Vol. 418 No. 6
1 Mr. Quinn asked the Minister for Finance if he will give details of (a) the number of public houses in the country at present who pay £100 as an annual licence charge and (b) the estimated increase he will obtain from them as a result of the changes which he has announced in his budget; whether such increased sums will be treated as deductible expenses from both personal and/or business taxes; and if he will make a statement on the matter.
47 Mr. J. O'Keeffe asked the Minister for Finance if he will outline the number of publicans in the country; and the projected additional yield from the proposed changes on licence renewals announced in the budget.
63 Mr. Durkan asked the Minister for Finance the total expected to accrue to the Exchequer in a full year on foot of valuation changes on licensed premises as announced in the 1992 budget; his views on whether such changes are in accordance with the Programme for Economic and Social Progress aspirations in respect of jobs; and if he will make a statement on the matter.
93 Mr. Quinn asked the Minister for Finance if he has received representations from the Vintners Federation of Ireland concerning the arbitrary changes announced in his budget regarding licence renewal fees from public houses; if he proposes to change his proposals in view of the absence of any ceiling upon public houses in contrast to other licences; and if he will make a statement on the matter.
I propose taking Questions Nos. 1, 47, 63 and 93 together.
At present there are 10,670 public house licences issued; a fee of £100 is payable in respect of each licence, irrespective of turnover or location. I consider it wholly appropriate to seek a fair return for the State in respect of the benefits and opportunities arising from the highly restricted issue of liquor licences. This is particularly the case when the restrained Government approach to alcohol taxation in recent years, in recognition of the impending EC Internal Market, has resulted in the proportion of retail drink prices accounted for by tax falling significantly and the tax content of drink declining in real terms. These considerations and general budgetary needs prompted me to look for a contribution to the Exchequer from the drinks trade by way of an increase in the licence fee, which was last adjusted in 1989. My budgetary proposals are aimed at raising an additional £3 million in a full year. I was anxious to ensure that whatever approach was adopted in that regard should as far as was practicable relate more closely to turnover. I was also concerned to ensure that all types of liquor licences were treated fairly and equitably, having regard to the different nature, conditions and scope of the various types of licences. As far as public houses and hotels were concerned, an approach based on the rateable valuation of the individual premises concerned, but differentiated by rate chargeable to take account of the different nature of the core businesses involved, appeared to offer an appropriate mechanism.
In the contacts which I have had subsequently with vintners' representatives, illustrative figures have been mentioned and I have listened carefully to the various reactions and will bear them in mind when framing the final Finance Bill proposals. Let me again emphasise that my primary objective is to raise the necessary amount of revenue by the fairest possible means.
I am satisfied that my objective can be met in a way which should not be unduly onerous on publicans. In any event the new charges will be deductible as a trading expense for income tax or corporation tax purposes, as appropriate, and the net additional cost of the licence will therefore be ameliorated to a large extent in most cases. As a consequence, there should be no adverse effect on the job targets in the Programme for Economic and Social Progress. Indeed, as this initiative is part of the general broadening of the taxation base, it is entirely consistent with the wider Government objective of reforming income tax as a means of promoting much needed employment growth.
Has the Minister indicated to his own back benchers or to the licensed vintners that he proposes to raise an extra £2 million directly from them in 1992-93? Have the Department assessed the likely impact this will have on employment in the licensed trade? The Minister has admitted that the extra charge in the licence fee will be deductible for income tax and corporation tax purposes. Have the Department assessed the level of this deduction?
It will have no effect on employment. I have had discussions with the licensed trade and it was envisaged that there may be an increase in employment because of the changes in taxation. I have mentioned the figure on a number of occasions, indeed, I mentioned it the last day in this House and I have already referred publically to the revenue that will be realised and how it will be deductible against tax.
Would the Minister not accept that the valuation base on which this tax will be based is unequal at present and that as a result many traders, who are also publicans, will be discriminated against severely because of the inequities in the valuation base?
As I said before, I have not very fixed views on the basis of how I will raise the money but the licensed trade have differing views. A large proportion of the licensed trade would like to see it based on the rateable valuation, while others would like to see it based on turnover. My principal concern is to try to maintain a fair share of State revenue from the drinks trade. The trade element in price is dropping and because of the reduction in excise and VAT, the percentage return on drink fell by approximately 6 per cent and the return on beer dropped by 7 per cent. I am seeking to get an equitable share by whatever means I can. The licence is a very saleable asset. Recently licences sold for——
You will drive them out of the market.
The past six licences which were up for sale sold for between £100,000 and £150,000, and if "out of the market" means that a £100 licence will sell for £150,000, it will be a while before I will put them out of the market. A publican pays £100 for a State licence regardless of where the publichouse is located, whether in rural parts with seasonal trade or in the most fashionable part of any of our cities, where there is a massive turnover. The system at present is totally inequitable.
A Cheann Comhairle——
It must be brief Deputy. Let us not forget that we are dealing with priority questions and there are still four remaining.
In the light of the Minister's admission that he wants to get money in by any means and he is not particularly fussy about the valuation base involved, would he not agree that the courageous and more honest thing to have done in the budget would have been to increase the price of drink so that everybody would pay rather than crippling some licensed vintners, as this measure is going to do? The Minister is evading in public what he is doing in private without really knowing the impact of his actions.
I totally reject that assertion.
It is a "cute hoor tax".
The percentage of tax on drink has fallen but the price of drink has gone up 19 per cent, 10 per cent higher than the consumer price index, and this is largely responsible for the increase in inflation.
What about the brewers?
