Dáil Éireann díospóireacht -
Wednesday, 15 Jan 1975

Vol. 277 No. 2

Financial Resolutions. - Financial Resolution No. 2: Customs and Excise—Spirits.

Minister for Finance (Mr. R. Ryan)

I move:

(1) That in this Resolution—"the Order of 1972" means the Imposition of Duties (No. 200) (Customs and Excise Duties and Form of Tariff) Order, 1972 (S.I. No. 220 of 1972);

"the Act of 1973" means the Finance Act, 1973 (No. 19 of 1973);

"the Order of 1973" means the Imposition of Duties (No. 208) (Beer, Spirits and Tobacco) Order, 1973 (S.I. No. 249 of 1973).

(2) That the duty of customs imposed by section 3 (1) of the Finance Act, 1920, on spirits described in column (1) of Part I of the First Schedule thereto, as amended by section 48 of and Part I of the Sixth Schedule to the Act of 1973, shall be varied, as on and from the 16th day of January, 1975, by the addition of the sum of—

(a) £6.851 to each of the rates of such duty chargeable immediately before that date in respect of every gallon of Perfumed Spirits entered in such manner as to indicate that the strength is not to be tested;

(b) £5.781 to each of the rates of such duty chargeable immediately before that date in respect of every gallon of liqueurs, cordials, mixtures and other preparations in bottle entered in such manner as to indicate that the strength is not to be tested;

(c) £4.282 to each of the rates of such duty chargeable immediately before that date in respect of every gallon computed at proof of spirits of any description not heretofore mentioned and mixtures and preparations containing spirits.

(3) That paragraph (2) of this Resolution shall not apply to—

(a) cider and perry mentioned at tariff code numbers 2207-254, 2207-262, 2207-426, 2207-434, 2207-627 and 2207-635 of the Schedule to the Order of 1972, or

(b) denatured spirits of any description mentioned at tariff code numbers 2208-215 and 2208-223 of the Schedule to the Order of 1972, or

(c) perfumery, cosmetics or toilet preparations of tariff heading number 33.06 of the Schedule to the Order of 1972 which are based on the spirits described in subparagraph (b) of this paragraph.

(4) That the duty of excise on spirits imposed by section 3 (2) of the Finance Act, 1920, as amended by section 48 (3) of the Act of 1973 and paragraph 5 of the Order of 1973, shall be varied, as on and from the 16th day of January, 1975, by the addition of the sum of £4.282 to the rate of such duty chargeable immediately before that date.

(5) That nothing in this Resolution shall operate to relieve from or prejudice or affect the additional customs duties or the additional excise duty in respect of immature spirits imposed by section 9 of the Finance Act, 1926 (No. 35 of 1926).

(6) 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).

Mr. Brennan

I should like to ask the Minister when does this extra charge come into operation?

Mr. R. Ryan

Forthwith.

Mr. Brennan

Is it chargeable tomorrow?

Mr. R. Ryan

Yes, as and from tomorrow.

Mr. Brennan

By the retailers and payable by the consumers?

Mr. R. Ryan

It will be charged on spirits leaving bond tomorrow and should not reach the consumer until such time as such spirits reach the retailer.

Mr. Brennan

The Minister is aware that the bond is sealed before a budget and this means that existing stocks are usually exhausted because people have to wait until after the budget to get deliveries. It is possible that many retailers and publicans will be collecting stocks tomorrow. Is there no uniformity with regard to the charge to the public? In my view this is a disgrace.

Mr. R. Ryan

I can understand the Deputy's difficulty, but short of saying that retailers should have no stocks on the day of the budget there is no way of determining how much of their stocks are attributable to what they had on the day of the budget and what they receive afterwards. Short of policing each retailer's premises to see what amount of stock was there and then policing the consumption thereafter, there is no way of determining the precise moment or in relation to what particular glass of the spirits served the new duty should apply. As the Deputy is aware, at present there is a most unfortunate industrial disput affecting the principal producers of spirits here so that the amount of floating spirits outside the bond is far less than it would normally be.

Mr. Brennan

Surely the Minister can appreciate—and he could have discussed this with the Minister for Industry and Commerce—that we could have a situation where one publican would have to charge the increase due to the fact that he had to get in new stock while another publican would not charge the extra for a week. This is most unsatisfactory and the consumer will be irate if he is asked to pay when he does not know when the increase should be applied. It is possible that a publican could have stocks to last a year.

Mr. Reynolds

Prior to a budget it is usual to hold spirits in bond. Spirits are held up for a different reason this year, because of the strike; but it is normal that spirits are not released from bond for a month or two prior to a budget.

Mr. T.J. Fitzpatrick

(Dublin Central): That practice was changed.

Mr. Reynolds

It was not.

Mr. Brennan

What does that prove?

Mr. Reynolds

That people, unfortunately, do not have stocks.

Mr. Brennan

I should like to remind the Minister that in 1948 when a Coalition Government reduced the price of spirits, tobacco and beer —of course they had to put it up by twice as much the same year—the retailers were immediately faced with having to sell their existing stocks at the reduced price.

Mr. Reynolds

I am against that argument. That is ridiculous. For donkeys years publicans have been enjoying increases. I am a publican myself and I know the position.

Mr. Brennan

I am making a case for the Deputy.

Mr. Reynolds

I do not need the Deputy to make a case for me.

Mr. Haughey

The budgetary table gives an Estimate of £6.2 million from this increase in taxation on spirits, but can the Minister indicate whether that is based on increased consumption, lower consumption or what effect does he think this duty will have on the consumption as distinct from the yield?

Mr. R. Ryan

The Deputy appreciates that past experience has been that when duties of this kind are increased there is a temporary reduction in consumption but, taking the overall year, it is expected that there will be no significant change. The revenue has been calculated accordingly.

Mr. Haughey

Is it on the basis that consumption will remain static and the £6.2 million is the net amount brought in by the increased duty?

Mr. R. Ryan

As the Deputy said on one occasion, it will probably still come up smiling.

Mr. Haughey

It is important that we know that the Minister does not estimate any actual increase in consumption; this is purely an increase in revenue brought in by the increased duty charged.

Mr. R. Ryan

Little change in consumption is contemplated.

Mr. Power

I should like the Minister to explain why he feels that an increase in the price of spirits would not mean a decrease in consumption when he felt a month ago that an increase in the price of petrol would lead to a decrease in consumption. The Minister mentioned that spirits would not increase in price only when they come out of bond but he made the same remarks in regard to petrol. Would the Minister give us a guarantee that there will be closer liaison between the Minister for Industry and Commerce and himself in this regard? The morning after the Minister announced the increase in the price of petrol the price at the pumps was changed and that applied to petrol that was not delivered that day but which the petrol stations had in stock. Those who complained were told to contact the Minister for Industry and Commerce who had, these people claimed, said it was in order.

An Ceann Comhairle

We are dealing with spirits.

Mr. Power

What will happen this time with regard to sprits? I see a comparison and I hope the same thing will not happen.

Mr. Brennan

The Minister may as well answer all of the questions together. I asked the same question regarding beer. The Minister gave a five-year average increase in the consumption of spirits. Would he give us the increase for last year, on which, I am sure, he is basing his estimated increase in revenue?

Mr. R. Ryan

The figure for spirits varies greatly. Last year—which, of course, was partly affected by the strike —showed an increase of 4.7 per cent over the previous year. In the five-year period there was an increase of 68 per cent but, in some years, the increase went as far as 14.7 per cent——

Mr. Brennan

4.7 per cent?

Mr. R. Ryan

4.7 per cent between 1973 and 1974. That is a provisional figure.

Mr. Brennan

That is a downward trend?

Mr. R. Ryan

That was a downward trend in respect of the year 1974, but the figure is provisional. There is an inclination on the part of Revenue to be careful with estimations and that figure could in fact be more buoyant when the ultimate figure is known.

In regard to Deputy Power's question, I do not profess to be a social scientist. I cannot determine all the causes of human behaviour but I think it is reasonable to say that a small consumption of spirits can sometimes increase a person's thirst; accordingly, even a small consumption can generate even greater consumption thereafter. The same does not necessarily follow in relation to the use of petrol in motor cars.

Mr. Brennan

On the question of increased prices, is it not correct that publicans can legally increase the price tomorrow?

Mr. R. Ryan

No.

Mr. Haughey

Can the Minister tell us if it was open to him to have any different level of increase on Scotch whisky, which used to come under the terms of the Anglo-Irish Free Trade Agreement; French spirits, such as brandy, and Irish-produced spirits? Under the new EEC régime could he have applied different rates of increases to different categories of spirits—home produced, British, EEC and, then, a fourth category outside of all of those again? Was that option open to the Minister and, if it was, why did not he avail of it in favour of home-produced spirits?

Mr. R. Ryan

The answer is very simple. In reply to the first part of the question, such an option is not open by virtue of EEC obligations. Accordingly, therefore, the second part of the question does not arise. There may be some variations by reason of the proof spirit of a particular drink but that is the only variation. There cannot be any variation on the grounds of home production or anything else of that kind.

Mr. Haughey

There is the fourth category which represents spirits produced not in this country, Britain or the EEC. I think rum is a particular case in point. Presumably, it would have been open to the Minister to have had higher rates on those spirits and, if so, why did not he avail of that option?

Mr. R. Ryan

I think there is an illusion abroad that we have total freedom in relation to the imposition of tariffs on goods which come from outside the Community. That is not so.

Mr. Haughey

Those are not tariffs.

Mr. R. Ryan

On an excise duty, which is comparable to a tariff because it is applied on national grounds and would be treated by the Community——

Mr. Brennan

Customs duty.

Mr. R. Ryan

Sorry, customs duty, because it would be treated by the Community as if it were a customs duty. The European Community benefits by free trade in the world because it exports more to the world than it imports from the world. Therefore the Community is reluctant to see any of its member states impose tariffs against products coming from outside, because this of course could have a retaliatory effect which could then boomerang against the European Community whose exports to the rest of the world might suffer as a consequence. Therefore we are now obliged to apply the one rate of duty to these items.

The Community is endeavouring to harmonise the structure of fiscal duty on all spirits on a Community-wide basis. That is not to say that they have yet arrived at the stage when the rate of duty would be the same but the structure as far as practicable must be harmonised. Therefore these disciplines will tend to contain the room for manoeuvre which we might have had previously. Certainly, at present the House may be assured that, if there was room for manoeuvre in the way in which Deputy Haughey suggests, I would have been only too happy to avail of it but it does not exist.

Mr. Haughey

Has the Minister given me a categoric assurance that there was no way open to him in which he could have favoured home-produced spirits against any spirits from any other part of the world imported into this country? Can he give me that categoric assurance that there was no element of favour which he could have afforded home-produced spirits against imported spirits?

Mr. R. Ryan

I can give the Deputy this assurance: that it could not have been done without raising more difficulties than would have been justified.

Mr. Haughey

So the Minister took the easy way out.

Mr. R. Ryan

No, it is not an easy way out; it is a reality. More difficulty would have been generated for this country by so doing than any possible gain would have justified.

Mr. Haughey

Therefore, it is not justified.

Mr. Colley

We intend to oppose this resolution. I should like to place on the record some of the reasons why we intend doing so. Apart from the content of the actual resolution itself, we wish to do so to underline our opposition to and disapproval of the basic stance of the Minister in this budget which we are convinced is going to do little, if anything, to stimulate the economy and get our people back to work.

Secondly, we wish to utilise this opportunity to record our disapproval of the fact that the Minister is now imposing this proposed taxation on top of a number of what could be reasonably described as mini budgets we have suffered in the past, one of them fairly recently and without even a vote in this House—the increase of 15p on the gallon of petrol.

Mr. Crowley

They could not be described as mini budgets either.

Mr. Colley

That is true. But the difficulty here is underlined even more by the fact that that increase was followed almost immediately by another substantial one and the Minister did not then reduce the increase he had applied, something that would follow logically from what he was saying. For these various reasons we intend to oppose this resolution.

Mr. R. Ryan

If Deputies opposite decide to vote against increased social welfare, that is their responsibility.

Mr. Colley

Would the Minister say that again?

Mr. R. Ryan

Deputies heard it and they do not like it.

Mr. Colley

Is the Minister saying that we are voting against increases in social welfare? Is that what he is saying?

Mr. R. Ryan

Yes.

Mr. Colley

Would the Minister try to correlate his figures? He proposes a deficit of £125 million on this budget. What portion of the revenue he proposes to get under this resolution does he allocate to what portion of the expenditure? By what process of logic does he relate this to social welfare? Would the Minister care to explain that to us?

Mr. G. Collins

Where did the petrol money go?

Mr. R. Ryan

I will explain it by putting a further question to Deputy Colley. I have told the Deputies already that there are so many imponderables and uncertainties in the world today that no point can be answered in a traditional way. Deputy Colley criticised the deficit but by how much would he say the deficit should be increased further so as to make up for the money he will not vote now to assist in the running of the country, to increase employment and to provide the money for social welfare?

Mr. Colley

If there was any credibility in relation to the budget we would deal with that argument but since the Minister cannot answer the question I suggest that perhaps the answer is that the money he is getting as a result of the increased cost of petrol and the other increases he has imposed have sunk without trace in a sea of inflation.

Deputies

Hear, hear.

Mr. O'Malley

Unquote.

Mr. Dowling

We take it that it would be illegal for a publican to charge the additional duties on whiskey that had already come out of bond.

Mr. R. Ryan

Yes.

Mr. Dowling

Therefore, as Irish Distillers are on strike, which means that Irish whiskey is not being supplied to publicans, would it not be illegal for publicans to impose the extra duty on Irish whiskey while the strike continues?

Mr. R. Ryan

I am glad to say that there are still quantities of Irish whiskey available. There is more than one source of Irish whiskey. All whiskey released from bond as and from tomorrow would be subject to the new duties but if there is Irish whiskey that has gone beyond the bond stage, this would not be subject to the increase.

Mr. Dowling

Since some brands will be held up until such time as the strike at Irish Distillers is terminated, would the Minister indicate to the public the brands of whiskey that can be bought at the old price?

Mr. Reynolds

Poteen.

Mr. R. Ryan

Any stocks that have already left a bonded warehouse should be sold at the old price. I hope no publican in the House will be tempted by the remarks of some Deputies opposite to break the law.

Mr. G. Collins

The Deputy from Roscommon has advocated that.

Mr. R. Reynolds

The Deputies are trying to hold their places on the front bench.

Mr. Molloy

Let the Deputy repeat what he said half an hour ago. Low standards.

Mr. Colley

It is in the interest of the public that we should have clarification of the position adverted to by Deputy Dowling. From what the Minister says am I right in assuming the position to be that any Irish whiskey produced by the firm that are on strike may not be increased in price until after the strike is settled?

Mr. R. Ryan

Anything removed from bond or imported as and from tomorrow will be subject to the new duty. Any product not falling into these categories should not be sold at a price to include the increased duty.

Mr. Colley

Therefore, any whiskey that emanated from the firm in question must have come out of bond before today in order to be sold at the old price and any whiskey or gin coming from that firm cannot be subjected to the new price until after the strike is settled. Is that not a correct interpretation of the position?

Mr. R. Ryan

Generally speaking yes. It would be wrong to say that there are no bonded warehouses here other than those under the control of Irish Distillers.

Mr. Brennan

Can the Minister say what amount will accrue to the Exchequer by way of VAT as a result of these increases? I asked this question last year and while the answer I was given involved a colossal amount this was not subsequently the case.

Mr. R. Ryan

The extra revenue includes the VAT element.

Mr. Dowling

The Minister has indicated clearly that there are certain brands of Irish whiskey which can be purchased at the old price but can he indicate the brands involved so that the public will be aware of the position?

Mr. R. Ryan

Advertising in the House would not be appropriate.

Mr. G. Collins

This is not advertising: it is consumer protection.

Mr. R. Ryan

I am touched by the Deputy's concern.

Mr. Dowling

The Minister has failed to answer the three questions I put to him, one of which concerns the cost of the social welfare stamp. Neither did he know when beer is brewed and now he cannot tell the brands of whiskey that the public are entitled to purchase at the lower prices.

Mr. R. Ryan

Any whiskey that has left bond already or which will not be imported from tomorrow onwards is entitled to be sold at the old price.

Mr. Dowling

This includes any whiskey emanating from Irish Distillers.

Mr. R. Ryan

Perhaps the Deputy would engage in a pub crawl tonight and ascertain what is available.

Mr. T.J. Fitzpatrick

(Dublin Central): Can we have some indication of what is the duty now on a glass of whiskey?

Mr. R. Ryan

The current duty is 19.15p on whiskey and 21.22p on brandy.

Mr. O'Kennedy

There is a 25 per cent increase in respect of whiskey and 40 per cent in respect of beer.

Mr. Dowling

Does this mean that the Government are getting twice as much for a glass of whiskey as the Arabs are getting for a gallon of oil?

Mr. R. Ryan

The Government do not get the money. It goes out again through the Exchequer for the benefit of the community.

Mr. T.J. Fitzpatrick

(Dublin Central): Therefore, the new duty is 23.83p on the glass.

Mr. R. Ryan

Yes, and there is the VAT element which rounds off the figure.

Question put:

The Dáil divided: Tá, 68; Níl, 64.

Tá

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Byrne, Hugh.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Corish, Brendan.
• Cosgrave, Liam.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• Dockrell, Maurice.
• Donegan, Patrick S.
• Donnellan, John.
• Dunne, Thomas.
• Enright, Thomas.
• Esmonde, John G.
• Finn, Martin.
• Fitzpatrick, Tom (Cavan).
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Patrick.
• Jones, Denis F.
• Kavanagh, Liam.
• Keating, Justin.
• Kelly, John.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerald.
• McDonald, Charles B.
• McLaughlin, Joseph.
• McMahon, Larry.
• Malone, Patrick.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Connell, John.
• O'Donnell, Tom.
• O'Leary, Michael.
• O'Sulivan, John L.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Spring, Dan.
• Staunton, Myles.
• Taylor, Frank.
• Thornley, David.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Níl

• Allen, Lorcan.
• Andrews, David.
• Barrett, Sylvester.
• Blaney, Neil T.
• Brady, Philip A.
• Brennan, Joseph.
• Breslin, Cormac.
• Briscoe, Ben.
• Brosnan, Seán.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• Fahey, Jackie.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzpatrick, Tom (Dublin Central).
• French, Seán.
• Gallagher, Denis.
• Gibbons, Hugh.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Hussey, Thomas.
• Kenneally, William.
• Lalor, Patrick J.
• Lemass, Noel T.
• Leonard, James.
• Loughnane, William.
• Lynch, Celia.
• Lynch, Jack.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Murphy, Ciarán.
• Nolan, Thomas.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Power, Patrick.
• Smith, Patrick.
• Timmons, Eugene.
• Tunney, Jim.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Tellers: Tá; Deputies Kelly and B. Desmond; Níl; Deputies Lalor, and Browne.

Question declared carried.