Dáil Éireann díospóireacht -
Wednesday, 28 Jan 1976

Vol. 287 No. 4

Financial Resolutions. - Financial Resolution No. 3: Excise—Tobacco.

Minister for Finance (Mr. R. Ryan)

I move:

(1) That the duty of excise on tobacco imposed by paragraph 10 (2) of the Imposition of Duties (No. 221) (Excise Duties) Order, 1975 (S.I. No. 307 of 1975), shall be charged, levied and paid, as on and from the 29th day of January, 1976, at the several rates specified in the Schedule to this Resolution in lieu of the several rates specified in the Fourth Schedule to the said Order.

(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).

SCHEDULE.

Rates of Excise Duty on Tobacco.

Description of Tobacco	Rate of Duty
		£
Unmanufactured tobacco:
Unstripped or unstemmed:
Containing 10% or more by weight of moisture	the lb.	6.789
Other	the lb.	6.989
Stripped or stemmed:
Containing 10% or more by weight of moisture	the lb.	6.789
Other	the lb.	6.989
Manufactured tobacco:
Cigars	the lb.	6.817
Cigarettes	the lb.	6.843
Cavendish or negrohead:
Manufactured in bond	the lb.	6.889
Other	the lb.	6.914
Snuff:
Containing more than 13% by weight of moisture	the lb.	6.814
Other	the lb.	6.914
Reconstituted or homogenised tobacco:
Containing 10% or more by weight of moisture	the lb.	6.789
Other	the lb.	6.989
Other:
Hard pressed tobacco	the lb.	5.643
Other pipe tobacco	the lb.	6.606
Other manufactured tobacco	the lb.	6.831

Mr. Colley

May I ask the Minister to clarify, in the same way, the total amount of the increase in duty or tax imposed by the budget on tobacco?

Mr. R. Ryan

The current retail price of the 20 standard size plain cigarettes is 42p. The duty content is 28.1p, VAT 2.6p. With the 3 pence increase the retail price will rise to 45p, duty content 30.9p and VAT will rise by 0.2p to 2.8p. With the increase in VAT on 1st March, 10 per cent, the retail price will rise to 46.37p, duty content 30.9p, VAT content increasing by 1.4p.

Mr. Colley

On 1st March the retail increase would be how much?

Mr. Ryan

The price will be 46.37p which is 1.37p over the increase now taking place.

Mr. Haughey

The increase is 4.37p.

Mr. Colley

How much will the retail price be on 1st March?

Mr. R. Ryan

That is a matter to be determined by the order to be made by the Minister for Industry and Commerce.

Mr. Haughey

Let us get this straight. The effect of this budget is that the 20 package of cigarettes will go up by 4.37 per cent.

Mr. R. Ryan

Oh, no—not per cent.

Mr. Haughey

That is 4½ pence. Do not be trying to get away with this 3 pence. It is 4½ pence.

Mr. R. Ryan

I will not accept, and the Deputy cannot suggest, that any particular price of that order will apply. The Minister for Industry and Commerce will fix the appropriate price in due course. I am giving the House the appropriate excise and VAT increases as a result of these Financial Resolutions.

Mr. C. Murphy

Is the Minister bringing in something he does not think will be implemented?

Mr. R. Ryan

The Deputy can be assured everything will be implemented.

Mr. G. Fitzgerald

What will the increase be? We all realise that promises from the Minister can no longer be believed in by anybody. For example, we did not hear anything today about a reduction of the pension age to 66, did we?

Mr. R. Ryan

Fortunately, it is not many people listen to Deputy Fitzgerald. I have given the figures which relate to the Financial Resolution before the House.

Mr. G. Fitzgerald

Is the Minister saying what I did not hear him saying in the budget speech that the pension age was being reduced to 66 years?

Mr. Reynolds

It has been reduced more in three years than it was reduced by Fianna Fáil in 16 years.

Mr. G. Fitzgerald

Is it reduced today?

An Leas-Cheann Comhairle

This is not relevant to the Financial Resolution.

Mr. Nolan

Why did the Minister not give the usual rebate on hard pressed tobacco? Traditionally Ministers with the interests of the poorer sections at heart gave a rebate on hard-pressed tobacco. In this and every other budget he has introduced he has given no rebate. Would he also let me know the retail price of two ounces of hard-pressed tobacco? What will it be tomorrow and what will it be on 1st March next when the second budget is introduced.

Mr. R. Ryan

I can assure the Deputy the concession in relation to hard-pressed tobacco will continue. I did not quite comprehend some of the other questions raised by the Deputy. I think the major one was that in regard to hard-pressed tobacco. The concession still applies.

Mr. Nolan

That is not an answer to my question. That rebate was introduced by a Fianna Fáil Minister for Finance to help the poorer sections. The Minister now is increasing the duty on tobacco but he is not increasing the rebate. There is no rebate and the Minister cannot get around that.

Mr. R. Ryan

There are more tears shed about hard-pressed plug tobacco than the average rainfall in Ireland. It is a hardy annual.

Mr. G. Collins

The Minister is trying hard.

Mr. R. Ryan

The Deputy is trying hard. I have some interesting figures here. In 1966, 1967, 1968, 1969 and 1973 the rate of duty was increased but there was no corresponding increase in the rebate. I think it is time the hard plug rebate was given an honourable burial.

Mr. Haughey

Particularly as we are all hard pressed today as a result of the Minister's policies.

Mr. R. Ryan

The whole world is hard pressed today. I do not think the Deputy would be over-impressed by having a passionate debate on the issue of hard-pressed plug tobacco.

Mr. Nolan

Would the Minister answer the other questions I asked? What will the current retail price be tomorrow of two ounces of hard-pressed plug tobacco? The Minister had figures about whiskey, brandy, and wines but he forgot that one. Surely he could let us know that. It is not so difficult.

Mr. R. Ryan

The rebate granted to both manufacturers of hard-pressed and other pipe tobaccos will continue to apply at the existing rate of £1.1875 per lb. weight and £0.225 per lb. weight respectively. The duty increases in this Financial Resolution will advance the duty element on hard-pressed and other pipe tobacco by amounts varying from 3.2 to 3.7 pence per ounce which, taking account of that, should result in retail price increases between 3½ pence and 4 pence per ounce. Does that help the Deputy?

Mr. Colley

That is tomorrow, is it?

Mr. R. Ryan

No. It should not apply in relation to any stock that may be in and I suspect there is quite a stock of hard-pressed plug tobacco in. This will not take place until such time as hard-pressed plug tobacco will be taken out of bond and put on the shelves.

Mr. Colley

Legally that will be the price from tomorrow.

Mr. R. Ryan

Not unless some entrepreneur has failed to have a stock of hard-pressed plug tobacco in.

Mr. Colley

Assuming the entrepreneur has slipped up, the increase will apply as from tomorrow. What further increase will take place on 1st March?

Mr. R. Ryan

I doubt very much if the computer is yet sophisticated enough to work out the value-added tax rates on hard-pressed plug tobacco for the benefit of the rebate but, if Deputies give me a moment, I will consult.

Ruairí Brugha

Could the computer tell the House what the revenue on hard-pressed plug and other pipe tobacco was last year?

Mr. R. Ryan

I must say people are hard pressed when they ask questions like that. I do not think there are many of the Deputy's constituents who are depending on hard-pressed plug tobacco.

Mr. Callanan

It is 4 pence per ounce. It will be 8 pence per half-quarter from tomorrow on.

Mr. Power

Will the Minister and his colleagues take any action against anyone who overcharges? What will they do?

Mr. R. Ryan

If the Deputy has a constituent aggrieved because a shopkeeper charges too much for hard-pressed plug tobacco he has in stock today I can assure him the law will be rigorously applied.

Mr. Power

Why did the Minister and the Government take no action against those who changed the price on their petrol pumps three years ago?

Mr. R. Ryan

Action will be taken if illegal activities are brought to notice.

Mr. Haughey

Not alone is the Minister dealing unfairly with the hard-pressed plug tobacco but the very knife with which the man cuts his hard-pressed tobacco is going up.

Mr. R. Ryan

Deputy Haughey has made a cutting remark. He overlooks the probability that the consumer of hard-pressed plug tobacco is probably already in possession of a knife and does not need to purchase a new one. If he wants it sharpened I am prepared to do it free of charge.

Mr. O'Kennedy

We were told that the effective increase on a packet of cigarettes will be 4.37p. having regard to VAT and the duty elements. The Minister for Finance will leave it to the Minister for Industry and Commerce to fix the price. I presume he will not allow the latter to cut it down to an increase of 4p because obviously this would mean a reduction in VAT or duty levels. I assume we may take it that the minimum increase in March will be 4½p?

Mr. R. Ryan

No. The figure is 4.37p.

Mr. O'Kennedy

We only deal in pence and halfpence. Will it be 4p, 4½p or even possibly 5p?

Mr. R. Ryan

The Deputy will appreciate that there are many different types of cigarettes on the market. What we called the old standard cigarettes represent a smaller proportion of cigarettes purchased. It is not possible to say what the precise increase will be in respect of any particular brand.

Mr. O'Kennedy

I am referring to the standard packet.

Mr. R. Ryan

The order of magnitude in relation to excise and VAT elements will be 4.37p.

Mr. O'Kennedy

Will that be 4½p on the standard packet? Surely the Minister must know this now.

Mr. R. Ryan

I am saying what the excise and VAT elements will amount to. It will be 4.37p——

Mr. O'Kennedy

If there is an increase where will it go? If the Minister for Industry and Commerce says that the increase will be 4½p, where will the extra .13p go?

Mr. R. Ryan

That is a matter for determination. I would expect that there will be representations from the trade regarding the manner in which such a margin should be distributed.

Mr. O'Kennedy

Is it possible that it will go into the Minister's pocket in addition to what he is already taking?

Mr. R. Ryan

No. The only tax that may be collected is that passed by this sovereign Parliament, with the support of Deputies on the opposite side of the House as well as Deputies on this side.

Mr. Colley

May we take it that the order to be made by the Minister for Industry and Commerce will not provide in the case of a standard 20 cigarette packet for an increase of less than 4.37p?

Mr. R. Ryan

Yes.

Mr. Colley

Since the nearest unit of currency is 4½p, may we take it that the increase provided for will not be less than 4½?

Mr. R. Ryan

The 4.37p will apply to the standard cigarette. There may be cigarettes with such an amount of tobacco in them that the increase would not amount to 4.37p, even from the excise and VAT point of view. They could amount to something less. The tobacco content of every brand has to be considered in order to decide the appropriate price. That is why I am unable to say what the price will be in respect of any particular brand and I am sure the Deputy will appreciate that.

Mr. Colley

Is the Minister saying the standard packet of cigarettes may be doctored to contain less tobacco in order to get the price down?

Mr. R. Ryan

No.

Mr. Colley

Otherwise, will he confine his remarks to the standard packet because that is all we are asking him about. In relation to the standard packet, will he agree that the Minister for Industry and Commerce will not be able to provide for an increase of less than 4½p?

Mr. R. Ryan

Yes, that would be assuming that the manufacturer was not prepared to accept a lower profit margin. There are so many variables here that it would be inappropriate to specify the increase.

Mr. Ray Burke

The Minister has the privilege of representing a Dublin constituency somewhat similar to my own. He is aware that it is not unknown for a Dublin working man on a Friday to have a pint, a small one and to buy a packet of 20 cigarettes. He will have to pay about £1.15 for that——

An Leas-Cheann Comhairle

Has the Deputy a question to put on Resolution No. 3?

Mr. Ray Burke

Does the Minister consider he is keeping faith with the Dublin workers, and indeed workers throughout the country, when he considers what a pint, a small one and a packet of cigarettes will cost?

Mr. R. Ryan

Yes.

Ruairí Brugha

Will the Minister state what is the consumption of hard-pressed plug tobacco?

Mr. Dowling

Mick McQuaid will not know where he stands.

Mr. R. Ryan

He might be embarrassed by some of the people who are championing his cause. With regard to hard-pressed plug tobacco, in round figures the amount of such tobacco is three-quarters of a million pounds weight.

Mr. Briscoe

Will the Minister state what is the retail value?

Mr. T.J. Fitzpatrick

(Dublin Central): Will the Minister state if the same increase will apply to all brands of tobacco? There is far less tobacco in tipped cigarettes than in untipped cigarettes. Will the 3p increase apply irrespective of the brand?

Mr. R. Ryan

No, I have been making this point. For illustrative purposes all we can do is to give the figure in relation to what is called the standard size cigarette. We know that there are large size filters, small filters, king size and normal size cigarettes.

Mr. T.J. Fitzpatrick

(Dublin Central): In his statement the Minister mentioned that the increase would be 3p per packet——

Mr. R. Ryan

On the standard size.

Mr. G. Fitzgerald

While the Minister is saying that the increase will be 3p on 20 cigarettes, is he not aware that this increase will apply also to tipped cigarettes because it will be the nearest unit of currency?

Mr. R. Ryan

No.

Mr. G. Fitzgerald

Will the Minister tell us what the increase will be on the different home brands of tipped cigarettes? I say it will be 3p because it is the nearest unit of currency. If this is not the case, will the Minister tell me what will be the increase?

Mr. R. Ryan

The duty is imposed on a pound of tobacco. I would say that the Deputy's knowledge about the weight of any cigarette is as good as my own——

Mr. G. Fitzgerald

Possibly it is better.

Mr. R. Ryan

Maybe it is better but I have not the time available to weigh individual cigarettes. Maybe the Deputy has. This has been argued at some considerable length. The Deputies know well what the problems are. There are so many different kinds of cigarettes, with differences in thickness, weight, length and so forth, that it is not possible in the course of this debate to proceed to give the Deputies a price list. The Department of Industry and Commerce will be looking at the detailed contents of individual cigarettes. It is the pattern of the trade to change their brands and the contents of the cigarettes so frequently these days that it is not possible to give a full price list. I have given figures which illustrate the consequences of the increase in the rate of duty on a lb. of tobacco and how that will result in the price of a 20 packet of standard cigarettes.

Mr. G. Fitzgerald

Is the Minister not aware that for the different brands of tipped cigarettes the vast majority will be increased by 3p. They will take advantage of the situation the Minister has created.

Mr. R. Ryan

The Minister for Industry and Commerce will ensure that no advantage is taken beyond that which the law permits.

Mr. Ray Burke

He has not done a very good job in holding prices. What guarantee have we that he will hold the price in this case?

Question put and agreed to.