We are opposed to this section as a matter of protest against the tax impositions of this and all the following sections. We are opposing this section.
Finance Bill, 1986: Committee Stage (Resumed).
SECTION 55.
Question again proposed: "That section 55 stand part of the Bill."
As the Deputy will be aware, this section, along with the others that follow it, forms an integral part of the financial provisions made by the Government in the budget. The purpose of these financial provisions is to provide for reductions in the income tax provisions we have had occasion to debate already. As I pointed out to the House, we are having significant reductions in income tax in this year's budget.
I must confess to a certain puzzlement that Deputy O'Kennedy would seek to oppose this section because it is merely an interpretation section. Whatever about opposing sections that actually mean something, opposing sections which merely determine the meaning of terms would suggest to me that perhaps Deputy O'Kennedy had not even read the Bill, or certainly the section, before he decided to oppose it. It is not normal to suggest that one will oppose an interpretation section, whatever about opposing sections that impose a charge, when there may be a legitimate reason for so doing. I am puzzled that Deputy O'Kennedy should oppose an interpretation section.
The Minister is easily puzzled.
I am sure the public would be interested to know why an interpretation section, rather than the others which we would reach in a few minutes, should have been chosen by Deputy O'Kennedy as something he would oppose. Although the section contains two lines only — and therefore would not tax anybody to read them — I would have to ask the Deputy whether he actually read the section before getting up to oppose it. It would appear to me that opposing an interpretation section is a rather odd procedure, to say the least. However, I will read the section for the benefit of the House so that the House can come to its own conclusions as to Deputy O'Kennedy's momentous logic in deciding to oppose a section of this innocuous character. The section says:
In this Part "the Order of 1975" means the Imposition of Duties (No. 221) (Excise Duties) Order, 1975 (S.I No. 307 of 1975).
I must ask myself: what great issue of public policy is Deputy O'Kennedy raising when he wishes, perhaps, to seek to have this House vote on this section involving considerable loss of time in a debate of limited time, indeed limited on the basis of an agreement with Deputy O'Kennedy.
If the Minister wants, I will explain to him again.
I will be interested to hear from Deputy O'Kennedy why he should oppose an interpretation section. Certainly I am prepared to be enlightened on this subject, as that is reasonable, but I must confess to a certain puzzlement that the Deputy would wish to oppose an interpretation section when he has plenty of opportunity all day to oppose and discuss substantial sections that impose actual charges.
I do not need to justify to this Minister or this Government what action I take and the reasons for it. But, in so far as the Minister does not appear to have even the capacity to understand our position on this whole Part I indicated to him, had he been listening, that I am opposing this as a formal protest against all of the other sections that follow imposing the heaviest levels of excise duty across a range of products, be they petroleum, beer, spirits, each and every one of them. If the Minister is not conscious of the fact that this Government have raised indirect taxes to the highest level of any country in western democracy, then he should not be where he is. After full consultations, on behalf of my party, I have decided that this section which the Minister acknowledges is an interpretation section — I presume it is inserted for some purpose because the Minister inserted it at the beginning of the customs and excise provisions——
If the Deputy reads it he will know exactly what is its purpose.
I am well aware of it. It is for that reason that I am using this procedure, if you like to demonstrate our total opposition to what follows.
This is interesting as an indication of the studiousness with which Deputy O'Kennedy applies himself to his brief, that when he has plenty of opportunity to oppose sections that actually impose charges, he proposes to initiate a debate on an interpretation section which merely defines, for the purpose of the section, what order we are talking about, that is the Order of 1975. It does not impose a charge; it does not argue about any matter.
I would have to assume that this is an example of the same studiousness that Deputy O'Kennedy applied when he put the Members of this House, and his own party, through the House to vote against section 3 of the Bill. If that vote had been carried all of the tax reliefs granted in this budget would have been withdrawn and we would have been back to a higher level of taxation.
The Minister is not dealing with the point.
Yet Deputy O'Kennedy and his colleagues on the other side voted against the tax reliefs in this budget. Therefore, I must ask myself: what degree of thought did they put into the position they adopted in this House, having called for larger tax reliefs, they then proceed to actually vote against what they would describe as the limited tax reliefs.
(Interruptions.)
We are on section 55. Will the Minister please come to section 55?
I am surprised that Deputy O'Kennedy should seek to oppose an interpretation section but in view of the illustration—and it is merely an illustration I have just given—of his mastery of parliamentary tactics, I am not really surprised that he should choose to oppose an interpretation section when there are plenty of others he could have opposed. I suppose I am not to be a judge of Deputy O'Kennedy's parliamentary tactics. Indeed, I am advised that he consulted with his Leader on this subject as well, or so he tells us, and that after deep consultation he decided to oppose this section. I invite the Leader of his party to intervene in this debate and perhaps advise us why he agrees with Deputy O'Kennedy in deciding to oppose a mere interpretation section when there are so many other things upon which——
On a point of order, I would just like to point out to you, Sir, that the position we are in at present is that the Minister is deliberately wasting time because he has received instructions from his Whip to keep talking until Government Deputies arrive in the House. I just want to draw your attention to that, A Cheann Comhairle, if it is in order.
I am asking, on a point of order, if that is a point of order. If it is not, perhaps the Deputy can be restrained by the Chair.
I shall hear the submission first.
Is it in order that the Minister should carry on in this facetious fashion when we are discussing the Finance Bill?
I think that we should get on with the Bill.
In continuing my contribution, I have no wish to be interrupted by Deputy Haughey, or indeed to provoke the Deputy by pointing out the ridicule in which he is putting himself and his party by defending his spokesman on this occasion in proposing to waste the time of the House in a division on a mere interpretation section, which as far as taxation is concerned means absolutely nothing.
The Minister may enjoy himself.
But that does not appear to worry Deputy O'Kennedy. He is perfectly happy to oppose a section of this kind. I should like to advise the House, in view of the fact that Deputy O'Kennedy has raised the matter, that this is quite a lengthy Imposition of Duties Order of 1975. It contains many sections, but to the best of my knowledge it has been accepted as a normal part of a Finance Bill that this order be cited in Finance Bills in the definition section at the beginning of this part of the Bill each year as being the order of 1975. That definition is accepted; we would have to cite the order in full in the Bill if we were not allowed to use the shorthand term "Order of 1975".
Deputy O'Kennedy has complained about the length of the Finance Bill. It would be far longer if we had to reproduce the entire contents of the order of 1975, which runs to many pages. I am sure that he is familiar with the order, having read it, in view of his having raised an objection. I would invite Deputy O'Kennedy to indicate what objection he has to the order of 1975 being cited in this case by shorthand rather than in extenso. It strikes me as rather strange that when he could oppose so many substantial matters in the Bill he chooses to have a division on a mere interpretation section. I must say that it reminds me of his parliamentary folly on section 3, when he opposed the giving of tax reliefs. He is similarly wasting the time of the Members of his own party by going through lobbies on an occasion of this kind——
Repetition.
——to do detriment to their own cause.
Question put.
The Committee divided: Tá, 70; Níl, 58.
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.
- 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, Martin Austin.
- Desmond, Eileen.
- Donnellan, John.
- Dowling, Dick.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Farrelly, John V.
- Fennell, Nuala.
- FitzGerald, Garret.
- Flaherty, Mary.
- Flanagan, Oliver J.
- Griffin, Brendan.
- Harte, Patrick D.
- Hegarty, Paddy.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerry.
- McGahon, Brendan.
- McGinley, Dinny.
- McLoughlin, Frank.
- Manning, Maurice.
- Mitchell, Gay.
- Mitchell, Jim.
- Molony, David.
- Moynihan, Michael.
- Nealon, Ted.
- Noonan, Michael (Limerick East).
- O'Brien, Fergus.
- O'Brien, Willie.
- O'Keeffe, Jim.
- O'Sullivan, Toddy.
- Pattison, Séamus.
- Prendergast, Frank.
- Quinn, Ruairí.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick Joseph.
- Skelly, Liam.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madeline.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John.
- Burke, Raphael P.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Kirk, Séamus.
- Kitt, Michael.
- Lenihan, Brian.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McCarthy, Seán.
- Morley, P. J.
- Moynihan, Donal.
- Nolan, M. J.
- Calleary, Seán.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Brian.
- Daly, Brendan.
- Doherty, Seán.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Liam Joseph.
- Flynn, Pádraig.
- Foley, Denis.
- Noonan, Michael J. (Limerick West).
- O'Connell, John.
- O'Hanlon, Rory.
- O'Keeffe, Edmond.
- O'Kennedy, Michael.
- O'Leary, John.
- Ormonde, Donal.
- O'Rourke, Mary.
- Power, Paddy.
- Reynolds, Albert.
- Treacy, Noel.
- Wallace, Dan.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael.
Tellers: Tá, Deputies F. O'Brien and Taylor; Níl, Deputies V. Brady and Barrett,(Dublin North-West).
Question declared carried.
SECTION 56.
Question proposed: "That section 56 stand part of the Bill."
I must confess to a certain amusement that Deputy O'Kennedy has now succeeded in his great ambition and had a division on the interpretation sections. Obviously, his warm feelings about this interpretation section were not shared by many of his Members because a very large number of them were absent. This suggests that it is not only Deputy Haughey who has no confidence in Deputy O'Kennedy but the entire Fianna Fáil Party have no confidence in him either because they did not show much confidence in turning up for the division lobby this morning. This suggests that Deputy O'Kennedy should, to use the time honoured phrase, consider his position.
Deputy Dukes, all is forgiven. Come back, you were much more civilised.
Question put and agreed to.
Section 57 agreed to.
SECTION 58.
Question proposed: "That section 58 stand part of the Bill".
This section imposes extra excise duty on petroleum products. I want to outline in detail the impact of the excise and VAT levels which the Government have imposed on petroleum products. The House having listened, if they do, will be satisfied that as a consequence of the level of excise duties which are being imposed by the Government the case for opposing this section is unanswerable for those who wish to listen. For those who do not, it is a matter for themselves.
From time to time the Minister for Finance has had some good advice, not just from this side of the House but, may I say as well, from sensible Deputies in his own party in relation to tax impacts, particularly the effect they are having on certain regions. I want to instance sensible Deputies such as Deputy McGahon, who has on many occasions spoken in this House on behalf of his constituents, who have been very seriously affected. I suspect that this must be affecting County Meath, the county which the Minister and Deputy Farrelly represent. They must know that the impact of the level of duty which they are imposing on hydrocarbons has been disastrous for the whole economy but in particular has decimated the Border regions. I would like to illustrate this by reference to figures which cannot be contradicted because they are official figures released by the Department of Finance.
When this Government came into office in 1982 the actual consumption of petroleum products was 49.10 million hectolitres. That consumption dropped in 1985 to 41.71 million hectolitres, a drop of over eight million hectolitres. This represents a drop of 20 per cent in the current consumption below last year's figures. To go back a little further, because this Minister had a hand in this during his short period as Minister in the last Coalition Government——
1980 would be a good year to go back to.
I am going back to 1980 if the Minister would allow me to do so. All the indications are that his stay in office this time will be even shorter and that the consequence of the excise duties which he is imposing will be even more disastrous. The actual consumption of petroleum products in 1980, before this Minister got his hands on the loot as a previous leader of his party would have said, was 61.75 million hectolitres. That is quite extraordinary. That figure has now dropped to 41.71 million hectolitres. The drop in consumption of petroleum products since then is exactly half of current consumption. There is no State anywhere in the world that can point to such a huge drop in the consumption of any product and especially petroleum products. This is as a direct consequence of the level of taxation imposed by this Government and which the Minister now proposes to increase in this section.
The tax element in the retail price of premium grade petrol is now 67 per cent. Before this Minister went in the wrong direction and started to impose penal levels of taxation, the tax element on the retail price of premium grade petrol was 48 per cent. We are witnessing the most outrageous consequences of ridiculous levels of taxation on our petroleum products in particular. This can be further illustrated by reference to the effect it is having especially on the motor industry. The fall off in consumption is reflected even in general revenue. Before this Minister came into office there were increases of the order of 25 per cent per annum. The increase in revenue from petroleum products in 1984 over 1983 was just less than 2 per cent. With this extra level of excise duty being imposed, all the indications are that the Minister is determined to do four things: first of all, to ensure that the revenue which will accrue even to himself and to the Revenue Commissioners will be further diminished; secondly, to crucify the motorists and the motoring public; thirdly, to decimate the industry; and, fourthly, to continue to make a major contribution to the Exchequer of the British Government through cross-Border leakage which is particularly evident in this area. In 1980 petrol sales through retail outlets represented 1,325,000 litres. In 1985 that figure had dropped to just over one million litres. These figures are available in the Minister's Department. The Government seem determined to continue on this path and Excise duty receipts are dropping all the time.
Between 1982 and 1984 deliveries of petrol to outlets in Border areas, including the Minister's constituency—my colleagues have been arguing in favour of some scope for economic activity in their counties—dropped by 58 million litres causing the closure of 57 filling stations and the loss of not less than 200 jobs. This pattern has increased since then and is continuing all the time. Anyone who goes near the Border will see, as I have seen myself on more than one occasion, that we are witnessing the inevitable consequences of crazy tax levels.
Since I came to the Oireachtas I have not seen a Government getting the benefit of such opportunities from outside as this Government have been getting. The price of oil on international markets has dropped in the space of nine months to pre-1973 levels. Everywhere else throughout the world Governments are properly taking advantage of this marvellous bonanza to generate new economic activity by passing on the benefits of falling oil prices, which have dropped in nine months by as much as they increased in ten years.
But what do the Government propose to do? They propose not only to maintain present levels of taxation but to impose more and more taxes. Even when benefits are due to accrue, the people are being told that the Government are determined that these benefits will not be passed on. I wonder if the Minister was up in time this morning to hear on "Morning Ireland" a very eminent international economist and consultant on government policy, Victor Kian, who will be addressing the Marketing Institute of Ireland this evening on the subject "Going for It". His theme will be that, now that we have a chance, we should take it and go for it. He was asked this morning what the Irish people ought to do in present circumstances. I would point out that he is not associated with any group in Ireland. He told the interviewer that the first thing the Irish people should do is to change the Government.
The man is an international economist of the highest repute. He said that, instead of allowing the extra benefits from outside to be passed on here, the Government are continuing to follow the blind path of imposing extra taxes on every possible commodity. The Irish Times today carries an advertisement for this evening's lecture and on the back page, in the same column, the paper carries an advertisement from motoring interests headed “Axe the Tax”. It states:
Did you know:
1. That for every £10 you pay for petrol the Government tax take is £6.67?
I do, and so does the Minister. In other words, out of every £10 paid, retail, for petrol the retailers and the petrol companies take £3.30. The petrol companies have been described as major barons and as "The Seven Sisters", but they are getting only a minuscule proportion of the price of petrol, 3.30 per cent. The advertisement continues:
2. That when you buy a £10,000 family car the Government collect £4,200.
Cheers for the Government, who collect 42 per cent out of every £10,000 car sold. The advertisement goes on:
3. That Government taxes on motoring amount to £800 million a year —£1,200 per car owner.
That is the reality and motoring interests have found it necessary to draw public attention to the harsh taxes of the Government. The final paragraph in the advertisement is:
Join the campaign to cut motoring taxes. Visit the SIMI Stand in Hall E at the Spring Show and collect your free car sticker.
That is the only free thing car owners will get. Maybe the Minister should go there. The advertisement finishes "Axe the Tax".
The figures I have given demonstrate beyond yea or nay that it is time the Government realised that a policy based on imposing the highest levels of tax on every possible product has been disastrously wrong. One of the reason why those Border counties, with which the Chair is familiar, have been decimated in the past few years is that the price differential in regard to petrol here and in the North is a major attraction for all Irish citizens living within 30 miles of the Border to go North to buy petrol, to the benefit of Margeret Thatcher and her Chancellor of the Exchequer. Of course, while they are there to fill their tanks they buy other commodities in respect of which the price differential may not be so great, beer, spirits and other goods. The Irish economy generally, but the Border counties in particular, even the Minister's county, have been suffering greviously from such differentials. My advice therefore is that, instead of axing the tax we should axe the Government because while they are there the economy will continue to suffer, and so will our people.
The most substantial advice the Deputy gave during his long contribution, and the only one with which I agree, was to people to visit the Spring Show. He, particularly, is not in a great position to put this case because when he was Minister for Finance in 1980 he had the doubtful distinction of adding 13.3 per cent to the tax on petrol. The budget this year increased the tax by 3.6 per cent, only a quarter of the level of increase imposed by Deputy O'Kennedy when he had the honour to hold the office I now hold. We all learn from our mistakes and perhaps Deputy O'Kennedy, in Opposition, has realised how bad his 1980 budget——
Are my figures wrong?
The Deputy's fulsome oratory was interesting——
If the Minister can contradict a single figure I gave I will withdraw my opposition to the section.
I would ask the Deputy to do the same in regard to the 1980 figures. I make the point that our level of taxation on petrol is not by any means the highest in Europe. France, Italy and Denmark have higher rates of taxation. Deputy O'Kennedy will not be aware that in discussions in the meetings of the Council of Economic and Finance Ministers which I attend regularly, views have been expressed by a number of Ministers that it is appropriate during this year for them to increase further the level of taxation on petrol in order to ensure there is not a distortion of energy prices on a temporary basis because of the recent fall in prices. Other Governments are considering increases in petrol prices on top of existing levels. I can tell the House we have no plans to follow that advice which is being tendered by member Governments in the EC.
The Minister should follow the advice of Deputy McGahon. He is a sensible man.
The ultimate result of Deputy O'Kennedy's advice would be that taxation policies here with regard to excise duties would be determined not by decisions of our Government but by the decisions of Her Majesty's Government in Britain. If Deputy O'Kennedy's advice were to be the guiding principle, essentially we would set our petrol price by reference to whatever decision was made by the Rt. Hon. Nigel Lawson, Chancellor of the Exchequer.
For reasons that are well known to the Deputy — he had a part in them — we have a far larger financial requirement. A vast amount of spending was initiated in 1977 by Deputy O'Kennedy and his colleagues and thus we now have the situation that virtually every pound of income tax has to be used to pay interest on debt. Essentially, we have to run the country on whatever revenue we can get from VAT and excise duties. Were that not the situation, of course we would have lower levels of excise duties on petrol. We would like to be able to do what some other countries have been able to do, but not all countries because, as I have pointed out, three other countries have higher rates on petrol. If we had not accumulated this very large level of debt through policies in which Deputy O'Kennedy played a large part, we would not need to have duties as high as they are. However, we can only take the situation as we find it, as it was left by Deputy O'Kennedy and his friends when they left office initially in 1981 and finally in November 1982.
Deputy O'Kennedy seems to be unable to make speeches for himself. He has to quote foreign economists who are offering political advice to us. Deputy O'Kennedy might not think it entirely appropriate to use quotations of that kind. The Irish people are well able to make up their own minds about who should govern them.
The Wall Street Journal said the same.
The people are well able to make up their minds about how they should be governed without the advice of foreign economists, quoted with approval by Deputy O'Kennedy, in addition to his suggestion that we should keep our policy on excise duty in line with that initiated by the Government across the water.
Of course I have to admit that the level of excise duty on petrol is higher than we would like it to be. I further admit that it causes considerable distortion of trade on the Border, that because of the wide difference in price there are people who frequently buy their petrol on the other side of the Border. Anybody who did not admit that would be blind. That is the case and there is no point arguing about it. What we have to recognise is that that situation is the direct result of the fact that our income tax is entirely used up in debt servicing. A large part of the responsibility for that rests on the shoulders of the party opposite because they got the country to the point where we do not have the freedom we would wish to levy lower taxes of various kinds. Deputy O'Kennedy opposes the suggestion that we should raise the money by substantially increasing income tax and he also opposes cutting public expenditure in various areas. Unless he wants us to do those things, I cannot see what choice there is, given the legacy of debt the Government have to service——
That is the problem: the Government cannot see.
——but to have an unacceptably, and regrettably, high level of taxation in respect of excise duties. That is the reality that faces the country and no amount of sonorous oratory by Deputy O'Kennedy will change that fact or erase his own record in the matter. When he had the opportunity to do something about it he increased petrol prices by 13.3 per cent in 1980 as against an increase of 3.6 per cent this year. Those material facts must be put before the house. If Deputy O'Kennedy calls for a vote on this occasion, I hope he will have more support from his party than he got on the last division. He was able to get in only 57 members of his party. It appears they do not share his view of parliamentary amusement and time wasting in calling for a division on the interpretation of sections.
It is the Minister who is time wasting.
Obviously some members of his party had the good sense to stay in bed this morning and not to come here to support Deputy O'Kennedy in the lobby. I invite him now not to prolong this debate any further. Let him call for a division now and see if he can improve on his score in the last division.
The Minister has invited me to call for a division but I do not propose to do that immediately. He referred to 1980, the year after I was responsible for financial affairs. Will he indicate the total tax on a premium grade of petrol after 1980? Then, let him indicate the difference between that and what he is now proposing. Those figures will show more than anything else the real facts of the situation. The Minister made the case that I imposed a crushing burden of taxation on motorists.
That is so.
I invite the Minister to put on the record the total tax element on a premium grade gallon of petrol after I left office as Minister for Finance and to compare that with the figure he is now proposing by way of total tax. The figure is now 178p of the total price of 266p but before the Government came to office on the last occasion the figure was 138p. There has been an increase of 40p per gallon of petrol in the past few years.
I was sorry to hear Deputy O'Kennedy make personal references to the Minister for Finance. At least he should give the Minister credit for introducing a Finance Bill that was a great improvement on the budget. For that reason I pay my compliments to the Minister.
Like Deputy O'Kennedy, I was up early this morning and I heard that economist exercising all his eloquence on radio in an appeal for a change of Government. The first thing that crossed my mind was that the economist was visiting this country to deliver an address and that he did not know the Opposition. Otherwise he might not have been so eloquent.
(Interruptions.)
As Deputy O'Kennedy referred to the economist he was inclined to boast that he was the only early riser in the Dáil who could have heard this man's eloquence.
I knew Deputy Flanagan was up.
I have visited many countries but I always made sure when I was abroad as a guest never to make any reference to the economy or the state of Government within a country. We hear the Minister blaming Deputy O'Kennedy for the high rate of duty on petrol and Deputy O'Kennedy blaming the Minister for it. The motorist does not give two damns who is responsible — he has to pay. I appeal to the Minister to do something about the price of petrol. While he states that other countries have higher rates of duty on petrol, these countries may not have such a high rate of tax and the outrageous rates of insurance which amount to sums of £1,000 or £1,200 per annum for some motorists, as well as the additional price of oil.
We have the dearest possible motoring in the world. In Ireland motoring is no longer a luxury but a necessity. Every worker has a car, although whether he has paid for it is a different matter. Every family must have a car. Taking into consideration the level of taxation and the amount of money screwed out of motorists by the insurance companies, as well as the amount taken in additional taxes by the State, the time has come for the Minister for Finance to set up a commission to investigate the problems of motorists. That commission should be given six months to make a report on methods of bringing down the price of motoring. It is impossible for motorists to pay the present rates.
Hear, hear.
I was expecting the reductions in the price of oil and petrol on the international market to be passed on to the motorist to a much greater extent rather than used to relieve the Exchequer. The Minister for Finance has plenty of common sense and an abundance of intelligence and, whatever Deputy O'Kennedy may say, he knows the people, meets them and realises their problems. I ask him to examine the problems of motorists in regard to the rates of duty on petrol and to convince his Cabinet colleagues that it is in the interests of the people and of the economy that a greater amount of the reduction in prices should be passed on to the motorist. I am a firm believer in this principle and it would be wrong if I did not make that statement and give the Minister the value of my opinion in this matter.
The most serious aspect of the difference in petrol prices here and in the Six Counties is that when a motorist crosses the Border to fill his tank he does not immediately return to the Republic but spends more money. If he is accompanied by his wife and family they may do their shopping across the Border. This is a considerable loss to our economy and it is adding considerably to the economy of the Six Counties. I cannot say whether it is part of Government policy to encourage spending by people from the Republic in the Six Counties for the purpose of improving the economy in the North of Ireland. I assure the House it is not the way I would do it. It is wrong that this encouragement should be given. Some motorists have to travel only a couple of hundred yards to cross the Border. We all know, Border Deputies especially, that it is quite wrong to have this great gap in the price of petrol as between here and the North because we are encouraging our people to contribute to the financial structure of the British Government in Northern Ireland. I would be the last man in this House to contribute one penny to the British economy. There is a principle involved in this matter in the Border areas.
There is also a grave concern on the part of motorists who feel they have been rooked by the insurance companies and through the tax on cars and on petrol, especially when they read in the papers about the vast reduction in the price of oil from Arabian oil wells and elsewhere. A greater proportion of the reduction should be passed on to the motorist. If the Minister cannot do it now, let us hope that next year he will be presenting an even more favourable budget and that, in the light of the opinions which are being expressed, he will do something to help the motorist. He must realise that motoring is no longer a luxury but an absolute necessity.
It is alarming how many people employed in Dublin drive up each day from the midlands. A great part of their income is spent on petrol, money which they should be spending on food and clothing for their families in order to improve their standard of living. I ask the Minister to do something within the next few months to assist the motorist who feels he is being scourged by the insurance companies and by the State.
I agree with every word Deputy Flanagan has said. I come from a Border constituency and Sligo town is only 30 milies from Enniskillen. Many people go there to fill their petrol tanks. People from Manorhamilton and other parts of north and south Leitrim also cross the Border. They are not just filling their cars, they are bringing home the groceries and various household goods from Northern Ireland and leaving their money to the British. I am concerned about that. I am concerned about the number of small businesses and shops that have closed in recent times in Border counties and in Sligo town. Only yesterday I put down a question to the Minister for Industry and Commerce asking him when it was hoped to reduce the price of lubricating oil to coincide with the reduction in the price of petrol and other oils. The Minister replied that he was not aware of any difficulties at present in relation to the price of lubricating oil further arising from the reduction in petrol and petroleum products generally or otherwise. We know very well that the price of lubricating oil has not come down. Whoever gave that reply did not do very much research into it. I am asking the Minister here now to find out the price of lubricating oils because people are going across the Border and bringing back five-gallon drums of it at less than half the price it is in the Republic. There has been no reduction whatsoever in the price of lubricating oils here to coincide with the way the price of petrol has come down in recent times.
People are going across the Border to buy parts for cars, tractors and other things. If something is not done about the price of petrol our hard-pressed motorists will not be able to keep going. A car is no longer a luxury; it is a necessity in every part of Ireland today. A person using a car every day to go to work is taxed to the hilt. The Minister here this morning blamed Fianna Fáil. He blamed Deputy O'Kennedy and his Government. The Minister is going into the fourth year now in Government. Let the Government govern the country and not go blaming Fianna Fáil for every thing that goes wrong. The Minister should forget about that. We have listened to this for the past three or four months. This Government were elected three and a half years ago. For goodness sake, let them govern the country. The Government are borrowing more now than was ever borrowed before and they are borrowing it not for productive purposes but to pay men on the dole. I say to the Minister for Finance to forget about Fianna Fáil. He is three and a half years in Government. Let the Government govern the country the way they should.
It would take more than four years for the economy to recover from the appalling consequences of the most notorious political document ever produced, the 1977 Manifesto, the repercussions which will be felt well into the next century by the unfortunate people. Having said that, I am going to identify with much of what has been said by Deputies from all sides of the House. Deputy Brennan spoke about the situation in Sligo, 30 miles from the Border. I would like to tell the Minister about the chaotic situation in my economically crippled town of Dundalk, which has borne the brunt of the Ulster troubles over the last 20 years without any compensatory measure or any recognition from any Government, my own included. I would point to the lack of a definite Border policy. What political party has ever produced a Border policy? In 1984 the Border area was clearly identified by the European Economic and Social Council report as being among the most underprivileged areas in Europe.
The situation in the Border region cannot be allowed to deteriorate any further. My town is the biggest in Ireland, with a population of 30,000 people, and it is a receiver's graveyard. Virtually every business that is left has a "For sale" notice. The only real activity is by the receivers and their staffs and the hundreds of thousands of people who go through there on their way to the North to the new town of El Dorado, Newry. It has been clearly said here today that petrol sales are the big drawing power. Is the Minister aware of the new trading village that has suddenly appeared in County Armagh, Hillside, at Carrigastiken, three miles from Dundalk on the Forkhill Road, where in the last year three major petrol stations have been erected. These are not tent villages. This is a permanent village with three petrol stations, a shoe shop, a grocery shop and two off-licences. Their turnover in the first year of operation was in excess of £6 million. That money is coming directly from the town of Dundalk and the loss to the Irish Exchequer is in excess of £4 million because of the extent of the Exchequer take from drink and from petrol. That is an appalling wastage to the Irish economy. There is a loss of £4 million in one little area, and we have 70 miles of Border from Dundalk to Buncrana. How much is Ireland losing? In 1984 the exodus across the Border was horrific and it reached a crescendo with a loss to the Exchequer of about £500 million which went to the authorities in the North. That is £500 million that we have given to Margaret Thatcher. The Government must acknowledge the wastage in the Border area and the terrible loss. They must find some way to close the avenues of loss.
Deputy Flanagan said that a car was now a necessity for the Irish family. I believe there are many Irish families who are now doing without a car because of the frightening burden to the lower income family. If they have a car they are working for the hire purchase company. Cars can be up to £1,200 cheaper in the North——
This is on hydrocarbons.
There is a difference of 22 shillings over £1, as between the North and South.
What is a shilling?
The Deputy is too young to know. What explanation or justification can the Government give? We are supposed to be a member of the EC which was designed to equalise trading conditions between different countries. That type of difference cannot be explained to the man in the street. I appeal to the Minister, who has made a very good start in his Ministry, to recognise this dreadful drain on the Irish economy and to reduce the price of petrol.
As many Deputies said, petrol is the drawing card which attracts people across the Border. Once there people buy everything, including the Sunday joint. That drain on the economy in the border region has left us economically crippled. In the latter part of 1984,200 buses passed through Dundalk to the North every Saturday. They came from every county. The Belfast Chamber of Commerce advertised in the Irish papers the virtues of shopping in the North. I want the Minister to reduce the price of petrol significantly to allow traders in the Border area to compete.
Two national petrol companies have closed all their outlets in the Dundalk region and the few family-run businesses which are attempting to sell petrol in the Border region have to suffer the indignity of cars pulling in for 50p worth of petrol to get across the Border. That cannot continue. In conclusion, I ask the Minister to produce a definite Border policy for this most hard-pressed region.
Listen to those two sensible Deputies.
I am calling Deputy O'Malley.
This debate on the tax on hydrocarbons and the cost of motoring started off as a point scoring exercise between the Minister for Finance and Deputy O'Kennedy. Looking at it from here, I would say they are equally guilty——
The Deputy played a part in the 1977 manifesto.
Who wrote the 1977 manifesto? Who was on the economic planning committee which planned Carnsore?
Deputy O'Malley without interruption, please.
I have heard it all.
It is a pointless exercise nowadays.
I was in Foreign Affairs.
It is a pity the Deputies fell out because they make a good team.
Deputy O'Malley on section 58.
The economic policy guru is now——
I think my point has been proved. We are now in May 1986 and we have some economic realities to face. We have heard about some of them from Deputies on different sides of the House. There is a high degree of unanimity about the economic realities we have to face, particularly in Border counties where the level of economic devastation is frightening. One of the reasons we have that situation in those counties is that the Minister for Finance, his predecessor and the Department of Finance, seem to believe that the Republic of Ireland is some sort of autonomous island in the middle of the Atlantic and is not influenced by events elsewhere. Of course, that is not the case. The Minister, I thought, put it a bit too simplistically when he said that, in complaining about the level of taxation in hydrocarbons, Deputy O'Kennedy was suggesting that the level should be set in this country by the Right Honourable Nigel Lawson, Chancellor of the Exchequer. It is a reality that the British Chancellor of the Exchequer fixes the rate of duty and therefore the price of petrol and allied products on part of this island, that there is a land border which is very extensive, that people are free to cross it, and that they do cross it in very large numbers not just for the purpose of buying petrol alone but to spend money on many other items.
I was intrigued by Deputy Flanagan's comment that this was a form of foreign aid. Of course, it is. We are the only country in the world which provides foreign aid to Britain. I would be glad to live with that fact if the people in Northern Ireland were the only beneficiaries, but the major beneficiary is the British Exchequer. I am not aware that the United States, Germany, Japan or any wealthy country provides foreign aid to Britain, but the Republic of Ireland does. The reason we do this is because the Minister for Finance does not see that on an island where there is a land border between two jurisdictions you cannot have tax rates which are totally out of line with another, otherwise you distort the situation entirely. Whether we like it or not, we have to take account of what the tax rates are in the other jurisdiction on this island, because if we do not we will devastate a substantial section of our community and lessen the overall tax take by the increases which are imposed.
The Minister quoted figures which would suggest that the rate of duty on petrol is higher in three other European countries than it is in Ireland, and he may well be right.
He is not.
Even if he is, the price of petrol is not higher in any other European country. That is something he fails to take into account because the level of profit here is higher than elsewhere.
The retail price to the consumer is higher in three other countries.
The phrase used was "the level of duty". Tourists from every country complain about the price of petrol in Ireland being higher than in any other country. That has been my experience.
The Deputy is wrong.
The tourists in the Border areas are less badly hit because they can cross the Border to buy petrol, but high petrol prices in places like Kerry, Cork and Connemara have a very serious impact on tourism.
I will quote figures for the Deputy.
There has been a marked decrease in the world price of oil in the last six or nine months but, unhappily, this country has had the least benefit from this. One would hardly know that the world price of oil has halved in the last year. Perhaps if one were an industrialist using heavy fuel oil one would be aware of this fact, but an ordinary consumer of petrol or diesel would not know it because the reductions have not been as great as they should have been. For the most part, the world price reductions have been taken up by increases in tax. This is not happening in the majority of other European countries.
For some reason motoring has always been picked out as fair game to be squeezed to the maximum possible extent. It is worth going back to a limitation which was brought in in the 1974 Finance Act. A limit of £2,500 was placed on the value of a car for trading purposes——
Let us talk about that.
This is very relevant to this matter because it is connected with the cost of motoring.
That was last raised in 1976.
Yes, that figure was increased in 1976 to £3,500, and it was increased to £4,000 in this budget, a very minor increase.
By comparison with what——
Deputy O'Malley to continue on section 58.
If that figure has been index linked, based on £2,500 in 1974 it would now be somewhere between £10,500 and £11,000, so that the £4,000 is considerably short. The very unreal position today is that companies who have to use substantial fleets of vehicles in the course of their business——
I raise a point of order. While I am delighted to hear Deputy O'Malley referring to this section because this is the first time since 1976 that any Government have done anything about the problem, I must ask you to rule on whether his reference to it in this case is in order as being relevant.
We are on hydrocarbons and section 68 of the Finance Bill.
The Minister for Finance has some sort of problem in that he cannot keep quiet either way. Ten seconds ago he was encouraging me to go on saying what I was saying. Now he is terrified I will say something he will not like so he wants me to be stopped. He is very restless this morning.
The Deputy might return to the section.
I remember the late Deputy Joe Leneghan making a reference in similar circumstances to a prominent member of the Fine Gael Party——
That is not in the section.
——who was acting in much the same way as the Minister for Finance is acting this morning.
I wonder what Deputy Leneghan had to say about Deputy O'Malley.
Perhaps the Minister for Finance will sit down now in the circumstances.
We might be able to exchange a few stories later when this business is complete.
That is the position in regard to the cost of motoring. Companies who because of the nature of their business have to have substantial fleets of cars are being charged corporation tax on profits which they notionally make only because of that provision, but where they have to pay corporation profits tax on profits that they do not make at all——
Come back to the section, please.
It is worth recalling in the context of this section that travelling expenses, for example, for, among others, Deputies and public servants have increased perhaps more than fourfold from that time, fivefold in some cases to take account of what is happening. Those increases are justified, but I would have thought similar increases would have been justified for those who have to provide cars either for their employees or for themselves in the course of their business.
Deputy, please stay with the section. That is not in the section. We are talking about hydrocarbons.
It is very much related to what was guillotined by consent yesterday. To come back to hydrocarbons, it is not just petrol and such hydrocarbons in which we see a completely distorted situation. Urea and nitrogenous fertilisers are manufactured from hydrocarbons.
Stay away from nitrogenous fertilisers and do not refer any more to manures. Stay with hydrocarbons.
I am doing so. Among hydrocarbons is natural gas. Nitrogenous fertiliser is manufactured from natural gas, therefore from a hydrocarbon. Therefore, the duty applicable to certain hydrocarbons is appropriate and the price of hydrocarbons is appropriate. Recently I had a question down which was disallowed for some technical reason as to why the cost of urea in this country at the moment is twice what it is in the world market. It seems very difficult to get any explanation on that point. Perhaps it is not surprising that we face a similar situation in regard to petrol, diesel and other hydrocarbons and that we seem unable to get any satisfactory explanation in relation to it.
Just before Christmas the Government decided to abolish the National Prices Commission. Basically I do not quibble with that decision because the need for them at that time had largely disappeared. Now, even though inflation is extremely low and is projected to fall due to external factors even further by the end of this year — I hope that will be so — advantage is being taken of that particularly in regard to petrol. The Government are making very little attempt, although they still retain all the necessary powers, to ensure that profiteering does not occur. This sort of thing is not very noticeable in Dublin where there is competition but, in remoter parts of the country where there is a petrol station about every five or ten miles of the road, it is very noticeable, and very little the average consumer can do about it unless proper steps are taken to deal with it.
In conclusion let me say it is very regrettable that there is such a huge discrepancy between the price of petrol here and in other European countries and particularly in Britain and Northern Ireland. The Minister is being quite unreal if he thinks we can act in isolation, that we can have levels of taxation on hydrocarbons, or anything else of that nature that is portable, which is completely out of line with a neighbouring jurisdiction. We cannot do that and the sooner we begin to learn it the better because the cost of not learning it can be seen in the ghost towns which line our side of the Border.
I am not going to launch an attack on the Minister on the cost of motoring because, give or take a penny or two, no matter who is in the Minister's seat the position will be exactly as it is as long as the present political attitude on every side of this House prevails and anybody who sits there will have to do exactly what the Minister is doing. As one who comes from a peripheral region which is largely rural, let me say that anything that puts up the cost of motoring discriminates against rural areas, particularly western areas. The businessman, the farmer and the resident on the west coast suffer more than people in the part of the country I come from who, in their turn, suffer considerably more than those in Dublin. Whether you are a private individual or are engaged in business, a car is an absolute necessity if you live in rural Ireland. I do not agree that it is an absolute necessity for private citizens who live on the east coast and are fairly close to the amenities such as shops, places of worship and so on.
Increased taxes on motoring and putting up costs discriminate against people in rural areas particularly in the west where generally they earn lower wages than people elsewhere because the industries they are involved in are less competitive. They have enough disadvantages. Very often I hear demands for regional policies that will transfer wealth to poorer areas from richer areas at both national and European levels. Instead of always looking for handouts of money, we should search out the policies that discriminate against the poorer areas. This is one such policy. By doing something about this, we could help to resolve a very serious problem for business people and private individuals in the poorer areas and improve their standard of living.
Consider people who establish an industry in County Fermanagh. I wish such people well because I carry my republicanism all the way. I have as much respect for the businessman in County Fermanagh who is trying to establish a business as I have for such a person in County Leitrim. I will not discriminate against him or advise anybody not to trade with him. I am a free trader at European level, particularly in the Irish context. I despise the person who claims to be a republican and the next day tells Leitrim County Council not to give a contract to the Business down the road in County Fermanagh. He does not want to do business with them because they do not trade in the State. However, if we want to have one country the best way of promoting the development of relationships is to open up the Border to allow free trade. Of course, free trade must be fair trade and it has not been fair along the Border for a number of years largely because of our Government's policies. I supported joining the European Community because——
The Deputy is getting into Europe now. He should stay on section 58.
I am dealing with the cost of motoring and the tax which helps to maintain the Border. The tax has many effects which should be discussed here——
We are discussing hydrocarbons.
We should discuss the effects which this tax has on the political, economic and social problems of those who live in Border regions.
The effects are disastrous.
They are, but I never recommended the removal of a tax without saying how it should be financed and nobody in this debate so far has done so. When I spoke on the budget I said we should devalue our currency and freeze wages and salaries, which is how I would resolve the problem. Let other people who think this tax is wrong identify where they believe the money should come from, or where spending should be cut to compensate for the money the Minister would have to concede if he reduced this tax. Having made that point clear, I am entitled to refer to the problems this tax creates. It is regrettable that when you approach the Border, from whatever side, the only people who stop you are the Irish customs officials. Why is it always on our side of the Border?
Because our taxes are so much higher.
The solution is to cut spending or the imposition of a tax somewhere else. Unfortunately, the House is not prepared to face up to that. Deputies keep harping at the Minister to reduce taxes without assisting him to resolve the problem. Let us come together and help him in this regard. I am quite prepared to face the political consequences of any action we take to reduce this tax but other Deputies are not. They want it every way. Observers on the Northern side of the Border, shrewd business people who have watched us for 50 years, know we will not change. They are establishing sites close to the Border to entice people from the South. I do not mind fair competition, I am in favour of free trade and everybody's right to buy what they want in any part of this island but our economic policies are creating this situation which is——
What does the Deputy suggest?
A freeze on wages and salaries——
That cannot be discussed on this section.
A freeze on salaries would be quite reasonable in view of the fact that our inflation rate could soon be nil.
Does that include a freeze on European Parliament wages and salaries?
We are not talking about devaluation but about hydrocarbons.
If you are going to heckle me——
The Chair is not heckling you; he is trying to guide you.
Thank you. This tax is encouraging further trade in the North, which is regrettable, as it is the only one of our major trading partners which has a balance of trade in its favour. The House should seriously consider the discriminatory effect which this has on the Border regions. If two industries, one on each side of the Border, produce a similar product and find it necessary to put three cars and three sales people on the road, it is obvious that the one on the Northern side will have a great advantage which, spread over three cars and three sales representatives will be enough to swing the balance in favour of the manufacturer in Northern Ireland.
This situation has been aggravated recently by the movement of British currency. If there is a downward trend in British currency tomorrow, people will cross the Border and the day after goods will cross the Irish Sea. That is the trend and I urge the Minister to take note of it, regardless of what the hooters and shouters say in this House. We must make it possible for the person who needs transport to survive in business. Spending must be reduced or taxation increased in other areas.
Mr. Cowen
I doubt if my words will fall on receptive ears as the Government seem to have all the answers in the House. However, they are not communicating them to the people outside the House and do not seem to heed the views of ordinary people who are trying to eke out a living in very difficult circumstances.
It has been suggested that to request a reduction in the price of hydrocarbons, petrol, agricultural diesel and so on would mean spending cuts to help finance such a reduction. The answer to that was contained in Deputy McGahon's speech. The level of taxation on hydrocarbons means that Northern Ireland benefits by about £500 million. To reduce the rates of taxation on hydrocarbons here would be self-sustaining and would ensure that, without the need for any spending cuts, the level of economic activity generated on this side of the Border would be very significant. If even a lower figure than £500 million is accurate, Deputy McCartin's assertion that one would have to cut spending does not stand up to examination. It is implicit in our amendment that we seek fair competition for traders on this side of the Border. That is a reasonable suggestion and it is quite clear that we have traders on this side of the Border who can compete, given the opportunity to do so. However, they are not given that opportunity because the policies of our Government ensure that they are not in a position to compete. Cognisance will have to be taken of that in view of the devastation caused in Border counties. Obviously I am not as aware of the situation as those who represent Border counties, but we are all aware of the bus loads leaving our own constituencies to shop in Newry. That results not only in a lack of economic activity in Border areas but in a drop in business throughout the country. It is very difficult to quantify the loss in figures but the concern expressed by all Members should convince the Government that funds are being soaked from the economy by shoppers going across the Border. We are not economists and we do not have the figures, but we are aware that this is a major problem. Something will have to be done about it.
The Deputy has the figures. They are relatively simple.
Mr. Cowen
Deputy McCartin had an opportunity of making his contribution without interruption and I am not prepared to tolerate him interrupting me. It is not possible to quantify the loss to the economy and I do not think anybody can tell me how many people leave County Offaly each weekend to shop in Newry. I do not think Deputy McCartin can tell me what Leitrim people spend on groceries across the Border. I do not think it is possible for the Minister to put a figure on that loss. But it is a major problem and it is not confined to the sale of petrol and diesel. Grocers and small traders who are being harassed by the Revenue Commissioners suffer most through the loss of this business. Those people are asking Members to do something about this.
I do not claim to be an expert in this field and I will not give the Minister convoluted statistics in an effort to prove that a scheme would be self-financing but I can assure him that unless something is done we will be in serious trouble. Business concerns along the Border are suffering and the loss is being felt further afield. The Minister must be aware, being from a constituency that is close to the Border, that many people make the journey to Newry and other Northern shopping centres, at weekends. When we suggested a reduction in VAT rates on electrical goods last year to help business people in the South we said that it would prove to be self-financing. That move brought results and the reduction was self-financing although the Department of Finance did not think it would be. Many electrical businesses were saved from total destruction by that reduction in VAT. The Minister must take cognisance of Members who are unable to argue in academic terms about this problem. The case being made today is valid.
As Deputy McGahon said, if we do not do something about this problem we are on a hiding to nothing. Deputy Brennan from Sligo dealt with the cost of agricultural diesel and lubricating oil. Many farmers have approached me about that matter. Yesterday Deputy Brennan received a reply to a question he raised in regard to that but it is obvious that the reply was not composed by the Minister because I presume he knows something about the matter.
Which Minister?
Mr. Cowen
The Minister for Industry and Commerce.
That does not arise on this section.
Mr. Cowen
I intend to raise this issue and I will continue with my comments until the Ceann Comhairle rules me out of order. Deputy Bruton should carry on as Minister for Finance and permit the Ceann Comhairle to do his duty.
Any Member is entitled to raise a point of order.
Mr. Cowen
I do not come into the Chamber too often to annoy the Minister and I intend making my statement. The Minister has had his opportunity.
The Deputy should address the Chair.
Mr. Cowen
I will leave the matter with the Chair. I will obey the Chair because he is a man of sense. The farming community, who are experiencing great difficulty, have had to pay a lot more money for diesel. Some Members claim that farmers do not pay enough, that they have a great time and that if the Government got more from them everything would be as sound as a bell. However, the farming community are getting a raw deal in that the huge reduction in the price of hydrocarbons has not been passed on to them. We must bear in mind that the income of farmers last year dropped by 17 per cent and that this year the figure will be greater because of the debacle in Europe some weeks ago. An effort should be made to help the farming community in regard to the price of diesel oil.
Seasonal workers who have been offered jobs by Bord na Móna do not find it economically worth while accepting the work because of the cost of getting to work. A man in Clara who is asked to go to Boora as a seasonal worker with Bord na Móna for six months and help him accumulate sufficient stamps to keep him going during the winter. It will cost that man between £20 and £30 per week to travel to work. The Minister must be aware that economically it is not worth a person's while travelling any distance to work if he or she earns £200 per week. We should make it worth their while to go to work. The cost of petrol is definitely too high. A reduction in the price does not mean that the Government have to embark on spending cuts elsewhere in the economy. We must consider that a lot of money is being lost to the economy because of the high cost of petrol. All we are asking for is a small reduction to relieve the hard-pressed sectors.
Like other Members who live within a short distance of the Border, I am concerned about the number of people who travel North to do their shopping. We all accept that the price of petroleum products is high and we would like to see it reduced dramatically. The price has not fallen in line with the fall in oil prices on the international market. However, only one Member has put forward a proposal to raise the revenue that would be lost if petrol prices were reduced to the figure that prevails in the North. The overall cost of motoring over the last ten years has increased considerably. Between 1977 and 1981 the Government increased the duty on petrol by 35p per gallon. We must bear in mind that during those years inflation was running at 22 per cent and the increase in the duty on petrol played a big part in that. It is true to say that the Coalition also increased the amount of duty on petrol, but the difference is that inflation now is in the region of 2½ per cent and is heading for zero. There is a big difference in what people can buy with their take home pay now compared to what it would have bought in 1981.
We all realise that the cost of travel to work constitutes a heavy burden on one's wage packet each week. For the life of me I cannot understand why people do not share this burden. I am talking from experience of large numbers of people in housing estates in my constituency, people working in the same factory and on the same shift. They all drive separately to work when the sensible thing to do would be to take one's car every third or fourth week only. I have put that proposition to them several times but they said they prefer to travel separately and so on. Certainly it is not easy for people who have to drive perhaps 30, 40 or 50 miles to different jobs in different locations and on different shifts. I know of certain people who will be working for Bord na Móna this summer, people from parts of my constituency, who could share travelling expenses, saving them a considerable amount of money.
There was reference to the price of diesel oil to the farming community. It should be remembered that the price of diesel oil to the farming community this time last year was £1.35 a gallon, whereas last week that figure had dropped to 87p a gallon. Therefore, any Deputy contending that there has not been a substantial reduction in the cost of that product is not being factual.
There was mention also of lubricating oils by one Deputy. I accept the Deputy's concern about the reply he received to his question, that it was not an accurate reply. I know because I happen to be involved in a small way in the distribution of lubricating oils. I know the price of lubricating oils has been considerably reduced over the past two months. I accept the Deputy's complaint in that respect; it would appear that the Department involved should have carried out somewhat more research.
Deputy Flanagan's suggestion about the establishment of a commission to investigate the overall cost of motoring is an excellent one, with a view to ascertaining where overall reductions could be effected. It must be acknowledged that the cost of running a family car has risen out of all proportion in recent years. There was mention of the cost of excise duty on new cars and so on. If the condition of our roads generally was better, then any new cars purchased would last a good deal longer. It should be remembered also that a Government were elected to office on a wild manifesto in 1977, who decided to do away with tax on those cars. Yet, within two years, they had doubled the £10 and £20 road tax rates.
In the four years when the yield from that tax was non-existent local authorities were short of money, leading to a rapid deterioration in the condition of our roads resulting, in turn, in extra money having to be spent by the motorist on the maintenance of cars. Therefore, it is amazing that Members of the Opposition should come in to the House and contend that this Government are crippling the motorist to the extent of the figures they mentioned. Yet no Opposition Member, including Deputy O'Malley — if a substantial reduction was effected in this tax, and I accept that it is particularly necessary in Border areas with which I am familiar — has suggested where the money will be found.
Some Deputies mentioned the bus loads of people going to Northern Ireland to shop. From the references to petroleum oils and so on, I wondered did such people go up on the bus to buy petrol because it appeared that was what they were doing. I would prefer to think they were not going to buy petrol. Deputy McGahon referred to the situation in 1984. It should be remembered that, since then, this Government reduced the rates of VAT with the result that it is not now worth people's while going to the North on the bus to shop as they did heretofore. There are no constructive suggestions as to how any such reduction in tax could be funded.
Mr. Cowen
Deputy McGahon answered the Deputy.
Deputy O'Malley mentioned a quotation in this House at one time by then Deputy Joe Leneghan. It reminded me of the Deputy himself when he was in and out of the Fianna Fáil Cabinet over a period of time.
There was also a reference to the foreign aid we are providing for Britain because of the extent of trading going on, with people prepared to travel to the North to buy different commodities. It appeared to me that the same Deputy was thinking about the time when he and his Government were involved in ensuring that people up there received foreign aid as far back as 1970. As Members of this House, collectively, we should bring forward constructive proposals to compensate the Exchequer for any reduction in tax yield of the magnitude envisaged. Because of our overall economic situation we must guard against imposing a burden on future generations by borrowing money to pay for such concessions because that would not be a responsible way to tackle the problem. I contend that the concern of most Deputies in this respect is genuine.
The arguments put forward by Deputies who formed part of Fianna Fáil Governments, such as Deputy O'Malley and Deputy O'Kennedy, do not speak well for the way they conducted the country's affairs when they were in a position to do something about the situation. As I said earlier, from 1977 to 1981 there was a 35 per cent increase and the present increase would be smaller in percentage terms when one takes into consideration the value of take-home pay.
I shall be fairly brief because most of the points with regard to the petrol retailers in the Border constituencies have already been covered. I am opposing this section because this increase affects every individual item purchased. The cost of transport is a major factor in prices generally. An important point has been made with regard to the regularly increasing cost of travel, particularly for people going to and coming from work. Because of the scarcity of jobs, people have to travel ever further to work. This has been happening over the past number of years. Travel costs are not tax deductible under any budgetary measures. No Minister for Finance has allowed this.
The effect of transport costs in every sphere was illustrated recently by the fact that cattle were dying in the west and north-west counties for lack of fodder. This was available in the south eastern counties at a reasonable price, but the cost of transport prevented farmers from being able to purchase that essential fodder in the south east. Even in a small country with relatively short distances to travel such as Ireland, the cost of transport is an enormous factor in everything we do. It is surprising that we have to bother having these petty reductions and increases in the budget at all, but I suppose it gives Deputies a useful opportunity to talk about them and making our views known. However, in a couple of months' time there will be another reduction of 10p, of which the Minister will grab back 5p. The price of oil is one of the major factors in giving a boost to the economy. If the Minister is preventing this boom, he is preventing job creation. He is increasing the cost of food products and everything else.
A number of speakers on the Government side have emphasised the need for Deputies opposing these measures to say where the money can be got. There are many ways in which that money can be got. Deputy McCartin suggested a wage freeze. A freeze on all handouts and grants should be suggested and the vast sums handed out by the Minister for Finance in grants used elsewhere. Each year our party make submissions to the Minister for Finance showing where money can be got, new taxes imposed, taxes collected which remain uncollected. On the section relating to VAT I shall be suggesting that £60 million could be saved on VAT refunds to unregistered farmers. It should be ensured that farmers register so that the actual amount of VAT to be refunded will be known, instead of having this purely notional figure which is increasing substantially every year.
I think the Deputy should wait until we come to the section on VAT.
That £60 million saving could enable the Minister to remove the section dealing with the increase in the price of petrol and, more importantly, the 71p per hectolitre increase on diesel oil which will increase overall costs and inhibit the expansion and development which the Minister and the Government side are saying are on hand for private enterprise. Transport costs as well as transport difficulties with regard to the conditions of the roads, are an inhibiting factor and the cost of fuel represents a very large part of these costs. This increase will have an effect, not just on those using cars or selling petrol, not on any particular section of the community, but on everybody. The cost of fuel is reflected in the price of everything bought in the shops. For that reason we are opposing the section.
By the nature of things, if the roles of Government and Opposition were reversed we would be saying the opposite to what we are saying on both sides of the House. That is the way the political system has developed in recent years. I hope that at some stage we can break away from that. I want to ask the support of the House for one suggestion in relation to this section. On buying petrol this morning, I was handed vouchers which say "Have a ball." For ten vouchers you get a golf ball or a tennis ball; for 20 vouchers you get a football.
This is not the responsibility of the Minister or his Department. I think this does not come under this section.
But, a Cheann Comhairle, for 40 vouchers you get a sliotar or a fun ball. There are many balls involved there.
You are not in order.
If all sides of the House were to put their minds to tackling the present system of petrol handouts, we would not have to be imposing the proposed rate of customs and excise under this section. It might be possible to hold the present rate of excise on hydrocarbon oils. If we could get the oil companies to reduce their costs instead of employing these gimmicks, which in reality are being paid for by the motorist, that would be some help. I feel strongly that that problem should be tackled. It would reduce petrol and oil costs significantly. This House would not then be asked to pass sections of this Bill maintaining such high rates of excise on hydrocarbon oils at a time when the price is falling dramatically in other countries and here. It could be allowed to fall even more. We would be able to reduce excise duty if we were to tackle that specific problem. The Minister might suggest to some committee of the House that it might look at that point on an all-party basis.
In conclusion, it is very hard to do anything about the level of taxes we have, be they excise duty or income tax, when the Government are spending two-thirds of GNP. There is no point in criticising the Government for crippling people on one day when later on the same day we ask them to cripple people even more by spending money on all sorts of schemes while condemning them for not spending money on other schemes. We all have pet schemes. It is extraordinary to want to cripple people more, on the one hand, while, on the other hand, criticising the Government for crippling them to the exent they have been crippled. We have to get a certain reality into the House. I made some suggestions yesterday about where more taxes should come from and I stand over them.
It is quite obvious from the debate and from the speakers on the Government side that there is general agreement that taxation is too high, particularly in relation to this section. The Government are fully aware of the consequences of the difference and disparity in the cost of fuel oils in the Republic and the Six Counties. I, as a Border Deputy, am familiar with the devastating effect which the taxation system, as it now stands, has had on many areas in the Border regions. Businesses are closing in the Border areas.
The Minister must be aware of the drastic fall-off in the Border areas in the sale of petrol and oil. Nobody in the present day would consider purchasing fuel oil on this side of the Border if he was any way convenient to the Six Counties area. It is a valid question to ask as to where do we find the money. I am sure that the Minister must have in his Department the figures in relation to the haemorrhage that has taken place in the Border areas in respect of the money which is crossing to the other side. The unfortunate aspect of this is that the majority of the money crossing into the Six Counties area is money which has been paid out by the Government. No matter what way we look at it, taxation on fuel oils has had a direct and indirect effect on virtually every aspect of our lives. We are totally dependent on it no matter what walk of life we are in.
Contractors can no longer compete within County Donegal and the other counties within the Border region in relation to public works. Their counterparts in the Six Counties can undercut them on any contract. It all hinges on the cost of oil. The time must have arrived, if it has not passed, when the Department of Finance must seriously look at the imposition they are putting on people in the Border regions. I believe we are being discriminated against in relation to taxation. The Revenue Commissioners are hounding business people who are making no money. Why are they making no money? Because of the chronic taxation system which is being imposed on virtually every commodity in which they have to do business. In no way can they compete with their counterparts in the Six Counties. Therefore, there must be some recognition taken of their situation and there must be some harmonisation in taxation in relation to this part of the country and the Six Counties if we are going to make any impression on our prevailing chronic unemployment situation. Despite all the drawbacks and difficulties, the tourist industry in Counties Donegal and Sligo earned £70 million last year. I put it to the Minister: what would the tourist industry make in that region if there was an equalisation of taxation?
Another disadvantage in respect of Border regions which I want to put to the Minister is in relation to the 35 per cent of oil which must be taken from Whitegate. Northern Ireland distributors are entering this country——
I have no responsibility here.
I want to put it on the record anyway in relation to the oil situation and taxation.
A passing reference.
The people who are involved trying to make a living and to give a service to the community have to compete with people who are compelled also to take 35 per cent from Whitegate, if they distribute oil in this country; but there is a grave concern among oil distributors in the Donegal region that this stipulation is not being imposed and that they are at an unfair trading advantage.
The section deals only with the imposition of excise duty on petrol and diesel.
The Deputy wants Whitegate closed——
As I said, business is collapsing in the Border regions. Contractors can no longer compete with their counterparts in the Six Counties in relation to public and private works. There must be some movement made by the Department of Finance where prices and taxation can be harmonised. We can no longer support taxation in the region of 65 per cent to 66 per cent on a gallon of petrol. I would ask the Minister to seriously consider this aspect.
The Minister asked me to inquire about the level of duty in 1980. I can now tell the Minister that the figure I have is that the total price after my budget in 1980 was 150.3p and the total tax was 75.2p. The Minister said that I imposed a huge level. They compare with the present figure which I have been referring the Minister to of well over 178p. Those facts are inconvertible.
Prior to the Deputy making that change, it was 51.4p and he increased it to 75.2p which is a very substantial increase in percentage terms.
The Minister better check his figures. I have got these directly from the Revenue Commissioners. I can give the Minister the precise date for all of them. Total tax before my budget was 55p.
If you look proportionately at the increase in the present budget, which is a tiny percentage increase on the previous level of tax, the level of tax increase by Deputy O'Kennedy was proportionately much larger both on the previous base of tax applied and in absolute terms. That is a fact. There is no need to spend much time on it as the record is there.
Deputy Conaghan urged that we harmonise our tax rates with those of the UK. I would have to point out to Deputy Conaghan that the UK is a petrol exporter and producer. It is also a motor car exporter and producer. Countries which produce products of that kind tend to have lower tax rates on their own products for mercantilist reasons than countries which import those products. As far as economic policy is concerned we are in a different position. We are not a motor car manufacturer nor are we a petrol producer. Obviously we could decide, regardless of our interests being different from those of the British, to follow their tax rates. One of the purposes for which we obtained independence was that we would be able to make our own decisions about the structure of our tax policy. Some people would say that even though we have done that we should follow what is done in Britain.
If we are not to have excise duty on petrol at its present level we would have to raise the tax in some other way. I doubt if Deputy Conaghan, Deputy O'Kennedy or any other Deputy who spoke on this would suggest that we increase income tax further to pay for a reduction in the price of petrol. Some Deputies put forward the view that reductions in the price of petrol would be self-financing. They would not. I would like to be able to reduce petrol by 5p per gallon but a reduction of that amount would reduce revenue in a full year by £11 million.
That is wrong.
A reduction in the rate of excise duty of 15p per gallon would result in an estimated loss of £30 million per annum. Those are not figures I have produced out of my own imagination. They have been prepared by the Revenue Commissioners who have, as Deputy O'Kennedy will know, a long standing record of making accurate predictions in regard to revenue. These figures should be accepted by the House as indicating the choices which we face. Where will we get the money if we do not levy it on petrol? Nobody, with one or two exceptions, in this long debate on this section has put forward alternative suggestions as to where we will get the money.
Many comments were made on cross-Border traffic. I agree it is regrettable that there is any significant cross-Border traffic. It is also regrettable that excise duty on petrol is as high as it is. I would very much like to be able to reduce it, but our other taxes are already spoken for. As I have already indicated, the entire income tax revenue, with virtually no exception, has to be used solely to pay for the service of debt. This means we have to put a much heavier burden than we would wish on the remaining taxes. We pay for every service, the defence service, the health service, the Garda service and all the other activities of the State out of excise duty and value-added tax because virtually the entire revenue from income tax is used up in servicing the debt. If we did not have such a large debt we would not have to rely so heavily on taxes other than income tax. We could use income tax revenue to pay for ordinary services and all taxes could be at a lower level. Unfortunately, those debts have been accumulated over a number of years.
Deputies opposite call simultaneously for increases in public spending and reductions in taxation which will result in even further increases in borrowing. If we are not going to increase taxation and at the same time we increase spending, the only way we will get the money is by increasing borrowing further. That means even higher levels of debt. Not only would income tax be used in servicing debt but perhaps some of the other taxes as well. The result of that would be that our remaining taxes which are not being used to service debt would have to be raised even higher still.
It is easy for Deputies on the opposite side of the House and on this side to say they are in favour of lower taxation. We are all in favour of lower taxation. The difficulty is to find the money to reduce the taxation. Certain cuts would have to be made to do so. If any party or Deputies opposite have suggestions for reducing expenditure I would be delighted to receive them. I would also be delighted to supply them with information as to exactly what would be saved by their proposal. I hope that invitation will be taken up by Deputies who may have ideas how this might be done.
I will take it up immediately.
Deputy O'Kennedy was absent for much of this debate and he might do well to keep his peace while I am making my contribution. I have been here for the entire debate. Deputy O'Kennedy absented himself for a considerable time.
I was only out for about ten minutes.
When I was called by the Chair I allowed Deputy O'Kennedy to intervene. Having been afforded that opportunity, perhaps he would now allow me to complete my remarks. When I am finished he can speak for as long as he wishes.
There has been a significant reduction in the extent of cross-Border shopping traffic since 1984. The customs and excise service carry out sample surveys on cross-Border traffic on particular days chosen at random. I am glad to be able to tell the House that not only was the amount of cross-Border activity less in 1985 than it was in 1984 but, furthermore, the sample surveys carried out so far in 1986 indicate a further reduction than that which obtained in 1985. That is a good sign but the result so far is very inadequate.
I would very much wish to reduce the tax levels on petrol further. I would like to see the price being reduced even more than it has been already. For that to happen it is necessary to pursue a policy which is prudent and which will create a reasonable balance between expenditure and taxation that can be sustained. Some of the suggestions made from time to time at various gatherings outside for the spending of £800 million would give a short term boost to the economy, but the ultimate result would be higher taxes and economic difficulties before very long. That is not what this Government are pursuing. We are pursuing a policy——
Of diminishing returns.
We have been told there are indications of a fall in the consumption of petrol. These should not be exaggerated.
It is a fact.
We must appreciate that there is an improvement in the fuel efficiency of motor vehicles and that more miles can be travelled with less petrol.
(Interruptions.)
We must also remember that there has been a significant substitution of diesel for petrol and this, in some part at least, is attributable to the fall in petrol sales, not the rise in taxation. It is important to point out that there are other significant factors and it is important to bear in mind that the Government's tax policy in regard to motor vehicles—while one admits that it is fairly harsh—is that we have to rely unduly heavily on exise duties, such as those on petrol, in order to balance the economy. We have sought to achieve an equitable distribution of the tax burden for industry as a whole. For instance, the duty on spare parts has been abolished and we have reduced the tax on repair services in order to provide an incentive to the Irish part of the motor industry which in the main is concentrated on the wholesale sector. On the other hand, we put heavier duties on the importation of new cars so as to give relatively favourable tax treatment to the Irish sector of the car industry.
I would point out that there are sections coming after this which deal precisely with what the Minister is now dealing with.
We are dealing with exise duties on hydrocarbons.
I submit that in the course of the debate Deputies raised all this, with the exception of Deputy O'Kennedy. Whereas we have a relatively heavy level of taxation on imported new vehicles, we have abolished the tax on spare parts and reduced it on repairs, so people will be able to keep their cars longer and, at the repair end, the industry will be able to give more employment. It is modest but it is an indication that in the financial climate this year we are doing as much as we possibly can to reduce the level of taxation. I very much wish to see a reduction in the level of petrol tax.
I understand and accept what Deputy McGahon and Deputy Flanagan said about the distortion in the Border regions because of the present high level of taxation on petrol here. I represent a county which is close to the Border. I agree that significant disruption is being caused, and it would be my ambition to see financial conditions created here as a result of economies in spending and prudent management of our economy, without having to resort to any of the artificial stimuli suggested by the Opposition, in order to achieve a reduction in tax levels. I acknowledge the case made for Dundalk by Deputy McGahon. I agree that town more than any in Ireland has suffered from its proximity to the Border.
I was glad to hear the contribution of the Father of the House. We are all very glad to see him back in such great voice and health after illness. The Deputy has spoken during many years with great eloquence since he first came here in 1948, and it was good to hear him this morning contributing with such force and conviction. I am sorry we have spent so long on this section, considering that there are many points to be made on other sections which we may not be able to reach.
I have never heard such a lot of distortion. The Minister's backbenchers obviously accept the reality of the position and I am surprised the Government and the Minister have not taken cognisance of the viewpoints of those Deputies. The Minister most certainly is letting down Deputy McGahon who has been trying to protect the interests of his Border constituents. The Government have sold Deputy McGahon down the river. The Minister tried to distort the figures given by Deputy O'Kennedy in regard to 1980. The tax take on petrol then was 34.7 per cent. In 1982 it was 47 per cent and now, because of extraordinary incompetence by the Minister, the tax take on petrol is 66.7 per cent and 59 per cent on auto diesel. The Minister tried to confuse Deputy Conaghan on comparisons with the UK, but we must remember that the UK was an exporter of petrol and that they manufactured motor cars.
The Minister must realise that Ireland is isolated from the other EC countries in relation to taxation on hydrocarbons. We have the highest taxation in that respect of any EC country except Italy.
Retail prices.
Our taxation on hydrocarbons is about 70 per cent greater than in Germany and one-third higher than in Denmark which is about average for the EC. Denmark is a welfare state, the envy of the world. The tax take here is 30 per cent more than in France. The Minister cannot confine his tight argument to a comparison of our taxation on hydrocarbons vis-á-vis the United Kingdom and leave it at that. There is no doubt the Irish motorist is being fleeced savagely by the Government. Most middle income and lower paid workers are suffering as a result of Government action. Because jobs are so scarce, many have to drive considerable distances to their places of work.
What about the medical profession? What about the black economy?
The medical profession are doing extremely badly because there is another monster of a Minister looking after the health care of the country. The middle income group — the new poor — have to bear all these additional costs. They incur considerable travelling expenses getting to work but, because of the PAYE structure, they cannot claim any compensation.
We have reached the stage of diminishing returns. No matter what diversionary tactics the Minister engages in, the public are well aware of what is happening. On the opposite side there are people who are very good at creating diversionary tactics. For instance, Deputy G. Mitchell is more concerned with vouchers for golf balls and so on at the various petrol stations. I hope the Minister will accede to the honest pleas of honourable and credible people such as Deputy McGahon who know what is involved. This Minister and this Government have fleeced the Irish motorists in every way. They have penalised them in the taxation they have imposed on petrol and also in respect of the cost of cars. We will deal with the latter point later on.
I have information on the retail price of petrol here as compared with other countries.
I want to know the tax element.
This indicates that as from 1 May——
On a point of order. the section we are debating relates to hydrocarbon taxes. If the Minister is going to make comparisons with other countries, let him tell us the taxes imposed in other countries by comparison with here.
That is not a point of order. Section 58 deals with hydrocarbons. The Deputy should allow the Minister to continue.
The Minister is not prepared to tell us about the tax element here as compared with other countries.
The debate is being conducted on the basis of the effect of taxes on retail prices. I should like to tell the House how our retail prices for petrol compare with other countries.
The Minister should not try to con people.
I am glad Deputy O'Kennedy has returned to the House after a lengthy absence, obviously refreshed and in good humour. I hope I do not give the impression of being irritable just because I have been here all the time. The information I have indicates that, while Ireland admittedly has a very high price for petrol, it is not the highest in Europe. As at 1 May the French price in terms of Irish pence per gallon was 269p, the Italian rate was 278.9, the Danish rate was 268.3 and the Irish rate was 266.4. I have to admit it is higher than the average in Europe but it is not the highest. France and Italy who represent a large proportion of the population in the Community, as well as Denmark which has a very good reputation with regard to employment, have higher rates of taxation on petrol.
The Minister should tell us what is the tax take.
I am giving that information so that people will not denigrate this country by making inaccurate statements in terms of international comparisons. Of course our prices are too high and of course the Government would like to reduce them. I am not going to defend the present levels on the basis that they are economically desirable or are an energy conservation measure. I regret very much that the prices are as high as they are, but the reason is due to the debts we have, the servicing of which absorbs all our income tax. The Government have to run the country on VAT and excise duties and thus the returns in this area will be higher than they would be if it were not for the burden imposed on this Government. We have to service the debts incurred in the past. The biggest splurge in debt creation was initiated by Deputy O'Malley, Deputy O'Kennedy and the other authors of the 1977 manifesto, as Deputy McGahon pointed out clearly two hours ago.
What did this Government do since November 1982?
Our excise duties are so high because so much money has to be used in servicing our debts. This costs us our entire income tax revenue. Therefore, we are forced to have excise duties on petrol that are far too high because they have to finance the running of the country. This would not have happened if our finances had been managed more prudently in the past. We cannot rewrite economic history. The Government have to deal with the present situation and regrettably, we have to have taxes at a higher level than would otherwise be justified. I have told the House it is my ambition to reduce these prices as much as possible in the years ahead. I recognise clearly the case made by Deputy McGahon and other Border Deputies, that these tax levels have a bad effect on Border towns.
We can go into questions of debt, budget deficit and economic policy, as the Minister is doing on every single section. When this Government came into office the total national debt was £12.7 billion, admittedly very high. The total national debt now is £21 billion, an increase of well over 70 per cent. If the Minister wants to get into arguments of that nature he should steer clear of the question of the debt and the deficit.
Why should I? They are facts. We have to service the debt.
Yes, the debt which the Government are accumulating at a rate unprecedented in any country.
Our debts are far too high. It is a fact.
Now we have an admission from the Minister that the debts he has accumulated are far too high.
The debts which we have in this country.
Of course, they are far too high. We are suggesting that the Minister should not use arguments against himself on that basis. The debts are not all inherited, as those figures demonstrate, unless we have somehow the power and capacity, which I do not think even Fianna Fáil would claim for themselves, to control what happens even when this Government are in office. My God, I wish we did.
On the question of hydrocarbon taxes, it has to be noted that the Minister has deliberately refused to give the tax levels imposed in other countries. He has tried but failed, although he has advisers accompanying him. We asked for tax levels to give the comparative level of taxes on the gallon or litre of petrol here. The Minister has deliberately refrained from giving the figures because he knows they would show that our tax levels on hydrocarbons are the highest in Europe. I see the Minister shaking his head and I am prepared to sit down and let him give the figures.
The Deputy cannot determine what I am going to say. I will say what I want to say.
I will yield to the Minister only if he gives the figures on taxation. Clearly the Minister does not want that. He deliberately tried to mislead the public and the House and that kind of trickery is totally unacceptable.
I would ask Deputy O'Kennedy to withdraw that remark. It is not worthy of him, nor is it true.
That has been established by none other than the Taoiseach as being entirely parliamentary. The Ceann Comhairle ruled only two days ago that "trickery" is entirely parliamentary.
The Deputy said I was deliberately misleading the House. It is not the case and the Deputy should not make such a statement. I have given the information I have. I have not the information on the tax content but I do have information on the retail prices. It is the retail prices that count because these are the prices people pay. I will obtain information for the Deputy, but it is quite unworthy of him to accuse me of deliberately misleading the House.
It might have been more appropriate if the Minister had the information before he came into the House.
I did not and would not mislead the House and Deputy O'Kennedy should not make allegations of that kind.
The Minister knows that the tax levels here on hydrocarbons are the highest in Europe. If he does not know it, then he should. He criticised my absence from the House for ten minutes. I have no facility for obtaining other information except by making direct telephone calls. I have no administrative staff and I was telephoning the Revenue Commissioners. The Minister could get any of his personal advisers to obtain the information I received through making that telephone call.
The Minister was not prepared to disclose the levels of tax in 1980 but he said that I had raised those taxes to an unprecedentedly high level. I will give those figures and any of the Minister's advisers should be able to confirm them for him. Total tax in 1980 on premium grade petrol was 75.2p, while the total price was £1.50. Now the total tax, as a consequence of the actions of the Minister's predecessor and his proposed action today, is £1.78, 20 per cent more than the total price in 1980. These are simple facts. I am speaking from official figures and I totally repudiate and reject the Minister's argument.
On 30 April this year I tabled a question for written reply concerning excise duty on petroleum and petroleum products in each of the years 1982 to 1985 inclusive. The provisional figure for total volume consumption in 1985 was 41.71 million hectolitres. The Minister also indicated as follows:
Owing to an error in compilation, incorrect figures of net duty-paid quantities of these products in the years 1980 to 1985 were given in reply to a question by the Deputy on 22 January 1986.
The Minister had to acknowledge that he gave me incorrect figures on 22 January 1986.
I was not Minister for Finance at that time.
I am not interested in the personality — I am interested in the Government.
The Deputy is making a reference to me.
I am talking about the Minister for Finance.
I am the Minister for Finance.
I have no interest at all in Deputy John Bruton personally. I am talking about the office he holds. The Minister for Finance gave me those incorrect figures. The written reply on 30 April 1986 went on to state that the correct figures for 1980 and 1981 were 61.75 million hectolitres and 55.16 million hectolitres respectively. Now that we have the correct figures from the Minister we have the admission that in 1980 petroleum products accounted for 61.75 million hectolitres and in 1985 that figure had dropped to 41.71 million hectolitres. It will drop further in 1986. The drop of 20 million hectolitres represents half of total current consumption. The question covered excise duty on petroleum and petroleum products.
The Minister has the gall to suggest that what we are proposing to him would inevitably lead to loss of revenue, but what we are proposing is the only guarantee of renewed revenue. As a consequences of his policy and that of his predecessor, we have seen consumption lost through cross-border leakage, a downturn in the tourism industry and lack of capacity in the domestic market. Those facts alone demonstrate that if the Minister desisted from imposing even these extra taxes today — and there have been persuasive arguments from all aides of the House — he would get enhanced revenue. Let the Minister not ask where he is going to find the extra money. Those figures demonstrate that we have lost 50 per cent of what we should have because of the tax levels the Minister has imposed. In the interest of the motorist, of the public and even of the Revenue Commissioners, I would ask the Minister not to persist on this course on which he seems to be hellbent and which would guarantee a further drop in consumption and a further loss of revenue.
I can understand the frustrations of some Deputies on the Government side, in particular people like Deputy McGahon, who are obviously tied by the Whip, so I will not embarrass them by making an issue of that. But I cannot accept the Minister saying taxes are too high and that if he could do something about them he would. The only person who can do something about those taxes is the Minister. Now is his chance, and by doing it he will get enhanced revenue. By dropping this proposal alone he would get at least £30 million in revenue. If the taxes were reduced to anything near what they should be with falling oil prices, the Revenue Commissioners would get at least £100 million. The revenue figures have fallen quite flat and, if the Minister persists in this course, he will find that next year we will be acceding the case when we sit on those benches because the facts speak for themselves.
I want to query the taxation of petrol versus LPG car gas. Perhaps the Minister could give the figures for one over the other? I heard an advertisement which was broadcast recently on the radio which states that there was some good news for the motorist in the budget, that tax did not go up on LPG. In relation to the overall trade balance position vis-á-vis all of the oil which is imported and LPG, is that a by-product of our gas industry in Ireland? If so, would it not be possible to have a very progressive policy of reducing the tax on LPG, even maintaining a high tax policy on petrol and thereby reducing imports?
I went over much of this this morning so I will not repeat myself. I suggest that the Minister should accept that we have reached the point of diminishing returns. I would like to point to the reduction of tax on betting which has been successful. It was reduced last year from 20 per cent, which was a penal imposition, to 10 per cent.
In relation to the Border area and the constant haemorrhage of money from that region, I honestly believe if taxes and excise duties were reduced to a more realistic level the Exchequer would get more money. I appreciate the difficulties of any Minister for Finance but I feel that the stereotyped approach which has been adopted over the years should be discontinued and a more realistic look should be taken at the Border region, particularly as far as the price of petrol is concerned.
The Government have had success in stopping the tremendous drain of money that was experienced in 1984 by reducing excise duties and taxes in the 1985 budget, and this had a beneficial effect and was much appreciated by business people along the Border. That definitely stemmed the flow of people and of money out of the country. If the Minister would accept that the law of diminishing returns exists here we would not be experiencing the loss to the Exchequer, in 1984, of £500 million. There is a tacit acceptance that the Border region is expendable while the Ulster troubles persist and while our terrible economic problems exist and that there is not much we can do about it. But we can no longer ignore the Border area because economic activity there has ground to a halt. I quoted the figure released by the North of Ireland authorities, £500 million. At what stage will the Government say the drainage is unacceptable? If it went to £1,000 million would they then feel it was no longer acceptable?
The Deputy is wandering away from the point.
I am not. I am just making an appeal to the Minister to accept that the law of diminishing returns operates here and that a reduction to a more competitive price would result in beneficial gains to the Exchequer.
Deputy Yates asked about the tax on LPG. It is about 50 per cent of retail price. That compares favourably, percentage-wise, with the percentage for petrol which is around 66 per cent. Deputy O'Kennedy made reference to figures for the fall in the consumption of petroleum products generally. The main fall was in the non-road fuels.
That is not so.
There was a 44.8 per cent reduction in the non-road fuels since 1980 whereas the fall in petrol used on the roads is about a 15 per cent fall in consumption.
The question of a reduction in petrol prices at this time being self-financing was again raised by Deputy O'Kennedy although I noted some of the Deputies on his own backbenches did not seem to have much confidence in this claim. My information from the Revenue Commissioners is that, for every one penny reduction we could make in the duty, we would lose about £2 million which indicates that if we were to reduce the price by about 15p we would lose about £30 million in revenue. I would have to admit however that the tax is at a very high level and if it were to be increased any further we would probably have a situation where we would indeed experience diminishing returns. But my information, supplied to me by the best qualified people available, the Revenue Commissioners, who obviously want to maximise the tax take, is that a reduction of this kind would, in fact, reduce the actual yield quite significantly as I indicated.
The Government did reduce some of the taxes considerably and these have, perhaps, this year at least — although it takes longer than one thinks — paid for themselves. So there is no question of our having a closed mind to making reductions if we can be satisfied that they will finance themselves. I would also say, as relevant to the claim made by Deputy O'Kennedy that these tax concessions would be self-financing, that there has in fact been a substantial fall in the retail price of petrol in recent times as a result of the fall in oil prices and that has not led to any great increase in consumption. If that self-financing argument were to stand up, one would have expected that the other reduction would have yielded a very large increase in consumption. That was, if you like, a dry run or a demonstration of what would be the effect on consumption——
Give us the figures to support that case.
——and the increase in consumption was not that significant and would not tend to bear out Deputy O'Kennedy's case.
What was the increase in consumption?
In fact, the opposite would appear to be the case.
The Minister is once again sheltering behind generalisations. He said there has been a fall in petrol prices generally but that the increase in consumption has not been very great. Would he please treat the House with a little respect and tell us exactly what the increase in consumption has been? Generalisations are not good enough. He must have the figures for the first quarter at least.
The peak petrol price level was in June 1985. The price came down from 311p in January 1985 to 299p, yet despite that fall the actual consumption of petrol fell through 1985 as against 1984 by 2.5 per cent.
Start with June 1985.
The peak price was 311.04p in June 1985 and it fell for the rest of the year; in January 1986 it was 290p. Despite that fall the total figure for 1985 as a whole, which admittedly represents the early part of the year when prices were high——
That will not do.
The total figure for 1985 as a whole represented a fall of 2.5 per cent on 1984, during which time prices were higher. I can assure the Deputy that the Revenue Commissioners take full account of this type of information which shows——
The Minister is attempting to mislead the House.
The Deputy should not say that the Minister is misleading the House.
I said he was trying to mislead the House, but he is not succeeding.
There was not the rapid increase in consumption Deputy O'Kennedy expected as a result of the fall in petrol prices. That is not to say that in the long run there will not be an increase, but patterns do not change that quickly and unfortunately the Government have to live in the meantime. On the basis of the figures available there is reason to be extremely sceptical about tax cuts being self-financing. However, as I have indicated, the Government do not have a closed mind on this approach and would adopt it if they though it would maintain or maximise revenue.
The Minister was asked simply to demonstrate whether there had been an increase in consumption since the fall in prices in June 1985. The Minister deliberately — I hope he is listening because I am saying "deliberately"— decided not to give the consumption figure——
I do not have those figures.
The Minister should have them.
I cannot foresee every question the Deputy might ask.
With the back-up staff available to the Minister——
I am not providing research staff for the Deputy.
If the Minister does not have the figures he should not say in this House——
I am making these statements on the advice of the Revenue Commissioners. The Deputy accuses me of misleading the House when I tell him what the Revenue Commissioners——
I presume the Revenue Commissioners have facts to support what they tell the Minister.
I do not have the figures with me, but I can obtain them. There is no justification for the Deputy accusing me of misleading the House. He should try to conduct this debate on a reasonable basis.
This Minister has available to him officers from the Office of the Revenue Commissioners and the Department of Finance and he should not make the statement that there was no increase in petrol consumption——
I did not say there was no increase in consumption. I said there was not a significant increase relative to the fall in prices.
Now he says he does not have the figures for the increase in consumption——
I am advised that——
Perhaps the Minister would get the figures to back up that statement.
I do not have the figures with me. I have given the Deputy the figures I have. I do not know why he is making a big deal of this. I have given the year on year figures which show a decline but——
The Minister is indicating his inability to use his authority with his officials to get figures to support general statements which are not true.
It is not a question of authority. I do not have the papers with that information in this room.
That is a terrible admission. It is the first time I have heard a Minister for Finance make such an admission. He makes a statement but he does not have the figures to support it.
I have some of the figures; I do not have all the figures. I have the year on year figures, but I do not have the monthly figures.
I have never heard the like of that from any Minister.
Make another phone call.
Deputy McGahon knows what to do. If I were able I would make a phone call to get figures, but the Minister cannot get the figures——
He will not answer me.
This demonstrates that the argument is won and the Minister knows he has lost.
That is like telling the team they have won because they do not want to face the second half——
We are being too kind because we do not want to expose the Minister's inability.
That approach would not win the European cup final. Call a vote.
I will be putting a written question to the Minister within the next few weeks about this and I presume the figures will be available.
We will provide the Deputy with a free research service.
The figures will demonstrate the argument I have been making——
I doubt it.
The Minister only doubts it now. But I am telling him they will and he will have to withdraw those generalisations. The argument is over. We have won.
Will the Minister give any information on the questions I raised? Why has the price of motor oil not been reduced compared with the price of petrol?
The Deputy is asking too much. The Minister does not know anything about that.
Question put.
The Committee divided: Tá, 68; Níl, 62.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Myra.
- Barry, Peter.
- Begley, Michael.
- Bell, Michael.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- Bruton, John.
- Crotty, Kieran.
- D'Arcy, Michael.
- Deasy, Martin Austin.
- Desmond, Barry.
- Desmond, Eileen.
- Donnellan, John.
- Dowling, Dick.
- Doyle, Avril.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Farrelly, John V.
- Fennell, Nuala.
- Flaherty, Mary.
- Flanagan, Oliver J.
- Glenn, Alice.
- Griffin, Brendan.
- Harte, Patrick D.
- Hegarty, Paddy.
- Kelly, John.
- L'Estrange, Gerry.
- McGahon, Brendan.
- McGinley, Dinny.
- Bruton, Richard.
- Burke, Liam.
- Carey, Donal.
- Collins, Edward.
- Conlon, John F.
- Connaughton, Paul.
- Coogan, Fintan.
- Cosgrave, Liam T.
- Cosgrave, Michael Joe.
- Coveney, Hugh.
- Creed, Donal.
- McLoughlin, Frank.
- Manning, Maurice.
- Mitchell, Jim.
- Molony, David.
- Moynihan, Michael.
- Naughten, Liam.
- Nealon, Ted.
- Noonan, Michael. (Limerick East).
- O'Brien, Fergus.
- O'Brien, Willie.
- O'Keeffe, Jim.
- O'Leary, Michael.
- O'Sullivan, Toddy.
- Pattison, Séamus.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick Joseph.
- Skelly, Liam.
- Taylor, Mervyn.
- Taylor-Quinn, Madeline.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Browne, John.
- Burke, Raphael P.
- Byrne, Seán.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Brian.
- Daly, Brendan.
- De Rossa, Proinsias.
- Doherty, Seán.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Liam Joseph.
- Flynn, Pádraig
- Foley, Denis.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Hilliard, Colm.
- Hyland, Liam.
- Keating, Michael.
- Kirk, Séamus.
- Kitt, Michael.
- Lenihan, Brian.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McCarthy, Seán.
- McEllistrim, Tom.
- Mac Giolla, Tomás.
- Morley, P.J.
- Moynihan, Donal.
- Nolan, M.J.
- Noonan, Michael J.
- (Limerick West).
- O'Connell, John.
- 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.
- Treacy, Noel.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Tellers: Tá, Deputies F. O'Brien and Taylor; Níl, Deputies V. Brady and Browne.
Question declared carried.
SECTION 59.
Question proposed: "That section 59 stand part of the Bill."
It is regrettable that the Minister is again proposing an increase in the excise duty on spirits. We welcome the fact that his predecessor listened to the case we made — for once — and did not add to the excise duty on spirits. The figures available to the Minister prove that the consumption of spirits increased as a consequence of that decision, which is welcome. It is regrettable when the trend is in favour of at least maintaining current excise levels and not increasing them that the Minister is reverting to the old pattern. I am afraid we will see not only reduced consumption but reduced revenue.
If the Deputy is suggesting another self financing tax cut on this section, I must tell him that the figures he was looking for earlier regarding the consumption of petrol indicate that it fell in the first quarter of this year as against the same quarter last year which does not bear out the Deputy's case. If he likes, I can produce the figures.
We are not talking about petrol.
I am looking forward to Deputy O'Kennedy's Parliamentary Question on the subject because the answer will disprove his case. It was necessary to put a modest increase on the excise duty on spirits. However, the section also provides for the abolition of certain duties also applying to spirits, for example, the duty on immature spirits and the extra duty charged on spirits where deferment of duty is availed of, both of which are relatively ancient charges, one of them dating back to 1915, which are being abolished.
Question put and agreed to.
SECTION 60.
Question proposed: "That section 60 stand part of the Bill."
We are dealing here with the rate of excise duty and drawback on beer which the Minister is proposing to increase by £3.30 on the standard barrel. It is again evident from the figures available to the Minister that the increase in the excise duty on beer caused the level of consumption to drop by at least 12.5 per cent to 15 per cent. It demonstrates the necessity to take a more prudent and balanced approach to the imposition of excise duties on consumer products. I should like to bring to the Minister's attention that, in addition to the magnetic attraction of the other side of the Border because of low petrol prices, everybody going up there to shop avails of the opportunity to purchase large quantities of beer. As other Members said, we are giving a grant-in-aid to the British Government, which is not part of our function.
The mainstay of our tourist traffic, the ordinary British working class holiday markers, are now sharply conscious of the fact that the price of drink generally, and beer in particular, is so much higher here that they are not coming any more. The Minister must acknowledge that the decline in tourism from the working class British, who were our best friends in many ways because of traditional association and many other things, has had a major effect on tourism and on revenue from excise duties on beer. I urge the Minister — without any great confidence — to reconsider his position because the dramatic effect of such a decision, when our tourism from other areas will obviously be affected by recent developments, will be felt all over the country. We should try to re-establish the tourism market from Britain.
In normal times the consumption of beer during the holiday period grows by at least 20 per cent because of the impact of tourism. That also applies to spirits and, to a lesser extent, to petroleum products. We will not now see that growth and the Minister should reconsider this proposal because the facts prove that there has been a drop in the consumption of beer over the past few years.
Consumption in 1985 was up 17,000 barrels as against 1984 and that was significant in itself.
The Minister should go back a year.
I must state that the fall-off in tourism from Britain, which the Deputy described, goes back to the beginning of the Northern troubles. It was a major fall. We have never reached the level of numbers of tourists coming here from Britain that we reached in 1967 and 1968, before the troubles in Northern Ireland became a major factor. While I agree that the price of drink is a factor in determining holidaying patterns. I think political considerations, unfortunately, have played an even larger part in keeping this group of tourists, whom I also value, away from us.
The Minister gave one figure but he should tell us the total level of consumption of beer in 1982 and 1983. If he does we will be able to see the relevance of the 1984 figure.
The lowest year for consumption was 1983 when it was 1,647,000 barrels. It rose very slightly in 1984 and rose rather more in 1985.
What was it in 1982?
I have given the figure for 1983. In 1985 it was 1,666,000.
What was the figure for 1982?
In 1982 it was 1,752,000.
It dropped the following year to 1,647,000 and that makes my case.
It was a big drop. The figures have been rising since.
It was a big drop because of the level of excise duty on beer.
Progress reported; Committee to sit again.