taoiseach

The figures I am giving now do not include VAT. I was sticking to the resolution.

Mr. Nolan

That was the question.

The Taoiseach

I am sorry if we are at odds here. I am not sure if I can answer that on this resolution. I doubt if I could lay my hands on the precise figures for VAT and so on as quickly as that. However, I will see what I can do for the Deputy. The total increase for 25 grammes in tax, including the VAT increase, for plug tobacco, would be 7.8p; for two ounces it would be just over double that. For flake tobacco it would be 9.4p for 25 grammes and for two ounces obviously just over twice that.

Mr. Nolan

Therefore it is approximately 25p per two ounces.

The Taoiseach

If you take plug tobacco it looks like being about 16p to 17p for two ounces. In the case of the other, flake tobacco, it looks like being about 20p, fractionally over 20 per cent.

Mr. Nolan

I asked a simple question about the price of an ordinary item on sale in any shop in this city or down the country — two ounces of tobacco. The Minister for Finance is imposing a duty on tobacco and cigarettes here today. Yet the Taoiseach is unable to inform this House how much will be the increase on two ounces of tobacco if, say, tomorrow afternoon somebody walks into a shop and asks for two ounces of tobacco. How is the shopkeeper himself to know what to charge for it or what is the duty on it? It is important that the House should know.

The Taoiseach

The difficulty arises from the fact that for the purposes of selling this product we are claiming to use ounces whereas the taxation is being levied in terms of grammes and all the data and resolutions are being passed in terms of grammes. That means I have had to calculate on my feet.

Mr. Nolan

Surely it is the responsibility of the Minister for Finance to have a table written out available to Members of this House and that can be issued to the Press and others tomorrow.

The Taoiseach

The difficulty here is that it depends upon the grade. I do not want to give figures that will mislead anybody because it does depend upon the grade. I can say that for two ounces of hard pressed tobacco I have a figure of 17.4p but for top grade it would be 21p per two ounces. But obviously it depends upon the grade. It is not possible to list every type of tobacco and say in the House here exactly what the amount will be as from a price list. But that is the range of variation within which the increase will fall.

Mr. Nolan

Yes, but normally after a budget there are advertisements issued by the various tobacco companies and others usually in the following day's papers. We must get these Financial Resolutions through this House this evening before 10.30 p.m. Therefore tomorrow morning a shopkeeper can increase those prices. The Minister for Finance is not present in the House and the Taoiseach sitting in for him is unable to inform the House what will be the price of two ounces of hard pressed tobacco in any shop in the country tomorrow.

The Taoiseach

But I have informed the Deputy. The answer to that question is 17.4p on two ounces, but there are other types of tobacco as well. For example there is a top grade which would be 21p. I do not want to mislead anybody by saying 17.4p if they come in looking for top grade tobacco and complain that there is a 21p increase. I am trying to be helpful to the Deputy, as I know he is endeavouring to help his constituents and people generally by clarifying this issue.

Mr. Nolan

The Taoiseach is now sitting in for the Minister for Finance and he should be in a position — as has always been the case with Ministers for Finance in this House — to inform the House of the exact increase on the price of a particular item on sale tomorrow on which a duty is being imposed by resolution of this House this evening. I am not satisfied with the explanation or answer the Taoiseach has given.

The Taoiseach

I am sorry, but a difficulty arises in areas like this where there are variations in quality. The same thing is true in regard to cigarettes. The figures I have given are required by EEC regulations to relate to the most popular price category. But, as I have said, there will be variations upwards or downwards depending upon the particular circumstances and price levels. Obviously I cannot reel off every type of cigarette and every particular brand of tobacco here and the figures; it would not be feasible. In both these cases the effect of the tax depends upon the particular quality of tobacco used. In the case of cigarettes this is very much complicated by the complex taxation system imposed by the EEC which involves the combination of value-added tax and specific duties.

Mr. Nolan

Accepting that there are different brands of cigarettes at different prices, whether tipped or not, generally speaking their price and that of two ounces of hard pressed tobacco are all the same. That is why I asked the question.

The Taoiseach

But I answered that question — 17.4p. I merely added the rider that it would be more for other kinds of tobacco, lest anybody be misled, wishing to help the Deputy. The answer is quite specific and clear in respect of two ounces of hard pressed tobacco. Perhaps I am giving too much information.

Mr. Gene Fitzgerald

What will be the CPI effect of this increase, including the VAT increase in September?

The Taoiseach

Point four three.

Mr. Gene Fitzgerald

That includes both.

The Taoiseach

I am informed — I am not a pipesmoker myself and therefore I am at a certain disadvantage vis-à-vis the Deputy — that it is in fact sold now in grammes and not solely in ounces. The Deputy's suggestion that we have adhered to the old fashioned ounces is not correct. Grammes are used for this purpose.

Mr. Gene Fitzgerald

The expert was Michael Pat Murphy who is no longer with us.

The Taoiseach

We are at a loss without him.

Question put.

The Dáil divided: Tá, 81; Níl, 78.

Tá

• Alderman Dublin Bay-Rockall Loftus, Sean D.
• Allen, Bernard.
• Barrett, Sean.
• Barry, Myra.
• Barry, Peter.
• Begley, Michael.
• Bermingham, Joseph.
• Birmingham, George.
• Boland, John.
• Bruton, John.
• Burke, Dick.
• Burke, Liam.
• Byrne, Hugh.
• (Dublin North-West).
• Collins, Edward.
• Dukes, Alan M.
• Durkan, Bernard J.
• Enright, Thomas W.
• Farrelly, John V.
• Fennell, Nuala.
• FitzGerald, Garret.
• Fitzpatrick, Tom.
• (Cavan-Monaghan).
• Flaherty, Mary.
• Flanagan, Oliver J.
• Fleming, Brian.
• Glenn, Alice.
• Governey, Desmond.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Paddy.
• Higgins, Michael D.
• Kavanagh, Liam.
• Keating, Michael.
• Kelly, John.
• Kenny, Enda.
• L'Estrange, Gerry.
• McCartin, John J.
• McMohan, Larry.
• Markey, Bernard.
• Mitchell, Gay.
• Conlon, John F.
• Connaughton, Paul.
• Connor, John.
• Cooney, Patrick M.
• Corish, Brendan.
• Cosgrave, Liam T.
• Cosgrave, Michael J.
• Coveney, Hugh.
• Creed, Donal.
• Crotty, Kieran.
• Crowley, Frank.
• D'Arcy, Michael J.
• Deasy, Martin A.
• Desmond, Barry.
• Desmond, Eileen.
• Donnellan, John F.
• Mitchell, Jim.
• Molony, David.
• Moynihan, Michael.
• Nealon, Ted.
• Noonan, Michael.
• (Limerick East).
• O'Brien, Fergus.
• O'Brien, William.
• O'Donnell, Tom.
• O'Keeffe, Jim.
• O'Leary, Michael.
• O'Sullivan, Toddy.
• O'Toole, Paddy.
• Owen, Nora.
• Pattison, Séamus.
• Ryan Richie.
• Shatter, Alan.
• Sheehan, Patrick J.
• Spring, Dick.
• Taylor, Madeleine.
• Taylor, Mervyn.
• Timmins, Godfrey.
• Treacy, Seán.
• Tully, James.
• White, James.
• Yates, Ivan.

Níl

• Acheson, Carrie.
• Ahern, Bertie.
• Allen, Lorcan.
• Andrews, David.
• Andrews, Niall.
• Aylward, Liam.
• Barrett, Michael.
• Barrett, Sylvester.
• Brady, Gerard.
• Brady, Vincent.
• Brennan, Paudge.
• Brennan, Seamus.
• Briscoe, Ben.
• Burke, Raphael P.
• Byrne, Hugh (Wexford).
• Callanan, John.
• Calleary, Seán.
• Clohessy, Peadar.
• Colley, George.
• Collins, Gerard.
• Conaghan, Hugh.
• Connolly, Gerard.
• Coughlan, Clement.
• Cowen, Bernard.
• Crinion, Brendan,.
• Crowley, Flor.
• Daly, Brendan.
• Doherty, Seán.
• Ellis, John.
• Fahey, Jackie.
• Faulkner, Pádraig.
• Filgate, Eddie.
• Fitzgerald, Gene.
• Fitzgerald, Liam.
• Fitzpatrick, Tom (Dublin South-Central).
• Power, Paddy.
• Reynolds, Albert.
• Smith, Michael.
• Tunney, Jim.
• Fitzsimons, Jim.
• Flynn, Pádraig.
• Foley, Denis.
• French, Seán.
• Gallagher, Denis.
• Gallagher, Pat Cope.
• Geoghegan-Quinn, Máire.
• Harney, Mary.
• Haughey, Charles J.
• Hyland, Liam.
• Joyce, Carey.
• Keegan, Seán.
• Kenneally, William.
• Killilea, Mark.
• Kitt, Michael P.
• Lemass, Eileen.
• Lenihan, Brian.
• Leyden, Terry.
• Loughnane, William.
• Lyons, Denis.
• McCarthy, Seán.
• McCreevy, Charlie.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Morley, P. J.
• Murphy, Ciarán P.
• Nolan, Tom.
• Noonan, Michael J. (Limerick West).
• O'Donoghue, Martin.
• O'Hanlon Rory.
• O'Leary, John.
• O'Malley, Desmond.
• Walsh, Seán.
• Wilson, John P.
• Woods, Michael J.
• Wyse, Pearse.

Tellers: Tá, Deputies L'Estrange and Mervyn Taylor; Níl, Deputies Moore and Briscoe.

Question declared carried.