Dáil Éireann debate -
Wednesday, 24 Feb 1993

Vol. 426 No. 6

Financial Resolutions, 1993. - Financial Resolution No. 7: Stamp Duties.

The Taoiseach

I move Financial Resolution No. 7:

(1) THAT section 203 of the Finance Act, 1992 (No. 9 of 1992), be amended by the addition of the following subsection after subsection (9):

"(10) Where a promoter changes its accounting period and, as a result, stamp duty under this section would not be chargeable or payable in the year 1993 or in any subsequent year (in this section referred to as ‘the relevant year'), then the following provisions shall apply:

(a) duty shall be chargeable and payable in the relevant year as if the accounting period had not been changed,

(b) duty shall also be chargeable and payable within one month of the date of the end of the accounting period ending in the relevant year, and

(c) the duty chargeable and payable by virtue of paragraph (b) shall, subject to the proviso contained in subsection (2), be chargeable and payable in respect of cash cards issued at any time by the promoter and which are valid at any time during the period from the due date as determined by paragraph (a) to the due date as determined by paragraph (b).”.

(2) 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).

This resolution provides for an increase in the levy charged on premiums in respect of certain classes of non-life insurance. The levy is at present 1 per cent of premiums received and it is proposed to increase this to 2 per cent. The increase will apply to premiums received on and from 25 February 1993. The yield is expected to be £9 million in 1993 and £11 million in a full year. This measure will not mean a cost increase for policyholders relative to the position in 1992 as the special 1 per cent levy in respect of the insurance compensation fund terminated on 31 December.

This resolution is essentially a technical amendment to section 203 of the Finance Act, 1992, which provides for a stamp duty of £2 on certain ATM cash cards. The duty is charged in respect of the accounting period of the bank or building society as the case may be, and is payable within one month of the end of that period. This arrangement was set up to facilitate banks and building societies in the administration of the tax following discussions with them. As enacted section 203 did not provide for a situation where as a result of a change in the accounting period of a bank or building society the duty could be avoided in a particular year. This has now occurred with one of the major banks. The effect of this resolution is to ensure that the cash card levy will be payable by customers of all banks and all building societies in 1993.

Mr. Noonan

(Limerick East): Resolution No. 1 provides that the price of 20 cigarettes be increased by 10p, and the yields are quite significant. Has the Taoiseach any figure to suggest what effect this increase will have on the number of people smoking? Is there an expectation of a reduction in the numbers smoking and what will be the effect of such a reduction? Will the Taoiseach indicate whether it will have an effect on employment in the industry and what advice is the Department getting in this regard? Will it be a question of keeping down the expected increase in the number of smokers or will there be an actual decline in the sales of cigarettes? Will there be a knock-on effect on the manufacturing side, with a possible loss of jobs?

Will the Taoiseach clarify the point made by the Minister in his budget speech today in relation to the effect on cross-Border trade? He indicated that a new scheme would be introduced so that country of origin stamping would be put on tobacco products. Will the Taoiseach explain what is meant by that because I do not understand fully how the system will operate in practice? If he has the figure in his brief, will he give the price differential after this imposition, in respect of 20 cigarettes of any standard brand, between here and Northern Ireland? If there is an expectation of distortion in cross-Border trade, what precisely has the Minister in mind in this respect? In respect of Resolution No. 2 relating to cider and perry the Taoiseach indicated an increase of 4p on a pint of cider. Will he explain what was the policy thinking behind the decision to increase the excise on cider and perry but not on any other beer or long alcoholic drink? The adjustments on hydrocarbons are of a technical nature.

On Resolution No. 5 which relates to amusement licensing duty, it was the Taoiseach, when he was Minister for Finance, or his predecessor, who brought in the original licensing system.

The Taoiseach

My predecessor.

Mr. Noonan

(Limerick East): We on this side of the House put down amendments to the Finance Bill to bring about what the Minister is doing under this Financial Resolution so we cannot very well oppose it tonight. The imposition of a 1 per cent levy on insurance policies which was introduced after the Insurance Corporation of Ireland collapse has, as I understand it, lapsed. The Minister and the Government have decided, after penalising policyholders for years, they will not benefit now that the levy has lapsed but they will impose a 1 per cent excise levy which will go to the Exchequer. Rather than the money going into the insurance fund it will in future go to the Exchequer and there will be no gain for the policyholder. I presume the non-life insurance policies the Taoiseach has in mind will include motor insurance, which is what we are talking about — non-life insurance is a euphemism for motor insurance.

The Taoiseach

And other insurance.

Mr. Noonan

(Limerick East): That would make the matter much clearer.

Mr. Carey

Security for offshore banks.

Mr. Noonan

(Limerick East): The insurance levy introduced at the time of the collapse of ICI has now lapsed but the unfortunate policyholders who are up to their necks with very severe impositions on car insurance will be given no relief — this money will be taken by the Exchequer——

Mr. Durkan

They will be hammered again.

Mr. Noonan

(Limerick East):——which is extraordinary. The ATM duty is an adjustment of a technical nature and there is not much point in talking about it. Before we go any further, I would like the Taoiseach to clarify some of the points I have raised.

The Taoiseach

With regard to the increase in cigarettes——

Mr. Cox rose.

An Leas-Cheann Comhairle

Excuse me, Taoiseach, would you prefer to deal with all the questions together?

The Taoiseach

I will take them all together.

Mr. Cox

I rise merely to ask the Chair's advice on this process, whether we should take the answers to each set of questions as they arise.

An Leas-Cheann Comhairle

You may carry on and the Taoiseach will come in at the end.

Mr. Cox

With regard to Financial Resolution No. 1, has the Government given any consideration to the question of ear-marking any or all of the increase in excise on tobacco products for health education in respect of cancer? I know there are a number of active lobbies who would have sought some such indication from Government.

In respect of the resolution relating to cider and perry, it is interesting that the increase is confined to cider and perry and is not extended to beer. I would like to hear the policy logic that lies behind that decision.

On Resolution No. 4 — hydrocarbons — if I understand the point made by the Taoiseach, we are reducing the excise on heavy oil used by the ESB in the generation of electricity and slightly increasing the excise on industrial fuel oil to bring these prices into line with the European norm. Is it expected that the reduction in price for the ESB will induce the ESB to use more oil as a means of generation, which probably would be unfortunate as it seems to be a more expensive fuel source than coal? Is it expected that there will be a possible knock-on effect there? I welcome the continuation of the Alumina zero rating which is critically important. If excise duty was imposed on the Alumina plant at Aughinish it would devastate its capacity to sustain production at that point.

On amusement machine licence duty, I welcome the Government's proposal. It is very much in line with that sought by the industry, as I know from representations I have received from people in Youghal, Limerick and elsewhere. This proposal is to be widely welcomed.

On Financial Resolution No. 6 will the Taoiseach list which policies other than motor policies are affected by the decisions not to give the consumer the benefit of the doubt yet again? This is another exercise in dipping into one's pocket. Do such policies include those taken out by policyholders in conjunction with their mortgages?

Ms. McManus

In his speech the Minister for Finance referred to gaming and amusement machines but the Financial Resolution simply refers to amusement machine licence duty. I am not clear as to what exactly is meant by that. There is a great difference between amusement machines, that is the traditional funfair machines that are located in various resorts around the country, and gaming or poker machines which are machines of a different nature. I would like clarification on what is involved here. Gaming was referred to in the Minister's speech but not in the Financial Resolution.

Minister for Finance (Mr. B. Ahern)

We are talking about fun machines.

Ms. McManus

Therefore, the word "gaming" is inaccurate.

Mr. Ferris

I seek clarification on two points, and I am being consistent in raising these points. Each one of us has constituency worries about increased taxation. The argument we have been making for years is that the cigarette industry gave much employment but fortunately in recent years it has diversified into alternative areas. If one looks at the complications in the health area caused by excessive smoking and also the number of deaths which the Minister recently announced resulting from smoking related diseases, it is appropriate that we should get additional revenue from this source while giving an incentive to people to give up the habit of smoking. Those of us who are fortunate to have given up smoking are always accused of preaching to those who find it difficult to do so. Perhaps today, Ash Wednesday, is a good day to start talking about this matter. I hope there will be benefits in terms of revenue as well as health. I am sure my constituency colleague, Deputy Michael Bell, has a different view of this matter because of the employment created by this industry in his constituency.

In relation to cider and perry — and I am being consistent on this matter also — my constituency is the only one in in Ireland that is involved in this industry. Last year Bulmers Showerings in Clonmel, a major employer in my constituency, were concerned that they would find it difficult to compete in Europe where there is a very strong wine lobby. Cider and perry have an unfortunate reputation, probably unfairly so. As other alcoholic drinks are exempt, perhaps there is a European reason for this increase. Even though it is only 4p per pint, it will take £1.6 million out of the industry, an industry which during crisis, particularly devaluation and the sterling crisis, finds it difficult to maintain employment. I had hoped the Minister for Finance would take measures to assist the industry. However, this imposition will have a significant bearing on it.

I should like the Taoiseach's assurance that this company will be retained, engaged in its present task with other major employers and maintaining the standards they have achieved. I would like him to bear that in mind even if it is a requirement of the European Community that this taxation should be imposed on these drinks. I am concerned about this as many people in my constituency are involved in the industry. Whether in Government or Opposition it is appropriate to express our reservations. I hope the Taoiseach can give us some such reassurance.

Mr. J. O'Keeffe

There are a few issues in relation to these resolutions on which I want to focus and get some responses from the Taoiseach. As I understand it, the £11 million levy on liability insurance applies to motor, employers' and public liability insurance. Is not one of our problems about job creation here occasioned by high costs, including the high costs of insurance? There was an ideal opportunity to reduce the costs in that the Compensation Fund no longer needed this topping up. If this Government was genuinely committed to job creation surely that is the one area it would not attack? Will the Taoiseach accept that this is a real attack on jobs, that all his rhetoric and that of his colleagues about their interest in enterprise and job creation is for the birds because it is in relation to decisions on the budget that one puts one's words into effect? Will the Taoiseach accept that an £11 million extra imposition, a lot of it on jobs, is outrageous within the context of there being over one-third of a million people unemployed? Does he accept that all motor insurance has a huge impact on jobs from the point of view of company vehicles, travellers and people going to work? The Government's imposition of tax to employers' liability insurance is a direct tax on jobs. Of course, to a degree, the same applies in relation to public liability. Again, in many instances it is a cost to an employer, yet this Government which pretends to have an interest in job creation has no hesitation in adopting what might be described as a "smash and grab" approach. It saw the £11 million and grabbed it irrespective of its impact on jobs.

I heard much talk about the interest of the Taoiseach and members of his party in the problems of insurance for young people. I need not bother reiterating what we heard from the Labour Party over recent years or remind the House of the crocodile tears it shed concerning motor insurance for young drivers. In three quarters of an hour will the Labour Party march into the lobby and vote for a resolution that will involve its Government imposing an extra tax on young drivers? The Labour Party in particular should be fully aware of what it is doing if it votes for this resolution. Will the Taoiseach accept that it constitutes an attack on jobs and insurance of all kinds, but particularly, on young drivers?

Mrs. Owen

In view of the day that is in it this could be called the "sack cloth and ashes" budget after what we heard.

There are three points I want to make, the first, is on the increased tax on tobacco products. In view of the overwhelming evidence that cigarette smoking is damaging to health, that consistently, budget after budget, we have increased taxes on cigarettes, will the Taoiseach and the Minister for Finance agree that the money collected from the sale of those products should be put automatically into the health area as additional money — I see the Minister for Health nodding his head — so that he would not be forced to increase hospital charges for our hard-pressed, sick people? Would it not be much better if the Minister for Finance took all the ten pennies he will collect from every packet of 20 cigarettes henceforth and gave it to the Minister for Health so that he would not have to impose these penal extra charges on the sick.

Before we finish I should like the Minister for Finance to give me some idea of how much money he expects to garner from the extra ten pennies.

The Taoiseach

I gave the figure already.

Mrs. Owen

Yes, it is £20 million. We could invest double that, £40 million, into eliminating the hospital waiting lists if we could get our hands on those £20 million yielded from cigarette taxation, extra money that could be spent on alleviating hardship and sorrow. The Minister announced that £20 million would be required to eliminate the waiting lists of people who needed new hips, or cataract removal operations. In the next sentence he announced he would give free colour television licences. I could not help thinking that one would first have had to have one's cataract removed before one could even see the colour television. I should prefer that money to go directly to alleviating the health problems caused by smoking.

I reiterate what Deputy Jim O'Keeffe said about the increased insurance costs for young motorists. The Minister for Finance is not old. Does he realise——

(Interruptions.)

Mrs. Owen

It is his new haircut today. He should have waited another week until the 12.5 per cent VAT became effective when he might have got his hair cut for £4 rather than £6 or whatever he paid. I do not know what men pay for haircuts now.

(Interruptions.)

Mrs Owen

I am afraid women's hair-dressing is much more expensive. Will the Minister agree that, in increasing the insurance cost for young drivers, he is forcing more and more young drivers to drive without insurance. More and more young people are driving without insurance because the insurance cover costs are double, three times the cost of cars? The value of the motor cars sometimes is only one-third of the price of the insurance cover costs being sought by insurance companies.

I welcome the Minister's proposal about gaming or amusement machines. I am glad Deputy McManus corrected the Minister's Budget Statement because, of course, it deals with amusement machines. Representing a seaside constituency I know this forms much of the business of the towns of Skerries, Rush, Lusk, Youghal and Ardmore, County Waterford, which I know very well. In his Budget Statement the Minister said there were other things he would examine in the context of the Finance Bill — a number of technical issues. Is one of those technical issues that represented by the Seaside Amusement and Funfair Association who wanted the duty removed from the push-penny machines? How long is it since the Minister played one of those push-penny machines? Probably a bit too long——

Mr. Cox

He has been pushing pennies all day.

Mrs. Owen

Is that one of the technical issues he will examine in the Finance Bill? Some people tend to call those push-penny machines gaming machines which, of course, they are not. They are amusement machines, no more or less, just like those on which one tries to grab a furry dog or something else. Will the Minister inform the House whether he will abolish duty on the push-penny machines? I am sure it would not be very difficult to do. I am also sure that the amusement and funfair people would be delighted to show the Minister how to play on these machines. I am afraid, at the rate the budget is imposing taxation, that is all people will be able to push around — pennies.

Mr. Durkan

In relation to increased duty on cider in respect of which I recognise the important economic factor represented by some of my colleagues, I am sure the main reason was financial, although there may be others. Bearing in mind perhaps the unfair reputation of cider drinking it does now present a considerable problem in some urban and rural areas. In a future Resolution perhaps the Minister might consider changing its presentation and/or packing to dissuade the types of abuses now prevailing.

The other point I wanted to make is in relation to the insurance industry. I cannot believe the Government could have been so petty as to take another swipe at the hard-pressed motorist. Our car insurance costs are higher than almost anywhere else in the world. It is extraordinary, at a time when 302,000 people are unemployed that the Government should decide when some little relief was coming the way of insurance premium holders to eliminate it. It is a cynical reaction on the part of a Government which is supposed to be espoused to enterprise. After all, Fianna Fáil in Government is supposed to be the party of enterprise, the party or the entrepreneur, the party of energy, a get-up-and-go party that would resolve our unemployment problems. Therefore, I cannot understand what the Minister's present proposal will do for unemployment or how it will encourage young people to insure their cars, they will continue to pay high premiums whereas they should be getting a reduction. I cannot understand how they can reconcile that policy with young Fianna Fáil policy enthusiasts who were strongly in favour of a reduction in motor insurance and called repeatedly for it.

This budget presented them with an opportunity to do something positive about that but they failed to do so. What about the other partners in Government? The party of idealists spoke on behalf of our young people, our hard-pressed mortgage holders, and motor insurers, people affected by increased public liability insurance cover over the years which is now almost the highest in the world. It is now almost impossible to obtain public liability insurance cover. In the midst of all this the Labour Party — I am sure they will say something about it — will probably vote against it although we have had no indication that they intend to do so. What will they do when the opportunity arises in just over 30 minutes? I hope in view of their sterling performance in that area — with which we all agreed — they will strongly uphold the views they upheld previously so honourably from these benches, and vote against the Resolution.

Mr. M. McDowell

This budget has been trumpeted by the Minister for Finance as pro-employment. There is a proposal before us to increase, effectively by one per cent, the cost of employers' liability insurance. Everybody who knows anything about employing people — and apparently that does not include the people who made decisions in relation to this budget — knows that in addition to employers' PRSI, every employer here faces a levy on his or her wages bill of about 10 per cent to cover employers' liability insurance. This is a crippling charge imposed by our legal, rather than our tax system, on employment. Everybody who knows anything about industry, employment and the service industry knows that every possible step has to be taken to curtail and or contain these hidden costs on employers.

This budget has been produced by two parties who said they accepted the analysis of the Culliton report, that the tax wedge was too high and that they would do something about it in this budget. There is an increase in the tax wedge on employment today, in that henceforth it will be more expensive to employ somebody because of the other tax changes the Minister has introduced. It will be more expensive to offer somebody a job, and less worthwhile to work. People earning under the average industrial wage will pay more in tax and levies than they have done heretofore. Then the Government imposed a secret levy on the activity of employment itself and an extra 1 per cent on employers' liability insurance.

What kind of pro-employment tactic is that? Is it logical? Where are the proposals about which we heard in the programme for Government for reducing insurance premia for drivers? What is the relevance of all the rhetoric from the Labour Party about bringing down the cost of insurance for the community at large? Do people think there is such a thing as a painless levy on the insurance business? Does the Labour Party, in particular, think that because insurance is big business one can fleece them for 1 per cent and that nobody will notice the difference? All householders must insure their house and will have to pay more because of the imposition of this levy. Every employer will pay more, quarterly or whenever, through his insurance broker, to keep people at work. Every person who drives a car will pay more to his insurers. This measure is being put in place as part of a budget that claims to be pro-employment. Not a single scrap of this budget is pro-employment. Every single major feature of this budget is aimed at making it less profitable to work and less profitable to offer work to other people.

This Government was elected on a promise to do something about unemployment. I think of all the high blown rhetoric in the National Concert Hall about a new beginning and what has happened here today, which is that this is a budget against employment, jobs, and enterprise. At every hands' turn the Government increased the pressure on unemployment. It has turned the screws on every possible front against those who are trying to make jobs and work for others in our economy. Employers who felt that perhaps this Government would see the logic in the Culliton report, who perhaps believed the Minister for Enterprise and Employment, Deputy Quinn, when he said that he was in favour of implementing the Culliton report; who heard the Minister for Finance speak in its favour, have seen a budget put before this House today which widens the tax wedge, drives more nails into the coffin of employment and which — by sleight of hand — adds 1 per cent extra to the cost of employers' liability insurance.

Where is the impetus to give jobs to people who need them? When he began his Budget Statement this afternoon the Minister said he was concerned about jobs. But this measure is destroying jobs. The Minister does not seem to understand how employers' liability insurance saps people's will to offer jobs to others; he does not understand that this is, in effect, an additional 1 per cent levy on the payroll levies every employer faces. He should admit that this is an anti-employment measure and withdraw it. We will oppose it and every single aspect of this budget that undermines the enterprise economy, the pro-employment economy about which Culliton spoke. No amount of posturing in public, getting soft rides from some section of the media about a pro-jobs budget — which I saw on the front of one paper this evening to the effect that this was Bertie's pro-jobs budget — or about being in favour of employment stands up to scrutiny. On every single front there has been a deepening of the trenches against employment. The decision to employ has been made more anti-employment, the decision to look for a job has been made that much more hopeless for those curently unemployed. Will the Minister withdraw this proposal now and admit that it is flawed? Will he also admit that the Government does not seem to have realised the damage which will be caused by the imposition on employers' liability insurance? Unless and until the Government shows some commitment to lessening the burden on the activity of employment there will not be an improvement in our economic situation. I echo what Deputy Cox said this evening. When it comes to a decision on reforming the taxation system to make it less anti-employment we must look at its effects on jobs. Deputy Cox said that this is not a pro-jobs budget and that it undermines the willingness of people to employ others. When it comes to tax reform, in particular, there will never be a better time to bring about pro-jobs tax reform than when we are in a budgetary crisis. There will not be a recovery if we keep tightening the screw on employment. Just because we are in difficult circumstances does not mean we should postpone tax reform; because things are hard at present does not mean one should penalise employers and employees.

The Minister's reaction in the face of the difficult budgetary situation which he and the Labour Party have largely created is to make the creation of employment and working less worthwhile. Until we decide that when the economy is going badly, there should be more emphasis on tax reform and pro-employment change, all these measures are doomed to failure. This budget will worsen the situation, not improve it. If there is any understanding on the other side of the House of the Culliton report, this measure should be withdrawn immediately.

Mrs. T. Ahearn

I agree with the comments that this budget is anti-jobs. One of the most important industries in my constituency, Showerings of Clonmel, has been singled out for attack. Certainly, I will be glad to vote against the increased duty on cider as proposed in it. Why has the Minister chosen this route, considering that an increase on cider in last year's budget yielded very little to the Exchequer? We must remember also that cider is one of the traditional beverages. It plays a vital role in the economy of the south east, in particular in Clonmel. At present Showerings employ 400 people in Clonmel, as well as generating employment in apple production. This increase in duty is detrimental to the future of the cider industry. While I welcome a responsible attitude to alcohol, there should be fairness and the Minister's decision to single out cider shows a certain weakeness in that he was not prepared to tackle other major drinks companies. This will affect the competitiveness of the cider industry and naturally will result in a reduction of its market share. This will cause unemployment in a town which was devastated 18 months ago by the loss of 350 jobs in Digital.

There is a case for special treatment of the cider industry, indeed the European Community made that decision when it adopted Directive 92/83 putting it in a category distinct from wine and beer. It has a very high labour content, and will face grave competition from imports if it cannot retain its price competitiveness. I am sure the people of Clonmel and in south Tipperary will have been very happy to hear my colleague, Deputy Ferris, speaking in support of the cider industry. However the difference is that I will be voting against the budget and that is what really matters. Deputy Ferris has the opportunity to put his words into action. Furthermore, two of the three Deputies in the constituency form part of the Government and it is regrettable that they could not have taken a stand at the first opportunity they had to protect the cider industry in Clonmel, 400 jobs and the economy of our constituency.

I will be delighted to vote against this budget. The Minister's decision is unfair, weak and passive and will not reap any rewards for the Exchequer in contrast to the loss that may result in a town like Clonmel.

Miss Flaherty

I join my colleagues on this side of the House in expressing my disappointment in relation to many of these proposals. The country is facing an unprecedented challenge and what we hope for from the serried ranks of the Government — from their combined wit and wisdom — is a great period of change as they promised in the election campaign.

Mr. Durkan

The ranks of Tuscany.

Miss Flaherty

What does this budget contain? My colleague, Deputy Browne representing Carlow/Kilkenny always has an apt phrase to describe things and he said it was a budget of 30 years ago. It is disappointing and lacks innovation. With regard to the proposals before us, will the Minister tell us why he did not take a leaf out of President Bill Clinton's book, who in attempting to make a fresh start looked at new sources of taxation and levied an energy tax as an alternative to taxing work? That option was recommended by the ESRI. There has been a minor alteration in the area of hydrocarbons to bring us into line with our European partners. Fine Gael has identified an energy tax — and we have been supported by the ESRI in this — as a major source of income with beneficial conservation effects which would allow us to make enormous improvements in easing the burden of taxation on work.

Did the Minister and his colleagues not consider this? Would this not be the kind of innovation which would allow us to invest heavily in our economy and in jobs and avoid the mish-mash of negative policies in relation to employment creation?

Mr. Cullen

I welcome the amusement machine licence duty, which is long overdue. I know Members referred to Tramore, County Waterford, and this certainly will be a help to them. That is the only positive point in this budget.

I was given my first job in Showerings of Clonmel and I speak from first-hand knowledge of that industry. The job potential of this industry seems to have been forgotten. As well as jobs in the plant, natural apples are produced in orchards which also creates employment in the area. It is an indigenous industry which produces a natural product and has potential for growth. We have heard much about Culliton and many other things, but when the first opportunity to do something positive arises, the Minister picks an obvious natural industry which has potential for greater growth and employment and dismisses it.

In the south east, in particular in Clonmel — as a follow on from Digital about which we are all so concerned and which is in difficulty in another part of the country — the Minister will take away jobs, investment and potential growth. This is also an area in which the Minister's colleague in the Department of Agriculture, Food and Forestry is searching for alternative usages of land. What is the Minister doing? One of the obvious areas — the planting of trees that can produce a natural product — will be levied with extra taxes and duties. What will happen? There will be no further investment. The Minister's colleague is searching for ideas for better usage of land, given the restrictions under Common Agricultural Policy, and yet he decided to penalise the planting of trees. Therefore we lose out on the extra usage of the land, the employment that could be created, the potential for growth in the area and the revenue potential of exporting the apples. That is all dismissed, obviously without any consideration from the Department's point of view, because the Minister did not know what he was talking about. He probably saw it simply as a manufacturing plant and did not examine the added value of that industry in Clonmel.

Many Members said that the Minister spoke in the context of the Culliton report. The 1 per cent increase in insurance levies imposed by the Minister is devastating for industries in which there is high employment potential. I know, and the Minister knows, of industries which have gone to the wall or have failed to get off the ground because of the high cost of public liability insurance. This is detrimental to the creation and sustainment of jobs. Employers are now faced with a further cost handicap from this Government in addition to everincreasing expenses. Where will it end?

No opportunity has been used by the Government or Minister in the budget to foster enterprise, given the options which are being taken here this evening. It is clear the Minister wants to substitute machines for people at work. He wants to marginalise and disregard all the people who are barely holding on to jobs as well as the 300,000 people we are trying to get back to the jobs market. He is sending a clear message to the unemployed that their services are no longer required. The light has been turned out and the Minister has given the kiss of death to the Culliton report. The title "Department of Enterprise and Employment" is meaningless jargon. It does not have empathy with the word "enterprise".

We are starting to debate the Resolutions and the Labour Party Ministers have left the House. They were not able to stomach what was said earlier and left collectively when most of the budget speeches were being delivered on this side of the House. My colleague, Deputy Howlin, the Minister for Health, who was so eloquent for the last number of years on these benches, has not said anything this evening but has decided to slip out the door.

What are we doing for young people? What future will we offer them when they try to get jobs in industry? We impose a motor insurance levy. We are sick and tired of talking in this House about doing something about the direct cost of insurance. Opportunities exist in the sales service industry but young people are unable to take up jobs because they cannot get insurance to drive a car for a company. We all know that but the Minister has imposed a further cost increase in that area. It makes no sense.

The Minister is creating a dependent society, encouraging people to stay on the margins and out of the workplace. The diminishing numbers in employment are being levied and taxed out of existence and their jobs are in danger. If the Minister proceeds down the road that this budget has set out for the Labour-Fianna Fáil Government over the next three or four years, 400,000 people will be unemployed. What will the Minister say at that stage when he knows the reality now? There have been constant increases in duties and levies. The budget is a total failure in its attempt to address the serious jobs crisis. The Minister has abdicated his responsibility, that of the Minister for Enterprise and Employment and the work of the people directly involved in job creation. The budget offers nothing to the people.

Mr. B. Ahern

I will endeavour, in the time available, to answer some of the questions. It is disappointing that Deputy Cullen could not see the benefit in spending £500 million on a capital programme. He cannot believe that in the most labour intensive industries, a reduction in VAT would not create employment——

Mr. Cullen

What about the food industry?

Mr. B. Ahern

He must know that the special investment accounts with the various criteria for equity seed capital investment and the initiatives to try to encourage the pension funds will do something for employment.

Mr. Cullen

Is the Minister suggesting that the £100,000 will be different?

Mr. B. Ahern

Deputy Cullen will recall the policies, which he pursued when we tried it last year with tax reform of all kinds, were primarily issues that I took on board. They were meant to create great incentives and activities and some of them were useful.

Mr. M. McDowell

Does the Minister regret that now?

Mr. B. Ahern

Unfortunately, nobody in the employment sector did anything about them. At the time when I brought forward some of those policies there was nobody around to support them, they encouraged me to bring them in——

Mr. M. McDowell

Does the Minister regret it?

Mr. B. Ahern

——but when it came to implementing them nobody supported them.

Mr. M. McDowell

There was no one out to get you.

An Leas-Cheann Comhairle

The Minister has only a few minutes left to respond to the questions raised by Deputies. Please allow him to do so.

Mr. B. Ahern

As in ten other member states excise on cigarettes will be paid by means of the purchase of tax stamps. It is a system used extensively throughout the Community. We have been discussing the system with the industry and with Revenue and it will take some time as I have indicated today, to finalise those discussions. However, the system works, and it forces compliance. I am sure everyone in the House will support it on that basis.

Mr. M. McDowell

People can bring in their own cigarettes.

Mr. B. Ahern

Maybe everyone in the world is wrong except Deputy McDowell. On the question of the comparison with taxes on cigarettes in Northern Ireland, the post-budget difference is 28p. There are still two budgets to come this year in the United Kingdom and while nobody can speculate precisely what will happen in those, I think the difference might narrow. The difference of 28p is made up of excise duty and VAT. That is quite a margin.

Mr. Noonan

(Limerick East): With a margin like that, people will be driving North for a smoke during their coffee break.

Mr. B. Ahern

Notwithstanding the health arguments, the potential employment implications of major price hikes must be taken into account. Employment in the industry fell from 1,700 in March 1988 to 1,300 in March 1992. There has been a decline recently of about 100. The increase of 4.3 per cent is ahead of inflation and it follows significant increases in recent budgets. Account must be taken of trade distortion and I would have increased it more were it not for that factor.

Earmarking tax for health promotion is not our policy. Taxes are not earmarked for spending purposes. Successive Governments have made moneys available in the Health Estimates but have not earmarked taxes.

Mr. M. McDowell

What about the health levies?

Mr. B. Ahern

I have listened with interest to the arguments about cider and perry. I have no doubt that this company is successful and that the added value and other initiatives are of considerable use.

Mr. Carey

Why crucify the company then?

Mr. B. Ahern

I will show that we are not crucifying it. It has a remarkable tax advantage over other products which is why the cider market is growing to such an extent. West Coast Cooler has a strength of 4 per cent and the duty per litre is 68p. Reno Cooler has a strength of 5 per cent and the duty is 68p. Beer, which has a strength of 4 per cent has a duty of 66p and beer premium lager, which has a 4.5 per cent strength has a duty of 73p. Cider and perry have a strength of 6 per cent and the duty is only 31p. There is a huge incentive for this industry in terms of relative taxation. A further increase would have been justified. Cider and perry are the lowest products with a strength of 6 per cent on sale in the State. Notwithstanding the increase, which is equivalent to 4p per pint, cider and perry in this band are still extraordinarily favourably taxed in comparison with all the other coolers and spritzers. There is no need to go through it; I have given enough figures which demolish all the arguments.

Mr. Durkan

That is self-delusion.

Mr. B. Ahern

It is half the price.

Mrs. Owen

It is due for a further 30p hike next year.

Mr. B. Ahern

It is a matter that could be considered.

Mr. M. McDowell

Are there any other success stories?

Mr. B. Ahern

I can only answer the questions raised. Deputy O'Keeffe raised the differential in favour of Northern Ireland. The duty on a six-pack of beer is 85p, wine 77p and spirits 33p. Duty raised on beer is substantially higher than in Northern Ireland. Consequently, with open frontiers further tax increases on beer would give rise to trade diversion as the drinks industry has argued. A few years ago the Government had to reverse their policy as a result of this. This industry is a very large employer, both directly and indirectly.

An Leas-Cheann Comhairle

I regret to interrupt the Minister but as it is now 9.45 p.m. I am obliged to put the following question in accordance with an order of the Dáil of this day: "That Financial Resolutions Nos. 1 to 7, inclusive, are hereby agreed to".

Question put:

The Dáil divided: Tá, 94; Níl, 58.

Tá

• Ahern, Bertie.
• Ahern, Dermot.
• Ahern, Michael.
• Ahern, Noel.
• Andrews, David.
• Aylward, Liam.
• Bell, Michael.
• Bhamjee, Moosajee.
• Bhreathnach, Niamh.
• Bree, Declan.
• Briscoe, Ben.
• Broughan, Tommy.
• Browne, John (Wexford).
• Burke, Raphael P.
• Burton, Joan.
• Byrne, Hugh.
• Callely, Ivor.
• Collins, Gerard.
• Connolly, Ger.
• Costello, Joe.
• Coughlan, Mary.
• Cowen, Brian.
• Davern, Noel.
• Dempsey, Noel.
• de Valera, Síle.
• Doherty, Seán.
• Ellis, John.
• Ferris, Michael.
• Fitzgerald, Brian.
• Fitzgerald, Eithne.
• Fitzgerald, Liam.
• Flood, Chris.
• Foley, Denis.
• Gallagher, Pat the Cope.
• Gallagher, Pat.
• Geoghegan-Quinn, Máire.
• Haughey, Seán.
• Higgins, Michael D.
• Howlin, Brendan.
• Hughes, Séamus.
• Hyland, Liam.
• Jacob, Joe.
• Kavanagh, Liam.
• Kemmy, Jim.
• Kenneally, Brendan.
• Kenny, Seán.
• Killeen, Tony.
• Kirk, Séamus.
• Kitt, Michael P.
• Lawlor, Liam.
• Lenihan, Brian.
• Leonard, Jimmy.
• Martin, Michael.
• McCreevy, Charlie.
• McDaid, James.
• McDowell, Derek.
• Moffatt, Tom.
• Morley, P.J.
• Moynihan, Donal.
• Moynihan-Cronin, Breeda.
• Mulvihill, John.
• Nolan, M.J.
• Noonan, Michael (Limerick West).
• Ó Cuív, Éamon.
• O'Dea, Willie.
• O'Donoghue, John.
• O'Hanlon, Rory.
• O'Keeffe, Batt.
• O'Keeffe, Ned.
• O'Rourke, Mary.
• O'Shea, Brian.
• O'Sullivan, Gerry.
• O'Sullivan, Toddy.
• Pattison, Séamus.
• Penrose, William.
• Power, Seán.
• Quinn, Ruairí.
• Reynolds, Albert.
• Ryan, Eoin.
• Ryan, John.
• Ryan, Seán.
• Shortall, Róisín.
• Smith, Brendan.
• Smith, Michael.
• Spring, Dick.
• Stagg, Emmet.
• Taylor, Mervyn.
• Treacy, Noel.
• Upton, Pat.
• Wallace, Dan.
• Wallace, Mary.
• Walsh, Eamon.
• Walsh, Joe.
• Woods, Michael.

Níl

• Ahearn, Theresa.
• Allen, Bernard.
• Barrett, Seán.
• Bradford, Paul.
• Browne, John (Carlow-Kilkenny).
• Bruton, John.
• Bruton, Richard.
• Burke, Liam.
• Carey, Donal.
• Clohessy, Peadar.
• Connaughton, Paul.
• Connor, John.
• Cox, Pat.
• Crawford, Seymour.
• Creed, Michael.
• Cullen, Martin.
• Currie, Austin.
• Deasy, Austin.
• Deenihan, Jimmy.
• De Rossa, Proinsias.
• Doyle, Avril.
• Dukes, Alan M.
• Durkan, Bernard J.
• Finucane, Michael.
• Fitzgerald, Frances.
• Flaherty, Mary.
• Flanagan, Charles.
• Fox, Johnny.
• Foxe, Tom.
• Barry, Peter.
• Blaney, Neil T.
• Boylan, Andrew.
• Gilmore, Eamon.
• Gregory, Tony.
• Harney, Mary.
• Higgins, Jim.
• Hogan, Philip.
• Kenny, Enda.
• Keogh, Helen.
• Lowry, Michael.
• McDowell, Michael.
• McGahon, Brendan.
• McGinley, Dinny.
• McManus, Liz.
• Mitchell, Jim.
• Molloy, Robert.
• Nealon, Ted.
• Noonan, Michael (Limerick East).
• O'Donnell, Liz.
• O'Keeffe, Jim.
• O'Malley, Desmond J.
• Owen, Nora.
• Quill, Máirín.
• Rabbitte, Pat.
• Shatter, Alan.
• Sheehan, P.J.
• Timmins, Godfrey.
• Yates, Ivan.

Tellers: Tá, Deputies Dempsey and Ferris; Níl, Deputies E. Kenny and Keogh.

Question declared carried.