We are opposing both these resolutions. I should like to explain that we would not normally be inclined to vote against excise duty increases on beer or spirits, our philosophy being that these are avenues which are explored by all Governments in endeavouring to raise the necessary revenue to meet their commitments. In normal times, Deputies — and indeed the general public — are not too averse to some form of reasonable increases in the excise duty on beer and spirits. On this occasion, we believe that a different situation applies. First of all, there is the general state of the economy and the serious hardship that exists because of falling living standards. This is plainly universal.
As far as beer is concerned, this additional imposition on what is known as the working man's pint is particularly inopportune. Apart from that, we believe the Minister is proceeding in the wrong direction. For some time we have been proposing the idea of selective self-financing cuts in taxation. Everybody admits that our economy has reached a state of diminishing returns, that the decline and deterioration in the level of economic activity are so catastrophic that revenue yields are diminishing, and that higher rates of taxes are in many cases bringing in less revenue.
We believe it can be shown that in carefully selected areas a reduction in tax rates would stimulate consumption and therefore be self-financing: even though you impose tax at a lower rate, because of the increased level of consumption you would get in as much if not more revenue. That is why I spoke of diminishing returns, and when you begin to get diminishing returns it is time to consider the tax rates you are imposing. It would be quite feasible to reduce tax rates and get more revenue. At the same time, you would have the advantage of stimulating economic activity and increasing employment with accompanying benefits.
It is our contention that the experiments of the Minister for Finance last year were successful. There is a suggestion by the Minister that that is not so, but all the evidence at our disposal, both from replies to questions by the Minister of Finance, substantiated by statements from the trade, indicates that the cuts in tax rates which were made by the Minister in regard to beer and spirits were self-financing — even though the tax rates were less, the returns increased. I have before me a question by Deputy O'Kennedy to the Minister for Finance on 22 January last. The reply showed that the returns in regard to beer were substantially increased last year as against 1984. The same applies to spirits. The reply referred to excise duty and VAT.
In view of that evidence we thought the Minister would pursue the experiment further and that apart from beer and spirits he would have looked at other areas in which the same process might have been engaged in. This is particularly true because of our situation vis-à-vis the Border. There is no doubt that increases in excise duties here immediately deflect trade across the Border. Therefore, from the point of view of bringing trade back to this part of the country, lowering of duties on certain products would be beneficial. We are at a loss to understand the attitude of the Minister in this regard.
All the information at our disposal leads us to believe that lower taxes here would be self-financing and would help to generate economic activity and consequently employment. Therefore, we are opposing this resolution. The Minister is only piling on the agony by imposing increased rates of taxes which will bring him in less revenue than he would otherwise get. In present circumstances the duties in this resolution are unduly hard on the large section of our people who take a drink as a form of relaxation. That, though, is not my real case. It is that the Minister is wrong from the point of view of revenue to impose these increases. It would be far better if he had left the rates as they were, or even reduced them again this year as an experiment.
