By agreement it is proposed to take the resolutions in the following order together; Nos. 1 to 5, inclusive, 9 and 10, 11 and 12 and 15 and 18, inclusive.
Financial Resolutions, 1980. - Financial Resolution No. 1: Excise—Beer.
That means that Nos. 6, 7 and 8 and Nos. 13 and 14, and 16 and 17 will be discussed separately.
The votes will be on those groups of resolutions.
The Minister should move resolution No. 1 and we will discuss the other four with it. When the five resolutions have been discussed the Minister will formally move the other four.
I move:
(1) That in this Resolution—
"the Order of 1975" means the Imposition of Duties (No. 221) (Excise Duties) Order, 1975 (S.I. No. 307 of 1975);
"the Act of 1979" means the Finance Act, 1979 (No. 11 of 1979).
(2) That the duty of excise on beer imposed by paragraph 7 (1) of the Order of 1975 shall be charged, levied and paid, as on and from the 28th day of February, 1980, at the rate of £90.121 for, in the case of all beer brewed within the State, every 36 gallons of worts of a specific gravity of 1,055 degrees, and, in the case of all imported beer, every 36 gallons of beer of which the worts were before fermentation of a specific gravity of 1,055 degrees, in lieu of the rate mentioned in section 39 (1) of the Act of 1979.
(3) That, subject to paragraph 4 of the Imposition of Duties (No. 246) (Beer) Order, 1980 (S.I. No. 49 of 1980), the drawback on beer provided for in paragraph 7 (3) of the Order of 1975 shall, as respects beer on which it is shown, to the satisfaction of the Revenue Commissioners, that duty at the rate mentioned in paragraph (2) of this Resolution has been paid, be calculated, according to the original specific gravity of the beer, at the rate of £90.121 on every 36 gallons of beer of which the original specific gravity was 1,055 degrees in lieu of the rate mentioned in section 39 (2) of the Act of 1979.
(4) 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).
(Cavan-Monaghan): The Minister in reply to a question by Deputy Peter Barry said that the increase in oil included VAT. What is the position regarding VAT on beer, spirits and so on?
In each case the figures proposed are VAT inclusive with the exception of wine.
(Cavan-Monaghan): There is a 16 per cent increase in the tax on a glass of whiskey and that includes VAT?
It does. In relation to beer, the increase in the excise duty will be 5.45 per pint on average with an additional payment of .55p in respect of VAT.
(Cavan-Monaghan): Can the Minister now tell us the tax content of the price of a pint of beer?
The pre-budget tax content was 16.9p and the post-budget content is 22.5p. The VAT was 4.7p before the budget and is 5.3p after the budget.
(Cavan-Monaghan): Has that to be added to the 22.5p?
Yes.
(Cavan-Monaghan): What was the pre-budget VAT?
The pre-budget VAT was 4.7p and the post-budget VAT is 5.3p.
(Cavan-Monaghan): Every individual who now purchases a pint of beer contributes 27.8p in tax. Could the Minister tell us the position in relation to an ordinary glass of whiskey?
The pre-budget duty was 34p, the VAT 8.7p and the post-budget duty is 48.5p and 10.2p VAT making a total of 58.7p.
(Cavan-Monaghan): It is pretty obvious that this drastic increase in the tax on beer and spirits and the consequent huge increase in the price of these products will make wage demands inevitable. We would all like to see wage demands kept to a minimum. The Minister, during the course of his speech, said that there could be no further wage demands this year. I put it to the Minister that he must be living in Greenland or that he must think we are a community of archangels. The vast majority of people will be worse instead of better off after the budget. The figures show that any person earning less than £8,000 a year will be worse off when he balances the benefits to be gained from the tax concessions against the increased cost of drink, cigarettes, driving a motor car plus the increase in the cost of living which I am told will be in the region of 5 per cent. Yet the Minister expects that there will be no claim for extra wages this year. That is wishful thinking. It is a repetition of last year when we were told that borrowing could be kept to around 10 per cent, when the Minister was told by the leader of my party that that was nonsense and that there was no way borrowing could be kept to that level. Last year the Minister was told that his budget was a budget of foreign inflation at about 15 per cent rather than 5 per cent, and that is as it turned out to be. It is not realistic or sensible to tell us that the price of drink will increase dramatically and at the same time say that we will not have further wage demands. Of course there will be wage demands, the Minister is inviting them.
What will be the new tax figure?
The net tax figure is 58p.
On a pint of beer? Are we not dealing with Financial Resolution No. 1?
(Cavan-Monaghan): We are dealing with Nos. 1 to 5 inclusive.
The new tax figure on beer is 15.7p, stout 16.9p and lager 18.2p. Those are the pre-budget figures. The post-budget figures and 20.9p, 22.5p and 24.7p.
And spirits?
The post-budget figure is 48.5p duty and 10.2p VAT.
The drinking public is being treated exceptionally harshly. There is no justification for extracting an additional 6p along with what is being extracted already. It may be said that a person can avoid paying this tax by not availing of the drink, but if everybody adopted this kind of discretionary attitude what would happen? Especially in rural Ireland, people gather in a public house to discuss the doings of the day and to meet neighbours, and the atmosphere is always conducive to friendly discussion. This is a traditional part of life in rural areas and also in towns, which the Minister is taxing out of existence by this sharp increase of 6p in the price of beer and 16p in the price of a glass of spirits. Is 16p the net figure or does it include VAT?
It includes VAT.
That puts the price of a half glass of whiskey in the region of 56p and possibly between 60p and, 70p in lounge bars which charge higher prices. Was any consideration given to the tourist industry by whoever was responsible for initiating these savage increases? Does the Minister consider that there will be an adverse effect on tourism?
Publicans are in general the best unpaid tax collectors in the country. They collect money without any charge on the State. It must be borne in mind that a way of life in rural Ireland is being taxed out of existence by reason of the savage increases imposed by this budget. Most people take a few drinks and they have to pay taxation much in excess of that paid by those who do not take a drink. The Minister proposes to raise £78.5 million extra from the drinking public, about £25 per head of the population in additional taxation. The Government attitude towards the drinking public is completely out of line. They are being asked to pay a disproportionate amount in taxation. Tax on beer and spirits was already high enough.
Is the Minister aware of the impact on the average household of the indirect tax increases which he is imposing?
The Deputy implies that he intends to tell me about the impact.
I should like to give the Minister a chance to answer.
The Deputy might as well tell me. I know he wants to do so.
Does the Minister mean that he has introduced this budget without any attempt to balance the gains or losses in regard to individual income groups using the published data which is available to him?
If the Deputy makes his case, I will make mine in reply.
The Minister's silence is suggestive, if not indicative, of the approach to this budget. Has the Minister studied the data produced on this subject and published by the Central Statistics Office which shows the balance of taxation and benefits for different income groups, depending on their family responsibilities? Alternatively, has the Minister approached the budget irresponsibly, giving income tax reductions of varying amounts which run up to over £2,000 per taxpayer for anybody over £20,000 but which involve no tax reduction for, by way of example, the agricultural worker with the statutory wage of £55.36 who gets no benefit from the budget but has to pay tax increases? I would have thought that before deciding on a budget of this kind the Minister would have examined the data available with a view to seeing how the balance of equity would be served by the budget. It would appear from the silence that he has not bothered to do that. He may not even be aware of the data which has been published. Would the Minister like to indicate his awareness of the existence of this data?
The Deputy seems to be asking a series of rhetorical questions. I will deal with these matters when I reply.
It is clear that the Minister is not aware.
It is no such thing. The Deputy has made a lot of cases by way of special pleading. That is his right and he can continue to do so. I assume he was referring to a single agricultural labourer and not a married one. When the Deputy makes his case I will reply.
I am taking the case of an agricultural labourer who is married with three children. He is not liable to tax in 1979-80 because, including the £175 allowance, he is not taxable up to £3,029 and his income is nearly £200 below that. Even if the Government had not given the £175 allowance he would not pay tax. Therefore he gets no benefit but he pays the indirect tax increases.
I am trying to establish the degree of irresponsibility, or responsibility, as the Minister approaches this. I am asking a simple question: is the Minister aware of the data published in this respect which is available and has he examined it or taken any account of the effect of this on different income groups?
I understood that by agreement we were taking Resolutions Nos. 1 to 5 at this stage. Those resolutions relate to beer, spirits, table waters and wines and do not relate to income tax which is dealt with in Resolution No. 13. I should like that matter clarified.
I am concerned to know if the Minister has bothered to find out the effect on households of different income levels of the increases proposed in these five resolutions. Data is available in this respect and I am trying to establish if the Minister is aware of its existence. So far I have not had much success. The Minister seems to know as little about it as his predecessor did some years ago in regard to a similar source of information in a television interview.
The Deputy should not either assume or be so presumptuous.
I have failed to get an answer from the Minister and, consequently, I must take it that he is not aware of the information and has not examined it.
The Deputy must be very happy with the budget.
(Cavan-Monaghan): The Deputy will not be very happy when he returns to his constituents.
My concern is that these taxes impose a burden on different households, depending on their expenditure on drink, which varies.
We do not drink a lot of table wine in the country areas.
(Cavan-Monaghan): The Deputy can tell his constituents that it was the historic document, the manifesto, that was the cause of it.
The magnificent document.
These duties, as part of fiscal or excise duties, as a whole will have a very regressive effect but the Minister does not seem to be aware of this. He does not seem to be aware that the data has been published. The Minister has shown that for the lower income group, which in terms of current purchasing power, would be about the level of the agricultural labourer, the proportion of income payable in the form of excise or fiscal duties which are largely made up in Resolutions Nos. 1 to 5 amounts to almost 15 per cent. In the case of people whose income exceeds £20,000 it falls to 4 per cent. By seeking to substitute these taxes for income tax the Minister has increased the burden of taxation, as far as one can make out from the figures published by the Government, on anybody earning less than £8,000 per year for the purpose of giving £2,000 per year away to anybody with £20,000 per year. Is that what Fianna Fáil Government is all about? Do they not care enough to examine the figures to see the effect of their actions? That is what I am trying to establish. It is a legitimate question and the Minister's silence appears to indicate that he is unaware of the data that is available and was published by the Government. He has entered into the budget giving these tax remissions which give nothing whatever to the agricultural labourer——
The Deputy is getting down to a debate on the General Resolution. We must keep to the terms of the resolutions before the House.
I am concerned with the taxes the Minister is imposing. They are strongly regressive being part of fiscal duties or excise taxes the incidence of which is about three-and-a-half times heavier on an agricultural labourer's household than it is on the household of a man earning £20,000 per year. The Minister has chosen this form of taxation to substitute for income tax. He is not giving any benefit to the low paid worker because he does not pay tax but he is giving £2,000 per year to those who have £20,000 per year already. I regard that form of shift in the burden of taxation as regressive and indicating the mentality of the Government. I am concerned that not alone are they introducing this regressive measure but they have not bothered to find out how regressive it will be or just how far up on the income scale one has to go with the budget before one gets any net benefit for the average household, taking a man, a wife and three children. It is the failure of the Minister to advert to the existing material to make any attempt to find out the effect of the budget which makes the budget grossly irresponsible. I would be interested to hear the Minister's comments on this.
(Cavan-Monaghan): Does the Minister anticipate that the drastic increase in taxes on beer and spirits will bring a demand for an increase by retailers because they will have more capital tied up in their businesses? In regard to the taxes on beer and cigarettes I should like to state that as a former Minister who was in charge of Tourism and Transport for a brief period I can recall the uphill battle we fought to promote the tourist industry. We faced all sorts of difficulties such as troubles on our island, doubtful weather and the fact that our alcohol was dearer than across the water. Last year I spent a short time in Scotland and discovered that the cost of drink there is substantially cheaper. Today's substantial increase will make drink a luxury. It will price us out of the tourist market when taken in conjunction with the increase in the price of petrol. I cannot see any future for our tourist industry. The director general of Bord Fáilte told us last week that we are in a very sensitive and difficult position. Now on top of all the other difficulties the Minister has imposed these crippling increases in taxation. In effect, he is telling the tourists that they will need to bring plenty of money with them and will get bad value here.
Will the Minister tell the House the amount of revenue these increases will bring in?
The increase on spirits will bring in an extra £14 million in 1980; beer, an extra £30.8 million; wine, an extra £4.6 million; cider and perry, a negligible £.06 million and table waters £7.3 million.
That £7.3 million will be collected from the children because the tax will be imposed on lemonade, orange and so on.
The Minister is expecting to raise an additional £60 million in the coming year from those items. For some time now Government spokesmen have suggested to the public that indulgence in drink and the like was neither good for the spirit nor the body and we were told that the Government intended leading us away from those practices. However, the Minister is now relying on those old faithfuls to balance his budget. Is it not true that that negatives the considerable publicity given to the iniquitous practices of indulging in drink, cigarettes and driving? The Minister is depending to a greater extent than before on these taxes. Can the Minister tell the House the effect these increases will have on the CPI? Although we would like to believe that people will reduce their drinking habits we know that the increases being imposed will mean less money for needy areas of household budgets.
The process of changing a practice that has been in existence for centuries will be long drawn out. I refer to the practice in many Irish households whereby money that should be channelled towards such essentials as food, footwear and rent is used to buy drink. Consequently, we regard the practice of increasing drink prices on the scale proposed in order to raise extra revenue to balance the budget to be negative in so far as the whole approach of the Government is concerned in relation to the moral and the social fabric of the community. The Government at least would like the people to believe that they were being led by this Government into a much healthier form of living than has been the case up to now. Despite expensive advertising campaigns, more reliance than ever before is being placed on these old reliables. I trust that the Minister will be able to let me know what will be the effect of these proposed increases in excise duty so far as the CPI is concerned.
I should like the Minister to comment on the implications of these increases for employment in the brewing industry. I represent a constituency in which there is located a brewery where good employment is given to many people all year round and where there is additional employment in the summer months. It has become fashionable to try to justify increases of this kind by saying that what is being done is for the good of the community as a whole and for the good of drinkers in particular. However, experience has shown that increased prices have little or no effect on the drinking habits of people who abuse drink but that they have an effect on the moderate or social drinker who has no difficulty in cutting back on his consumption of alcohol.
Increases in drink prices affect the tourist trade adversely and this, in turn, affects employment prospects. I am not suggesting that we should not be concerned in regard to the abuse of drink but that is a matter for the Minister for Health. Increases of the kind proposed here often have the effect of aggravating a situation in which there is abuse of drink in that the person concerned leaves the household budget short thereby creating tensions in the family which lead only to greater abuse of drink.
My main concern at this point is to ensure that the level and the standard of employment in the brewing industry is allowed to develop as our tourist trade develops and as people become more sensible in their drinking habits. I should like to have the Minister's observations on these points. Tourists visiting the country usually have a limited amount of money to spend and they will not increase that money to take account of increases in prices. That is why I say that, if prices are brought up to a level that affect severely the moderate drinker or the tourist, the trade will be affected and that means an adverse effect on employment not only in the industry but also in the tourist trade generally.
On a point of order, am I correct in understanding the position on the occasion of a budget to be that after the delivery of the budget statement and the speeches of the spokesman on Finance of each of the main Opposition parties, it is not usual for anyone to go into detail in regard to the proposals. Certain resolutions must be dealt with before midnight. Consequently should we not put those resolutions now and leave detailed debate for the general discussion on the budget?
There has been agreement, following the suggestion of the Committee on Procedure and Privileges to some changes in procedure. The House is not in Committee. Members are entitled to speak on the separate Financial Resolutions, apart from the General Resolution, but they must adhere strictly to the terms of the resolutions before the House. Deputies may speak a second time on any resolution for the purpose of elucidation on any point and the Chair will be as lenient as possible in that regard.
Will this change in procedure affect the situation in any way in regard to present stocks of petrol, beer or spirits?
We are discussing Resolutions Nos. 1 to 5, which deal with excise in respect of drink.
The Deputy may not be aware of the arrangements that were made to conclude by midnight. As the Chair has said, we are entitled to proceed with the resolutions within that time scale, having reached agreement in the general interest that the resolutions should be concluded by midnight.
The Chair would advise Deputies to keep strictly to the point and to be as brief as possible. There has been agreement to take the resolutions in certain groupings where possible. For instance we are taking together Nos. 1 to 5 while Nos. 6, 7 and 8 are being taken separately. Then, Nos. 9 and 10 are being taken together while Nos. 11 to 14 are being taken separately and Nos. 15 to 18 are being taken as a group.
Like Deputy Pattison, I am very concerned about these resolutions because in my constituency soft drinks and vodka are manufactured. These industries give a great deal of employment. At national level this matter is of grave concern. About 44,000 to 45,000 people are involved in the brewing distilling and licensed trades. Because of a number of price increases in beers and spirits in the last few months, there has been a falling off in that business. This latest increase in beers and spirits will seriously affect the trade.
Social drinkers will be hard hit by these increases. The price of drink in Ireland is, in my view, higher than in most continental countries. How do our prices compare with those in Britain, Spain and other European countries? I am very concerned about this because there is a danger that people who might come here on holidays will change their minds when they realise that the price of spirits, soft drinks and petrol is so high. Increases of this magnitude could hit our tourist trade. I could go a stage further: there is a danger that Irish people will decide to go abroad because it will be cheaper than staying at home.
The price of drink in this country is astronomical. I am very concerned that the price of soft drinks has been increased. This budget has hit the young person very severely through increases by way of VAT on soft drinks and dancing. There is a grave danger that many of these people may decide to take alcoholic drinks. Therefore, soft drinks should not have been affected by this budget. With cut backs in health and education young people have suffered enough.
An increase of 6.6p. on a one litre bottle of table water has been introduced today. That is a sizeable increase and I believe it was wrong to introduce it. The manufacture of soft drinks, the brewing of beer and the distilling of spirits are very sensitive trades. If these increases had been introduced five years ago there would have been an outrage throughout the country. No matter what the Government think, these are exorbitant increases. I can guarantee that they will be very unpopular all over the country. They are in excess of what the market can take at present.
I will take first the last point made by Deputy Enright, which has been re-echoed by a number of speakers. He said that, if this kind of increase had been introduced five years ago, there would have been an outcry. A number of Deputies referred to the percentage of the total tax in the price of drink. For the benefit of the House I should give some percentages both after today's budget and the budget mentioned by the Deputies.
After today's budget the total tax content of the retail price of beer is 47.6 per cent. In January 1976 the total tax content was 52.7 per cent. The Deputy will not miss the significance of those figures and dates. In March 1976 it was 49.3 per cent and in September 1976 it was 48.3 per cent. In May and September 1973 it was 48.4 per cent. In significant years, 1973 and 1976 and at specific times the actual duty content was proportionately higher—in one or two cases it was significantly higher—than it is now.
I will deal with spirits now because the pattern is not very different. The total percentage of tax, VAT included, after today's budget, with retail prices as they are now, is 52.4 per cent. In May-September 1973, after actions taken by the Government, it was 54.2 per cent and remained in excess of the figure I am talking about for some time. That is the first point that needs to be clearly put on the record and understood.
I will tell that to the fellows in the pub tonight.
I am just putting on record that even before today the percentage effect of the adjustments will be less, proportionately, than in the period 1973 to 1976.
They will go crazy about that in the pubs.
I said in my statement that because of the balance of payments situation the options open to us were in this area and for that reason we went for the discretionary area as much as possible. I gave my reasons for not going for the other areas. It has been said that these increases are cruel. Though they may seem to be cruel they are not in any way as cruel as they would have been in some other areas. The Government are satisfied we have gone for the right option.
I will deal with the point made by Deputy Pattison and others, the effect this will have on employment in the brewing industry. I have indicated that the incidence in relation to small breweries has been reduced considerably—we are continuing for a further year to protect the interests of the small brewers, by agreement between the Government and the small brewers, to the extent of £160,000.
I do not think that would apply to the brewery mentioned by Deputy Pattison.
It applies to the brewery in Kilkenny.
I wonder.
There was some concern expressed about the effects on tourism and I would point out that the duty-free facilities are still available for tourists coming from Britain and elsewhere. Deputy Enright spoke of comparisons in drink prices between Ireland and other countries from which tourists come. Retail drink prices, even pre-budget in Britain, in relation to whiskey in particular, compare very closely with the post-budget situation here, and who am I to say what the post-budget situation will be in Britain? The same applies to most other European countries from which tourists come. One should not overstate the impact in this respect. Most European countries have moved in a similar way.
How will the duty-free facilities be of any benefit to tourism? Tourists purchase when they are arriving and leaving. How can that be of benefit to the Irish manufacturers?
The case being made is that these increases will have a damaging effect on tourism. I am saying that the duty-free facilities are available to tourists and therefore the increase in duty here will not apply to what they will purchase, although, of course, they may purchase liquor outside duty-free areas.
That is a weak argument.
They will have to stock up when they are coming in.
Deputy FitzGerald looked at the total budget package, particularly the income tax scheme, and said he did not see any reliefs for farmers or farm labourers. He asked how did we overlook the impact on them. We have looked at the household budget survey and we examined very carefully the effects of the income tax provisions. As I said, we opted for the discretionary element in indirect taxation.
The Minister will be going into these matters on other Resolutions.
I have covered the ground fairly extensively on Resolutions Nos. 1 to 5.
What will their effect be on the price index?
It will be in the region of 1½ per cent.
Would the Minister indicate how he or his Department arrived at the conclusion that these increases were proportionate to income when the published data in this respect indicate that on the lowest incomes fiscal duties are three-and-a-half times as burdensome as on the highest incomes in the scale shown?
That is a general matter.
It is a very specific matter. It relates to the unfairness of the burden being imposed on different households.
I am not trying to interrupt the Deputy but he knows, just as well as the Chair, that there will be several opportunities to raise this specific matter. It does not apply to the duties on drinks.
It does; I am sorry.
It does not apply to drinks alone.
I am specifically asking about the effect of the duties on drink on households of different income levels. The Minister has suggested that they are proportionate to income. I am asking him, in the light of the figures in this particular publication, how he can say that when fiscal duties, which consist very largely of duties on drink and tobacco, drink in particular, show such an extraordinary degree of regressiveness, three-and-a-half times as heavy on the less well-off than on the better off. I recognise that some of this may be due to the effects of tobacco, possibly. It is arithmetically impossible to see how the fiscal duties could be so regressive if in fact duties on drink, which forms such a large proportion, are proportionate. I am challenging the Minister's statement which does not seem to be confirmed by the facts available.
I do not accept that.
Would the Minister then give me the figures on which he is basing it? I have put my cards on the table.
The Minister may have other opportunities——
It is my only opportunity of asking questions.
The Chair would like an easy life on these resolutions. There will be other opportunities.
The Minister seems to want an easy life because he is not answering the question.
I am putting Resolutions Nos. 1 to 5.
I should like to ask the Minister what is the position in regard to cider and aperitifs. I see he is proposing a modest increase of 10p on the tax element—that is on page 55—on the retail price of a gallon of ordinary cider. The change represents an increase of approximately 2p on the price of the ordinary flagon of cider. How does the Minister work that out? I am not too sure what he means. A flagon of cider is two pints. Is the increase in the tax element 10p on the pint?
Per gallon. It works out at roughly 2p per flagon, making the total excise duty content about 9p.
Do I take it then that the Minister is differentiating between, say, stout and beer, and cider?
I am, of course. But the Deputy wants the answer to the cider question now on which I can give him precise——
In other words, it is 2p per pint?
In relation to cider, yes.
Does the Minister consider it wise to have cider much cheaper in price than beer and stout?
The Deputy will be aware that last year was the first time it was increased. There is just one industry particularly involved here, which was one of the factors determining a decision one takes in this case.
I appreciate that but——
The alcoholic content is also very much lower.
Then I would ask the Minister to consider that anomalous situation.
I think I know what is the Deputy's concern but there are considerable factors in relation to alcoholic content——
There has been a tendency for young people to purchase cider in supermarkets because of it being much cheaper in price than beer and stout. When young people are commencing to drink they are far more likely to go for it because of it being more reasonable in price. Surely it is unwise to widen the gap further between the price of cider and that of stout and beer?