Financial Resolution No. 1: Alcohol Products Tax

(1) THAT for the purposes of the tax charged by virtue of section 75 of the Finance Act 2003 (No. 3 of 2003), that Act be amended, with effect as on and from 16 October 2013, by substituting the following for Schedule 2 to that Act (as amended by section 58 of the Finance Act 2013 (No. 8 of 2013)):

“SCHEDULE 2

Rates of Alcohol Products Tax

(With effect as on and from 16 October 2013)

Spirits:	€42.57 per litre of alcohol in the spirits

Beer:
Exceeding 0.5% vol but not exceeding 1.2% vol	€0.00
Exceeding 1.2% vol but not exceeding 2.8% vol	€11.27 per hectolitre per cent of alcohol in the beer
Exceeding 2.8% vol	€22.55 per hectolitre per cent of alcohol in the beer

Wine:
Still and sparkling, not exceeding 5.5% vol	€141.57 per hectolitre
Still, exceeding 5.5% vol but not exceeding 15% vol	€424.84 per hectolitre
Still, exceeding 15% vol	€616.45 per hectolitre
Sparkling, exceeding 5.5% vol	€849.68 per hectolitre

Other Fermented Beverages:
(1) Cider and Perry:
Still and sparkling, not exceeding 2.8% vol	€47.23 per hectolitre
Still and sparkling, exceeding 2.8% vol but not exceeding 6.0% vol	€94.46 per hectolitre
Still and sparkling, exceeding 6.0% vol but not exceeding 8.5% vol	€218.44 per hectolitre
Still, exceeding 8.5% vol	€309.84 per hectolitre
Sparkling, exceeding 8.5% vol	€619.70 per hectolitre

(2) Other than Cider and Perry:
Still and sparkling, not exceeding 5.5% vol	€141.57 per hectolitre
Still, exceeding 5.5% vol	€424.84 per hectolitre
Sparkling, exceeding 5.5% vol	€849.68 per hectolitre

Intermediate Beverages:
Still, not exceeding 15% vol	€424.84 per hectolitre
Still, exceeding 15% vol	€616.45 per hectolitre
Sparkling	€849.68 per hectolitre

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

The Taoiseach

This resolution provides for increases, with effect from midnight, in the rates of alcohol products tax across the full range of alcohol products. The increases, when VAT is included, amount to 50 cent on a standard bottle of wine, 10 cent on a pint of beer, 10 cent on a pint of cider and 10 cent on a standard measure of spirits, with pro rata increases for other products. The expected yield from the increases is approximately €35 million in 2013 and €145 million in a full year.

Deputy Billy Kelleher

This is a missed opportunity. We have been speaking for a long time about public health policy in the context of alcohol consumption and the damage it causes to broader society. This is an increase in excise that will affect the off-trade and the on-trade equally. There was an opportunity to address the off-trade and below-cost selling, consider the introduction of minimum pricing and deal with the fact that a plethora of supermarkets are wholesaling alcohol to broader society, which is having a major impact. This is a budgetary matter but it could have been addressed. There was an opportunity to do so in the context of introducing minimum pricing, which is recommended by all experts who have looked at the difficulties Irish society faces due to the increase in alcohol consumption, particularly among younger people. It has been identified that their sourcing of alcohol is primarily from off-licences and supermarkets and that it has a damaging effect. In the context of this resolution, it would have been more appropriate, as a public health policy as well as a tax-raising initiative, to address the issue of off-licences.

Deputy Pearse Doherty

This is one of the Government's main taxation proposals. It will take in €145 million in additional taxes from people who consume alcohol. The retention of the 9% VAT rate for the tourism sector been dressed up by the Minister as making up for this, but the 9% VAT rate for 2014 will amount to slightly more - around €290 million from across the entire hospitality and tourism sector. This will be a blow to vintners and, most importantly, individuals. My question to the Taoiseach is whether he can give us some indication of the homework he has done on this. As the longest-serving Member of the House, the Taoiseach remembers debates about the driving force for cross-Border shopping, which was alcohol sales. Can the Taoiseach give an indication of the homework the Government has done on the factors at play in the levying of an additional 50 cent on a bottle of wine in terms of the average price of a bottle of wine in Tesco compared to one in Asda? Has the Government done its homework on whether there is potential for the Government to drive people to purchase alcohol across the Border?

I have no problem with anyone shopping on either side of the Border. County Donegal, my home county, gets the benefit of people deciding to buy petrol and diesel on this side of the Border. Likewise, residents in Derry get the benefit of shoppers going in the other direction. However, when alcohol sales are a driver of cross-Border shopping, people stock up on alcohol beyond what they would consume if they were going to the local supermarket. Has there been analysis of this?

Deputy Denis Naughten

I am disappointed that the Minister for Finance did not examine the introduction of a lid levy. Presentations have been made to the Minister and I have raised the point on a number of occasions. My understanding is that the Minister said the advice from the Attorney General was that he could not differentiate between the on-trade and the off-trade in respect of alcohol sales. However, they are governed by two separate licences that are issued separately by the courts and the Department of Justice and Equality. Completely different statutes are involved, so I cannot understand why they cannot be dealt with separately.

The big advantage of introducing a lid levy is that it would bring in far in excess of €145 million - approximately €200 million per annum. The other big advantage to it, and the difference between that and minimum pricing, is that minimum pricing will only increase profits for the major multinational retailers in this country. A lid levy would bring additional funds to the Exchequer that could be ring-fenced to deal with the problems associated with alcohol, particularly within the health service. I ask the Taoiseach to look at this issue again, because there is a direct correlation between consumption and tax. There is also a strong argument at European level that there is flexibility where a measure is being introduced as a health provision. That is acknowledged by the Minister, who says the legal issue is now at home rather than abroad. One must remember that in 2003 the Government brought in a similar initiative, specifically in relation to alcopops, because of the particular difficulty they raised at the time. I would ask the Taoiseach to examine this.

The budget proposals involve €1.2 billion in taxes, as announced by the Minister for Finance, and €1.6 billion in cuts, as announced by the Minister for Public Expenditure and Reform. That adds up to a figure of €2.8 billion, not €2.5 billion. Perhaps the Taoiseach would clarify that in his response.

Deputy Joe Higgins

Táimse glan in aghaidh an méid atá an Taoiseach tar éis a chur chun cinn. Is ionsaí eile e seo ar phócaí gnáth dhaoine - €145 milliún breise ag teacht as na pócaí céanna, cuid den scéim déine lena bhfuil an Rialtas ag leanacht ar aghaidh. Is rud é seo atá agus a bheidh tubaisteach do chúrsaí eacnamaíochta. I am opposed to this and I will vote against it. I suppose we should at least be grateful that the Taoiseach had the grace not to try to justify it by arguing that it was for health reasons - or, maybe, to put it the other way around, he did not have the neck to argue that this new grab at the pockets of ordinary people was justified for health reasons.

There are serious health issues relating to alcohol, as there are relating to tobacco, in this society. They should be taken seriously and they should be addressed through serious measures. It is not a serious measure, in case anyone is pretending otherwise, to simply land more increases that hit in particular those who drink little alcohol or drink in moderation, which is most people. Those are the people who have been hit harshly by the austerity measures of the past five years. There is now another burden of a further €145 million if consumption remains stable. If the Government wants to implement serious measures to deal with alcohol, which has toxic effects in society, let us look at the social background and social issues, let us look at the glamorising of alcohol, and let us ban the advertising of alcohol right across the board in every medium in which it still exists, ban its glorification and deal with the issues that, unfortunately, give rise to serious problems among a certain cohort of our people who seriously abuse alcohol, which means serious abuse for those who are near and dear to them. This is not the way to do it. I oppose the measure.

Deputy Billy Timmins

This measure will be voted on shortly and, obviously, the vote will be successful.

Deputy Timmy Dooley

I would not depend on that.

Deputy Billy Timmins

Before I make my contribution, I must declare an interest in the form of a family pub.

Deputy Naughten said that a lid tax could bring in €200 million. The Taoiseach drives through the towns of this country on his way up from Mayo on Sunday or Monday night and sees the pubs empty. There is no one in them. For a number of years, there was no tax increase on alcohol. In the past couple of budgets, there has been such an increase. I ask him to consider, perhaps during the finance Bill, having this measure reversed. The Minister, Deputy Noonan, made reference in his speech to the retention of the 9% VAT rate, which had been reduced from 13.5%, but most of the pubs that are really suffering do not serve food any more due to labour and overhead costs. There was a documentary on Irish pubs recently, although I did not see it. It is out in the cinemas. The pub plays an integral part in Irish life. Pubs are literally dying on their feet. The Taoiseach will know the situation better than I do. It is a kick in the teeth to an sector that is dying and that is losing jobs.

The Taoiseach is familiar with the needs of rural Ireland. It is not something that is unique to rural Ireland. It is the same with the pubs around suburban Dublin, most of which are empty if one goes out on a Tuesday or Wednesday night. It is merely one more nail in the coffin. I ask the Taoiseach to go back and examine the measure in view of the fact that a person who positions him- or herself outside any supermarket or multiple on a Friday evening or Saturday will see people coming out with boxes of beer and trays of alcohol, spirits and wines. It would serve a dual purpose if this burden were placed through a lid tax as opposed to an increase in excise.

Deputy Lucinda Creighton

I lend my voice to the sentiments that have been expressed by pretty much everybody who has taken the floor to date. We must appreciate that there are significant constraints on the Government in terms of what can be delivered upon in this budget, and I am conscious that credible, effective and immediate revenue-raising measures must be introduced. Having said that, I must point out that most people have welcomed the retention of the 9% VAT rate for the hospitality sector as a significant, important and positive decision taken by the Government in setting out the draft budget today. I suppose the contradiction is that this measure will hit that sector significantly, particularly the pubs, as mentioned by Deputy Timmins and others, but also restaurants and hotels - all the licensed premises that we are trying to support and to which we are trying to provide some stimulation through the VAT measure. I see a slight contradiction in this approach.

It is clear that a lid levy would raise a greater sum of revenue for the Exchequer. Potentially, it would ease the pressure on the other measures that have had to be taken, which I will not list, as we will have plenty of opportunity to do so over the next 24 hours. It would make sense to go back and review the potential of such a measure, both from a revenue-raising perspective - because the revenue that can be raised is greater than what is proposed through this 10 cent increase in excise on alcohol - and from the perspective of public policy. When one is constrained by what one can do through budgetary measures, one can prioritise public policy and the public interest, and health must be factored into that. There is an opportunity here to do something that is substantially and credibly in the interest of supporting health policy in this country by tackling binge-drinking and the scourge that is alcoholism in this country.

Deputy Timmy Dooley

I thought the real Opposition would not get any opportunity to oppose these measures, such is the level of opposition from within the Government side.

An Ceann Comhairle

There is no need for that. This is in committee and everybody is entitled to make known a view, from both sides of the House and none.

Deputy Timmy Dooley

I accept that.

I am pleased that the Taoiseach has effectively given in to the pressure to retain the 9% VAT rate on tourism-related products. That is beneficial and helpful and I am pleased that the Minister has listened to the industry. However, in what the Minister is doing, there is an element of the three-card trick. He is also putting a greater burden on the Irish pub trade.

The Taoiseach is giving with one hand and taking on the double with the other. The rural Irish pub is a very significant tourism attraction and, therefore, the measures to increase the excise on alcohol across the trade will impact disproportionately on the pub trade and on tourism activities. On the other hand, the Taoiseach could have followed the example Fianna Fáil had set in our budget proposal which was the introduction of a lid levy as a means of dealing with the public health issue, recognising that the abusive consumption of alcohol is impacting on the cost of the delivery of health services. It is clear that some of the multiples - not the independently owned off-licences - are using alcohol as a loss leader in an effort to attract customers to the shops to purchase other products with a much higher margin. This budget does nothing to address that issue. It is disappointing that the real negative impact will ultimately lead back to the people who are providing a service in rural and urban areas and a tourism attraction. In addition to a retention of the 9% VAT rate, the Minister's Estimates relating to tourism show that funding of €13 million for tourism promotion is discontinued. This will have a negative impact on the capacity of the State to market Ireland abroad. Money has been taken out of the pension fund over the past three years and the Taoiseach has not spent all of it in the way he promised-----

An Ceann Comhairle

The Deputy should keep to the motion. There are five more speakers and only eight minutes remaining before the Taoiseach's reply.

Deputy Timmy Dooley

The budget seeks to give the impression that the Government is doing something wonderful for the tourism sector in its efforts to attract tourists to the country - which is the case - while on the other hand limiting the capacity of the Department of the Taoiseach and Fáilte Ireland to market the country because funding of €30 million has been taken away. The sector which has the most to gain is being damaged by this policy.

An Ceann Comhairle

There is nothing in the order to allow for the Taoiseach to reply. Unless the House is agreeable-----

Deputy Timmy Dooley

We know the Taoiseach does not debate and we would not expect it.

The Taoiseach

I will answer the Deputy directly.

An Ceann Comhairle

There is no need to be so smart all the time, Deputy. I am only trying to make a point and to be helpful to others. If the House agrees to allocate at least two minutes for the Taoiseach to reply, this would leave five minutes speaking time for the remaining speakers. Is that agreed? Agreed.

Deputy Robert Troy

I wish to voice my opposition to this measure. Once again, we are hitting a sector that is on its knees. My own village of Ballynacargy has four small rural pubs, similar to many villages all over the country. Such pubs no longer open at this time of the evening; they do not open until 8 p.m. or 9 p.m. and in some cases, 10 p.m. because the business is not there. The Taoiseach stated earlier that this measure is offset by the retention of the 9% VAT rate but that will not help many pubs in rural Ireland because they do not serve food. This measure is hitting the ordinary man and woman who like to have a pint in the evenings. It will do nothing to address the health issues. If the Taoiseach were serious about addressing the health concerns associated with excessive drinking he would not hit the place where people can go to drink in moderation and in a controlled environment. Last year, when I spoke in opposition to a similar motion I advocated the lid levy as a means of tackling below-cost selling in supermarkets, the Taoiseach replied that the Government would bring a report on below-cost selling of alcohol before the House in a matter of weeks. He told the House that the then Minister of State, Deputy Shortall, had completed a considerable amount of work prior to her departure. Almost 12 months later, that report is still to come before the House while the Taoiseach instead has tackled a labour intensive sector which is on its knees. Family businesses are on their knees and are not receiving any support. The Taoiseach should not talk about tackling the health issues caused by excessive drinking because if he were interested in that issue he would bring forward the report on below-cost selling.

Deputy Richard Boyd Barrett

It is clear that this is not a public health measure; it is just a revenue-raising measure. Nobody could take seriously a Government claiming it was interested in public health when earlier today it has attacked the eligibility to health care of some of the most chronically ill and elderly people in the country. This measure is just about revenue but in so far as it is a revenue-raising exercise, it is a regressive measure. It regressively and disproportionately hits the least well-off and, as has been pointed out, it regressively and disproportionately hits the small rural pubs and those who work in them and depend on them.

If the Government wants to raise money from this sector to finance public health or anything else, it should increase the corporate tax take from the people at the top in a progressive way, as has been suggested. However, that is the one thing the Taoiseach will not do; he will not even consider higher corporate taxes on these people. Instead he adopts a measure that will further hit the ability of the least well-off to have a little bit of down time and it will hit the small rural pub. There is nothing progressive about it; it is just a revenue-raising grab.

Deputy Willie Penrose

I am a pioneer so the measure does not affect me. However, I reflect the views of a lot of people because alcohol plays a complex role in Irish society and it is associated with many aspects of social and cultural life. It is generally consumed for enjoyment and relaxation in a sociable setting. The pub plays an important role in this regard because it is a controlled environment within which people drink providing as it does an over-arching view of what people drink. The pub trade in rural Ireland is under threat. I have no problem getting more money from the drinks industry and it is high time that a social responsibility tax was levied on the drinks industry. Accident and emergency departments are filled with people suffering the effects of alcohol, in particular at the weekends, on Friday, Saturday and Sunday nights. I say this as someone who has helped out in many of these areas.

The real excise issue to address is alcohol that is cheap relative to its strength. These measures proposed today could undermine the pub trade. I call on the Taoiseach to bring forward the minimum unit price legislation without delay. The Minister of State, Deputy White, has brought a memo to Government. It is about time the memo was elevated to a more prominent level. There is no reason to delay. It may require North-South co-operation but the time has come to recognise good public houses for what they are.

Deputy Róisín Shortall

I agree with Deputy Pearse Doherty that it is no way to treat Members of the House to call out an order without circulating it. It is the least the Ceann Comhairle could have done, in my view, to show some respect for Members.

It is very disappointing that the Government is taking this approach. This measure is no substitute for an alcohol strategy. The steering group produced a draft strategy 18 months ago which contains proposals for minimum pricing, for a social responsibility levy and a number of other measures. It is very regrettable that the Government has been sitting on its hands in this regard and that we do not have a Government strategy. Alcohol misuse is a serious public health threat to the entire country which needs to be dealt with in a serious way by recognising the problem of off-sales drinking and the lack of supervision of drinking in the home which is providing the growing market for below-cost selling. The Government is actually subsidising the sale of cheap alcohol through the VAT costs involved. It should have been tackled in a meaningful way. This measure is not a meaningful way and it is nothing to do with public health. This is simply a revenue-raising issue which is likely to exacerbate the existing problems with alcohol and it is very disappointing.

The Taoiseach

Deputy Shortall is correct. This resolution provides for increases in the prices of alcohol products with effect from midnight. It is not meant to be an alternative strategy for alcohol nor is it a strategy for dealing with alcohol consumption. The item was on the agenda for today's Cabinet meeting but it is an issue that requires some considerable discussion both at Cabinet and in the House.

Therefore, as a result of the budget, it will move on.

A number of points have been made. Minimum pricing of alcohol is an issue that is being dealt with by the Minister of State at the Department of Health, Deputy Alex White. It was the subject of a court case in Scotland and it is also before the European Commission. Below-cost selling is a matter for the Minister for Jobs, Enterprise and Innovation, and he has it in his sights.

The question of a lid levy was raised by a number of people. The Minister has been examining ways of restricting the selling of cheap alcohol in off-licences, and particularly supermarkets that have pallets of the product. In recent budgets the Minister examined a proposal to apply a tax to alcohol sold in certain containers and outlets, the effect of which would mainly have applied to off-licences. When the proposals were examined they were found to be in breach of aspects of the relevant EU directive on alcohol taxation, which requires that such taxes are applied by reference to the nature and strength of the product rather than the means of packaging or the location in which the product is sold.

Prior to this year's budget, the Licensed Vintners' Association and the Vintners' Federation of Ireland submitted proposals to the Department, supported by legal advice, on the introduction of a lid-on levy. An examination by the Revenue Commissioners suggested the proposal would likely be in breach of the EU excise directive concerning the general arrangements for excise duty. Further discussion between the vintners and the Department of Finance on the matter resulted in a more focused opinion, covering what they believed was the issue highlighted by the Revenue Commissioners. The opinion of the Attorney General was sought on the revised proposal and the view expressed was that the legal sustainability of the measure was questionable and it would fall outside the framework of the directive.

There is a discrepancy in the figures because of the carry-over of measures contained in budget 2013, which amount to €500 million. There are social issues arising from this, as mentioned by Deputy Higgins. I could bring him to many lonely outposts that were once thriving public houses but for a variety of reasons are not any more. The Minister of State, Deputy White, has brought the matter before the Government for discussion today and it will be discussed here very shortly. Pubs do not provide food in many cases, and places may become popular for reasons such as location. There are constraints on the Government. The question is not about the 9% VAT rate. Deputy Dooley voted against it when it was introduced, and there was no pressure on the Minister to introduce it.

Deputy Timmy Dooley

I voted against the raid on the pension fund.

The Taoiseach

By the reduction in the rate from 13.5% to 9% the industry was sustained, and it has provided 15,000 new jobs. County Clare, no more than anywhere else, has seen a beneficial impact.

Deputy Eamon Gilmore

The Deputy was against it.

Deputy Timmy Dooley

I have a list of things that the Tánaiste was against.

The Taoiseach

It is a case of listening to those in the industry and seeing where there is a demonstrable result that can sustain the industry and provide 15,000 jobs. People are excited about this measure and the abolition of the travel tax, which should affect air fares. Deputy Troy is gone, but I had a famous Latin teacher from Ballynacargy, which he mentioned.

Deputy Dara Calleary

Vote Colm Keaveney.

The Taoiseach

The report will be on the agenda before too long.

Deputy Barry Cowen

He will not be drinking a pint with him.

The Taoiseach

Deputy Penrose mentioned minimum pricing, which is part of what the Minister of State, Deputy White, will be dealing with. As I mentioned to Deputy Shortall, this is not an alternative process.

Deputy Doherty asked about cross-Border comparisons. A cross-Border survey carried out by the Revenue Commissioners on 25 September 2013, using an exchange rate of €1 equals £0.8419, indicated that a 75 cl bottle of wine cost €9.25 here compared to €8.62 in Northern Ireland, with an alcohol product tax that is €0.40 higher here; a 50 cl can of beer cost €2.08 here and €1.94 in Northern Ireland, with an alcohol product tax that is €0.08 lower here; and a 70 cl bottle of whiskey cost €24.71 here and €23.05 in Northern Ireland, with an alcohol product tax that is €0.93 higher here.

An Ceann Comhairle

I thank the Taoiseach.

The Taoiseach

I will finish in two minutes. The rate of duty on beer was last increased in 1994 and the cider rate was increased at the end of 2001 to bring it in line with the rate for beer. The spirits rate was increased the following year and this increase was also applied to spirits-based alcopops. Rates for wine, with pro rata increases for certain fermented and intermediate products, were increased in the 2009 budget. There was a general decrease in rates for all alcohol products of approximately 20%, inclusive of VAT, in the 2010 budget. There was no change in 2011 or 2012. Excise duty on all alcohol products was increased in the 2013 budget, with €1 per bottle of wine and ten cent for each pint of beer and cider and a standard measure of spirits.

Beer consumption declined for all years from 2001 to 2012, with the exception of 2005, when a modest increase of 0.3% occurred. Cider consumption has decreased since 2007, with consumption this year estimated to be the same as 2012. With the exception of 2003, when there was a 20% fall in consumption, spirits consumption increased in the period up to 2007 and, following a decline in 2008 and 2009, increased by 11.7% in 2010, 3.2% in 2011 and 2.4% in 2012.

Ireland has the highest excise rates-----