Dáil Éireann debate -
Wednesday, 30 Jan 1991

Vol. 404 No. 4

Financial Resolutions, 1991. - Financial Resolution No. 1: Excise — Tobacco Products.

The Taoiseach

I move Financial Resolution No. 1:

(1) THAT in this Resolution—

"the Act of 1977" means the Finance (Excise Duty on Tobacco Products) Act, 1977 (No. 32 of 1977);

"the Act of 1988" means the Finance Act, 1988 (No. 12 of 1988);

"the Act of 1990" means the Finance Act, 1990 (No. 10 of 1990);

"cigarettes", "cigars", "sweetened pipe tobacco", "hard pressed tobacco", "other pipe tobacco", "smoking tobacco", "chewing tobacco" and "tobacco products" have the same meanings as they have in the Act of 1977, as amended by the Imposition of Duties (No. 243) (Excise Duty on Tobacco Products) Order, 1979 (S.I. No. 296 of 1979), and by section 55 of the Act of 1988.

(2) THAT the duty of excise on tobacco products imposed by section 2 of the Act of 1977 shall, in lieu of the several rates specified in the Eighth Schedule to the Act of 1990, be charged, levied and paid, as on and from—

(a) the 31st day of January, 1991, at the several rates specified in the First Schedule to this Resolution, and

(b) the 1st day of March, 1991, at the several rates specified in the Second Schedule to this Resolution.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

FIRST SCHEDULE

Rates of Excise Duty on Tobacco Products

Description of Product	Rate of Duty
Cigarettes	£42.52 per thousand together with an amount equal to 15.08 per cent. of the price at which the cigarettes are sold by retail
Cigars	£64.740 per kilogram
Sweetened pipe tobacco	£65.422 per kilogram
Hard pressed tobacco	£41.837 per kilogram
Other pipe tobacco	£52.590 per kilogram
Other smoking or chewing tobacco	£54.631 per kilogram

SECOND SCHEDULE

Rates of Excise Duty on Tobacco Products

Description of Product	Rate of Duty
Cigarettes	£42.52 per thousand together with an amount equal to 16.43 per cent. of the price at which the cigarettes are sold by retail
Cigars	£66.290 per kilogram
Sweetened pipe tobacco	£66.989 per kilogram
Hard pressed tobacco	£42.839 per kilogram
Other pipe tobacco	£53.849 per kilogram
Other smoking or chewing tobacco	£55.939 per kilogram

This Financial Resolution provides for a budget day increase in excise duty of 8.1p, that is 10p, including VAT at 23 per cent, on a packet of 20 cigarettes with pro rata increases on other tobacco products. It also provides a further increase of 2.8p in excise duty on a packet of 20 cigarettes with pro rata increases on other tobacco products from 1 March 1991 so as to leave the retail price unaffected by the change in the standard rate of VAT. I do not know whether I need explain that any further. The changes in VAT will not come into effect until 1 March next. Therefore, the additional change has to be made at that date so that the 10p increase will be effective.

Mr. Barry

We are not voting against this even though there is a strong temptation to do so because the level of increase is savage. I do not believe the reason given by the Minister this afternoon. This was not done for health reasons but purely monetary reasons. People may throw their hands up in horror and say that the money should not be spent on tobacco and cigarettes but the Minister should remember that we have many unemployed people and perhaps their only consolation during the day is to smoke. Without having figures to prove it, I would reckon that they are a very large percentage of our smoking population. This imposition on unemployed people is far too much. We all accept the irrefutable evidence that smoking damages health and that it is related to cancer, but there are thousands of people, largely unemployed people, who have few comforts in life apart from smoking. To put 10 per cent of the cost of a packet of cigarettes is unthinking and unfair to those people.

Mr. G. Mitchell

A Leas Cheann Comhairle——

An Leas-Cheann Comhairle

If Deputy Mitchell would not mind I will now, according to tradition, move to a spokesperson from the Labour Party, Deputy Liam Kavanagh.

Mr. Kavanagh

There are many excesses in life at the moment and if they were to be cured by increases at budget time it would be a solution to many of our problems. The Minister in introducing his budget today said he was not increasing the old reliables. Cigarettes were always an old reliable and in days gone by it was regarded as a very harsh penalty to increase excise duty on tobacco. Now attitudes are changing in relation to smoking. It seem that now an increase of 10p on a packet of cigarettes can be sold as a penalty for being environmentally unsafe. That is the wrong way to go about it if that is the intention. Of course that is not the intention. If this is a way to penalise smokers it has failed over and over again. In 1981 the increase brought the cost of a packet of cigarettes to over £1 and now ten years later it is over £2 and it will not stop people smoking.

If we want to stop people smoking, if we believe that it is a danger to health, then we should pursue the programme the Minister for Health embarked on and if it fails he must take other measures to inform the public of the dangers. Perhaps advertising which implies it is a macho thing to smoke should be looked at.

This is a way of helping to balance the budget. People who smoke would prefer if they did not. They are hooked on it and want to change but only some people have the willpower to change. Certainly increasing the price of cigarettes will not change that habit. As Deputy Barry said, this is about the only consolation some people have and they are prepared to spend a proportion of the meagre money they get from social welfare or in unemployment benefit to buy a packet of Woodbine or pipe tobacco in order to have that little bit of enjoyment. Old people who have been smoking all their lives will not change.

The Taoiseach

I do not think there are Woodbine any more.

Mr. Kavanagh

They were the typical smoke of the——

Mr. Carey

They are still there, Taoiseach.

Mr. Kavanagh

My point is that we are opposing this increase because it is simply to raise funds for the Exchequer. This has not been done as a health promotion activity. It will hit people who perhaps have not the willpower to stop smoking, who have no other pleasure in life. This old reliable should be excluded from additional tax. Drinking is every bit as bad for health. In the case of those who drink and drive, perhaps the Minister for Finance should have increased the price of drink to stop that happening. The Minister has let that off. In fact, the price has been reduced because of the reduction in the higher level of VAT. The argument fails and I intend to oppose this.

The Taoiseach

I do not want to interrupt but I should move on the proposal as to how we deal with these resolutions.

An Leas-Cheann Comhairle

The Minister of State has already moved the time allocation motion. In respect of resolutions Nos. 1 to 3, one question will be put at 8.45 p.m. on the three resolutions.

Mr. Rabbitte

I find it a bit difficult to get worked up about this resolution, although it provides an opportunity for the House to show what it thinks about this budget. Smoking is injurious to health and, therefore, it is a bit difficult to argue against a choice like this being made. If the Minister for Finance has to raise some revenue from the old reliables and has a choice between the pint of Guinness and the packet of cigarettes, I can see a lot of sense in the decision that was made. I would be a great deal more impressed if there was a link between the revenue raised and the revenue being earmarked for health awareness purposes. There is no evidence that it is going anywhere other than into the maw of the Exchequer generally. In that sense what Deputies Barry and Kavanagh have said is probably true. If we believe the notice compulsorily displayed on cigarettes to the extent that smoking is bad for health, it is very difficult to argue that the choice made here is logically wrong but it offers us an opportunity, being the first resolution, to comment on this unimaginative and unadventurous budget.

An Leas-Cheann Comhairle

Deputy Gay Mitchell for a brief comment.

Mr. G. Mitchell

I understand we have until 8.45 p.m. to discuss the three resolutions. Why should my comments be very brief?

An Leas-Cheann Comhairle

It is customary that apart from the spokesperson, we do not have contributions from other members of the party. Rather do they ask questions. I am merely reminding the Deputy of the tradition that exists in the House.

Mr. G. Mitchell

With due respect, your comments are totally unnecessary. I am quite within my rights to make a contribution. It would help the proceedings of the House if the Chair did not interfere when Deputies are exercising their rights.

An Leas-Cheann Comhairle

There is an obligation on the Chair to remind the House of what has been agreed to on the matter of time, that everything is being disposed of by 8.45 p.m.

Mr. G. Mitchell

There is an obligation for all Deputies to be orderly. I want to make a couple of points about this resolution. I do not accept it was on health grounds that this 10p increase is being imposed as the Minister's speech suggested earlier. If that were the case, why did the Minister not impose 20p or something more severe? I reject the suggestion that this is imposed on health grounds. This is a revenue-raising imposition.

Given the need for EC harmonisation of taxes and duties, it would seem that there will be a great disparity between the cost of cigarettes here and in the North of Ireland which borders the constituency of the Minister for Health. We may find that people will stock up by buying across the Border and we may have to remove these costs in the future.

If the Ministers for Health and Finance are serious about the health risk, why not go for a total ban on cigarettes over a given period, say between now and the year 2000 or 2005? We should set some specific period for the banning of cigarettes if that is the objective. It is objectionable that we should seek to raise revenues on the poor health which will be suffered by those who smoke cigarettes. That was the reason given by the Minister. Fine Gael will not oppose this resolution but it is disingenuous to suggest that its introduction is for health reasons.

Mr. Byrne

We should dispel the myth that the only people who enjoy smoking cigarettes and even over-indulging in them are those depending on social welfare or living in desperation because of unemployment and social deprivation. That is an unfair and incorrect suggestion. People of all classes are smokers. It is not just poor people who engage in this unsocial habit.

The Minister for Finance implied that he imposed this increase because the Minister for Health told him he was worried about the number of people smoking. If that is a fact, we should deal with it head on. It is sad that more and more young girls are being attracted to smoking. This is much less the case in regard to young men. It is a dangerous and disturbing trend in society but it is not sufficient that the Minister for Health should supposedly whisper in the ear of the Minister for Finance and say that the way to solve this problem is by increasing taxes. An increase in tax would not, on its own, be sufficient to deter people from smoking.

The health warning on cigarette packets has done nothing to deter first-time smokers, teenagers and school children. The Minister may in due course outline exactly what he intends to do to reinforce public awareness regarding the dangers of smoking and to reverse the trend of tobacco smoking among young people. Perhaps he will outline the development of the existing policy of his Department for a public educational campaign to persuade people voluntarily to desist from smoking.

Mr. Boylan

The Minister for Finance said he was imposing an increase of 10p on cigarettes because he wanted to deter people from smoking. He said the Minister for Health had had a word with him. I do not accept that. It was merely an excuse for hitting one of the old reliables in order to raise revenue. Having made his statement, however, the Minister should live up to it. I accept Deputy Byrne's point that young boys are not smoking to the extent they did when I was growing up. They are more involved nowadays in fitness and sport. The number of young girls who are smoking is noticeable but that is their affair.

I would point out that old people enjoy smoking. Old men enjoy a pipe because it whiles away a long dreary day. Many old people are living in misery, as the Minister for Health and the Taoiseach are aware. In my constituency we have a terrible problem that there is nowhere for old people to go even for a few weeks during the winter months and some people live in terrible conditions. I would suggest that the Minister for Health should whisper to the Minister for Finance that he wants to use the extra 10p for these old people who served this country well and built it up. They made no contribution to the massive debt we have today. They worked hard and brought this country through bad times. Those who think we are seeing bad times now should talk to people over 70, 80 and 90 years of age. I suggest that the Minister should target that money to give those old people some little relief in the last years of their lives.

Tomás Mac Giolla

I want to speak on behalf of pipe smokers. It is not only old people who smoke pipes; the Minister should encourage young people to take up the pipe. The Minister for Finance says he is doing this on behalf of the Minister for Health. I do not believe this for a moment. The Minister for Health has never condemned pipe smoking. There is no health warning on pipe tobacco. If the Minister says it is a danger to health, will he tell us what the proof is? When the price of cigarettes is increased in a budget the price of pipe tobacco is always increased as well. If cigarettes are such a danger to health, as I think they are, the alternative should be to encourage people to smoke healthy tobacco, that is pipe tobacco.

I refer the Minister to the increase in the price of chewing tobacco. What danger is there in chewing tobacco? Anyone who chews tobacco spits it out, so there may be a danger to other people. I never met anyone who chewed tobacco and I am amazed they are still making it. Does any Member know a person who chews tobacco? Are they still making chewing tobacco? It is stated here every year as part of the budget that the Minister is increasing the price of chewing tobacco.

If one wants to discourage people from smoking cigarettes one should give the incentive of cheaper pipe tobacco and encourage the smoking of pipes instead of cigarettes. People may not like the pipe and it might put them off smoking altogether. The Minister should consider this point. He has continually condemned the smoking of cigarettes but has never condemned the smoking of pipes. How can the Minister for Finance say he is imposing this increase on behalf of the Minister for Health? I would ask the Minister for Finance to reconsider and simply to increase the price of cigarette tobacco, leaving the others as they are.

Mr. Carey

Since we are taking Financial Resolutions Nos. 1, 2 and 3 together, I should like to speak on Nos. 2 and 3.

An Leas-Cheann Comhairle

It was decided that we should take them seriatim, not inclusively. I thought it would have been better to do so but the House did not agree. We will dispose of Financial Resolution No. 1 before we move on. I regret that was the decision of the House.

Mr. Carey

You can have my tuppence ha'penny for the cigarette people. As one of those who gave up smoking in 1979 I have no regrets. I am glad I was successful in doing so and I feel a lot better healthwise. Many people will not breathe too well tonight when this 10p is put back on their packet of cigarettes. It is not in character for the Taoiseach to impose this kind of miserly charge against the few remaining people who use cigarettes. I am very surprised that he would make this attack in this way and say that it is for health reasons only. It is, I believe, a short circuit to get the budget balanced and I do not think there was any thought at all put into it.

The Taoiseach

I will be very brief because I am sure Deputies want to get on to the other resolutions. We should not get into any divisive argument as to whether the Minister for Finance is doing this for health reasons or otherwise. Quite clearly he is doing it for both reasons. He is doing it, I would say, primarily as a Revenue raising exercise, but it is also true that the price of cigarettes in particular has a bearing on consumption. The figures show that. Whatever about increasing the price of cigarettes not preventing people from smoking, certainly the observe is true, that lowering the price of cigarettes does encourage smoking. The figures show that. The real price of cigarettes has fallen by about 5 per cent in the last two years and consumption has increased.

I do not want to go into the merits or demerits of this too much here, but I would like to say passionately that all tobacco is bad for health. I am very sad to hear Deputy Tomás Mac Giolla say what he said about pipe smoking and chewing tobacco because one person very near and dear to me died much younger than he should have because he was an inveterate pipe smoker and for no other reason. Deputy Mac Giolla and others are deluding themselves if they think pipe smoking is harmless.

Tomás Mac Giolla

The Taoiseach can add the Minister, Deputy O'Hanlon to that. He never said a word about pipe smoking.

The Taoiseach

It may be a little less harmful but I do not think there is much to choose between them.

I would, on behalf of my colleague, the Minister for Health, re-inforce very strongly the undeniable statement that all tobacco is bad for health and cigarette smoking is particularly pernicious. One of the warnings is that cigarette smoking causes cancer and leads to people dying younger than would otherwise be the case. These are the facts of life. So if there was no other reason for putting on this 10p it would be justified on health reasons. That, however, is not the Government's case. We would openly and honestly admit that we are killing two birds with the one stone. We want the revenue and at the same time we think it is a good thing to do from the point of view of health.

Mr. Deenihan

How many lives would it save?

Tomás Mac Giolla

On what scientific evidence?

An Leas-Cheann Comhairle

We will move on to Resolution No. 2. Any question to be put on Resolution No. 1 will be put at 8.45 p.m.