Michael Noonan
Ceist:3 Mr. Noonan (Limerick East) asked the Minister for Finance the progress, if any, which has been made towards the harmonisation of excise rates with those of our EC partners.
Ceisteanna — Questions. Oral Answers. - Excise Rates Harmonisation.
Last November the Commission put forward revised proposals on rates of excise duties. These proposals differed from previous proposals in that they allowed for flexibility. This flexible approach involves setting a minimum rate of duty for some products and a rate band for others.
Under the Irish Presidency, initial discussions on these proposals took place and useful progress was made in clarifying member states' attitudes to this difficult issue. However, in the absence of the Commission's complementary proposals on movement of goods and structures, member states were understandably unwilling to commit themselves on the rates issue.
At the most recent ECOFIN Council meeting on 8 October last, Commissioner Schrievner presented the remaining excise proposals. Since then, intensive discussions at expert level have commenced and Ireland is, of course, participating fully in these discussions.
Ireland's concern with the cost of the harmonisation package is well known in this House. This cost presents major budgetary problems for Ireland. Despite this, in the 1990 budget, I made a first step towards harmonisation by reducing the standard rate of VAT from 25 to 23 per cent by reducing excise duty on television sets, videos and table waters and by abolishing excise duty on records, CDs, matches and lighters. Further progress will depend on the outcome of the talks in the EC and on the general budgetary position.
(Limerick East): Have the Government a general policy on the Irish position on the reduction in excise duties?
Yes. The policy is to get down as close as we can as soon as we can, taking account of the budgetary constraints, to approximation rates of VAT as——
(Limerick East): I am asking about excise, not VAT.
The new proposals are more or less in line with what the EC have in place. There does not seem to be much room for manoeuvre at this early stage. It is very difficult to make any projection as to what rate might be agreed. Consequently suppositions would be purely hypothetical.
(Limerick East): Although I have not asked about VAT, I recognise that some progress was made by the Minister in the last budget and I hope he continues to make progress. Is it the Government's intention to move downward excise rates on hydrocarbon fuels, electrical goods, tobacco and alcohol or have the Government taken on board the arguments from some quarters that items such as cigarettes and alcohol are injurious to health and that while there would be a downward movement in relation to fuels and electrical goods, there would not be an intention to move downwards in relation to alcohol and tobacco? Have the Government sorted that out?
We have taken these matters into consideration. Other member states take the view in relation to certain items to do with health that the rates may not have to be reduced. Some member states are talking about increasing certain rates in certain areas. It is at a very early stage and the excise proposals only came through on 8 October. We are in the early days and I have no doubt the Deputy will return to it at a later stage when things become clearer.
(Limerick East): Would the Minister not agree that the dislocation of trade across the Border is due more to inequalities in excise duties than to inequalities in VAT or prices and that consequently it is not possible to make a decision on the 48-rule without making a parallel decision on excise rates or letting the Minister's intentions be known?
We seem to be going back to Question No. 1 in regard to the 48-hour rule.
(Limerick East): That is why the two questions were put down.
The Deputy is absolutely right when he says we must take both into consideration, but he does not expect to get a clear statement of taxation policy in advance of the budget. I made certain adjustments in excise in this year's budget which worked very well and I will be looking at various aspects in the next budget.
(Limerick East): I am not looking for specifics just policy guidelines.
The first indication of policy guidelines was this year's budget. Excise and certain other items were brought down and it worked well.