Dáil Éireann debate -
Wednesday, 4 Dec 2002

Vol. 558 No. 5

Financial Resolution No. 6: Excise – Spirits.

(1) THAT in this Resolution "alcohol" means pure ethyl alcohol.

(2) THAT the duty of excise on spirits imposed by paragraph 4 (2) of the Imposition of Duties (No. 221) (Excise Duties) Order 1975 (S.I. No. 307 of 1975) shall, in lieu of the rates specified in the Second Schedule to the Finance Act, 1996 (No. 9 of 1996) as amended by section 240 of, and Part 3 of Schedule 5 to, the Finance Act, 2001 (No. 7 of 2001), be charged, levied and paid, as on and from 5 December 2002, at the rate of €39.25 per litre of alcohol in the spirits.

(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).

Financial Resolution No. 5 provides for an excise duty increase on tobacco products with effect from midnight tonight which, when VAT is included, amounts to an increase of 50 cent on a packet of 20 cigarettes with pro rata increases on other tobacco products. The increase is expected to yield €138.5 million in a full year and to increase the CPI by an estimated 0.42%. It is expected that the increase in price will reduce projected consumption by 2.5% compared to what it would otherwise have been. The Government remains very concerned about smoking and its impact on health. A substantial increase should help to discourage smoking, particularly by young people.

Financial Resolution No. 6 provides for an increase of excise duty on spirits which, when VAT is included, amounts to 20 cent per standard measure of spirit. It also abolishes the lower rate of duty which currently applies to low strength spirit alcopop drinks. The measure will, when VAT is included, increase the tax on a typical bottle by 35 cent. The expected yield from these increases, which will take effect from midnight tonight, will be approximately €89.8 million in a full year. The increases are also aimed at contributing to tackling the health and public order problems associated with excessive consumption of such drinks, particularly among young people. This measure will increase the CPI by approximately 0.176%.

Mr. Coveney

I welcome the thinking behind this if it is to reduce the consumption of cigarettes and alcopops in particular. I wish to focus upon the alcopops issue for a moment. An extra 35 cent on the cost of a drink that already costs between €4 and €5 is going to have absolutely no impact on the number of alcopops sold on an annual basis. Barmen will tell you that young people who are buying alcopops often do not even look for their change. If the Government is serious about targeting a specific drink type and trying to price it so as to reduce consumption significantly, 35 cent is a miserable effort at doing so. An alcopop like Smirnoff Ice costs about €5 in Dublin and €4 outside Dublin. Raising this to €5.35 is not going to reduce the consumption of that drink in Dublin. So this is effectively a taxation on the backs of young people on the pretence that the Government is trying to reduce the consumption of alcopops. The result will be that the exact same amount of alcopops will be drunk next year, in fact probably more because of the aggressive marketing campaigns those companies have. The Government, though, will be taking a nice slice of taxation off the backs of young people.

I am happy to see the increase in prices on cigarettes. That is an adequate and good measure. In relation to the alcopops, however, this is neither one nor the other. It is not going to have the desired effect of reducing consumption. If the Government was serious about that it would significantly increase the price. This would force young people to think again and buy alternative drinks. Unfortunately that will not happen with this relatively small increase. We are taxing young people but getting no social benefit from it.

We have the worst binge drinking problem in Europe, as the Minister for Justice, Equality and Law Reform will know. It is not a laughing matter. Two out of every five 12 to 15 year-olds binge drink once a week at the moment. That is a horrifying figure, and most of them binge drink on alcopops. This measure will have no social impact in terms of reducing the consumption of this drink. On the other hand, it will tax young people. Consequently, I have a major problem with this proposal.

Mr. C. Lenihan

My only advice to Deputy Coveney and his younger voters is to remember the old saying "a pint of plain is your only man". This Government has not touched the pint and it is right not to do so. This particular measure is not a discrimination against young people. The Tánaiste has rightly pointed out that there is a great deal of excessive drinking. This measure more or less brings the alcopop-type drink in line with other spirits.

The most important thing we can do in budgetary matters is to bring an element of simplification to the tax code. It is better that we harmonise similar drinks into similar tax brackets. That is basically what the Minister for Finance is attempting to do here. There is the other motive behind all of these measures of raising revenue at a time when we have seen a huge shortfall in the Exchequer returns in terms of tax revenue.

It is rich and ironic to hear Fine Gael, who are supposedly, according to Garret Fitzgerald at least, being urged to move to the left, coming wildly to the aid of binge drinkers and, if you are to believe the debate on the previous resolutions, credit card holders—

Mr. Coveney

Is the Deputy saying we are coming to the aid of binge drinkers?

Mr. C. Lenihan

—as if credit card holders in this country or any other are poor or disadvantaged people. The poor and the disadvantaged do not have bank accounts. Therefore, they do not even come under this particular user tax that is being imposed in relation to credit cards—

Mr. Coveney

That was the last debate. We have moved onto cigarettes and alcopops now.

Mr. C. Lenihan

I find it quite funny and rather rich to hear that happen. It is funny also to hear Deputy Cuffe of the Green Party coming to the defence of the large commercial investor class who have found that the stamp duty is now being raised. It is ironic to see left-wing parties in this House complaining about a budget which has taxed the business community more than the ordinary citizen. That is the kind of budget I am very much in favour of and I am disappointed to see left-wing parties in this House not recognising the clear principle that the Minister for Finance has outlined in that regard in this budget. This budget is increasing the tax take to a certain extent from the business classes and not from the ordinary people, PAYE or otherwise. That is the right approach in the current economic circumstances.

In doing that the Minister for Finance has paid a very close ear to Fianna Fáil backbenchers, who have made the point continuously for the last few months that if we are to go through a straightening or difficult period it should not be at the expense of the less well off. That is evident in this budget.

It is ironic also that the parties opposite are criticising the Government from an almost pro- business right-wing perspective. After years of—

An Leas-Cheann Comhairle

The Deputy should focus his remarks on the resolutions before the House.

Mr. C. Lenihan

I am focused on the resolutions. It is a pity some of the Members opposite are not particularly focused on them. I am focusing on the issue of spirits and cigarettes. I would be interested to hear the views of the Tánaiste as to what extent this budget will add to inflation. I hope we can meet our inflation targets. My one serious worry about this budget is that it perhaps may add to inflation, though hopefully it will not.

Deputy Coveney's spirited defence of young people in their binge drinking habits is just amusing. Perhaps he should find some other area to deploy his many talents. In relation to the overall effects—

Mr. Coveney

That was a very intelligent contribution by the Deputy.

Mr. C. Lenihan

I am glad the Deputy is not the arbiter of intelligence in this House. If he was it would be a very sad day for the House and the country.

Mr. Coveney

The Deputy has spent about a minute on the relevant topic.

Mr. Stagg

I agree with Deputy Coveney about alcopops. To correct the record, he was not at all defending binge drinking. He was making the suggestion that the amount of taxation being put on alcopops was inadequate to have effect. I agree with him. It is mere tokenism. It is revenue raising rather than having the desired effect of preventing young people from drinking to excess.

I am amused at the idea of the Minister for Finance, Deputy McCreevy, being described as left-wing by Deputy Lenihan. I am sure Deputy McCreevy would be amused also. I have first-hand knowledge of the effects of cigarettes and addiction to them. I am disappointed at the level of additional taxation. A sum of 50 cent will not be effective in preventing people from taking up the habit. If it was €2 to €5 extra, making a packet something around €10, that would prevent young people from taking up the habit in the numbers they are now doing according to statistics. As somebody who is suffering from the addiction of nicotine, I advise them not to take up this very bad, unhealthy and costly habit. There are no positives in it from any point of view.

Extra taxation should be at a level that would be revenue neutral. There should be no extra take to the revenue because of the reduction that tax will cause in consumption.

Taking extra revenue from cigarettes is the wrong way to go. I am not sure if the Minister for Finance can revisit this area. If he considers the impact of nicotine addiction on the cost of health care he should introduce a penal tax on cigarettes to make them so expensive that it would be difficult for people to avail of them widely and would discourage young people from starting to smoke.

Mr. Ardagh

The imposition of the tax on cigarettes has the dual purpose of raising revenue and promoting health. I represent Dublin South Central, a socially disadvantaged area. Many people, including single parents, in receipt of social welfare payments smoke cigarettes. I ask the Minister for Enterprise, Trade and Employment to ensure that some of the revenue collected from the sale of cigarettes is directed towards putting in train various methods and programmes to assist people who want to give up cigarettes. Deputy Stagg said smoking is addictive and is difficult to give up particularly if it is the one addictive vice one has and is considered a necessary crutch. The increase in the excise duty on cigarettes will discourage young people from starting to smoke and perhaps that will be its greatest effect.

The increase in the excise duty on alcohol is welcome. I am sure that a number of Members present saw the "Prime Time" programme the other night on the behaviour of young people following the excessive consumption of alcohol. The increase of 20 cent on a measure of spirits will have an effect. Not only do young people use alcopops but they spike them from naggins of vodka which is a regular occurrence. With this measure, the price of vodka will also increase. We must not only increase the excise duty but we, as an Oireachtas, must put in place in the future some form of legislation or programme that will discourage young people from drinking to the extent that they do. This is a small step towards how that can be done.

I met a person recently who said that the SSIAs should be abolished because it is terrible that such money is being given freely to people who are saving and the scheme is costing the country a fortune. He told me that he runs two pubs in the city and that people are coming in on only one night at the weekend rather than two. These measures will help address the drink problem, including the behaviour of young people who have consumed excessive alcohol, and the health aspect for cigarette smokers.

Mr. Morgan

I am not sure that these price increases will have the sobering effect that is sought. It would have been a better exercise to ban alcopop drinks. The alcohol industry uses them as a device to lure young people in particular into binge drinking. While we will support the increase in this instance, banning alcopops would be the best way forward.

The Leas-Cheann Comhairle might be able to give me some guidance on a matter, given that on a number of occasions I got advice from him on the long-standing traditions of this House. When I can I like to take such advice. Since I have been elected, I notice that it seems to be a long-standing tradition of the House that governments in general and Ministers for Finance in particular seem to be continually hoodwinking those who elect them to office. Is there any method I could use to change that long-standing tradition?

An Leas-Cheann Comhairle

The Chair cannot advise the Deputy on that matter.

Mr. Fleming

I wish to speak on the issue of the 35 cent tax on alcopops. It is good this measure was introduced by the Minister for Finance because it is a topic of conversation following the "Prime Time" special programme the other night. I join those who say that the 35 cent increase on the price of alcopops is not half enough. I am sure not one person buying an alcopop drink tonight knows the price of it or what it will cost after midnight following the increase. I watched on the RTE News this evening the reaction of young people who were asked for their view on the increase. They said that it would have no impact on their drinking.

Mr. Gormley

Exactly.

Mr. Coveney

This is the point we were making.

Mr. Fleming

The Minister for Finance tapped into this issue by highlighting it in his Budget Statement and it is one to which we could usefully return. There seems to be a broad consensus on the damage to young people caused by the consumption of alcopops and the binge drinking sessions in which they engage at the weekend. I welcome this measure, but I would like it to be only the first step in a radical examination of this area.

When I watched the "Prime Time" special programme and saw gardaí on the street carrying people who were drunk and putting them into police cars I was shocked at the waste of hard earned taxpayers' money. The gardaí have more important things to do. It is tragic that these young people, drunk out of their minds, end up in the accident and emergency units of our hospitals. This is not a Dublin phenomenon. It is happening in every town. Doctors and nurses cannot be blamed for not wanting to work in these units at the weekend. Likewise, gardaí cannot be blamed for not wanting to work if that is their job.

There was a good deal of publicity about the personal public service number. Such young people who end up in casualty departments would be too drunk to know their number, but a mechanism to provide for a minimum charge of, say, €50 every time a person comes into the casualty unit drunk should be introduced. If they did not have that amount, having probably spent several times that sum in the pub prior to arriving at the casualty unit, their PPS number could be noted and the money could be taken out of their wages within 28 days if they did not pay the charge in the casualty department or to their local health board office, Such a charge would have a sobering effect. At issue is not only the impact of alcohol consumption on their health, for which society will have to pick up the tab as the years go by, but the immediate cost to the health services when they end up drunk in casualty units. There is a strong case for the introduction of such a minimum charge.

Television advertising of alcopops must be radically examined. The industry should be given a short period in which to change its advertising approach and if it does not do so the House should ensure it happens. The advertising of alcopops is not even geared at teenagers but at nine and ten year olds to ensure that by the time they reach the age of 12 or 13 they will be buying these drinks. The advertising of these products should be radically overhauled as it is doing untold damage. Any money collected in revenue from tax on such products, including this increase, is not half enough.

Mr. Gormley

I have heard some justifications for the SSIAs, but Deputy Ardagh's excuse that they are actually a health measure took the biscuit. The excise duty on cigarettes does not go far enough. This issue led me to become involved in the environmental movement. I was always passionately opposed to cigarette smoking and its effects. We see those effects in terms of health.

Prior to the publication of the Estimates, I met an American expert on cigarette pricing, as did the Minister's colleague, the Minister of State at the Department of Health and Children, Deputy Tim O'Malley. I was given to understand from the statement issued subsequently by Deputy O'Malley that there would be a massive increase in the price of cigarettes, which I would welcome. I want cigarettes to be priced out of existence. This price increase will not do it. The Minister, Deputy Harney, said it would lead to a 2.5% reduction in smoking but that is nothing. Look at the number of people who are suffering from emphysema, heart disease and cancer. Deputy Fleming spoke about the cost of alcohol to the Exchequer and our hospitals. Look at the cost of cigarette smoking. It is phenomenal. We have to examine this again. There cannot be any more ambivalence. We can either see it as a revenue raising exercise or we can focus on the health issue. We should do the latter and say, for once and for all, that we have enough of cigarette smoking and its glamorisation.

The increase in the price of alcopops will not have any impact on the drinking habits of young people. We need to increase the price significantly if it is to act as a deterrent of any sort. The programme on RTE was sobering, if Members will pardon the pun. One could see the effects of alcopops. Why do we have alcopops? In the first place, they are easy to drink and they are sold to teenagers on that basis. There has been a dramatic increase in the number of women who get badly drunk, to such an extent that some of them have to get the morning after pill because they do not know what happened the previous night. That is the effect of alcopops. They are anti-social and have a devastating effect on society.

Look at the violence on our streets. People who are drunk on alcopops seem to experience a different type of inebriation. They seem to have no respect for anybody. The inebriation is on a different level. We have to get extremely tough on this matter. Look at the number of fights that occur. How many constituents have written to us about their children's safety when they go into town on a Saturday night? People behave in a most violent way towards them for no reason.

Unfortunately, this resolution is simply a revenue raising exercise. It will not change behaviour, one of the reasons for taxation. Look at the success of the tax on plastic bags. That changed behaviour. I agree with Deputy Ardagh that we need more hypothecated taxes, where the tax is ring fenced and used for a good purpose. In the case of plastic bags, the tax is being used for environmental purposes. Taxes on cigarettes could be used to get people off cigarettes. That is the approach required.

I am disappointed with these measures. They will not change behaviour. I hope Deputy Fleming is serious and that we can revisit this issue at a later stage and change people's behaviour.

An Leas-Cheann Comhairle

There is only four minutes remaining and I have to give the Minister the option of replying.

Mr. English

Can I have one minute of the Minister's time?

Mr. J. Higgins

The Minister has already had her say.

Ms Harney

I wish to reply.

Mr. Durkan

Will the Minister give a minute to Deputy English to make a point?

Ms Harney

A number of Deputies on the backbenches also wish to speak.

Mr. J. Higgins

Of course, we want to speak. We want to show up the brazen hypocrisy of this Government.

Mr. Rabbitte

The Order of Business is that the House will not adjourn until midnight. The House could agree to the allocation of a few more minutes to this issue because a number of Deputies wish to contribute.

Ms Harney

It might be helpful if Members heard the response as to why some of the things Members suggest did not and could not happen. I do not disagree with anything that has been said but there are reasons for us taking these decisions.

Mr. J. Higgins

Nobody is calling for a division on this issue and it is obviously exciting more discussion than later resolutions. With the agreement of the Dáil, it should be possible to continue this debate for some time.

An Leas-Cheann Comhairle

The Minister is in possession.

Mr. Gormley

I want to hear from the Minister.

Ms Harney

With regard to cigarettes, the increase is 50 cent. There was significant support within the Government to make it higher but we could not do it because of the impact on the CPI. The 50 cent—

Ms McManus

Take it out of the CPI.

Ms Harney

I will deal with that as well. The impact on the CPI is 0.42%. The Government said in the programme for Government that it wishes to discuss with the social partners the removal of alcohol and particularly cigarettes from the CPI index as a basis for negotiations. The ICTU has disagreed. The consumer price index is harmonised throughout Europe and the CSO publishes the CPI increase every month. It also publishes, separately, the figure without alcohol and tobacco but most people ignore it. The impact on the CPI is the only reason the increase was not higher.

The situation with alcohol is different. All Members have suggested that the increase on alcopops should have been higher. I wish we could do that but under EU law we could not increase alcopops more than the general increase that applies to spirits. The increase we are applying on this occasion, the biggest ever, will increase the price of the typical bottle of spirits by approximately €4. That is substantial and will make Ireland the third highest in Europe in excise duties imposed on spirits. The CPI impact of the price increase in alcopops is small. Although they are a significant problem for young people, they do not account for a huge amount as a percentage of the spend of disposable income.

The other issue with imposing a larger increase on spirits is that people can bring in spirits from other EU states, given the relative prices, for their personal consumption. Furthermore, there would be an encouragement to smuggle. Clearly, we had to move in a reasonable way. However, it is the highest excise increase ever imposed on spirits and we could not impose a higher increase on alcopops. If we were to ban alcopops, we would have to ban lemonade, coke and other drinks so that was not an option. These issues accounted for a considerable amount of discussion and analysis at Cabinet between the Minister for Finance, the Minister for Health and Children and other Ministers.

An Leas-Cheann Comhairle

Are the motions agreed to?

Mr. English

Can I make one point?

An Leas-Cheann Comhairle

I have to put the question.

Question put and declared carried.