asked the Minister for Finance the steps he proposes to take to prevent the further deterioration of the economy in the Border counties as a result of the variation in the price of goods on either side of the Border.
30.
Ceisteanna—Questions . Oral Answers . - Border Price Variations .
29.
asked the Minister for Finance the estimated amount of revenue he expects to lose this year in the Border counties, as a result of the variation in the price of goods on both sides of the Border.
31.
Mr. Leonard
asked the Minister for Finance if he is aware of the serious effect the price differential between North and South of the Border is having on employment and business; and the steps he proposes to take in the matter.
32.
asked the Minister for Finance if he has made any assessment of the loss to the Exchequer as a result of cross-Border non-commercial business due to the difference in prices between the North and South in petrol, drink and other goods; and if he will make a statement on the matter.
: It is proposed to take Questions Nos. 29 to 32, inclusive, together.
I realise that price differences between here and Northern Ireland can cause problems for certain traders. However, our tax level and its distribution between the various sectors must be determined primarily in the light of our own needs and preferences rather than by reference to tax rates elsewhere. As I indicated in my budget statement, the Government are giving urgent attention to combating smuggling with all the resources at their command and steps have been taken to bring about improvements. Surveillance by customs officials has also been stepped up considerably. It is not possible to estimate the loss of revenue in Border counties or that due to non-commercial business arising from the difference in prices between the State and Northern Ireland.
Mr. Leonard
: Would the Minister not agree that in a documented submission made to him in March by a group of traders representing six counties in the Border region there was an audited certificate showing that the region was losing a weekly purchasing power of £2.8 million or an annual figure of £145.6 million? These figures have not been contested. Surely the Minister and his Department should re-examine the budgetary measures which are having such a harmful effect on the Border region.
: I have a very clear recollection of that submission and that is not the only meeting I have had with groups representing traders in Border areas. I appreciate the difficulties with which they are faced. Differences in the level of taxation have not arisen only during the past four months. These differences have been there for some time and the trade flows in question did not appear for the first time during the past few weeks. I appreciate that recent developments have made life more difficult for people in those areas. As to putting an exact figure on the extent of the difficulty, while I do not wish to dispute the work that went into that submission, by definition it is impossible to estimate what the loss of trade and revenue would be because we do not know the extent of the purchases in question.
Mr. Leonard
: Would the Minister not agree that the increase in the price of petrol sparked off this problem? During the past two months the Minister has had an opportunity to investigate the figures in that submission but I have not seen them questioned by the Government. If there were such a massive loss in any other area of the economy legislation would be introduced immediately to rectify the matter. I would ask the Minister to contact the Revenue Commissioners regarding the monthly VAT returns on petrol. He will find that the figures in the submission will be very close to those supplied by the Revenue Commissioners.
: I do not dispute the figures submitted by individual traders which show the difference between their level of trade now as compared with a period in the past. That is obviously a matter they can determine for themselves. We have two difficulties in this area. One arises from the level of legitimate trade across the Border which has gone on for some time and where price differences lead people to behave in particular ways and to buy their goods on particular sides of the Border. It is a two-way process. The other problem arises from the level of illegal trading or movement across the Border. We have increased the level of surveillance and begun to make progress in the number of successful seizures. We have seen in recent weeks an increase in the number of cases detected and in the volume of goods taken over by the customs authorities. The levels of our taxation are fixed by reference to far wider considerations than the particular problem we find in Border areas.
: Would the Minister agree, although it is a two-way process, that there has never been such a gap as there is now, with the consequent increase in the volume of traffic? Would he consider, since it would be impossible to have different rates of VAT or excise duties for selected counties, some mechanism similar to MCAs to try to remove the serious distortions which exist as a result of very high rates of excise duty, VAT and taxation generally? It would not necessarily be called a system of MCAs.
: I am not sure that the procedure Deputy Wilson has in mind would be appropriate because the MCA system applies to normal wholesale trade. The difficulty to which we are referring is at the ordinary retail trade level and I am not sure that this kind of system would be capable of application. Following submissions made to me by groups of Border traders, I am investigating a number of different ideas which have been put forward which may or may not be practicable. If measures can be put forward that will have a practical effect I will be extremely happy to implement them.
: The Minister has really answered my question as to whether he proposes to take any economic measures to alleviate the very serious problems Deputy Leonard has raised. Is he aware that in the early years of the Northern troubles the British Government created an enterprise zone for the hard-pressed traders in Belfast? I believe that very shortly a similar type of operation will be needed to help the hard-pressed traders in my own town of Dundalk and I would exhort the Minister to consider it in a serious fashion.
: The concept of an enterprise zone, mentioned to me some time ago by Deputy McGahon, would be seen more by way of compensation for developing the level of economic activity in these areas than as a direct counter to the problem raised in these questions. It is certainly an idea that will be given full consideration.
: Is the Minister aware that £150,000 sterling is purchased each week in County Donegal and used to buy goods in the Six Counties which are legally brought back to Donegal? Does he accept that as he increases taxes there will be a diminishing rate of return, especially in Donegal? Would he consider a special duty-free zone for Border counties where VAT could be reduced right along the board to allow the Border counties and the business in that area to survive, otherwise there will not be any Border counties?
: I have already stated my view about the role of differentials and tax levels in bringing about the kind of trade in question. In reply to the Deputy's first question about the purchase of sterling in County Donegal and other areas and its expenditure in Northern Ireland, I am sure the Deputy will agree that most of this expenditure is carried out by people who live adjacent to the Border and that it is very much a matter for those people to decide, within the limits of the rules governing the importation of goods at retail level, how much of any produce they buy and where. With regard to the third party of the Deputy's question I do not know if the setting up of a duty-free zone would eliminate the problem. Perhaps, if we did that, the effect of it would be to remove the Border to the edge of that zone and we would have the same difficulty we have at the moment.
: Is the Minister not aware, as Minister for Finance, that people from west Donegal and the islands off the west coast are buying sterling and using it in Northern Ireland to purchase their goods? I am appalled to learn from the Minister that he is not aware of this but, no doubt, while he is in Dungloe next week, he will see practical examples.
: I cannot help it if the Deputy chooses to put a completely erroneous construction on what I have said. The remark I made was that as far as I am aware — I have been told this by numbers of people from the Border areas — a large part of the expenditure to which the Deputy refers, is carried out by people who live in the Border areas. That is not for a moment to deny the fact that people from far outside the Border areas carry out purchases of those kinds. The Deputy has confirmed the point I made.
: Is the Minister aware that the traders in the Border counties estimate the loss of revenue to the Exchequer at £145 million? Is he aware that it is mainly as a result of the increase in the price of petrol by 36p a gallon that there are so many people now crossing the Border to buy petrol and doing their shopping while they are there? Would the Minister consider reducing the price of petrol by 50p a gallon, which would reverse the trend and would not result in any loss to the Exchequer at the end of the year?
: I am sure the Deputy will appreciate it when I say that I would dearly like to be in a position to reduce the price of petrol by 50p a gallon. What that would require in terms of modification in other taxes or expenditure is a completely different matter and I am not at all sure that the Deputy would be at one with me in resolving that part of the problem.
: The Minister's reply is too simplistic because when one crosses the Border at the moment and goes into any town the other side of the Border one sees a queue of cars from the Twenty-six Counties. Each person fills his or her car, presumably at a loss to the State of about £20 in revenue. Would the Minister consider investigating the matter to see if by reducing the price of petrol generally he would make up the revenue by those people buying their petrol this side of the Border?
: I have already said that Border traders, other interests involved and Members of the House have put a number of suggestions to me, including the one the Deputy has just made, which I am looking at. If I can find among those suggestions any measures that would effectively get over this problem, without, I must add, prejudicing the total revenue available to the State, I would be very happy to take those measures.