I wish to share my time with Deputy Moynihan-Cronin.
Adjournment Debate. - Duty Free Sales.
That is agreed.
I welcome the opportunity to raise this issue now as the deadline for the abolition of duty free sales is next year. It is essential the Government keeps up pressure in Europe to ensure that deadline is extended. This battle can be won and it must be won in the interest of protecting jobs. The argument to abolish duty free sales was made unanimously by the Finance Ministers in the context of the completion of the internal market, but the position has changed given that the internal market has not been completed in the anticipated timeframe.
There is a logical argument for retaining duty free sales, particularly in the context of creating and maintaining jobs which is the main priority of the EU. There is no doubt a sizeable number of direct and indirect jobs will be lost if duty free sales are abolished next year. It can be logically argued that EU countries need time to develop policies to respond to the economic and social consequences of the abolition of duty free sales. A majority of European countries appear to be coming around to this view and it is not outside the bounds of argument that in the interest of maintaining jobs we could persuade all the countries concerned to come around to this view.
Many of my colleagues including, Deputy Ryan and Bernie Malone, MEP, have raised this issue and Senator Joe Costello raised it with Mr. Santer in the Seanad last week. As a representative from the mid-west, the Shannon region is particularly vulnerable in this regard. Shannon Airport is in a precarious position and it must remain competitive. It is in a more peripheral location than Dublin Airport, which has a large population and a capital city on which to depend. It is essential Shannon Airport remains competitive to carriers and to passengers. Duty free sales is an important mechanism for keeping down costs because it raises funds for airports and ensures that the costs to carriers and to passengers are not prohibitive. In the interest of maintaining direct and indirect jobs in the mid-west region and along the west coast, it is essential duty free sales are maintained. It was indicated that the Committee of the Regions in Europe fully supports the retention of duty free sales for a period.
At the behest of the Transport Ministers — and I acknowledge the part played by the Minister, Deputy O'Rourke — the Commission has undertaken a study. The abolition of duty free sales would have adverse consequences in a number of EU countries, and it is beginning to realise that now. There has been a change of attitude in France and Germany. Spain, Portugal, Belgium and Holland have been supportive and Scandinavian countries are beginning to realise that this is an important issue. This battle can be won and it is essential the Government keeps up the pressure to enable us retain jobs that are dependent on duty free sales.
I welcome the opportunity to speak on this important issue put forward by my colleague, Deputy O'Sullivan. Coming from Kerry South, which has benefited greatly from access to air access, I am acutely aware of the importance of duty free sales and the benefit it brings in terms of maintaining affordable fares for those who wish to travel by air. I am concerned about those working in airports, particularly those employed in small regional airports, including those employed in my nearest airport, Farranfore. In terms of revenue, duty free sales are vital for the survival of Farranfore Airport. The income from duty free sales contributes to 25 per cent of the wages of the employees in that airport and its abolition would bring into question not only the jobs of those dependent on the sale of duty free goods, but the future sustainability and viability of Farranfore Airport.
In recent months the Minister for Tourism, Sport and Recreation mooted a proposal to introduce a tourist entrance tax of £3 accompanied with a hike in air fares which would result from the abolition of duty free sales. That tax would have a devastating effect on the tourism industry in Kerry. It is vital the Government adopts a policy to sustain our regional airports. Farranfore Airport is Kerry's link to Europe. As the EU moves towards greater convergence, there is a need to maximise the infrastructural access to isolated areas. Duty free sales are essential to the sustainability of regional airports and I urge the Government to ensure they are retained.
The Minister for Finance is unable to reply to this matter because he is preparing for next week's budget. Once again this House by way of this Adjournment matter has shown great interest in the question of duty free sales for EU travellers after 1999. It is an interest unparalleled in any other EU Parliament. The continuing debates in the Dáil Chamber and in the Seanad reflect the continuing and unique efforts of the Irish, and especially by the Irish Government, to have the decision on duty free sales reversed and to support the efforts of those employed in the affected sectors.
On the basis of decisions already taken, duty free sales for EU travellers will end at the end of June 1999. Ireland has raised this issue at various levels over the years. Not alone have we continually called for an EU wide study, but we have also called for a basic rethink. Other than Ireland, only Finland, at a transport meeting some years ago, has ever raised the issue in a relatively positive way at any Council, and that point needs to be emphasised. Ireland has raised it often at all levels, and at various EU Councils, including at the European Summit. Finland has since moved to the negative camp and does not support retention of duty free sales beyond 1999. Perhaps this is in solidarity with the general Scandinavian approach which favours high tax and restrictive alcohol and tobacco policies.
The 1991-2 decision to end duty free sales was confirmed by the Commission at ECOFIN on 19 May 1998 and supported by the majority. The Commission was strongly supported by a number of member states, who did not wish to see the original decision revisited. At the 19 May meeting, however, a number of countries gave support for the first time to the Irish call for a study, in particular Germany and France. The Government has changed in Germany and there are strong reports that Germany will raise the issue again during the Germany Presidency, which will run from 1 January to 30 June 1999, and we would very much welcome that. We need a new singer to sing the Irish duty free sales song.
The Minister for Finance has written to his new German colleague on this matter, as he has to several other EU Finance Ministers in recent weeks. As yet he has not had a reply to his letters seeking support for a change of heart. I do not doubt, however, that a German initiative will be very useful, when it comes. It still requires a Commission proposal, and unanimous agreement. However, the EU Commission shows no signs of changing its mind on this subject.
In advance of the May ECOFIN meeting, the Minister visited Knock, Shannon, Kerry, Cork and Dublin Airports to meet the staff, management, trade union and worker directors to explain the issues, the difficulties we faced and the efforts we were making in relation to duty free sales. In Cork he also met representatives of the ferry operators. At those meetings he stressed that transport workers, who of necessity have great contact with travellers, and strong links with workers in other countries, could have a major role to play in changing the minds of people in Europe on this topic. The Minister recently again met the local duty free sales organisers to co-ordinate our approach and he has also met the Aer Rianta worker directors.
They reported on their meeting with Commissioner Monti, which did not produce a meeting of minds. The worker directors subsequently visited Portugal and Denmark to lobby on this issue and they have kept us informed about their deliberations. They found a more sympathetic hearing in Portugal than they did in Denmark, where the trade union movement supports the abolition of duty free sales.
During the summer Monsieur Capet reported to the French Prime Minister. Monsieur Capet represents the Pas de Calais region and he suggested that the decision should be revisited. His proposal has not got much attention as yet but it reflects further concern about the impact of the decision in another member state.
On 2 October the European Commission clarified how the value added tax, VAT, and excise duty rules should be applied to sales to intra-EU air and ferry travellers from 1 July 1999, when duty free sales to travellers within the European Union will be abolished. The Commission confirmed that existing excise duty legislation means that sales on board ships and aircraft on journeys within the EU will be subject to the excise duty at the rate applied by the country where the goods are loaded. With regard to VAT, the existing rules provide for taxation to be applied at the rate of the member state of departure. It also reaffirms that under existing legislation voyages from one member state to another are considered to be intra-EU voyages as with sales subject to VAT and excise duty, even if the ferry or aircraft crosses international waters or airspace.
In recent weeks the international duty free trade lobby group has organised a tour of European ports and airports for journalists to seek to change opinion. I assure the Deputies that the Government will continue its efforts to support the duty free case in Europe and the detailed information I have given in this debate bears testimony to that resolve.
The Dáil adjourned at 9.05 p.m. until 10.30 a.m. on Wednesday, 25 November 1998.