Dáil Éireann debate -
Wednesday, 8 Feb 1995

Vol. 448 No. 7

Financial Resolutions, 1995. - 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);

"cigarettes", "cigars", "fine-cut tobacco for the rolling of cigarettes" and "other smoking tobacco" 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 Regulation 26 and Regulation 29 of the European Communities (Customs and Excise) Regulations, 1992 (S.I. No. 394 of 1992).

(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 Third Schedule to the Finance Act, 1994 (No. 13 of 1994), be charged, levied and paid, as on and from the 9th day of February, 1995, at the several rates specified in the 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).

SCHEDULE

RATES OF EXCISE DUTY ON TOBACCO PRODUCTS

Description of Product	Rate of Duty
Cigarettes	£57,21 per thousand together with an amount equal to 16.82 per cent, of the price at which the cigarettes are sold by retail
Cigars	£87.079 per kilogram
Fine-cut tobacco for the rolling of cigarettes	£73.481 per kilogram
Other smoking tobacco	£60.412 per kilogram

This resolution provides for excise duty increases on tobacco products from midnight tonight which, when VAT is included, amounts to 12p on a packet of 20 cigarettes with pro rata increases in other tobacco products.

An Leas-Cheann Comhairle

Is the financial resolution agreed?

Mr. B. Ahern

We will decide at 8.30 p.m. whether or not it is agreed. This financial resolution will create great hardship for people who smoke but I am not one of those. For the benefit of discussion perhaps the Taoiseach would give us an indication of the rates of duty on cigarettes the rate of increase last year and the expected revenue yield for 1995? Will he give a progress report on the new cigarette stamp regulations, the implementation of which I was involved in last year. That is important in protecting our revenue base and the income received from excise duty on cigarettes. We have taken great care to develop this scheme which will protect our revenue base. Perhaps the Taoiseach will give us a report on that matter.

The Taoiseach

I will deal first with the last issue the Deputy raised. The introduction of tax stamps for cigarettes is designed to help minimise sales of smuggled cigarettes. When the stamp regime is introduced all packets of cigarettes on sale in the State will have to have an Irish tax stamp affixed. The tax stamp on each packet will indicate that excise duty has been paid in the State, and any packet that does not have a tax stamp will be clearly of suspect origin. This will greatly assist customs officers in their efforts to counteract illegal trading.

Planning for the introduction of tax stamps is continuing with the full co-operation of the tobacco industry. The necessary enabling legislation was included in last year's Finance Act and the new system is expected to be introduced in September 1995. A period of six months has been agreed with the tobacco industry before the introduction of the penalty provision which will make it an offence to sell unstamped cigarettes. The six months period will allow retail outlets time to clear unstamped packets of cigarettes in stock. On the other points raised by the Deputy——

Mr. B. Ahern

Perhaps the Taoiseach would clarify this matter further.

An Leas-Cheann Comhairle

Strictly speaking a Member other than the Taoiseach is entitled to speak only once on the resolution. If the Deputy has a number of points to make perhaps he will make them now. Perhaps some intervention by way of clarification could be allowed.

Mr. B. Ahern

I was thinking of my position on the other side of the House when I had to speak many times.

Mr. M. Ahern

Is this a change in practice? It seemed to apply every other year.

Miss Harney

There is no objection to it.

Mr. B. Ahern

I recall two years ago when I was defending the increase on cider, one Deputy opposite jumped up and down throughout the night, and the reason was not that he drank the cider but was protecting Clonmel.

Mr. Ferris

That is right.

Mr. B. Ahern

The Deputy certainly spoke more than once on that occasion because I answered him about 25 times.

An Leas-Cheann Comhairle

When Deputies have made their contributions there may be a question and answer session.

The Taoiseach

I am as inexperienced at this as anybody. When do I speak?

Mrs. O'Rourke

All the time.

An Leas-Cheann Comhairle

The Taoiseach will be replying to the debate.

Mr. D. Ahern

He can justify it then.

Mrs. O'Rourke

That will be difficult.

Mr. B. Ahern

On the issue of cigarette stamps, the revenue base is vitally important to the State and that is the reason so much time was spent on that matter. I am sure the Taoiseach will be aware that in more recent times — I am not saying it started on 15 December — cigarettes sales on the streets have been increasing. Cheap cigarettes are being sold in Dublin city centre, particularly at weekends, by a huge number of people.

Mr. Rabbitte

The Casual Trading Bill is on the way.

Mrs. O'Rourke

Where is it?

Mr. B. Ahern

In fairness to casual traders, even those selling in areas other than designated areas, this is a different issue. I will not deal with normal casual trading but I think the Minister, Deputy Rabbitte, will be aware of the kind of trade that is going on.

Mr. McGahon

It was going on last year.

Mr. B. Ahern

That is what I said, it did not start on 15 December. I was glad to work with the tobacco industry and the Revenue Commissioners on this matter. They worked very hard to devise a scheme of stamping which will help the domestic market and protect the revenue base — my concern is very much to protect the revenue base. The selling of smuggled cigarettes has not been in operation for only about the last two years, I raised this issue with the Garda authorities and the Revenue Commissioners. The problem is getting worse by the month and the volume of sales is clearly affecting the revenue take. If one walks though the streets any Saturday — I am sure these people operate on other days also — they will see the level of sales of cheap cigarettes. Most penalties in other casual trading areas have no effect whatsoever and I am not sure why these laws are on the Statute Book when they are of little use.

In terms of protection of the revenue base on cigarettes, which is very high, what progress is being made on this matter and will the laws be implemented? We on this side of the House take no great issue with the increase of 12p but we would take issue if the price is simply increased every year without implementing the necessary controls. There are probably 100 regular salespersons selling smuggled cigarettes for which the State gets no duty and that is a serious matter. If that practice was regulated there would be no necessity to put 12p on a packet of cigarettes. I would ask the Taoiseach to outline the penalties, controls and regulations envisaged and also the progress being made in tightening up this flagrant abuse which is taking place on the streets of this city and, I am sure, elsewhere.

The Taoiseach

The powers dealing with tobacco smuggling go back to the Customs (Consolidation) Act, 1876, which provides that any person who improperly imports a product into the State without payment of duty is guilty of an offence and liable to a penalty of £1,000 or treble the value of goods, whichever is greater. Section 106 (6) of the Finance Act, 1992, provides that any person who imports into the State excisable products which have borne excise duty in another member state and fails to comply with certain conditions, including the payment of Irish duty, is also guilty of an offence. In addition, smuggled tobacco products may be seized under the law. Customs officers have wide-ranging powers in dealing with illegal importations. They may stop and question people and search, detain and seize baggage, goods vehicles etc. on reasonable suspicion.

It appears there has been an increase in this practice. The Deputy will find it interesting that the number of seizures of cigarettes has increased from 56 in 1991 to 302 in 1994 while the value of seized cigarettes has increased from a mere £82,000 in 1991 to £4.7 million in 1994. Clearly this is a significant problem, as the Deputy is fully aware from his previous office.

There were initial difficulties in initiating prosecutions for the illegal importation of tobacco products under the new Internal Market legislation. In addition to the usual difficulties of proving criminal intent, doubts have been expressed about the adequacy of some aspects of the new offence provisions in the law dealing with tobacco products imported from other member states of the Union. These doubts on which I am not in a position to elaborate without further inquiries, have been largely resolved and prosecutions can be expected shortly.

Deputies might be interested to know the countries from which smuggled cigarettes mainly originate. The three locations particularly suspect are tax warehouses in the Netherlands; the Canary Islands, Gibraltar and Spain and third countries, particularly the United States. Obviously it is not possible to quantify the loss to the Revenue from smuggled cigarettes — it is impossible to quantify the loss in any area of tax evasion. There was an increase in legitimate deliveries of tobacco products during 1994, so obviously smuggled cigarettes are not swamping the market.

The Garda, who have powers under the casual trading Act, can act in regard to unlicensed trading. In a joint operation in Dublin city centre on 28 July 1994 they seized 4.24 kilograms of tobacco from 12 individuals. If the Deputy requires more information I can get it for him.

Mr. D. Ahern

As a Deputy from a Border constituency, I welcome the decision not to increase the price of petrol. Prior to the introduction of the budget it was suggested that the price of the old reliables, including petrol, would be increased. Thankfully, it has been decided not to proceed along these lines.

I want to elaborate on the points made by my party Leader about the increase in the price of cigarettes. When Fianna Fáil was in Government I objected at parliamentary party meetings to the decision to increase the price of cigarettes by 10p or 20p. These decisions are made by people behind the scenes and obviously politicians go along with them. Do they ever think of the effect of these increases on the cigarette industry? The very fine cigarette factory in my home town employs a significant number of people but, unfortunately, there has been a reduction in the workforce in recent years due to some extent, to the increase in the price of cigarettes. My constituency colleague, Deputy Brendan McGahon, and I are at one on this issue.

An effort was made in last year's budget, through measures on stamping and branding, to deal with the ever increasing illegal importation of cigarettes sold on the street with no return to the Exchequer. Tighter controls in this area would lead to a better return for the Exchequer than increasing the price of cigarrettes by 12p this year and 10p next year, the easy option taken by successive Governments. When I objected at parliamentary party meetings to the decision to increase the price of cigarettes I was in a minority of one or two. It must be recognised that people earn a good living from the manufacture of cigarettes, not only for home consumption but also for export. I ask that some consideration be given to this point if not this year then next year.

An Ceann Comhairle

I hesitate to interrupt the Deputy but the usual procedure is that interventions are brief. I would dissuade Deputies from the tendency towards debating matters and making long speeches, which are not in order now. Interventions, elucidation etc., are important but speech making——

Mr. D. Ahern

We were informed earlier that we could speak only once.

An Ceann Comhairle

The Chair is giving latitude at this time, and has always done so.

Mr. McGahon

I am always brief.

An Ceann Comhairle

I appreciate that.

Mr. McGahon

I want to protest against this unwarranted increase in the price of cigarettes. An increase of 12 per cent is totally unjustified as it is above the rate of inflation. I accept that cigarette smoking poses a health hazard — Deputy O'Hanlon made this point very strongly in recent years — but there is much hypocrisy associated with the assault on cigarette smoking. How many people die every year from alcohol abuse and related illnesses? How many children are interfered with by people under the influence of alcohol? How many families have been devastated as a result of the widespread abuse of alcohol? Given our tolerance of alcohol and the ambivalence in the political world to the dangers it poses — we recently saw the power of the publicans' lobby — we turn a blind eye to this problem and do not curtail the advertising of this substance which causes misery for thousands of people. It is easier to home in on an ailing industry for which the bell is tolling than increase the price of drink.

The cigarette industry provides gainful employment for 300 people in Dundalk. I join Deputy Dermot Ahern in protesting against the increase in cigarettes. The final irony——

An Ceann Comhairle

Brevity, please.

Mr. McGahon

——is that this savage increase is being imposed by the son of a very distinguished and lovable Dundalk woman who happens to be my aunt.

An Ceann Comhairle

Family connections ought not to be brought into the matter.

Mr. McGahon

The time has come for all political parties to accept that the cigarettes industry provides gainful employment. The Taoiseach said that illegal cigarettes are thought to originate in the Netherlands and some other areas. This illegal industry is already established in every town, and this will lead to a loss of Revenue.

An Ceann Comhairle

A number of Deputies are offering. The question must be put at 8.30 p.m. so brevity should be the keynote of our proceedings.

Mr. M. McDowell

I sympathise with the views expressed by Deputy McGahon. The proposal to increase the duty on cigarettes is unwarranted from a number of points of view. First, no effort was made by the Government in the budget to save money, and on that general ground I am against increasing taxation of any kind. Second, as a member of a party founded by Deputy O'Malley it would be disloyal of me to sell the pass and support this increase. On a more serious note, I take the point that this increase is above the rate of inflation. Since Deputies De Rossa and Rabbitte have only delivered to old age pensioners an increase directly in line with inflation, for those old age pensioners who enjoy cigarettes there will be a significant reduction in their disposable income as a result of this change.

Mr. Rabbitte

I thought the Deputy was opposed to more public spending.

Mr. M. McDowell

From that point of view I have a difficulty with this resolution and will oppose it.

The second matter I want to draw attention to was dealt with briefly and concisely by Deputy Ahern, that is the scourge of illegal trading. The figures mentioned by the Taoiseach clearly indicate that what Deputy Ahern said was correct. If the value of illegal cigarettes seized suddenly jumped from £82,000 in 1993 to £4.7 million in 1994 there is clear evidence of a massive illegal trade throughout the country. To increase the price of legal cigarettes further while leaving illegal trading uncountered is irresponsible. The people who make their living dealing in tobacco deserve better.

The imposition on cigarettes does not affect me personally but the increase on cigars does because I enjoy the odd Havana. The last time I enjoyed a Havana cigar was when I was negotiating with Deputy Quinn of the Labour Party and I had the benefit of two Havanas blown into my face over a period of one a half hours.

Mrs. O'Rourke

That is all the Deputy got.

Mr. N. Treacy

He got short shift.

Mr. M. McDowell

While Deputy McGahon was completely out of order in referring to family relatives, the man himself gets through a fair number of Havanas when he wants to.

I understand it is normal to close excise warehouses for a period before the budget is introduced to prevent speculative purchases in anticipation of a Financial Resolution of this kind. Did that happen on this occasion? In that context will the Taoiseach indicate whether he is happy with the confidentiality arrangements for this budget and in particular with the situation which seems to have transpired where a Minister leaked details of the budget to the media four hours before it was announced in this House?

Dr. O'Hanlon

Is the return to Revenue from the sale of tabacco diminishing? Is the Taoiseach aware that, apart from the illegal importation of cigarettes, the theft of cigarettes from supermarkets and stores throughout the country constitutes a serious problem? In some cases this is the only item stolen. The Taoiseach indicated that the number of seizures increased from 56 to 302 in the space of one year. Do these figures include the number of seizures of stolen cigarettes or only the seizures of illeglly imported cigarettes?

I am conscious of the health hazards — Deputy McGahon referred to this — associated with tobacco products. There is no harm reminding ourselves that 5,000 people die each year while 16,000 are hospitalised. How much extra revenue does the Taoiseach expect to raise from the sale of tobacco products in the current year and how much was lost during the past two days, when everybody knew that there would be an increase of 12p on each packet of cigarettes, in the rush to the wholesalers?

An Ceann Comhairle

I observe Deputies Kirk, Sargent and Bell offering. We want to ensure that the Taoiseach is given the right to reply before the matter is put to a vote at 8.30 p.m. Let us be circumspect and brief. I will call the Taoiseach at 8.20 p.m.

The Taoiseach

Five minutes will do.

Mr. Kirk

It is obvious that the Members who represent the north-east are anxious to speak on this issue.

An Ceann Comhairle

Brevity, please.

Mr. Kirk

Hence there is a full attendance in the Chamber for this short debate. This is understandable as in this budget a savage and vicious attack has been launched on the tobacco and cigarette industry, particularly in the Dundalk area. Cigarette and tobacco manufacturers will feel the draught when the proposed increase takes effect.

We have to be realistic. Unfortunately, at all times the cigarette industry — not particularly for health reasons — has been the target in collecting additional revenue to replenish the coffers of the State. This increase is exceptionally steep, savage and vicious. One can only envisage the impact it will have on employment in companies such as PJ Carroll in Dundalk, where employment is diminishing.

An Ceann Comhairle

Not too long, Deputy.

Mr. Kirk

I appeal to the Taoiseach to reconsider because this imposition will have severe economic implications, particularly in Dundalk.

Mr. Bell

Of the four Deputies who represent County Louth I am the most qualified to speak on this subject as I smoke 40 Carrolls a day, seven days a week while my three colleagues are non-smokers. If everybody were to follow their example Carrolls would have closed down a long time ago. It always amazes me when I hear non-smokers argue that we should keep the price of fags down, or cigars for the matter.

Naturally, I am concerned about the threat to employment, but employment at Carrolls has declined during the years and this has as much to do with the introduction of new technology as it has with the price of cigarettes. It would not matter to me if the price of a packet of 20 cigarettes was £5; I would still smoke. It is not the price that is important in persuading people not to smoke but the danger it poses to their health. Deputy O'Hanlon touched on this issue.

I hope that the price can be kept as low as possible to maintain a balance, having regard to the illegal importation of cigarettes. These are being sold openly on stalls on the streets in Dublin and other urban areas at knockdown prices. The cigarette industry is dying while those who smoke are a dying race. Successive Ministers have increased the price.

In my own parliamentary party there are only three smokers. There was a time when two-thirds, perhaps more, smoked. I am sure the position is the same in the Fianna Fáil Party, Fine Gael and other parties. If everybody were to follow the example of Members of the Oireachtas, PJ Carroll and other cigarette factories would be wiped out.

I support the increase, although I admit it is a large one, but I do not think it will have an effect on employment at PJ Carroll. Two years ago I was in the Canary Islands where I could buy Carrolls No. 1 for 50p per packet. At that time they were £2 per packet here. Those cigarettes were exported from Dundalk to Spain and the Canary Islands where they could be bought for such a low price. They were manufactured at 50p per packet in the factory in Dundalk.

Mr. E. Kenny

What would they be in Guadeloupe?

Mr. Davern

Unfortunately, you will never know.

Mr. Bell

They would probably be only 25p. I realise the Ceann Comhairle is under pressure with time allocations. I will be voting for the motion for the reasons I have given.

An Ceann Comhairle

I now call Deputy Sargent and I would ask the Deputy to be brief.

Mr. Sargent

It is a long time since Deputy Ahern spoke and I had indicated that I wished to speak, but I will be brief nonetheless. I wish to ask the Taoiseach, in the light of this resolution, if it would be possible to estimate the loss to the Exchequer resulting from information on this resolution being made available a number of days before it was enforced and the opportunity that provided for unscrupulous people to stockpile cigarettes, thereby avoiding paying the additional money. In addition to the revenue to the Exchequer from tobacco excise duties, would it be possible to estimate the cost to the health service as a result of the effects of tobacco smoking? Mention was made of the number of hospital beds taken up by smokers. It would be interesting to compare those figures because I believe it would highlight the fact that tobacco sales do not generate revenue or create jobs. In fact many more people could be employed if we were to use that revenue more gainfully. We have been talking here for almost an hour about one noxious weed which is a non-food crop. Will the Government give at least as much attention to the potential of another non-food crop which is completely neglected in this budget, namely, the raw materials for bio-diesel and ethanol which are important for——

An Ceann Comhairle

The Deputy is deviating from the subject matter before the House.

Mr. Sargent

I am talking about tobacco because we are talking here about employment. A Cheann Comhairle, you did not choose to interrupt Members when they were talking about the employment factor in tobacco.

An Ceann Comhairle

Deputy Sargent will not reflect on the Chair.

Mr. Sargent

I simply want to talk about this resolution. I have waited a long time to make this point.

An Ceann Comhairle

You will now resume your seat, Deputy.

Mr. Sargent

I simply wanted to make the point that was expressed by other Deputies. May I conclude the point I was making?

An Ceann Comhairle

The Deputy is showing hostility to the Chair. Resume your seat forthwith, Deputy, or leave the House.

Mr. M. McDowell

There is smoke coming out of the Deputy's ears.

Mr. Sargent

The excise duty on tobacco is costing health and jobs in this country.

An Ceann Comhairle

Deputy Sargent will now leave the House.

Mr. Davern

This is not an animal protest.

An Ceann Comhairle

Resume your seat or leave the House, Deputy. That is the last time I will tell you.

Mr. Sargent

I do not mind being called an animal by Deputy Davern.

Mr. Davern

I did not call the Deputy an animal. I said this was not an animal protest.

An Ceann Comhairle

Deputy Seamus Brennan has been offering for some time. Perhaps he will appreciate that some of his colleagues are also anxious to contribute.

Mr. S. Brennan

Will the Taoiseach comment on the proportions in the budgetary arithmetic? I am not sure if I am reading these tables correctly but, if I am, the excise duty from cigarettes, the 12p increase, brings in £25.7 million.

The Taoiseach

You are.

Mr. S. Brennan

I will put that in proportion. An increase of 1 per cent on social welfare would have cost the Government approximately £20 million to £30 million. The total take from the residential property tax is £12 million. The entire reductions in income tax in the budget come to £88 million and, if one adds on £22 million, that would bring the figure to £110 million. Is it not worthy of attention that on one measure such as this the Government brings in £25 million? We then have four days of publicity surrounding income tax concessions, which in most cases amount to £3 or £4 per week. Are the proportions of this budget not totally out of kilter?

Mr. Davern

I, too, am concerned about the early release of this information. I worked for a cigarette manufacturer for many years and I am aware that many people were anxious to buy pre-budget cigarettes in order to make a profit. It had been signalled for quite some time that the price of cigarettes would be increased by 10p per packet and they will now be increased by 12p per packet. That represents £2 per carton and any wholesaler who bought thousands of cartons over the past few days will make an enormous profit. I would remind the Taoiseach that the Titanic sank as a result of only one leak, but worse could befall this Government with the leak to which I have referred. An inquiry should be made as to the number of people who pre-ordered exorbitant amounts of cigarettes and any profits gained should be paid in income tax or whatever other tax such people are liable for. It was the most blatant abuse of a revenue I have ever seen.

Mr. Cullen

The cumulative effect of these increases on the cigarette industry over the past number of years means that we are now approaching the point of diminishing returns. If one examines the figure given by the Taoiseach of £4.7 million in seized goods, one could hazard a conservative guess that the total value of the growth industry in the sale of illegal cigarettes coming onto the market must be in the region of £20 million to £25 million. I might even be generous in my estimation. The point has been made earlier, which is unfortunate, that many old people living alone enjoy a cigarette and they will now be faced with a derisory increase in their pensions and an increase of 12p per packet of cigarettes.

Reference has been made to jobs in the industry. I am a smoker and we should not forget that the tobacco industry has given great support to the arts and sports in particular. Many jobs are sustained by the income that is made available through the cigarette companies, both directly to the Exchequer and to many worthy causes. It should not be forgotten that many events would not have taken place were it not for the support of the tobacco industry. We have now reached a point where it is becoming impossible to enjoy a cigarette at a reasonable price.

Mr. B. Ahern

I wish to ask the Taoiseach one final question. I thank him for the statistics he gave in regard to the raids and the amount of money collected on one day in July of last year. I acknowledge that this matter has gone on for some time, but during the course of the coming weeks will the Taoiseach appoint a Minister or a Minister of State to take responsibility for investigating what is major abuse? I believe millions of pounds of excise are being lost to the State by what is happening in the streets. Some people say that the situation is not that bad but I can tell the Taoiseach from personal experience that is horrendous.

The Taoiseach

Many points were raised in the course of the debate and I hope I will manage to answer most of them. The total revenue derived from cigarette taxation is £522 million. The increase in revenue this year is £25 million as a result of this measure. We estimate that will yield £30 million in a full year. A number of Deputies suggested that we are reaching the point of diminishing returns in respect of cigarette taxation. The evidence is to the contrary. There was a 2.3 per cent increase in tobacco consumption last year, there having been a decline the previous year.

Mr. M. McDowell

That is legally obtained tobacco, I presume.

The Taoiseach

That is taxed tobacco. Obviously there was a further increase when one includes illegally obtained tobacco. Consumption of tobacco is only 7 per cent lower than it was in 1994, a relatively steady adjustment which, even in 1984, was foreseeable by the manufacturers. It was obvious that there would be considerable pressure on cigarette consumption because of health considerations, apart from taxation, and manufacturers realised that they would have to diversify and adjust. They have attempted to do so with mixed success. I would point out to Deputy McGahon that the increase is 4.6 per cent, not 12 per cent — a 12p increase.

Mr. McGahon

It is above the rate of inflation.

The Taoiseach

That is correct.

Mr. McGahon

Therefore it is unfair.

The Taoiseach

It is not necessarily unfair. It has been settled policy for some time to discourage tobacco consumption by tax measures. That there has been a disproportionate increase in the tax on cigarettes in this budget is nothing new, but the decline in tobacco consumption has been relatively slow. Deputy Bell was accurate in describing some of the reasons for the decline in employment in the industry as being more attributable to technology changes than to falls in the consumption of tobacco.

I have no information for Deputy O'Hanlon about the theft of cigarettes. On the question of the withdrawal of cigarettes from bond, which was raised by Deputy McDowell and others, there is a voluntary agreement between the manufacturers and the Revenue, not a formal legal agreement, whereby they undertake to restrict the delivery of supplies out of bond to normal levels in the period leading up to the budget. My understanding is that there has not been any abnormal egress of cigarettes from bond in recent days, despite the speculation about the likely increase on excise duties on tobacco in the budget. I am advised that in practical terms a retailer would not be able to gain much advantage by doing this because of the amount of money he would have to tie up to make any significant gain. The value of the cigarettes, the fact that this is only 4.6 per cent increase and the fact that they would have to carry the whole cost of the cigarettes for the time they were in stock are limiting factors. Furthermore, the commercial insurance companies place further limits on the amount of cigarettes for which a retailer would be covered in the event of theft.

Mr. Cullen

It is the big supermarkets that are doing it.

The Taoiseach

Deputy Cullen has made a valid, if disorederly, interjection about big supermarkets. That situation is covered by the undertakings given by manufacturers not to allow increases in the rate of egress of cigarettes from bond in the run up to the budget. I will make inquiries to see if there was any unusual movement in recent days, but I am confident that when those inquiries are complete we will find that there were not. Either way, I will let Deputy Cullen know the result of my inquiries.

I am sure I have omitted to answer some Deputies' questions. Are there any further questions?

Mr. M. McDowell

What about Deputy Quinn's Havanas?

The Taoiseach

Was he chewing them, or smoking them, or was the Deputy chewing them? Was he offered one? My understanding is that the Deputy was not offered one.

Mr. Cullen

I do not know if it is quantifiable, but can the Taoiseach tell me what contribution the cigarette industry is making towards supporting a wide range of organisations in art, culture and sports and helping small organisations and local communities to put facilities together? A huge amount of money is being made available by the industry in areas where the State is not making funds available. Does the Taoiseach have any idea of the amount of moneys donated by the industry to that budget, because it is an important aspect of funds for small communities? In some instances there are quite large contributions and it should not be forgotten that that is a valuable source of funding.

An Ceann Comhairle

The time is fast running out and the Taoiseach is entitled to be afforded an opportunity to reply.

Mr. Kirk

Can the Taoiseach tell us how many people are employed in the tobacco and cigarette industry at the present time?

The Taoiseach

There are 1,100. I do not have information in response to Deputy Cullen's question. There are mixed views on this. Many are interested in reducing cigarette sponsorship of sporting events because they feel it encourages smoking in a subliminal way.

Mr. Ring

Do the cigarette companies make any contribution to the Department of Health to help people who suffer from lung cancer?

The Taoiseach

They contribute excise duties to the Department of Finance which assists the Department of Health with its programmes of public expenditure on health. However, I am not aware of any direct contribution by the cigarette companies to the Department of Health.

Mr. J. Mitchell

Has any consideration been given to how much the price of cigarettes must increase to achieve a reduction in their consumption?

The Taoiseach

The Deputy will be aware from his work in other areas that in terms of cigarette consumption it is very hard to estimate the point of diminishing returns. It depends very much on general conditions, on health-consciousness at a particular time, on the amount of disposable income etc. I cannot answer that question. Virtually every Minister for Finance wants to increase the tax on cigarettes just enough to maximise the revenue without killing the goose that lays the golden egg. There are many Ministers for Health who wish the Minister for Finance would go further. I think that in this case Minister Ruairí Quinn has got the balance right.

Mr. J. Mitchell

It is the Government Deputies who are asking the questions now because the Opposition has run out of smoke.

Mr. Davern

There are none more pure than the reformed.

Question put and declared carried.