asked the Minister for Finance if he will account for the difference between the pre-budget estimate for excise duties of £1,260 million and the post-budget estimate of £1,216 million bearing in mind that he increased the projected yield from excise duties in the budget by £1.6 million net (increases £7.4 million, reductions to offset VAT £5.8 million).
Ceisteanna—Questions. Oral Answers. - Pre- and Post-Budget Excise Duties Estimate.
6.
The pre-budget estimate for excise duties was £1,260 million. Budget day reductions amounted to £69 million, consisting of £43 million to offset the impact of the increase in the low rate of VAT on certain commodities and £26 million reduced tax buoyancy. Budget day additions, exclusive of VAT, amounted to £25.3 million, including £5 million from changes in certain duty-free allowances. The net result of these changes was a reduction of £43.7 million on the pre-budget estimate giving the post-budget figure of £1,216.3 million.
Do I understand that VAT buoyancy was reduced on the budget estimate?
The figures mentioned by the Deputy in his question were only part of the overall changes. The pre-budget total for excise duties was £1,260 million. Budget excise changes amounted to £20.3 million. The changes in the duty-free allowances amounted to £5 million. The alteration in rates of VAT on beer and spirits to compensate for the change in the excises came to a reduction of £43.7 million and there was a buoyancy factor of £26 million.
Did the Minister reduce the buoyancy factor by £26 million?
We had a negative provision of £26 million to take account of the effect of those changes on the buoyancy of revenue.
The Minister took £26 million off in buoyancy.
Yes. The total effect was to move from the pre-budget estimate of £1,260 million to the post-budget figure of £1,216 million.
I find it surprising that the VAT buoyancy element should be reduced by that substantial amount. Is the Minister saying that reduction in the buoyancy element was because of changes made in the budget or was it based on economic projections for the year? Normally buoyancy in revenue is based on economic projections of movements in the economy. Is the Minister saying that that reduction in the buoyancy element was because of a revision due to changes made in the budget?
Yes. The figure of £26 million was the buoyancy effect of changes made in the budget.
In effect the Minister is saying that because of extra excise duties to bring in extra money to the revenue he reduced the buoyancy by £26 million, thereby suggesting he has reached the point of no return in excise duties.
No. If we take excise duties and VAT together the total effect was to have an increase overall in total revenue compared to the pre-budget estimates in respect of excise duties and VAT.
Perhaps this could be teased out on the Finance Bill.
Will the Minister state if the £26 million negative buoyancy was included in the £75 million mentioned on budget day?
It was included.