Dáil Éireann debate -
Wednesday, 25 Jan 1984

Vol. 347 No. 4

Financial Resolution No. 1: Beer.

The Taoiseach

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, subject to paragraph 4 of the Imposition of Duties (No. 258) (Beer) (No. 2) Order, 1982 (S.I. No. 37 of 1982), 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 26th day of January, 1984, at the rate of £146.047 for, in the case of all beer brewed within the State, every 36 gallons of worts of a specific gravity of 1,055 degrees, and, in the case of all imported beer, every 36 gallons of beer of which the worts were before fermentation of a specific gravity of 1,055 degrees, in lieu of the rate specified in paragraph 4 (1) of the Imposition of Duties (No. 263) (Excise Duties) (No. 2) Order, 1983 (S.I. No. 42 of 1983).

(3) That, subject to paragraph 5 of the Imposition of Duties (No. 267) (Beer) (No. 2) Order, 1983 (S.I. No. 398 of 1983), the drawback on beer provided for in paragraph 7 (3) of the Order of 1975 shall, as respects beer on which it is shown, to the satisfaction of the Revenue Commissioners, that duty at the rate specified in paragraph (2) of this Resolution has been paid, be calculated, according to the original specific gravity of the beer, at the rate of £146.047 on every 36 gallons of beer of which the original specific gravity was 1.055 degrees.

(4) That where it is shown to the satisfaction of the Revenue Commissioners that beer in respect of which the duty of excise imposed by paragraph 7 (1) of the Order of 1975 has been paid has been used, on or after the 1st day of March, 1984, by any person as an ingredient in the production or manufacture of a beverage (other than beer) containing not more than 1.2% of alcohol by volume, they may, subject to compliance with such conditions as they may think fit to impose, repay to that person the duty of excise paid on the quantity of beer so used.

(5) 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

We are opposing this Resolution and I will give our reasons as briefly as possible. If we had before us a budget which set out to achieve any particular economic or social objective, if we had a budget which set out to improve the position of the lower income section of the community, particularly social welfare recipients, we would be prepared to vote for an increase in excise duty, or VAT, or whatever, on beer and spirits. We have done so in the past; we did not oppose increases on beer and spirits when it was shown clearly that the proceeds of the increased tax would go for some worthwhile social purpose.

I have often argued here that the man or woman who likes his or her pint is reluctantly prepared to go along with increases in the price of the pint if he or she thinks that old age pensioners will benefit thereby. If the increase proposed in this Resolution could be seen clearly to be directed to some worth-while social purpose of that sort we would not oppose it. On the other hand, if in this budget there was a general structure which could be seen clearly to be a strategy to improve economic performance, particularly in regard to employment, we would not oppose the increased tax. If the budget provided some important incentives for increasing employment or reducing unemployment we would support such a strategy, and if that involved expenditure from the Exchequer we would be inclined to vote for the necessary taxes to finance such expenditure. That would be our position normally.

However, no such circumstances apply here in regard to this Resolution. There is no strategy, no economic strategy of any sort, and particularly there is no attempt in this budget to do anything to improve the situation in regard to employment — there is no proposed expenditure for employment, no incentives, no strategy of any kind.

Under that heading there is no justification for this increase in tax on a particular section of the community, nor is there any improvement proposed for lower income families and social welfare recipients. What is proposed is minimal to the point of being derisory.

On many occasions as a member of a Government in different capacities I brought forward, or participated in the framing of budgets which did more or less improve the lot of the lower income sections, but I would be ashamed today to bring in a budget which provides an increase of 7 per cent for old age pensioners, the unemployed and all those categories who rely on the State to maintain their already very low standard of living. The percentages proposed are contemptible particularly when there is talk of understanding and sympathising with the plight of those who are unemployed for long periods and then proceeding to increase their allowance from 7 per cent to 8 per cent. It is inconceivable that any Government would do something as minimal and contemptible as that.

We find, on the social side, nothing important enough to justify voting for any tax to support this. The amount given to the social welfare recipients in the budget could be given without raising any tax. It is so minimal that it could well have been done within the compass of the budget arithmetic without any taxation. Another reason why we will not vote for this increase in the duty on beer is because spirits are not being touched. It has traditionally been the argument at budget time about beer on the one hand and spirits on the other that the pint is the most popular drink with employees and the lower income section of the community. It is almost certainly true that spirits are by and large the drink of the wealthier section of the community. Ministers of Finance down the years have always been careful, if at all possible, to favour the beer sector when it came to taxation or at least to keep a balance. On this occasion the person who drinks beer is being asked to bear the entire level of taxation and the drink which is most favoured by the better-off section of the community is not being touched. That is another reason why we do not feel we should vote for this excise duty on beer.

I know that some argument will be advanced about employment in the distilling industry but I do not believe that will stand up. Employment in the brewing industry is just as important as employment in the distilling industry. This discrimination should not be introduced. I am subject to correction but I believe it is the first time it has been introduced. At budget time we always endeavoured to maintain a balance or if possible to favour the section of the community who, because of their economic circumstances, drink beer instead of spirits. If there was some justifiable purpose involved in raising tax on beer we would not very strenuously object to it but on this occasion we see no reason whatever for voting for this increase and we will vote against it.

Mr. S. Brennan

If 2p was the extent of the proposal today one would not worry too much about it but, taken in conjunction with the fact that on 3 January 1983 2p was put on, 6p was put on in last year's budget, a further 2p was put on last July, 2p in November and now another 2p is put on, this makes a total of 14p on the pint in a 12-month period. That is a disproportionate increase on any commodity and is quite a serious imposition which discriminates particularly against the lower paid in the community.

The Commission on Taxation said that narrowly based indirect taxes on goods and services rank very badly in terms of equity. They are not too keen about selecting commodities like this for treatment in this way. This industry has little import content. It is probably the industry with the lowest rate of import content. It works out at approximately 7 per cent import content and is a major contributor to the balance of payments. Any Minister has to be very careful about tinkering with the price in the way this has happened in the past 12 months. There are approximately 35,000 people employed in this industry. That does not take into account those in the hotel industry. The experts estimate that about one-third of expenditure in hotels is on drink. This industry is a major employer in the State.

This industry has a very high content of young people involved in it. There is probably the greatest number of young people employed in this industry when we take all industries into account. When you add up all the increases in the past 12 months culminating with the 2p increase today this makes a major assault on the price of the pint in the past 12 months. This is a direct threat to the jobs of all those young people. The 2p put on today is the end of the thin wedge which was inserted 12 months ago.

Most of the other EEC countries get about 1 per cent of their total revenue from excise duty on beer and spirits and we get about 9 per cent. This industry is being disproportionately attacked. It is very damaging to the great number of young people in the industry and those hoping to get work in it in the year ahead. The various associations involved in the drink industry estimate that the volume of drink sold has reduced by 30 per cent in the two-year period. This shows that the more that is put on the greater the reduction in the volume consumed. As the 14p is piled on the pint the volume goes down, so less money is brought in than if it was left the way it was in the first place. The figures appear to bear that out when one looks at the decrease in the volume of beer and spirits in the past 12 months. About 11 per cent of the tourist revenue comes from the drink industry. I submit that the 2p increase today is the end of a 12-month period where a total of 14p has been put on the pint.

The various associations also estimate that the State is losing between £40 million and £50 million through the smuggling of spirits particularly. This is having a damaging effect on many of the towns and the area around the Border and it is very damaging to the industry generally. They reckon they are losing about £40 million to £50 million per annum. It would be more appropriate for the Government to try to save some of this £40 million to £50 million by looking at the Dickensian legislation that exists. There is a 1924 Act which permits the State to look at the licensing arrangement of a public house which might happen to be dealing with smuggled spirits, but that Act is just lying there and nobody has looked at it for a long time. If the Government could make a hole in that £40 million by looking at the legislation, they would save a great deal more than they will by piling on this 2p every couple of months on an industry which employs 35,000 people, most of them young. An amount of 14p on the pint in 12 months is the record in this House, not this harmless-looking 2p of today.

Mr. Gene Fitzgerald

Like the other speakers, I oppose this taxation imposition for many reasons. The 2p on the pint of stout, beer or ale is an attack by this Government once again on an area of industry, to a large extent native industry, where jobs are being put at risk. My own city and region are suffering to an extent never before experienced. Many in this House may say, "Not Cork again", but it is Cork again. We will have just one traditional industry left in that city after Fords close, and that is the brewing industry. We have the only two independent breweries left in this country, one employing 362 people and the other approximately 260.

In this budget and its overall approach the ordinary wage packet is again being reduced. For example, there is to be a pay freeze in the public sector, according to today's budget. The 1 per cent levy is being continued, according to the Financial Resolutions before us. I suggest that that 1 per cent is a further 1 per cent taken off this year's earnings from everybody, because one could reasonably have expected this Government to discontinue this 1 per cent levy which was put on, we understood, for just one year. As well as that, we have the other tax impositions, including that on clothing which we will come to later tonight, all affecting the wage packet of the worker going home. At the end of the day he in many cases will be spending his residual on such items as beer. Because of the attack on his wage packet he will have less residual to spend on beer. His beer will cost him more because in the last 12 months very substantial increases have occurred.

In today's budget speech the Minister said:

The excise duty increases will take effect from midnight tonight but increases in retail prices must await a new maximum prices order where appropriate.

Can the Taoiseach tell us what the total price increase will be, taking the 2p increase together with what the maximum retail price allowed might be and whatever VAT imposition there is over and above the 2p?

The employment content here is very important and significant. The development of the beer market from March 1983 to March 1984 is estimated in bulk barrels to have dropped by about 3.5 per cent. If that trend continues it will have an impact on employment. As in all their other approaches here, this Government have done absolutely nothing in this budget for employment and efforts and impositions such as this can only create further job losses. As I have said, I speak for an area where the last traditional industry, the last traditional big employer, left to us is the brewing industry. Perhaps successive Governments have gone too far, but this 2p on the ordinary man's pint of beer or stout is again an attack by the Government. We will be opposing this measure and I appeal to Members of this House to support our opposition. There are Labour Members from the Cork area who should be expressing some concern about the unemployment situation there. Here they can make an effort by giving the message to the Government that we will not tolerate any further attacks on jobs in that area. This 2p increase together with what has happened in the last 12 months and the additional increases will all tend to the loss of further jobs.

The Taoiseach rose.

An Leas-Cheann Comhairle

Deputy John Wilson.

The Taoiseach

Sir, we were proposing to conclude at 7.30 p.m. as the Opposition requested. Do they wish to extend the debate? I am at their service, but naturally I assumed I would have five minutes to reply.

Mr. Wilson

I would like to have just one minute. I want to emphasise the danger to employment in this increase in the excise duty on beer. Let us not forget what Deputy Fitzgerald said about the breweries themselves where employment is going down. Let us not forget also that in the retail outlets the numbers of workers are dropping drastically. If the Minister for Finance would come out of purdah for a few minutes and deal with the real world and look at the auctioneers' books in Dublin city he will see that there are more bars on their books that they cannot sell than ever in the history of this city. Let us not forget also the impact on tourists, or on farming because the farmers contract to supply malting barley. I emphasise strongly the difficulties of my area along the Border. This has been referred to already. We are in a parlous economic position there vis-à-vis the large imposts on not merely beer — that is what we are dealing with at the moment — but in other areas also. The Northern Ireland Tourist Board and Bord Fáilte last year had a very appealing and strong promotion from Mourne through the Erne Valley to Carrick-on-Shannon. It did not get the publicity it deserved. It did not get the publicity that shooting gets, but this kind of impost is impacting on that also.

An Leas-Cheann Comhairle

The Taoiseach has two minutes.

The Taoiseach

This is an informal arrangement. I rose five minutes before the end.

An Leas-Cheann Comhairle

If it is informal I will accept it.

The Taoiseach

The Leader of the Opposition suggested that this budget does nothing for lower income groups or for employment and therefore he is not willing to vote even 2p on beer. I would point out to him that, exclusive of the social welfare increases, this budget applies, as I estimate, at least £15 million to lower income groups, £5 million to the family income supplement scheme, £5 million to the remission of the temporary levy on people's incomes under £96 a week, £4.3 million on the increased exemption limits which exempt 15,000 people at the bottom of the income levels from income tax, £.5 million for voluntary organisation helping the less well off, not counting provisions such as extension of the free telephone rental scheme and the additional allowance for elderly people in respect of medical cards. Leaving aside altogether the social welfare increases, the amounts provided for people on low incomes whether they are social welfare or in employment is £15 million or 50 per cent more than the amount raised by the tax on beer.

With regard to the increase in social welfare the Deputy will be aware that, exclusive of taxation, the cost of living increase in the past 12 months has been 6.5 per cent. This budget adds less than 1 per cent to the cost of living. Therefore, including the budget the annualised rate of inflation now stands at 7.5 per cent.

On that basis the increases of 7 to 8 per cent for social welfare are designed to maintain living standards.

Secondly, he said that it did not do anything for employment. I refer him to the extension of the enterprises allowance scheme, the taxation provisions in relation to profit sharing, the £8 million put into roads, the deep-water berth at Ringaskiddy, Galway airport, house purchases through the SDA loans and the Housing Finance Agency and primary school building.

I would refer him to the provision being made for tax relief in respect of long-term risk capital in new firms, to the provision in respect of capital and other allowances and to stock relief provisions. Also, there is a reduction of about one quarter in the tax on residual fuel oil for industry. All of these measures are designed to help industry. In money terms they add up to a total of almost £25 million. Therefore, in respect of the two matters the Deputy mentioned as not being dealt with, there is a provision of £40 million in the budget, of which £10 million is being provided by way of an increase in the tax on beer.

Regarding the points made in respect of consumption, I would point out that the increase in the pint of beer is 2p, including the VAT increase. That is a 1¾ per cent increase in the price of beer or one-quarter of what an indexed-based increase would be. It is one-quarter of what the increase would be if we were to maintain an increase in the price of beer relative to the cost-of-living increase of 7½ per cent.

The official advice in respect of this 1¾ per cent increase in the price of beer indicates that there will be no consequent impact on the level of consumption. On the question of a comparison between spirits and beer, I would point out that the last time the party opposite introduced a budget, that was in March 1982, they increased the tax on spirits by 3p per half glass while the tax on the pint of beer went up by 4p. They did not seem so inhibited then by the relationships between spirits and beer.

There has been a reduction of 35 per cent in the consumption of spirits since 1978 while in the same period the reduction in the consumption of beer has been 2 per cent. The rationale of not increasing the price of spirits by way of taxation at this stage is evident from that. It is believed that there would be a fall in the consumption of spirits if we increased the tax on spirits. I think I have answered the various points made and I do not consider that any case can be made for voting against the 2p increase.

Question put.

The Dáil divided: Tá, 82; Níl, 75.

Tá

• Allen, Bernard.
• Barnes, Monica.
• Barrett, Seán.
• Barry, Myra.
• Barry, Peter.
• Begley, Michael.
• Bell, Michael.
• Bermingham, Joe.
• Birmingham, George Martin.
• Boland, John.
• Bruton John.
• Bruton, Richard.
• Burke, Liam.
• Carey, Donal.
• Cluskey, Frank.
• Collins, Edward.
• Conlon, John F.
• Connaughton, Paul.
• Coogan, Fintan.
• Cooney, Patrick Mark.
• Cosgrave, Liam T.
• Cosgrave, Michael Joe.
• Coveney, Hugh.
• Creed, Donal.
• Crotty, Kieran.
• D'Arcy, Michael.
• Deasy, Mark Austin.
• Desmond, Barry.
• Desmond, Eileen.
• Donnellan, John.
• Dowling, Dick.
• Doyle, Avril.
• Doyle, Joe.
• Dukes, Alan.
• Durkan, Bernard J.
• Farrelly, John V.
• Fennell, Nuala.
• FitzGerald, Garret.
• Flaherty, Mary.
• Glenn, Alice.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Paddy.
• Hussey, Gemma.
• Kavanagh, Liam.
• Keating, Michael.
• Kelly, John
• Kenny, Enda.
• L'Estrange, Gerry.
• McCartin, Joe.
• McGahon, Brendan.
• McGinley, Dinny.
• McLoughlin, Frank.
• Manning, Maurice.
• Mitchell, Gay.
• Mitchell, Jim.
• Molony, David.
• Moynihan, Michael.
• Naughten, Liam.
• Nealon, Ted.
• Noonan, Michael. (Limerick East).
• O'Brien, Fergus.
• O'Brien, Willie.
• O'Donnell, Tom.
• O'Keeffe, Jim.
• O'Leary, Michael
• O'Sullivan, Toddy.
• O'Toole, Paddy.
• Owen, Nora.
• Pattison, Séamus
• Prendergast, Frank.
• Quinn, Ruairí.
• Ryan, John.
• Shatter, Alan
• Sheehan, Patrick Joseph.
• Skelly, Liam.
• Spring, Dick
• Taylor, Mervyn.
• Taylor-Quinn, Madeline.
• Timmins, Godfrey.
• Treacy, Seán.
• Yates, Ivan.

Níl

• Ahern, Bertie.
• Ahern, Michael.
• Andrews, David.
• Andrews, Niall.
• Aylward, Liam.
• Barrett, Michael.
• Barrett, Sylvester.
• Brady, Gerard.
• Brady, Vincent.
• Collins, Gerard.
• Conaghan, Hugh.
• Coughlan, Cathal Seán.
• Daly, Brendan.
• De Rossa, Proinsias.
• Doherty, Seán.
• Fahey, Francis.
• Fahey, Jackie.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzgerald, Liam Joseph.
• Fitzsimons, Jim.
• Flynn, Pádraig.
• Foley, Denis.
• Gallagher, Denis.
• Gallagher, Pat Cope.
• Geoghegan-Quinn, Máire.
• Gregory-Independent, Tony.
• Harney, Mary.
• Haughey, Charles J.
• Hilliard, Colm.
• Kirk, Séamus.
• Kitt, Michael P.
• Lemass, Eileen.
• Lenihan, Brian.
• Leonard, Jimmy.
• Leonard, Tom.
• Leyden, Terry.
• Lyons, Denis.
• Brennan, Mattie.
• Brennan, Paudge.
• Brennan, Séamus.
• Briscoe, Ben.
• Browne, John.
• Burke, Raphael P.
• Byrne, Hugh.
• Byrne, Seán.
• Calleary, Séan.
• McCarthy, Seán.
• McCreevy, Charlie.
• McEllistrim, Tom.
• Mac Giolla, Tomás.
• MacSharry, Ray.
• Molloy, Robert.
• Morley, P.J.
• Moynihan, Donal.
• Nolan, M.J.
• Noonan, Michael J. (Limerick West).
• O'Dea, William.
• O'Hanlon, Rory.
• O'Keeffe, Edmond.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond J.
• Ormonde, Donal.
• O'Rourke, Mary.
• Power, Paddy.
• Reynolds, Albert.
• Treacy, Noel.
• Tunney, Jim.
• Wallace, Dan.
• Walsh, Joe.
• Walsh, Seán.
• Wilson, John P.
• Woods, Michael.
• Wyse, Pearse.

Tellers: Tá, Deputies Barrett (Dún Laoghaire) and Taylor; Níl, Deputies B. Ahern and Briscoe.

Question declared carried.

Financial Resolution agreed to.