Dáil Éireann debate -
Wednesday, 3 Dec 2003

Vol. 576 No. 2

Financial Resolutions Nos. 3 and 4. Financial Resolution No. 3: Mineral Oils. - Financial Resolution No. 4: Tobacco Products.

(1) THAT in this Resolution –

"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 "smoking tobacco" have the same meanings as they have in the Act of 1977, as amended by section 86 of the Finance Act 1997 (No. 22 of 1997) and by section 94 of the Finance Act 2002 (No. 5 of 2002).

(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 Schedule 3 to the Finance Act 2003 (No. 3 of 2003), be charged, levied and paid, as on and from 4 December 2003 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	133.39 per thousand together with an amount equal to 18.32 per cent of the price at which the cigarettes are sold by retail
Cigars	196.409 per kilogram
Fine-cut tobacco for the rolling of cigarettes	165.740 per kilogram
Other smoking tobacco	136.261 per kilogram

Financial Resolution No. 3 provides, with effect from midnight tonight, for an increase in mineral oil tax on auto diesel and petrol which, when VAT is included, amounts to 5 cent on a litre of auto diesel and 5 cent on a litre of petrol. The rate for substitute auto fuel is also increased by the same amount to maintain parity with that for auto diesel. The resolution also provides for an increase of 2.5%, inclusive of VAT, on the rate for aviation gasoline for use by aircraft other than commercial aircraft where no excise applies. Following these increases, the Irish rate for petrol will still be below the EU average while the auto diesel rate will be at approximately the average level. The expected yield for these increases is approximately €183.3 million for next year and €185 million a full year. Therefore, the measures will increase the CPI by approximately 0.1845%.

Paragraph (1) increases the rate of excise on certain mineral oils to those set out in the scheduled resolution. Paragraph (2) is a standard declaration included in all financial resolutions, as required by the Provisional Collection of Taxes Act 1927.

Resolution No. 4 is an amendment to the Act of 1977. It provides for excise duty increases on tobacco products with effect from midnight tonight which, when VAT is included, amounts to an increase of 25 cent on a packet of 20 cigarettes withpro rata increases on other tobacco products. The increase is expected to yield €59.7 million next year, and €60.5 million in a full year. It is expected the increase in price will reduce projected consumption by 1.13% compared to what it would otherwise have been.

As has been indicated previously, the Government remains very concerned about smoking and its impact on health. The increase should help to discourage smoking, particularly by younger people. The measure will increase the CPI by approximately 0.187%.

Mr. Hogan

Fine Gael will be opposing Financial Resolution No. 3 on the basis that it is anti-business, anti-employment and will contribute enormously to the cost base of business and employment, which has already been overstretched by cost increases. I cannot understand why the Government, which was warned by the National Competitiveness Council earlier this week about the major impact cost increases are having on business and employment, will take an additional €94.8 million in diesel costs out of enterprise in order to balance the books for the Minister for Finance.

The cost base of the economy has gone through a difficult time with rises in insurance, energy and fuel costs. The Minister for Finance has not heeded the warnings from the National Competitiveness Council or Forfás to keep our costs as low as possible to promote employment opportunities. The increases will feed into the entire manufacturing sector, which is already under pressure. Some 170 jobs have been lost recently in three firms in the south east, two of which are in my constituency. One of the main reasons for these job losses is the higher cost of energy and insurance. The budget will impose additional costs on the unfortunate businesses that are suffering enough already. The imposition of an additional €88.5 million in excise duty on petrol follows a major increase in road tax in recent years.

Motorists have been badly hit by the Government in that money that used to come from central Exchequer funds now comes through motor taxation into the local government fund. The increase in the cost of petrol will feed back into the system thus contributing to higher costs and less disposable income for consumers, along with higher wage demands in the next round of pay talks. In addition, allowances in tax rates have not been index linked in the budget, which consequently will contribute to higher levels of personal taxation being extracted from workers. We will be opposing the imposition of an extra €183.3 million on the business and commercial sector and on employment.

Mr. P. Power

I had hoped Financial Resolution No. 4 would meet with universal support in the House. I understand the social partners were looking for an even higher increase than the 25 cent the Minister announced in the budget today but this increase must be viewed in the context of the smoking ban which will be introduced in early 2004. The ban is receiving greater acclamation and greater acceptance on the part of the broader public. It is recognised as an innovative and progressive initiative on the part of the Minister for Health and Children. Both these measures should be viewed as an incentive to people to give up smoking. As a former smoker and one who smokes the occasional cigarette, I am waiting to be incentivised into giving them up.

The dual approach of the smoking ban in the workplace, public houses and entertainment areas and the increases announced in today's budget will incentivise the thousands of people who want to give up smoking. Not only is this a revenue raising exercise but it is also an exercise in good public health. As public representatives we have all visited hospitals and witnessed every year the hundreds of cases of elderly people suffering from pulmonary and cardiac diseases. They will all say that their diseases are directly related to excessive smoking throughout their lives. At the same time we must balance tax increases with people's right to smoke and any adverse increase in the consumer price index. One of the main thrusts of today's budget was to continue the fight against inflation and when we balance all these factors, a reasonable increase of 25 cent will meet with universal acceptance in the House.

On Financial Resolution No. 3, I take on board Deputy Hogan's point – he has left the Chamber – about its impact on competitiveness. Nobody likes increasing taxes, be they direct, indirect or any other type of capital tax, but this increase has to be viewed in the context of the expenditure increases announced in the budget. Hundreds of millions of euro will be provided for additional social welfare increases, the biggest ever increase, and they have to be funded from somewhere. I know Members opposite will shout about stealth taxes, as they did last year and this year, but in my book it is very simple. We can either provide for these increases by direct taxation, income tax and capital gains tax, indirect taxation or by borrowing.

As the Minister for Finance said today, borrowing is the ultimate stealth tax because we are only passing the hardship on to future generations, as we know to our cost in this House. Engaging in that type of wholescale borrowing to fund those types of social welfare increases creates a massive black hole in the economy which someone has to pay for ultimately. Let us rule out borrowing as we have for the past ten to 13 years and concentrate on the other two elements of taxation, direct and indirect.

Direct taxation involves capital taxes, which are a separate issue, and income taxes. The Minister for Finance made a cogent and simple argument today as to why we should not go down the road of high tax and high spend, as we did in previous years. That is a blind alley. If we want to pay for the progressive social welfare increases announced today, we have to find that money somewhere. While the increases in the tobacco products can be justified on the grounds of public health, and I take on board the points made by Deputy Hogan, the increases in the mineral oils are reasonable in all circumstances. I commend Financial Resolutions Nos. 3 and 4 to the House.

Mr. Rabbitte

I agree with the arguments advanced by Deputy Hogan and, for the reason of those arguments, the Labour Party will be voting against Resolution No. 3. We have had the debate on Resolution No. 4. There was a time in this House when there was always some grandstanding by Deputies representing the Dundalk constituency, but that is not so prevalent any more. That is not to say that it will not hurt people who can least afford it. I am not in favour of arguing for people to have the right to kill themselves but it will hurt people who are already hurt by this budget.

On the question of road diesel and petrol, the amount brought into the coffers is virtually the same as the amount provided for in the tax package. The tax package costs approximately €287 million and approximately €243 million is recouped under this measure alone. It shows the paltry nature of the tax package and the fact that for the first time in a number of decades, more than one third of taxpayers are driven into paying the marginal rate of tax. That is against a Government objective of reducing it this year to 20%. Almost 34% are now paying at the top rate.

If the House was expected to countenance an increase in excise duties that impacts on competitiveness and on the personal burden of motorists, I would have thought it would have happened in the context of some move by the Minister on eco-taxes. The Minister promised us last year that he would address the question of eco-taxes and make a start in terms of our contribution, but I do not see anything in the budget in that area. The fact that he has not adverted to it this year while last year inviting us to anticipate some initiatives by him in this area must mean that the Government has gone off the idea, and that is immensely regrettable. This is simply an old-style raid on the old reliables to raise money that will have an impact on people who need transport to get to work. It will affect the personal motorist who now finds himself or herself paying tax at the marginal rate and business and competitiveness will be affected as a result. For that reason we, too, will not be supporting Financial Resolution No. 3.

Mr. C. Lenihan

That was a remarkable contribution from Deputy Rabbitte. Churchill once told a researcher who was preparing him for a speech to give him the facts and he will twist them whatever way he wants. Deputy Rabbitte is a master exponent of that particular black art. He talked about a raid on the old reliables but an aspect of the budget to be welcomed is that it has not hit the favourite old reliable of all of us, namely, alcohol, which has not been touched in this budget. That is right, given the potential effects of the smoking ban on public houses and the licensed trade generally. There has been a downturn in that market mirroring the downturn we have seen in the general economy. It is welcome that that reliable was not hit this time. A Minister has to find items on which he can raise taxes and this is one of the items he has chosen.

The public health argument is fairly clear and I would welcome any figures the Taoiseach may have in the briefing documents accompanying the Budget Statement on the total tax yield from tobacco and the best forecasts in terms of the relationship between price and consumption. In other words, at what level does price effect a downturn in the habit?

A particular issue which strikes me as important is that while we all want people to give up cigarettes, there is an effect on the Exchequer. Obviously there will be a downturn in revenue. I would be interested to hear predictions and forecasts from both the Department of Finance and the Revenue Commissioners on the downturn in Exchequer yield from the downturn in consumption related to the price increase. I would also like to hear if any assessment has been made of the possible effects on Exchequer revenue arising from the smoking ban.

In recent years we have seen a huge involvement of organised crime and some subversive movements, which some Members may be able to assist us on, in smuggling tobacco products across borders. I would welcome a strong signal from the Minister that, as he increases the price of tobacco, he will also give the Revenue Commissioners the proper powers and resources to pursue the evil people who trade in the illegal smuggling of cigarettes. There are serious organised crime figures involved in this and subversive movements have funded themselves through smuggling. I hope all concerned will redouble their efforts in fighting this as it is a particularly reprehensible form of fraud against the taxpayer.

At what point does one turn against further increase in cigarette pricing? I would like to see some forecasts or predictions from the Department on how far the State can go in increasing the price of cigarettes before negative returns are shown in inflation and to the Exchequer.

Mr. Eamon Ryan

The Green Party will support both resolutions. We support Financial Resolution No. 3 as it runs in parallel with our views on how we should improve the environment. The duty on diesel fuel is significantly below that on other unleaded fuels. There is a misconception that diesel fuel should be promoted and because vehicles get greater mileage from it, it is thought to be cleaner and more environmentally sustainable. I am afraid that the latest scientific advice shows this is not the case.

Mr. Durkan

It is not true.

Mr. Eamon Ryan

Pollutants from diesel have a worse effect at both local and global levels. The particulates emitted from diesel have a much worse effect than CO2 and emissions from other fuels. We need to re-examine the level of duty applied to diesel and stop promoting it as a fuel to which people should switch. The level of duty has led to a large switch to diesel and has worsened the pollution effects from our transport system.

While we welcome the measures, it is remarkable that the Minister for Finance did not once mention a switch away from labour taxes towards environmental taxes. In the last six budgets the Minister for Finance has trotted like a showjumper at Punchestown up to the fence of introducing environmental taxes and refused. Last year he promised that he would start doing this, yet he does not have a word to say on the matter 12 months later. We know that the Cabinet is publicly divided on this issue, as it is on other issues. The Tánaiste has come out as a strong opponent against the introduction of environmental taxes and has cited competitiveness concerns. The World Bank – I am sure it would agree with the Tánaiste on many matters – has looked at this in some detail and its analysis shows that 70% of countries that introduced environmental taxes have seen economic employment improvements as well as environmental ones.

With the level of environmental problems we are facing, Ireland cannot be the last to introduce such a tax. We must be to the forefront. The Minister for Finance missed an incredible opportunity to mention the environment, environmental taxes and what he is contemplating in the area. While the Government may still be split on the matter, it is time it made a decision and made it public.

The environmental effect of such taxes will never really amount to anything if our capital investment programme is consistently and massively swayed towards building new roads. On the one hand we are encouraging more traffic while on the other hand we are raising taxes to discourage it or gain revenue from it. There is an incredible imbalance in our capital investment programme where we are looking at €1.7 billion being spent on roads each year, with a small fraction of this going on public transport. Our competitive position as a country will depend on what sort of broadband structure we put in place, what kind of research we invest in and how we move people. The most effective way of moving people in our economy is not by road – this will inevitably lead to congested cities – it is by public transport.

Until the Government moves away from this mad road-building programme and starts investing in public transport, we will not receive the environmental benefit of these taxes. The real test for the Government before Christmas will be whether it is willing to invest in the metro project and fund it in part from the five-year capital programme it promised. The real test in the spatial strategy is whether the Government will fund the western rail corridor to link Galway, Limerick, Sligo and other western towns. The real test is whether it will provide suburban rail lines into Cork and make our society sustainable both economically and environmentally.

While we support this measure, it is a tiny fraction of what is needed if the Government is serious about protecting the environment and creating a sustainable economy.

Mr. Mulcahy

I support Financial Resolutions Nos. 3 and 4. I do not think there is any controversy regarding No. 4 and believe that most Members will support an increase of 25 cent per packet of 20 cigarettes. I agree with Deputy Hogan on the issue of competitiveness with regard to Financial Resolution No. 3. When one looks at the increase of 5 cent per litre, it is a small increase in the overall context of the budget. There is to be an extra €30 million for schools, local government is receiving an extra €30 million and €20 million has been allocated to the decentralisation programme. People must be honest, we have to raise revenue somewhere.

Mr. Crawford

I did not think the word "honest" was relevant on the Deputy's side of the House.

Mr. Mulcahy

Those who are against this 5 cent per litre increase should tell us how they would raise the revenue. Would they increase personal taxation, capital gains tax or stamp duty? The Government has put forward a sensible proposal in this regard and it behoves those who are against this to say what they would do in its place.

I disagree with the sentiments expressed by Deputy Eamon Ryan. While it may come as a surprise to the Deputy, well maintained roads are needed for inter-provincial buses too.

Mr. Eamon Ryan

Bus lanes could be put on the motorways.

Mr. Mulcahy

If one wants to travel from Dublin to Galway or Cork to Galway, there must be good roads.

Mr. Eamon Ryan

Ireland has the worst CO2 emissions in Europe.

Mr. Mulcahy

There is nothing contradictory in saying that good roads will be built and a good public transport infrastructure will be put in place.

Mr. Eamon Ryan

We are not spending money on public transport infrastructure.

Mr. Mulcahy

I am glad to note that the Green Party, unlike Fine Gael and Labour, will support the 5 cent per litre increase. It is a small amount in the overall context of the budget.

The issue of a carbon tax is a red herring at this stage and does not arise in this budget.

Mr. Eamon Ryan

It should arise as it is the most important tax issue facing us.

Mr. Boyle

It was promised last year.

Mr. Mulcahy

It is certainly linked to the issue of competitiveness. Deputy Eamon Ryan may not understand that this country must remain competitive. If we tax business out of existence, we will quickly become a Third World country, which is, perhaps, what the Green Party wants.

Mr. Eamon Ryan

The Deputy's party introduced VAT increases last year.

Mr. Mulcahy

Perhaps the Deputy wants us to cycle from Dublin to Cork and between our cities. Fortunately, however, the world has moved on.

Mr. Coveney

The Government promised to introduce carbon taxes within 12 months and failed to do so.

An Leas-Cheann Comhairle

It will not be possible to accommodate all eight Deputies who are offering in the time available, unless each speaker is brief.

Mr. J. Higgins

If Government speakers did not take up so much time, we would not have the problem.

An Leas-Cheann Comhairle

There are now ten Members offering.

Mr. G. Mitchell

The Society of the Irish Motor Industry has already pointed out the extent of the annual contribution of the motoring public to revenue. When one adds to this the figure of €183 million generated by this source alone, one finds that the motoring public makes a significant contribution to the cost of the Exchequer. As my colleague, Deputy Hogan, pointed out, this added cost will have serious implications not only for trade, but also for tourism and services. When one adds the changes to benefits-in-kind proposed in recent times, this amounts to a severe additional penalty on the motoring public.

I will comply with the request of the Leas-Cheann Comhairle by making a brief comment on Financial Resolution No. 4 regarding excise on tobacco. The Taoiseach gave two figures, namely, that the measure would add 0.187% to the consumer price index and would result in a 1.13% reduction in smoking. A Deputy asked for an explanation of the economic rationale of the figures. I would like the total costs to the Exchequer of smoking to be taken into account.

A couple of years ago, I wrote the second report on smoking for the Oireachtas Committee on Health and Children. The former Deputy, Alan Shatter, wrote a previous report. The fact is that half of all patients admitted to St. James's Hospital in my constituency are admitted due to smoking-related illnesses, whether hardening of the arteries, heart disease, cancer or other illnesses. When one extrapolates this figure throughout the hospitals in the State, particularly larger hospitals, one finds that smoking generates significant costs for the Exchequer. I would like an economic study to be done to take into account the cost to the Exchequer of the health implications of smoking.

According to medical evidence, nicotine is more addictive than heroin, although the latter does much more damage more quickly and quickly gets people, the young in particular, into deep trouble. Evidence given to the Committee on Health and Children indicates that the tobacco industry deliberately dresses up nicotine to make it palatable to young people and encourage addiction by removing some of the nastier tastes of tobacco.

In France, where more young women are smoking, it is now possible to forecast the increase in the death rate from cancer among women. This issue has been grasped already. I would like an economic study, separate from medical studies – the Committee on Health and Children has already published two reports on the medical implications of smoking – to be carried out on the cost factors of smoking to the Exchequer. At this time in the cycle of parliamentary business, when we are examining issues from the perspective of the Exchequer, such a study would pay dividends in more ways than one.

Caoimhghín Ó Caoláin

The Sinn Féin Deputies will oppose Financial Resolution No. 3 and support Financial Resolution No. 4. The proposed increase on mineral oils is anti-motorist and anti-transport industry. Only eight days ago, a week ago yesterday, we had a further financial resolution in the Chamber targeted at motorists regarding an increase in the cost of motor taxation. On that occasion I asked the Minister whether further bad news was in store for motorists arising out of the budget on 3 December. Of course, the Minister kicked to touch, but he knew well that this was exactly what motorists were about to face.

I am glad the debate is so amusing. While it does not surprise me that the Minister for Justice, Equality and Law Reform is the joker in the deck on the Government benches, I am sorry the Tánaiste also thinks the matter before us is—

Ms Harney

Would the Deputy like to hear what the Minister said?

Caoimhghín Ó Caoláin

Nothing the Minister would say would surprise me.

Dr. McDaid

He said the measure will add 5 cent to the price of a petrol bomb.

Caoimhghín Ó Caoláin

He may know more about that matter than me, given that he, unlike me, served on the Border with a gun in his hand. Perhaps he will tell that story.

Mr. Treacy

He was uniformed.

A Deputy

They have something in common.

Caoimhghín Ó Caoláin

There were all sorts of uniforms but let us stick with the issue. Where I come from there is virtually no public transport system, with the exception, the Minister of State at the Department of Transport, Deputy McDaid, will note, of express buses transporting people from counties Donegal and Derry to this city. It is important, therefore, to recognise the effect of this measure on those who are dependent on private transport to access their place of work. Like the increase in motor taxation last week, this is a tax on accessing one's employment, a further tax on work. This is the reality for many people in this State.

Furthermore, those involved in the transport industry, which has faced significant turmoil in recent years, now have a further increase in charges to meet. What will be the net effect of all this? The goods and commodities on which we depend daily are likely to increase in cost due to the domino effect of the increases in the cost of the transportation and delivery of goods. An increase in the cost of fuels will undoubtedly result in a hike in the cost of taxi fares and public transport, greater than that being discussed here. Such measures often spill over into multiples of the original increase. This is what people are facing.

The Deputies opposite will argue that this 5 cent increase is small, but its effect is anything but small. The motorist has again become an easy target for the Government, which has targeted them twice in this jurisdiction in eight days. There will undoubtedly be a serious backlash as motorists will not accept continuously being treated as a soft, easy target.

Mr. Noonan

I do not know where the price of fuel will go in the coming period. Obviously, events in Iraq, Georgia and the Middle East are driving up the price, while recent events regarding exchange rates are driving it down. The points made by Deputy Hogan and others were well stated. One would expect the strategy of the Government, particularly the Tánaiste, to be to try to control those factors of competitiveness which are within domestic control. Looking ahead, the two main factors on competitiveness, exchange rates and interest rates, are not within the control of the Government.

The position could become black by late next year. The exchange rate of the euro against the dollar is $1.15. While the value of the euro is heading south now, it was worth $1.20 at one point. When it was heading in the other direction, its value fell to as low as 85 cents, which amounted to a 35% discount or bonus on the position it should have had based on a trade weighting. If it were to follow the same trend in the opposite direction, as the American monetary authority is now trying to cut out the consumption that was sucked in by the high exchange rate, it would flatten out at $1.55. That is frightening, given that it is at $1.20. I do not think it will go to $1.55. However, one of the main factors of competitiveness in Ireland is totally beyond our control now and it could deteriorate rapidly to an extent that would be extremely painful.

Interest rates reached the bottom of their cycle six months ago. They are on the increase internationally and they will do so gradually. However, the decision of the European Council of Ministers to allow Germany and France to breach the Stability and Growth Pact will add one point or one point and a quarter to whatever the interest rate might have been, if that had not occurred. I was surprised the Minister for Finance, for reasons of interest rate control, did not fight that more strongly. I know the voice of Ireland in the European Council is weak, but it can be symbolic. He should have voted against the breach of the Stability and Growth Pact because as interest rates climb through the summer and into the autumn, I have no doubt that the fact that the French and Germans are not controlled by the Stability and Growth Pact means that the European Central Bank will have to react and, as it reacts, interest rates will increase further.

I have three questions. Will the Tánaiste give us the yield from both excise measures? The Taoiseach may have already given them, but I missed them. Perhaps she will divide the yield between diesel and other fuel commodities. What effect will both motions have on the consumer price index? When excise on tobacco products was increased in the last budget, a strong case was made that this was a health measure, not a revenue raising one. The case was made so strongly that the yield was dedicated to the Department of Health and Children and ring-fenced to be used on health expenditure. There was no mention of that in the Minister's speech today. Do I take it that the yield from this excise increase will go to the Exchequer and not to the Department of Health and Children?

There is huge ambivalence about increases in excise on tobacco products. With respect to the Deputies opposite, that ambivalence was heard in speeches tonight and sometimes in the same speech. On the one hand, people hope the increase will improve people's health and stop them from smoking, but, on the other hand, they are nervous that it will not yield the anticipated amounts because if that does not happen, the tax must be found elsewhere. The type of schizophrenia which applies to excise increases on tobacco products must be addressed. Excise duty is either being increased as a health measure or as another way of getting revenue. However, it is not possible to ride both horses.

Mr. Crawford

I am shattered at this increase, which is serious in terms of competitiveness. We discussed the plight of agriculture and other sectors earlier. This will have cost implications in many areas. I am worried about the effect this will have on the Border region. The Minister of State at the Department of Transport, Deputy McDaid, knows as well as I do that the area has been boosted in recent years by the number of people coming across the Border to buy fuel and subsequently other products. We, in County Monaghan, have been given the two fingers today as far as decentralisation is concerned.

Dr. McDaid

There is still a difference of 21 cent per litre on unleaded petrol and 33 cent per litre on diesel.

Mr. Crawford

We have limited time on this side of the House. There may be a difference but the closer the price gets, the fewer people who come across the Border. People are going to the North to buy other goods as we have become uncompetitive.

Dr. McDaid

There is still a big difference.

Mr. Crawford

It is a major issue. Monaghan town has lost many jobs. The supermarkets and shopping centres depend on the trade from the North. If people do not come across the Border to buy petrol or diesel, they will not come to buy other products. It is a short-sighted retrograde step which will increase costs. We are already uncompetitive. I strongly oppose this uncalled for measure which is damaging.

People are worried about publicans. However, the price of spirits and alcohol has not been increased. The Minister for Justice, Equality and Law Reform keeps telling us about the problems associated with the abuse of alcohol. Surely something could have been done to ease the pressure.

Mr. McDowell

What does the Deputy suggest?

An Leas-Cheann Comhairle

The Deputy should speak to the resolutions before the House.

Mr. Crawford

A slight increase in the price of alcohol might have been less damaging to the economy, although it may have affected tourism.

Ms Harney

There are many people working in the drinks industry.

Mr. Crawford

The price increase in petrol and diesel will affect tourism more than anything else.

An Leas-Cheann Comhairle

I call Deputy Joe Higgins.

Mr. Curran

When will we on this side of the House get a chance to speak?

An Leas-Cheann Comhairle

I looked at that side, but I did not see anyone offering.

Mr. Curran

We have been listening to the other side all night.

An Leas-Cheann Comhairle

The Deputy must offer. I have looked every time, but no one offered.

Mr. J. Higgins

This is my seventh budget. It is unprecedented for members of the Government to take up so much time in a debate on the night of the budget. It is the first time I have seen that happen.

Mr. O'Dea

We are entitled to do that.

Mr. J. Higgins

The Government is wasting its time.

Mr. O'Dea

The Deputy is wasting time. He is always wasting time.

Mr. J. Higgins

The increases in indirect taxes through petrol, diesel and cigarettes reveal the truth about this budget and about a dishonest Government which attempts to portray itself as a friend of the PAYE worker, while keeping levels at a certain rate. However, it then cynically claws back every concession given in recent years through indirect taxation.

Mr. Treacy

The Deputy does not want to pay for anything.

Mr. J. Higgins

Petrol is not a luxury for many working people, particularly those in rural areas. Those living on awkward routes in urban areas, who are subjected to the excruciatingly deficient public transport system, face the same problem, namely, they must use their cars.

I am opposed to the increase in taxation on cigarette and tobacco products, particularly in view of the fact that the justification being given for it by the Government is that it is being done for health reasons. That is pious cant, particularly when successive Governments have tolerated the glorification of nicotine in advertising and have allowed it to be sold to get huge revenues over the decades. Unfortunately, when hundreds of thousands of people are addicted to such a terrible drug, the Government decides to increase the taxation, while pretending it is for the good of their health. Effective and honest measures to overcome addiction to nicotine are required, not another increase in tax under a cynical guise.

It is envisaged that €243 million will be raised from these measures. We can see where the Government's loyalties lie when we see that the reduction to the corporate sector as a result of the past two budgets will be €634 million a year from now on. It is a case of continuing to give it to the millionaires, while taking it back from ordinary people.

Mr. Treacy

On what is the Deputy basing that? That is fiction.

Mr. J. Higgins

No one should give credibility to these tax increases by dignifying them with the term "environmental taxes". These taxes penalise ordinary people whose cars are not a luxury, while they mean nothing to the rich. It is wrong to give them the credibility of being environmental taxes about which the Government knows nothing. It also tried to suggest the bin tax was an environmental tax. Justifying them in such terms allows the Government to cover up its complete failure to provide a proper public transport system and a waste management plan.

While these measures impact on ordinary working people and on poor people because they are indiscriminate across the board, on the plains of Kildare the manicured stallions rest easily in their stalls, while the tens and hundreds of millions of euro they earn every year for their millionaire owners will be untouched by the Minister. From the islands of Bermuda to the shores of Lake Geneva, the billionaire tax exiles will also rest easy because they go on their way without a finger raised against them by this Government of the rich and for the rich, a Government that is hitting ordinary people. It is time it was exposed for that.

Mr. O'Dea

The Deputy is a terrible fraud. He should sit down and spare us.

An Leas-Cheann Comhairle

I remind Deputies that to offer they must stand up.

Mr. Durkan

I will offer as well.

Mr. O'Dea

The Deputy is a terrible fraud and hypocrite.

An Leas-Cheann Comhairle

Order. Deputy Curran.

Mr. O'Dea

Deputy Joe Higgins is a sanctimonious fraud.

Mr. Curran

I am addressing—

Mr. O'Dea

I will tell Deputy Higgins a few things.

Mr. Durkan

I am to speak before Deputy O'Dea.

Mr. Curran

I will address my initial remarks to Deputy Joe Higgins, because unlike him, this is only my second budget. It is not a question of the Government Deputies taking up time. When we debated the financial resolutions arising from last year's budget, Deputies on all sides of the House had an equal opportunity to speak. I do not know what happened in previous years, but that is what happened last year. I take exception to the Deputy saying it is his time to speak. It is for the House to debate these issues.

Mr. O'Dea

It is always his time. He only wishes to speak of Stalin and Trotsky.

Mr. J. Higgins

Will Deputy O'Dea give me his column in the Sunday Independent?

An Leas-Cheann Comhairle

Order please. Deputy Curran should speak to the resolutions.

Mr. J. Higgins

Deputy O'Dea speaks of Stalin and Trotsky as if they were the same people. He should go back to the history books.

An Leas-Cheann Comhairle

Deputy Curran has the floor.

Mr. Perry

Let Deputy Curran speak.

Mr. Curran

I thank Deputy Perry. Having listened to the comments, and in a general manner—

Ms Burton

It is not a general matter. The Deputy should speak to the resolutions.

Mr. Curran

After the Minister made his Budget Statement I took the opportunity to listen to—

An Leas-Cheann Comhairle

The Deputy should address his remarks to the resolutions before the House, not to the budget debate.

Mr. Curran

My comments are specifically relevant to the resolutions. In their replies to the Budget Statement, each party spokesperson outlined a litany of areas where they wanted to see increased expenditure. It is, therefore, ironic that when the measures to fund increased expenditure are being debated they criticise them.

Deputy Ó Caoláin spoke about the effect the budget will have on business. His party spokesperson spoke about this and said it was a lost opportunity that employers' PRSI was not to be increased. Would that not have been a far greater taxation on employment?

An Leas-Cheann Comhairle

The Deputy's remarks are more suitable to the budget debate. He should confine himself to the resolutions before the House.

Ms Burton

What about cigarettes and petrol?

An Leas-Cheann Comhairle

We are dealing with Financial Resolutions Nos. 4 and 5.

Mr. Curran

I am speaking about the proposed increases in petrol and diesel specifically. In doing so I refer to the contributions by Deputy Ó Caoláin and Deputy Crowe, which are significantly at odds with each other.

Ms Burton

I misunderstood the Deputy.

Mr. Curran

Deputy Noonan made a number of relevant points, especially his reference to foreign exchange rates and the fact that as oil and oil products are normally traded in US dollars, there will be benefits from the current favourable exchange rate. If the exchange rate goes the other way, the checks and balances in the system will mean that while we may lose on one side, the competitiveness of export products may improve. It is, therefore, unfair to view the impact of oil prices in a narrow context. It is necessary to consider the wider context of the impact of oil price changes and exchange rate movements on the global economy.

The radio programme, "Five Seven Live" recently undertook a survey on the price of fuel around the country in different stations. It revealed discrepancies in the prices advertised.

Mr. Stagg

The prices ranged from 69 cent per litre to 81 cent per litre.

Mr. Curran

Precisely.

Mr. Stagg

Why does the Government not do something about it?

Mr. O'Dea

The Deputy did not do much about it when he was on this side of the House.

Mr. Curran

I am pleased Deputy Stagg heard the same radio programme. I will not ask the Deputy a question because he will probably not be entitled to answer it, but I am sure he will know where these prices place Ireland in terms of the EU league of fuel prices.

Mr. Stagg

I do.

Mr. Curran

In what position is Ireland?

Mr. Stagg

A very good position.

Mr. Curran

It is a lot better than very good. Nobody wants to justify increases in the price of any product as it is easier to argue against them, but the reality is that the various schemes announced in the budget have to be funded. The method used to raise extra funding does not put us at a competitive disadvantage. The price of fuel, even after the increases announced in the budget, will be well below the European average.

Mr. Stagg

The good news is that the cheapest place to buy petrol is near the Deputy's home area in Mountrath.

Mr. Curran

I travel by bus. It is easy to argue against increases and argue they are uncompetitive. However, they must be viewed in the round. The cumulative effect of the increases announced today on the CPI will be modest. The Minister was aware of this when making his decisions in this area. While an increase in fuel prices has a bearing on industry and our competitiveness, Deputy Ó Caoláin should be aware that the impact will be far less than what would happen if the Minister was to implement an increase in employer's PRSI, as recommended by his party's spokesperson, Deputy Crowe. That would have a much more significant impact on employment.

The proposals in Financial Resolution No. 3 are modest. They keep Ireland well within the range of prices being charged across Europe. Consequently, I commend both of resolutions.

Mr. Coveney

I will attempt to stick to the resolutions as best I can. I am in favour of Resolution No. 4 for the obvious reason that I hope it will help in reducing the number of cigarette packets that are purchased next year. I am glad the Minister for Justice, Equality and Law Reform is present as a significant problem is developing in regard to the black market trading of cigarettes. As prices are increased, the incentive to trade on the black market becomes more tempting. While there is a need to continue increasing prices, there is also a need to take firm measures to try to stop the traffic of cigarettes coming from Spain, Portugal and other European countries. It has become a significant problem, particularly on the south coast and across the Border. I am tempted to elaborate on that latter aspect, but I will refrain from doing so.

I cannot agree with Financial Resolution No. 3. Deputy Hogan has outlined the competitiveness argument, but I will outline another argument that has not yet been made. I hope the Tánaiste and Minister for Enterprise, Trade and Employment will be able to comment on my questions. It is about the need to promote a biofuels industry in Ireland. Most progressive countries in Europe that have a carbon emissions problem—

An Leas-Cheann Comhairle

Is this linked to the resolution?

Mr. Eamon Ryan

It is linked to the resolution.

Mr. Coveney

Yes, and I will explain why if the Leas-Cheann Comhairle will give me some latitude, as he did the Government Deputy before me.

Mr. Noonan

It is the last item.

Mr. Coveney

Ireland has significant potential to copy Germany and a range of Scandinavian countries which have active biofuels industries by incentivising the development of such fuels through excise duty reductions. We have the best climatic conditions for growing energy crops in Europe, yet we are doing nothing about it. This could have a significant impact on the levels of carbon and greenhouse gas emissions in Ireland. The transport sector contributes in a significant way to our problem, but here is a ready-made solution if we have the imagination and ambition to make use of it. Not only will it help to solve the carbon emissions problem but it will also create a whole new industry within agriculture, which has been proven to be viable in other European countries, when we drop the excise levels sufficiently to make it financially viable.

It is regrettable that we have not had the imagination and ambition to use this resolution not only to increase duties on diesel and petrol and, in doing so, discourage their use, but also to encourage the use of alternative fuel sources such as biodiesel as a substitute for diesel and ethanol or other liquid gases as a substitute for petrol.

An Leas-Cheann Comhairle

I must point out to the House that the question must be put at 9.14 p.m.

Mr. Durkan

On a point of order, I have already asked the Minister of State at the Department of the Taoiseach whether it would be possible to extend the time available to accommodate some Members who want to speak on these resolutions.

Mr. Coveney

An extra ten minutes would be more than sufficient for our side.

The EU has set a commitment to ensure that 7% of agricultural land within the Union is used for growing energy fuels by 2005. We have done nothing about achieving this objective.

An Leas-Cheann Comhairle

If the debate goes on beyond 9.14 p.m. we will have no power to extend the order.

Mr. Coveney

The lack of promotion of biofuels in this resolution is a missed opportunity.

Debate adjourned.