Financial Resolution No. 1: Excise — Beer. - Financial Resolution No. 2: Excise — Spirits. Financial Resolution No. 3: Excise — Wine and Made Wine. Financial Resolution No. 4: Excise — Cider and Perry. – Dáil Éireann (25th Dáil) – Wednesday, 25 Jan 1989

The Taoiseach

I move Financial Resolution No. 1:

(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).

(2) That, without prejudice to the rate of duty on imported beer which contains not more than 0.5% of alcohol (being pure ethyl alcohol) by volume, 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 26th day of January, 1989, at the rate of £152.595 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 specified in section 67(1) of the Finance Act, 1986 (No. 13 of 1986).

(3) THAT 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 specified in paragraph (2) of this Resolution has been paid, be calculated, according to the original specific gravity of the beer, at the rate of £152.595 on every 36 gallons of beer of which the original specific gravity was 1,055 degrees.

(4) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provision of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

The Taoiseach

I move Financial Resolution No. 2:

(1) THAT in this Resolution—

"alcohol" means pure ethyl alcohol;

"the Order of 1975" means the Imposition of Duties (No. 221) (Excise Duties) Order, 1975 (S.I. No. 307 of 1975).

(2) THAT the duty of excise on spirits imposed by paragraph 4(2) of the Order of 1975 shall be charged, levied and paid, as on and from the 26th day of January, 1989, at the several rates specified in the Schedule to this Resolution in lieu of the several rates specified in the Seventh Schedule to the Finance Act, 1986 (No. 13 of 1986).

(3) 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 SPIRITS

Description of Spirits	Rate of Duty
Spirits of any description not mentioned hereinafter and imported mixtures and preparations containing spirits	£20.085 per litre of alcohol in the spirits
Imported perfumed spirits entered in such manner as to indicate that the strength is not to be tested	£18.277 per litre
Imported liqueurs, cordials, mixtures and other preparations in bottle entered in such manner as to indicate that the strength is not to be tested	£15.464 per litre

The Taoiseach

I move Financial Resolution No. 3:

(1) THAT in this Resolution—

"actual alcoholic strength by volume" means the number of volumes of pure alcohol contained at a temperature of 20ºC in 100 volumes of the product at that temperature;

"% vol" means alcoholic strength by volume.

(2) THAT the duties of excise on wine and made wine imposed by paragraphs 5(2) and 6(2), respectively, 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 26th day of January, 1989, at the several rates specified in the Schedule to this Resolution in lieu of the several rates specified in the Eighth Schedule to the Finance Act, 1986 (No. 13 of 1986).

(3) 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 WINE AND MADE WINE

Description of Wine and Made Wine	Rate of Duty
Still:
Of an actual alcoholic strength by volume not exceeding 15% vol	£2.04 per litre
Of an actual alcoholic strength by volume exceeding 15% vol	£2.96 per litre
Sparkling	£4.08 per litre
Wine and Made Wine whether still or sparkling of an actual alcoholic strength by volume exceeding 22% vol:
An additional duty for every 1% vol or fraction of 1% vol above 22% vol	£0.23 per litre

The Taoiseach

I move Financial Resolution No. 4:

(1) THAT in this Resolution—

"actual alcoholic strength by volume" means the number of volumes of pure alcohol contained at a temperature of 20ºC in 100 volumes of the product at that temperature;

"% vol" means alcoholic strength by volume.

(2) THAT the duty of excise on cider and perry imposed by paragraph 8(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 26th day of January, 1989, at the several rates specified in the Schedule to this Resolution in lieu of the several rates specified in the Sixth Schedule to the Finance Act, 1986 (No. 13 of 1986).

(3) 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 CIDER AND PERRY

Description of Cider and Perry	Rate of Duty
Of an actual alcoholic strength by volume not exceeding 6% vol	£0.93 the gallon
Of an actual alcoholic strength by volume exceeding 6% vol but not exceeding 8.7% vol	£4.03 the gallon
Of an actual alcoholic strength by volume exceeding 8.7% vol	£9.27 the gallon

Resolution No. 1 deals with the proposal to increase the excise duty on beer. The effect of the resolution will be to increase by 1p, including VAT, the price of a pint of beer. This will bring in £5.7 million in 1989 and £6.9 million in a full year. The effect of the change on the CPI will be 0.05 per cent.

The purpose of Resolution No. 2 is to give effect to an excise duty increase of 2p, including VAT, on a glass of spirits. This will bring in £3.2 million in 1989 and £3.5 million in a full year. The effect on the CPI is estimated to be 0.04 per cent.

The purpose of Resolution No. 3 is to give effect to an excise duty increase of 4p, including VAT, on a 75 cl bottle of table wine or made wine and will provide for a pro rata increase in the case of stronger wines and sparkling wines. It will bring in £600,000 in 1989 and £700,000 in a full year and the estimated effect on the CPI is 0.004 per cent.

Resolution No. 4 will give effect to an excise duty increase of 25p, including VAT, per gallon of ordinary strength cider or perry with pro rata increases for cider and perry in the middle and higher alcoholic strength ranges. It will bring in £500,000 in 1989 and £600,000 in a full year and it will have no effect on the CPI.

Mr. Dukes

The first thing which strikes me on looking at the information which the Taoiseach has given us is why have the Government gone to all the bother of putting another 4p on a bottle of wine and 25p a gallon on cider and perry for £1.1 million this year and £1.3 million in a full year. I am sure that if the Government had put their minds to it really seriously they could have squeezed at least that amount from this fictional revenue buoyancy they are going to have from this European money they think they might get, if they ever get around to having a plan. It seems to me that these are just more irritations than anything else.

I wonder why there is such a disproportionate increase in the duty on cider and perry, that is if there is going to be one in the first place. There is a penny on a pint, 2p on a glass of spirits, 4p on a bottle of wine and pro rata for stronger wines but 3p on a pint of cider. I wonder why an increase of that magnitude has been put forward for cider? Is it because there is a feeling that cider is in some way less desirable or less tolerable or is it because cider is supposed to be a more dangerous drink in some respects than spirits or wine?

I should also like the Taoiseach to tell us the total increases in the prices of each of these commodities in the past year. In relation to beer, for example, it is only a very short while since there was a substantial increase in the brewers' price, and unless I am mistaken I think there was another increase imposed by the brewers sometime during the past 12 months. I stand open to correction on that but I should like the Taoiseach to tell us what the increases have been during the past 12 months. If one takes all of these increases together the total revenue in 1989 will be £10 million and not an awful lot more than that in a full year. Will the Taoiseach indicate to us what effects the Government expects these changes to have on the consumption of each of these products and how that compares with what has been happening to consumption during the past 12 months?

The Taoiseach

First, with regard to wine and cider, I think the increase is just in the interests of fair play; if we are going to increase the cost of beer and spirits it is only fair that the duty on wine and cider should be increased also. One of the principal reasons for the increase on cider, and I think it owes its origin to history, is that because cider was very much an infant industry and a native industry it was always very gently treated by successive Ministers for Finance at budget time. The situation has changed very considerably and there has been a very considerable increase in the consumption of cider. The consumption of cider and perry increased by 5 per cent in 1983 and has more than doubled since 1980 so the feeling is that it is only fair that the duty on cider should be brought somewhat into line with the other alcoholic beverages. The excise duty on beer is more than four times that on cider and perry although beer is generally considered to be of a slightly lower alcoholic strength. So the present increase is really a step in the direction of correcting this imbalance in view of the very considerable increase there is in the consumption of cider. The increase on wine is simply on the basis of keeping a balance between the different forms of alcoholic beverages. If the duty on beer and cider is going up, it is only fair that the duty on wine should go up also even though the return is very small by comparison.

In regard to price increases by the trade, these increases represent a 26 per cent increase in the trade price of the pint since March 1986, which is almost three times the rate of inflation over the same period. I hope that information will suffice for the Deputy.

Mr. Dukes

Since last March or since March 1986?

The Taoiseach

Since March 1986. By comparison the amount the Minister is looking for is very small. In fact I would not be at all surprised if the trade felt they could absorb this themselves.

Mr. Dukes

Is that an invitation to them?

The Taoiseach

Yes. I would like to invite them to seriously consider absorbing this in view of the increases that they have awarded themselves recently.

Mr. D. O'Malley

I would like to agree with what the Taoiseach has just said because it strikes me that the increases under these four headings are very small indeed. In view of the very substantial non-tax increases in the last two years, and the figure given by the Taoiseach of 26 per cent in a little over two years is certainly very substantial, I would have thought that the small duty increases could have been absorbed. It is worth reminding ourselves that the increase proposed under Financial Resolution No. 6 is being absorbed in the sense that there were increases that would otherwise have taken place.

I am not terribly concerned about the duty increases here which are small and are not of much consequence one way or the other. What I am concerned about is a matter I raised here earlier today in relation to the use of the Provisional Collection of Taxes Act, 1927, which was mentioned in each one of these four resolutions. The last part of Financial Resolution No. 1 reads:

It is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927.

There is considerable doubt as to whether that Act is now constitutional. In fact, among lawyers there seems to be general agreement that the probability is that it is not constitutional and if any of these resolutions which are passed tonight are challenged before the Finance Act is passed, it may well be that they will be set aside. In this respect, I would like to refer to an article in the Dublin University Law Journal, 1985, by Mr. G. W. Hogan, one of the many brilliant people within our——

Mr. McCartan

He should have put his brains to some use.

Mr. D. O'Malley

I rather think he does. If the Deputy read some of his work, he would agree that he puts his brains to very good use, not least in this article where he argues very strongly that the Imposition of Duties Act, 1957, is unconstitutional and sets out the reasons, and he has been held to be right. The High Court has agreed with him in the recent case — McDaid v. Sheehy which was decided last week. He goes on then to argue that if the 1957 Act is unconstitutional, the Provisional Collection of Taxes Act, 1927, must also be unconstitutional for the same reasons which apply in this case.

I would like to read a short extract from what he has to say on page 139 of that journal:

The Imposition of Duties Act, 1957 is not the only statute in this area which appears to be vulnerable to challenge. The Provisional Collection of Taxes Act, 1927 permits the raising of existing taxes by Dáil resolution. This statutory mechanism is used to cover the interim period between the Budget and the enactment of the Finance Act for that fiscal year. Although certain safe-guards are built into this procedure — including a provision that such resolutions lapse after four months of the date of their taking effect unless reenacted by the subsequent Finance Act — it would nonetheless appear that this legislation does not conform to the requirement of Article 15.2.1º that legislation must be enacted by Act of the Oireachtas. A decision to raise taxes — even on a provisional basis — necessarily involves the "cancelling, repeal or alteration" of earlier financial legislation, and the 1927 Act thus appears to contemplate an unconstitutional delegation of power. The Government's decision to take steps to curb such tax avoidance schemes is in itself unobjectionable. However, the use of the Imposition of Duties Act, 1957 is the wrong way to achieve this objective.

Unlike the 1957 Act which has been found unconstitutional and which is a post-Constitution Act, the 1927 Act is a pre-Constitution Act and there is no presumption of constitutionality about it. The onus is on the State to prove its constitutionality if and when it is challenged. I think they will have grave difficulty in the light of Mr. Justice Blayney's decision in the McDaid case on the 1957 Act. Therefore, I would ask this House to consider at this stage whether it is largely wasting its time on this procedure. If the challenge takes place before the confirming Finance Act, there is a very strong likelihood, to put it mildly, of its being found unconstitutional.

An Ceann Comhairle

I hesitate to interrupt the Deputy. He raised this matter with me on the Order of Business and I indicated to him that he might raise it more appropriately now on the Financial Resolutions. I trust he will not go into greater detail which would be more appropriate to the debate on the budget proper. Perhaps the Deputy has now made his point.

Mr. D. O'Malley

I would have thought it was more appropriate to the debate on the resolutions because when they are passed that is the end of them, and I think it would be futile or perhaps academic to discuss them on the budget.

An Ceann Comhairle

I have facilitated the Deputy. This is extraneous to the subject matter of the Financial Resolutions.

Mr. D. O'Malley

I am just finished anyway but, with respect, I do not think it is extraneous because the Act is referred to in each of the resolutions and it is part of the subject matter of the resolutions.

An Ceann Comhairle

The Deputy has been facilitated in raising this fundamental issue.

Mr. D. O'Malley

We should hear from the Taoiseach on this point in the light of last week's decision. I put down a question to him for today but it was transferred and therefore I did not get an answer to it. It is necessary to have this information because the decision goes to the very root of the whole procedure we are engaged in at present.

The Taoiseach

I have absolutely no doubt about the position. I am quite satisfied that these resolutions are fully in accordance with the Constitution and will be of perfectly valid effect. The court case dealt with orders made by the Government. My understanding is that the objection to that procedure was that taxation should be a matter for the Dáil. In this case we are following the time-honoured procedure and are having the taxes imposed by resolution of the Dáil and subsequently confirmed in the Finance Act. The advice of the Attorney General is that these resolutions are quite in order and will have the force of law. He considers that the constitutional reference to Financial Resolutions in article 17.1.2º re-enforces their legality. That sub-article of the Constitution states:

Save in so far as may be provided by specific enactment in each case, the legislation required to give effect to the Finance Resolutions of each year shall be enacted within that year.

The practice of enacting the Financial Resolutions each year in the following Finance Act arises from that sub-article. Of all the procedures we engage in here, few of them have this very solid constitutional support. The provision is that the resolutions must be enacted into legislation within four months. We intend to do that but in the meantime there can be no doubt in any reasonable person's mind that these Financial Resolutions will be fully effective. As I have said, they are in a completely different category from the sort of Government orders dealt with in the High Court judgment. It seems they derive their strength directly from the Constitution. As long as they are enacted into legislation within the year, certainly within the four months laid down, there can be no problem about them.

Mr. McCartan

The issue in relation to these orders is not the minutiae advanced by Deputy Dukes in raising the cause of the discriminative cider gallon nor the almost daily worry of the Progressive Democrats with regard to constitutionality. The question is whether we in this House give support to the budget as advanced by Fianna Fáil in the Minister's speech here today. Deputy De Rossa has already signalled that we oppose fundamentally and on principle the thrust of this budget. We intend, at the very first opportunity when a vote is allowed, under Resolutions 1 and 4 which are now tabled for discussion, to oppose as best we can the proposals of this budget. Consequently, we will be calling for a vote on these resolutions and will be opposing the Government. We would ask all other Deputies in the House to consider doing likewise. We have indicated that Fianna Fáil have shirked on the major issues that face the economy, that face any Government — the issues of unemployment, job creation, poverty and a fair tax system.

An Ceann Comhairle

I hesitate to interrupt Deputy McCartan but he knows full well that we are dealing now with specific matters in respect of Financial Resolution 1 to 4. Members may elaborate at some great length when we come to deal with the Finance Bill and the date on the budget proper but this is not the opportune time to do so. I must insist that the Deputy confine his remarks to the resolutions under discussion, Resolutions 1 to 4, which are very specific.

Mr. McCartan

I accept your ruling, a Cheann Comhairle. We hold the view that the increases as represented here and conveniently converted into percentage representations of the impact on the consumer price index are insignificant but they represent a significant gesture as being an integral part of the overall strategy of Government budget and for that reason we cannot support them. I would say to the other two parties in opposition who have contributed that it is not in any way honourable to approach a debate, even on something as incidental as the increases represented here, by raising issues about the discrimination of the cider gallon on the one hand or by what appears to be the Progressive Democrats' position whenever they are afraid to say they are supporting the Government in their budgetary process of cutbacks, raising problems of constitutionality, relying on that great coterie of legal academics that Deputy O'Malley has so ably lauded here tonight. It is time for the Opposition in this House to take their proper positions and challenge on principle what is being advanced and not stand up half-heartedly, attempting to window-dress a position they are not prepared to take. The Workers' Party have indicated that they are prepared to take that position and will be attempting to translate it into a vote of protest against this budget.

The Taoiseach

I would like to ask representatives of The Workers' Party if there is any budget we could bring in here that they would not vote against.

Mr. McCartain

The answer to that is no.

The Taoiseach

These are the most gentle forms of taxation——

Mr. McCartan

The answer to the Taoiseach's question is absolutely no.

An Ceann Comhairle

Please, Deputy McCartan. The Deputy has made his point.

The Taoiseach

These are the most gentle forms of taxation that I can recall in my long time in this Dáil. We are doing no more than bringing excise duty on these old reliables into line with the increase in the rate of inflation or the cost of living, whichever way you like to put it. Whether the Deputy likes it or not they go to help finance increases in social welfare for the poorest and weakest sections of the community. The Deputy is forcing himself into a silly, ridiculous corner by voting against them. Does he think any decent man in a pub would object to paying one penny more for his pint of beer on the basis that it will go to help finance increases for social welfare recipients. The Deputy is really just posturing in this matter. If he wants to oppose the budget by all means oppose the general resolution but by opposing these minimal taxes which will have hardly any effect on spending by the general public and which will have minimal effect on the CPI the Deputy is marginalising his party.

An Ceann Comhairle

Before Deputy Dukes proceeds I wish to say that we are dealing with these Financial Resolutions under the provisions of Standing Order No. 41. Accordingly, a Member other than the Minister or the Taoiseach who is in possession is entitled to speak once only on each resolution. The Chair, however, on these occasions is prepared to allow a certain amount of informal intervention to enable Members to seek elucidation on each resolution. I trust that any reference would be quite relevant but detailed discussion should be reserved for the Finance Bill.

Mr. Dukes

I want most informally to seek some elucidation from the Taoiseach. I asked him what he expected would be the effects of each of these changes on consumption of the taxed items here. If I may be permitted a brief intervention, I cannot really see why everybody including the Taoiseach is getting into such a terrible paddy about these matters, if Deputy McCartan will allow me to use that word. It seems to me that with regard to at least two of these cases the increases are hardly worth the bother of imposing. I do not accept the Taoiseach's idea that fair play demands that because he is putting 1p on the pint and 2p on the glass of spirits he should proceed the rest of the way and put another 4p on a bottle of wine and 25p on a gallon of cider. That is a funny idea of fair play. What the Taoiseach is really saying is that he has allowed himself to be swayed by the argument that there must be an equality of misery. You cannot equate these things because, although I know that the Taoiseach may not personally be well acquainted with this, drinking a pint of beer is very different in many ways from drinking a glass of wine, even for somebody like myself who occasionally likes to do each of these. They are not drinks that compete directly with each other. Therefore it is not necessary, in the name of fair play or equality of treatment, to put up the tax on all simultaneously.

As far as making a contribution to social welfare increases is concerned, the £10 million mentioned will more than cover the actual net increase in social welfare expenditure that the Government have proposed, compared with their Estimates of last year.

We saw a very interesting thing in the Principle Features of the 1989 Budget about social welfare. You will find there that the Government say today that they are handing out £59 million in social welfare increases. How are they funding that? These increases are almost totally offset by £52 million worth of savings that the Government say they will make by comparison with the Estimates produced towards the end of last year. The Government have today decided to make £7 million more available for social welfare than had been——

An Ceann Comhairle

There is nothing about social welfare in these resolutions. The Deputy is deviating very widely from the Financial Resolutions before the House.

Mr. Dukes

Not at all, Sir. It is certainly not an action that justifies the increases, small as they are, in excise duties of the types mentioned here. We shall be coming back to this at a later stage. That whole operation in relation to social welfare expenditure is nothing more than a fraud and a sham. It is calling something by another name and making only £7 million extra available.

An Ceann Comhairle

The reference to social welfare is hardly in order now.

Mr. Dukes

It is certainly not an attack on poverty that requires——

An Ceann Comhairle

The Deputy has made a second speech on Financial Resolution No. 4. I think he will agree that the Chair has been generous with him. A mention would be appropriate, but second speeches are not in order.

Mr. Dukes

I have almost come to the end of my remarks, anyway.

Mr. Roche

In more ways than one.

Mr. Dukes

I just wanted to make that point. The Taoiseach should not be justifying these small, as he calls them, increases in taxes by referring to what the Government are doing in relation to social welfare.

The Taoiseach

Deputy Dukes has asked me about alcohol consumption. There is a good deal of information that I could give him about that, but the net effect of it all is that these duties will provide the amounts of revenue which I gave at the start. Let us look at beer consumption. That grew by nearly 3 per cent in 1988 over 1987. It is estimated that there will be a further growth of about 1½ per cent in 1989. The budget increase of 1p on the pint should have a negligible effect on consumption. Consumption of spirits grew by 6.6 per cent in 1988 over 1987 and a further growth of over 7 per cent is expected in 1989, after taking account of the budget increase of 2p on the glass. The effect of the budget increase is put at less than 0.5 per cent.

Consumption of cigarettes has been steadily declining in recent years due in part to public concern about the health risk imposed by cigarette smoking and partly to relatively high taxation. My own campaign as Minister for Health had, I am sure, an enormous impact on the situation when I introduced, for the first time in this country, statutory control and restrictions on the advertising of tobacco.

Mr. Dukes

Why did we have to do it all over again?

Mr. Roche

It did not have any effect on Deputy Dukes.

The Taoiseach

I was a pioneer in the world in my day. It is anticipated that 1989 will show a fall of over 1 per cent. The effect on consumption of the 4p increase in today's budget is estimated at less than .5 per cent.

Petrol consumption has been declining since 1982. In 1988 consumption fell by 0.5 per cent. The 1989 consumption will be similar to that of 1988. The budget increase should have little or no effect on consumption as the price at the pumps is not expected to change — in fact it will not change — nor will it have any effect on the CPI, I trust that that information will be sufficient for the Deputy.

To deal with Deputy Duke's point about the different types of alcoholic beverages, my own feeling is that, by and large, wine is consumed by the better off classes in our society whereas the pint of beer is generally regarded as the working man's drink. We would be subject to criticism if we increased the excise duty on beer and did not increase it on wine. It is as simple as that.

Dáil Éireann díospóireacht - Wednesday, 25 Jan 1989

Financial Resolution No. 1: Excise — Beer. - Financial Resolution No. 2: Excise — Spirits. Financial Resolution No. 3: Excise — Wine and Made Wine. Financial Resolution No. 4: Excise — Cider and Perry.

Dáil Éireann díospóireacht -
Wednesday, 25 Jan 1989