Financial Resolutions, 1992. - Financial Resolution No. 16: Excise Duties on Mechanically Propelled Vehicles – Dáil Éireann (26th Dáil) – Wednesday, 29 Jan 1992

Financial Resolutions, 1992. - Financial Resolution No. 16: Excise Duties on Mechanically Propelled Vehicles

The Taoiseach

I move Financial Resolution No. 16:

(1) THAT the Finance (Excise Duties) (Vehicles) Act, 1952 (No. 24 of 1952), shall, as respects licences under section 1 of that Act taken out for periods beginning on or after the 1st day of April, 1992, be amended in Part I of the Schedule thereto (inserted by the Finance Act, 1991 (No. 13 of 1991)):—

(a) by the substitution of the following paragraph for paragraph 1:

"1. Vehicles of the following descriptions not exceeding 500 kilograms in weight unladen:

(a) bicycles or tricycles (other than tricycles neither constructed nor adapted for use nor used for the carriage of a passenger), £20;

(b) vehicles with three or more wheels neither constructed nor adapted for use nor used for the carriage of a driver or passenger, £20.",

(b) by the substitution of "£50" for "£40" in subparagraphs (a), (c) and (d) of paragraph 2,

(d) by the substitution of the following subparagraph for subparagraph (a) of paragraph 3:

"(a) Vehicles constructed or adapted for the carriage of more than 8 persons which are owned by a youth or community organisation and which are used exclusively by the organisation solely for the purpose of conveying persons on journeys directly related to the activities of the organisation and which have seating capacity for—

(i) more than 8 persons but not more than 20 persons, £150;

(ii) more than 20 persons but not more than 40 persons, £220;

(iii) more than 40 persons but not more than 60 persons, £300;

(iv) more than 60 persons, £375.",

(e) by the substitution of the following subparagraph for subparagraph (b) of paragraph 3:

"(b) Vehicles (other than those referred to in subparagraph (c) of this paragraph) used as large public service vehicles within the meaning of the Road Traffic Act, 1961, and having seating capacity for—

(i) more than 8 persons but not more than 20 persons, £150;

(ii) more than 20 persons but not more than 40 persons, £220;

(iii) more than 40 persons but not more than 60 persons, £300;

(iv) more than 60 persons, £375.",

(f) by the substitution of "£45" for "£35" in subparagraphs (a), (b) and (c) of paragraph 4,

(g) by the substitution of "£120" for "£90" in subparagraph (d) of paragraph 4,

(h) by the substitution of the following paragraph for paragraph 5:

"5. Vehicles (including tricycles weighing more than 500 kilograms unladen) constructed or adapted for use and used for the conveyance of goods or burden of any other description in the course of trade or business (including agriculture and the performance by a local or public authority of its functions) and vehicles constructed or adapted for use and used for the conveyance of a machine, workshop, contrivance or implement by or in which goods being conveyed by such vehicles are processed or manufactured while the vehicles are in motion:

(a) being vehicles which are electrically propelled and which do not exceed 1,500 kilograms in weight unladen, £50;

(b) being vehicles which are not such electrically propelled vehicles as aforesaid and which have a weight unladen—

(i) not exceeding 3,000 kilograms, £150;

(ii) exceeding 3,000 kilograms but not exceeding 4,000 kilograms, £190;

(iii) exceeding 4,000 kilograms but not exceeding 5,000 kilograms, £245;

(iv) exceeding 5,000 kilograms but not exceeding 6,000 kilograms, £340;

(v) exceeding 6,000 kilograms but not exceeding 7,000 kilograms, £460;

(vi) exceeding 7,000 kilograms but not exceeding 8,000 kilograms, £580;

(vii) exceeding 8,000 kilograms £580 plus £135 for each 1,000 kilograms or part thereof in excess of 8,000 kilograms.",

(i) by the substitution of "£60" for "£50" in subparagraphs (a), (b) and (c) of paragraph 6, and

(j) by the substitution of the following subparagraph for subparagraph (d) of paragraph 6:

"(d) other vehicles to which this paragraph applies—

(i) with an engine capacity not exceeding 1,000 cubic centimetres, £92;

(ii) with an engine capacity exceeding 1,000 cubic centimetres but not exceeding 1,500 cubic centimetres, £12.50 per 100 cubic centimetres or part thereof

(iii) with an engine capacity exceeding 1,500 cubic centimetres but not exceeding 1,700 cubic centimetres, £14.50 per 100 cubic centimetres or part thereof

(iv) with an engine capacity exceeding 1,700 cubic centimetres but not exceeding 2,000 cubic centimetres, £16.00 per 100 cubic centimetres or part thereof

(v) with an engine capacity exceeding 2,000 cubic centimetres but not exceeding 2,500 cubic centimetres, £19.50 per 100 cubic centimetres or part thereof

(vi) with an engine capacity exceeding 2,500 cubic centimetres but not exceeding 3,000 cubic centimetres, £22.00 per 100 cubic centimetres or part thereof

(vii) with an engine capacity exceeding 3,000 cubic centimetres, £800

(viii) electrically propelled, £92:

Provided that where the rate of duty so specified in any case equals a number of whole pounds and a fraction of a pound the fraction of a pound shall be regarded as a whole pound".

(2) THAT the Finance (Excise Duties) (Vehicles) Act, 1952, shall, as respects licences under section 1 of that Act taken out for periods beginning on or after the 1st day of April, 1992, be amended by the substitution of "£90 or less" for "£70 or less" (inserted by the Finance Act, 1991) in subparagraph (b) of subsection (2) of section 1.

(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).

This resolution provides for a number of things. First it provides for an increase of about 20 per cent in the annual road tax for private cars with a new flat rate of £800 applicable to cars exceeding 3,000 cc; a new £20 flat rate of road tax for motor cycles and similar vehicles; increases in the rates of duty applicable to goods vehicles, with the duty on vehicles up to three tonnes unladen weight being increased from £100 to £150 and the duty on heavier vehicles being increased by about 35 per cent. There will be an increase in the threshold below which the option to pay road tax on a part-year basis does not apply, from £70 to £90. All these proposed changes will take effect from 1 April 1992.

Mr. Noonan

(Limerick East): I wish to thank the Taoiseach for his very full explanations. However, I should like to raise a couple of points for the purpose of information. In relation to the seven resolutions grouped together, will the Taoiseach say what the individual estimated yield or loss will be to the Exchequer in relation to each one? If it is of significance, will the Taoiseach indicate whether there is an increase or a decrease in the consumer price index? I am not interested in small amounts. Will there be any significant increase across the range of goods?

With regard to tobacco products, will the Taoiseach indicate in the first instance what, on a straight line basis, an increase of 1p on a packet of 20 cigarettes will yield and what it will yield on a multiple of 16p? What is being allowed for diminishing returns? I presume it is intended on the face of it to reduce the practice of smoking by putting on this increase. Have the Government taken the effect of the increase on the tobacco industry into account? For example, have they taken the advice of a company? Has there been any indication in the regular discussions which the company in Dundalk have with the Minister for Industry and Commerce of the loss of jobs which will ensue from a reduction in the practice of smoking, which seems to be the intention of the Government who based their case for this increase on health grounds? There is no point in one basing one's case on health grounds unless the practice of smoking is reduced.

I should like to ask the Taoiseach to agree to dedicate the proceeds of this tax to the health services. It seems there is a logic in putting extra excise on items like tobacco and cigarettes which are injurious to health. However, it logically follows that the revenue which derives from that should be dedicated, for example, to shortening the enormous waiting lists for elective surgery in our hospitals. I should like to hear the Taoiseach's views on why he believes the yield should be rolled into general Exchequer funding and why, even though it is justified on health grounds no attempt is being made to dedicate the proceeds of this increase to the improvement of health here.

Financial Resolution No. 2 deals with a minor item and all I need to know is the yield. Financial Resolutions Nos. 3 and 4 also deal with minor items and I do not see much loss to the Exchequer. They tidy up proposals which were made in the past. The removal of this excise over time is being done at the request of the trade rather than for any reasons of loss of revenue.

A number of questions arise from the reduction of excise on petrol. Is any attempt being made to differentiate between the excise on unleaded petrol and the excise on leaded petrol in this reduction? What will the cross effect on VAT be and will there be a parallel VAT decrease? Will this reduction apply also to diesel? In terms of fuel being environmentally friendly, I understand that diesel is a cleaner fuel than unleaded petrol and a vastly cleaner fuel than leaded petrol. If we were to follow the trend of previous budgets, there is a case in logic for reducing the imposition on diesel. The Minister mentioned a figure of 9p on a gallon of petrol but will there be a pro rata decrease for diesel?

With regard to road tax, I should like the Taoiseach, apart from stating the reasons for the incrase of 20 per cent and the ceiling of £800 on vehicles over 3000 cc, to give the range across the different powers of cars so that we can familiarise ourselves with the present schedule of road tax and the new schedule of road tax. In the case of vehicles which are used by people in business, for example, vans and landrovers which were free from excise up to now because they were used for commercial purposes, will he explain what the imposition actually is, given the yield and state if there are any exemptions? I presume the measure is being introduced because in the opinion of the Revenue Commissioners there was widespread abuse and people were using an exemption for the business community to buy small vehicles for private purposes. Is any exemption now available as a result of this measure to the business community who genuinely drive from their small country shops to the cash and carry on their half day and take the goods home with them?

Will the Taoiseach indicate if any progress has been made in Europe on the harmonisation of excise on motor vehicles? Will the first registration fee announced by the Minister in lieu of excise duty be at a fixed agreed yield and not subject to subsequent moves towards harmonisation? To put it more simply, is it now the position that all attempts to harmonise excise on motor vehicles in Europe have ended and is it being left to individual Governments simply to introduce a first time registration fee which would yield the same amount as the present excise duty and that there would be no necessity, because it is a national first registration fee, to proceed down the road towards harmonisation of excise duty?

Mr. Quinn

I want to express my appreciation at the way the Whips have tried to organise the debate this evening. I will try to be a concise as is conducive to good discussion and debate.

I do not think anybody can seriously argue with the tobacco provisions in the budget. As one who from time to time smokes a cigar, I think the case has been well met and I do not think there is any public disappointment with that. It will obviously hurt some people but it is designed in a way that nobody could seriously argue with it, and we certainly do not propose to so do.

I welcome the increase in the price of cider and perry because, many teenage cider drinkers are alcohol abusers. If market mechanisms make it less easy for people to acquire such products, then this is to be welcomed. Harmonisation of duties makes a certain amount of sense when one takes into account the fact that cider, like beer, is an alcoholic drink. Unfortunately I do not think this increase will make a lot of difference in terms of the difficulties that are caused by the illegal sale of cider. I would like to think that some of the additional revenue — perhaps the Taoiseach, in is capacity as stand in for the Minister for Finance, can tell us what the additional yield will be — would be used to intensify efforts to prevent the illegal sale to minors of all alcoholic drinks, of which cider is the most celebrated in its abuse.

I have nothing substantial to say about the budget as it relates to televisions, videos and camcorders. There is a certain degree of rationalisation here, but I want to devote a certain degree of attention to petrol, or hydrocarbons as it is properly identified in this proposal. It seems a long time to the Taoiseach — it must seem like an eternity — since we celebrated the Green Presidency. The jewel in the crown of Ireland's six month's temporary tenure of the Presidency of Europe was its green dimension, yet all rhetoric and everything that went with it, seems to have been abandoned, if not forgotten, by the gnomes of Merrion Street in that no differentiation is made — although I am subject to correction in the type of petrol that is to be reduced by 9p per gallon. I would have thought this an ideal opportunity, particularly when reducing taxes and since we are now converted to market mechanisms, some more obviously than others, to give a premium in terms of a reduced price for unleaded petrol as against leaded petrol. There is no reference to a differentiation between these two types of petrol in the resolution or in the Ministers statement. This will be a great disappointment to the many people in the community who share aspirations for a better environment and for a decrease in pollution.

I now turn to motor vehicles. Some private vehicles can be converted for commercial use. This was identified by the motor manufacturers. For example, the manufactured vehicles which could be used for private and commercial purpose. In order to make them commercial vehicles, the back windows were covered and, the back seats removed. By using such vehicles for everyday use people were clearly abusing the tax laws. Therefore, I have no problem with harmonisation in this case. However, it seems that what is being given with the one hand is being taken with the other — fuel costs are being reduced but motor tax is being increased by Financial Resolution No. 16.

Will any of the additional money from the increase in the sale price of cider and perry be made to the authorities to combat the illegal sales of alcohol to underage persons? Can the Taoiseach explain why the Government, if we pass this resolution tonight, still have the power without reference back to the Oireachtas to introduce a differential between leaded and unleaded petrol? In other words, do the Government have the executive administrative discretion to set a price differential between leaded and uleaded petrol after we vote tonight or must we attempt to amend this measure? Would the Taoiseach clarify the position in relation to the tax yield from road tax? How much additional money will accrue from the increase in road tax and what will be the cost of the reduction in petrol?

Mr. Gilmore

I do not think anybody can argue with the increase in the excise on tobacco or cider and perry, although I doubt whether these increases will have the desired effect or whether, continuing to increase the excise, it will have the effect of dissuading people from smoking or from buying cider. Very often underage people buy cider, and I say that with regret. It is probably more honest to say that these are fairly easy targets for raising revenue. I am sure many people will welcome the abolition of excise on televisions, videos and camcorders but they will wonder at the fact that while VAT is abolished on those items it is increased in items which would be considered more essential.

I want to concentrate on the hydrocarbons issue. I was surprised at the manner in which this proposal has been put forward. I recall that during the Green Presidency to which Deputy Quinn referred great play was made about the additional reduction in the excise duty on unleaded petrol which, it was claimed, would have the effect of encouraging more people to switch over to unleaded petrol. It is fair to say that, through the reduced price of unleaded petrol and because of the increased awareness by the public of the desirability of not using leaded petrol, there has been a very significant increase in the use of unleaded petrol and a decrease in the use of leaded petrol.

I am surprised that the opportunity which presented itself of a fairly significant reduction in the excise on petrol was not availed of in a way which would have given an even greater incentive to the public to switch over to unleaded petrol. For example, I would have thought that if it was decided not to reduce the price of leaded petrol, but to reduce the price of unleaded petrol it might have the effect of encouraging more people in a very decisive way to switch over to unleaded petrol.

I am surprised at this move for another reason. Lest the thrust of the Green Presidency be forgotten entirely after Ireland's term of Presidency, there is in the European Community increased discussion about the idea of introducing carbon taxes. The European Community is examining the "Greenhouse" effect on the world environment and is preparing for a world environmental conference in South America next year, where no doubt we will be represented and the Government will contribute to the many fine declarations on reducing CO2 emissions. At a time when there is discussion on the use of carbon taxes as a means of discouraging people from polluting the atmosphere, it is strange that we should introduce a proposal that will have the effect of reducing a carbon tax in a way that does not distinguish between the use of leaded and unleaded petrol. I join with Deputy Quinn in asking the Taoiseach to indicate whether there may be some way in which that distinction can be made even at this late stage. The policy adopted previously of trying to provide an incentive for people to switch over to using unleaded petrol should be continued and encouraged.

Mr. Deenihan

I join with other Members in welcoming the increase in the excise duty on tobacco and cider. I hope it will act as a deterrent and prevent many young people abusing tobacco and cider. However, if that is the purpose of the increase, it should be accompanied by a better educational programme.

I should like to address the increase in road tax. It is ironic that the Government who removed road tax in 1977, are now a party in Government who have introduced this cruel hike. To increase road tax by 20 per cent is farcical, especially when one considers the condition of the roads in rural Ireland. The rural population must cope with the worst roads in Europe. Indeed a recent report states that only 400 miles of the 2,400 miles of county roads in Kerry are up to standard. That is unfair and I find it totally objectionable. It would be one thing if this money was invested in county roads or in roads in the counties from which it was taken.

An Ceann Comhairle

The repair of county roads is a matter for the budget debate proper or the Estimates Department of the Environment.

Mr. Carey

The Deputy is referring to motor tax.

An Ceann Comhairle

The Deputy is speaking about road repairs.

Mr. Deenihan

The question of motor tax relates to them.

An Ceann Comhairle

The Chair makes his own deduction in these matters.

Mr. Deenihan

This cruel imposition will be resisted by rural people. If the Government are serious about doing something for rural Ireland they should consider the motorists. The Taoiseach is aware of the importance of a car in rural Ireland. Young people, in particular, will not be able to afford the additional 20 per cent increase in motor tax because they are being hit already with the highest insurance premiums in Europe in addition to the high cost of secondhand cars. If the Government had any consideration for people in rural Ireland they would have reduced motor tax by a reasonable amount instead of imposing this penal hike.

Mr. Kavanagh

I differ with some of my colleagues in their approach to the increase of 16p. on a package of 20 cigarettes. I heard a titter in the House today when it was mentioned that the increase in excise on cigarettes and tobacco was for health reasons. We should be honest and say that this increase will raise money to pay for the concessions in the budget. The increase may have the effect also of turning some people off smoking.

Mr. Quinn

Will the Deputy give them up?

Mr. Kavanagh

This is a means of raising money to pay for the concessions in the budget. If the increase was an effort to stop people smoking, why did we not impose a similar increase on alcohol. Many alcoholics do not drink cider and perry, they drink whiskey and beer. Indeed if the Minister for Finance felt that an increase in excise would improve health, he could have put £1 on the pint. The increase in the price of cigarettes will cause hardship to people who find it difficult to give up smoking. In some houses up to three people smoke. For some people on low incomes, smoking is unfortunately the only pleasure left to them. The point should be made that this imposition is to raise money. I take the point made by Deputy Noonan that if we want to improve health, we should fund the health services properly.

With the range of television channels available people may watch channels that carry tobacco advertisements at sporting events throughout the world. Tobacco companies sponsor sporting events and smoking is connected with what would otherwise be regarded as healthy sports. The tobacco companies have diverted the money they cannot spend on television advertising to advertising in areas where young people congregate. It would be helpful if an educational programme was introduced in schools before young people get hooked on smoking.

I do not disagree with raising money for social welfare by imposing 16p. on a packet of 20 cigarettes. However, the Government should come clean and not say they are imposing the increase for health reasons. If that is the reason the Government should, in conjunction with the health boards, spend more money on banning advertising that encourages young people to smoke.

Mr. Garland

I congratulate the Minister on increasing the duty on cigarettes; he has not increased it sufficiently. Perhaps in 20 or 30 years time people will not smoke. It is a most obnoxious habit which is bad for people's health. The banning of smoking would be counter productive because people would find a way around it. I agree with Deputy Kavanagh that it is an absolute scandal that tobacco companies are allowed advertise. All tobacco advertising should cease.

I will not comment on Resolutions Nos. 2, 3 and 4. However, I have considerable difficulty with Resolution No. 5 on hydrocarbons. Deputies Gilmore and Quinn referred to the need to introduce a carbon tax. This is very necessary and it will be imposed by the EC in the next year or so. Something will have to be done to conserve our dwindling resources of fossil fuels and at the same time reduce pollution. The Minister made some excuses for the reduction in the price of a gallon of petrol. He mentioned cross-Border trade and I accept that is a factor but he did not produce the figures to show its effect on tourism. I know it is a difficult question but petrol has been dropping in price in the past few weeks and people have noticed that each time they fill the tank the price is 50p or 20p less than previously. The Minister has given a very inadequate reason for the reduction in petrol prices; I should have thought that he would increase them. Depending on the Minister's reply, I would have very serious difficulty in supporting Resolution No. 5.

With regard to the section on motor vehicles, Financial Resolution No. 6, I should certainly go along with the proposed 12.5 per cent increase for so-called vans. We all realise that the practice that has been going on is quite a racket. I accept that the reduction of excise duty on smaller cars is another effort to differentiate between the gas guzzlers — the 2.5 litre and the 3 litre plus cars — and other cars. That is a gesture in the right direction.

I await the Minister's response, particularly in relation to Financial Resolution No. 5.

Mr. Finucane

Like the Deputy who spoke earlier, I do not smoke, but many people, despite reminders on cigarette packets that cigarettes damage one's health, continue to smoke. It is wrong to increase the price by 16 pence and say that is to deter people from smoking for the good of their health. I agree with the Deputy who said that the measure was really an exercise to raise revenue. Most Governments would shudder if everyone gave up cigarettes completely because that would constitute a tremendous loss in revenue. The argument put forward could also be applied to alcoholic consumption. The price of a pint is to be increased by a few pence, but we all know that excessive drinking can also lead to health risks. However, in relation to alcohol I do not ever hear people say that drink should be cut out or its consumption should be moderated by the Government because it is a health risk and often leads to rather serious complaints. I therefore support the Deputy who spoke previously. I consider the increase of 16 pence on cigarettes to be excessive.

Reducing the price of petrol by 9 pence a gallon is a worthwhile decision and if it helps to reconcile the differential between ourselves and those across the Border, so much the better. Tourists who come to this country often complain about the price of petrol. I am glad that positive movements have been made in that direction in recent times and the 9p reduction in the budget will enhance that movement.

I feel that a 20 per cent increase in road tax for cars is dramatic. In the heady days of 1977 the Taoiseach's predecessor actually abolished road tax. We have changed dramatically from those days. When road taxes were abolished in 1977 everyone with a Honda voted for Fianna Fáil because they did not need to pay road tax, but now the tax is going up in massive leaps. While I should not like to deal with the matter at length because it concerns another issue, Deputy Deenihan was quite right when he said that it is very hard to tell the hard-pressed motorist that the road tax is to be increased by 20 per cent when already motorists express criticism to their county councillors about the condition of the roads and say that if they had their way they would not pay any road tax. There will certainly be criticism of the Government's decision to go for such an excessive increase.

Mr. Ferris

I wish to comment on Financial Resolution No. 2, which concerns cider and perry. I did not intend to speak on this subject because there is much misunderstanding throughout the country about cider. I know that there is a view, perpetrated by the news media and other people, that somehow or other cider is a dangerous drink and is used to excess by young people. That view is not correct. Cider is a very specialised drink and is used by a certain category of people at a particular time of the year.

An excellent company in the South Tipperary constituency, the Showerings Bulmer enterprise, was last week awarded a certificate by the Minister for Industry and Commerce for being one of only 30 companies in Ireland to achieve the status of the ISO, 9002. The company employs more than 400 people in the production of a drink that comes from apples and other natural produce. I am afraid that that drink is being put into a category in which it will have to compete with the glamour of beer drinking. I am worried that the company will not be able to survive and could have difficulties in maintaining their workforce if cider is treated in the same way as beer.

Showerings Bulmer take a very responsible attitude towards the criticism extended in the news media about the drinking of cider. It is easy for the news media to say that youths get into trouble at cider parties. However not one cider container was ever found at the scene of a cider party when any of those incidents were investigated, but innumerable containers of different beers were found at those sites. Showerings Bulmer has spent a lot of money on the production of a video which is used responsibly in schools to ensure that young people are made aware of the danger of over-drinking not only their own product but all alcoholic drinks.

It is most unfair to single out a specific product that has a limited market but has still managed to survive in very difficult times because of its excellence and because of its historical connection with apple growing in South Tipperary and other parts of Munster. I caution the Taoiseach and the Government that they may be treading on dangerous ground in merely lumping cider in with other products and treating it as another alcoholic drink that is abused. In my opinion, it is not, and although I agree with my party spokesperson about rationalisation of taxation in that area, we should always treat like with like, and in this instance a particular product is being treated unfairly. I have said that in the past in relation to this subject and it is appropriate for me to say it again now. If I did not, I would not be responsible nor would I represent the views of many people in my constituency, people who understand the product and know when and how it is used and why it should be used properly.

I should like to make passing reference to the motor vehicle changes. While any reduction in excise duties on the importation of cars is to be welcomed, it is a pity that whatever good has arisen from that will be eliminated by the 20 per cent increase in road tax. Many working people can never aspire to ownership of a £12,000 car in order to benefit from the reduction in VAT, but many people going to work in reasonably good old cars still have to pay the 20 per cent increase in road tax. The cost is significant when taken against the wages those people earn and the opportunities they have, limited as they are, to travel to work. We should have concern for those factors when we are trying to assist people to be as mobile as possible.

Mr. Rabbitte

I wish to briefly refer to a point that——

An Ceann Comhairle

I would concur with the Deputy on the aspect of brevity. The debate must conclude at 9.40 p.m., and I am sure that the House would wish the Taoiseach to respond to the many queries that have been put to him regarding the Financial Resolutions. There are other Members seeking the opportunity to speak, so brevity must be the keynote.

Mr. Rabbitte

I shall be very brief. No one has referred to the sleight of hand involved in the commitment to abolish excise duty on motor vehicles. Such was the expectation of the people when the merits of the Single Market were being bruited about. In the absence of Gay Byrne, a good friend of the Taoiseach, being available to tell the people about this, it should be highlighted that when the Single Market was being sold to the people they were led to expect that one thing from which they would benefit was the importation of cars.

Now we have what is a feature of budgets generally, the endless capacity of the servants of the Minister for Finance to devise a budget that seems to give away concessions with one hand but claw them back with the other. When the people hear that the Minister is obliged to abolish the initial excise taxes, but that he proposes to introduce a first time registration fee, they will know that this is classic sleight of hand and that no benefit will accrue to people who have long been punished by excessive excise taxes in this area.

Because of the state of the motor industry the Minister proposes minimal remedial interim arrangements whereby on his own calculation there will be a benefit of some £300 to somebody buying a new car at a market value of £12,000. That, coupled with the 20 per cent increase in road tax which is excessive and unjustifiable, will be a great disappointment to many people. As Deputy Finucane remarked, it shows that we have come the full circle since 1977 when an election was won on the abolition of the road tax, one of the elements of the election package at that time.

I cannot see how anyone can make a rational argument to oppose the increased duty on tobacco, but there is an inescapable truth in what Deputy Kavanagh said. There is no doubt that working class people will be impacted on most severely as a result of this increase. Employment will also be impacted on in Dundalk for example. When the anti-smoking campaign was first embarked upon, we were promised replacement industries for the gradually diminishing tobacco industry. Steps have not been taken to provide those replacement industries. On health grounds I am convinced of the merits of this tax but as Deputy Kavanagh said the truth is that it is a revenue gathering exercise which will impact very severely on working class people who are addicted to this life killing drug but who will not be weaned from it as a result of it being made more expensive. It will merely impact on their disposable income.

Mr. Kenny

I agree with Deputy Ferris's remarks with regard to cider. The Minister is behind the times. The volume of cider being consumed by young people is on the decline. In any bar there is a complete range of powerful lagers on sale costing £2 per bottle and more. It is these lagers to which young people are now turning. Cider has been singled out here perhaps as a sop to our failure to deal with the drift of young people into excessive alcohol consumption.

There has to be a limit on the price of tobacco and cigarettes. Every health conscious person will agree with the Minister but the consequences of such a tax in working class areas is that people will buy more lottery tickets in the hope of making a big kill. A further consequence will be the glamorisation of tobacco and smoking. Tobacco companies have always been successful in attracting new customers by advertising, associating tobacco with major sporting events and they will continue to do that. While smoking may be prohibited its prohibition will have the effect of glamorising it.

Mr. Browne

(Carlow-Kilkenny): The Minister says that he is removing the remaining duties on larger televisions. Do I take it that it has gone on small televisions?

The Taoiseach

Yes.

Mr. Browne

(Carlow-Kilkenny): As a non-smoker who feels smothered by smoke from cigarettes and cigars in a crowded room I must defend cigarette smokers. While smoking harms health people with a longing to smoke should be able to smoke. We live in a democracy. We could take the extreme view that since cars probably kill more people than smoking we should tax cars off the road. In a democracy we should allow people the choice to smoke or not to smoke. I agree that it is easy to tax tobacco because it is the agreed perception that it is harmful to health, but we should not tax smokers out of existence.

Tomás Mac Giolla

As one who is addicted to this life killing drug——

Mr. Spring

——and surviving.

Tomás Mac Giolla

——as my colleague so roughly puts it, I would make the point that the Minister is obviously looking for money. We cannot tax out of existence everything that is a danger to health. Over the years I have been repeatedly told on radio and television programmes that sugar is very bad for my health, that potatoes are very bad for my health, that bread is bad for my health, that butter is worse and salt is dreadful. Unfortunately, I am very strongly addicted to every one of those products. I love sugar and use a lot of salt. I smoke as well. I could die tonight. Would it be from too much salt, too much sugar or cigarettes?

Mr. Browne

(Carlow-Kilkenny): From too much tax.

Tomás Mac Giolla

For years I have been listening to how bad cholesterol is but suddenly I have discovered that there is good cholesterol and bad cholesterol. Then I was told about polyunsaturates and their great advantages. They have been shot down now, and one must not touch them. Now it is monounsaturates which are good. I do not know what a saturate is, not to talk about an unsaturate and the "ploys" and the "monos" mean nothing to me, but this is what we are all listening to. Are they taxable? The Government could make a fortune——

The Taoiseach

We are not taxing those in this budget.

Tomás Mac Giolla

——on butter, sugar and salt, but cigarettes have been picked on because it is a useful way to collect money.

Many speakers have strongly made the point that people under stress need some kind of drug or something to do. People are increasingly moving to cannabis and stronger drugs. If people are pushed from cigarettes they will find other things. If we go to the extreme of banning cigarettes, they will be imported illegally and the Government will not get a penny. There are always ways of getting a product. The Minister should make a decision whether he wants to ban cigarettes because they are a danger to health or if he just wants to collect money. What the Minister is doing now is collecting money from many people who are unemployed, who increasingly smoke cigarettes, drink alcohol and take other drugs. The Minister should be honest and say he is just taxing these people and trying to take more money from them. He is not trying to save their lives. He will not save my life anyway.

Mr. Rabbitte

I do not think he would want to.

Mr. McCormack

I refer to the 20 per cent increase in road tax. It is a very difficult pill for hard-presssed motorists to swallow, particularly in areas like County Mayo where the county roads have deteriorated to such an extent that it is hardly possible to travel along some of them in a motor car. In some parts of Connemara where the roads are particularly bad people cannot take their cars up side roads, so they must park them and walk to their houses. In some cases priests, doctors and essential services to old people have to be cut out entirely because of the impassable state of the roads. An increase of 20 per cent in road tax is not acceptable to people who have to endure these conditions.

Can any system be devised whereby road tax collected in a county could be retained there for the repair and upkeep of county roads? All EC grants are used for national primary and national secondary roads and bypasses. The county roads are being neglected because county councils are not adequately funded. People might have a lesser objection to an increase of 20 per cent in road tax if there was a possibility that the money would be retained within the county to be spent on the repair and upkeep of roads in their area. It is difficult to continue paying road tax to central funds when the central Government are not providing enough money to county councils for the repair and upkeep of roads. The Taoiseach might consider some system which would encourage people to pay their road tax.

Mr. Spring

I wish to raise two aspects. The increase in road tax strikes me as a very severe hike on the amount people are already paying. The Taoiseach will have memories of abolishing road tax at one time.

The Taoiseach

I did not do it.

Mr. Spring

Not personally.

Mr. Rabbitte

The Taoiseach was otherwise preoccupied at that time.

Mr. Quinn

But he was collectively responsible for it.

The Taoiseach

The Deputy has got it wrong again.

Mr. Spring

In the interests of harmony I withdraw that allegation, if it is considered such.

The Taoiseach

Now that the Deputy has started he could go on withdrawing.

Mr. Spring

We will let the Taoiseach go out quitely. The average motorist will respond strongly to the increase in road tax, for the reasons outlined by Deputy McCormack. The condition of county roads in rural Ireland is such that they are a source of constant complaint. In many areas school buses are refusing to travel along some routes because of the condition of country roads. The Minister for Finance might address this question. There was no mention in his speech of additional funding for roads. People could possibly accept this increase in road tax if they could see a return in terms of spending on the roads.

Obviously there is a choice in relation to cigarette smoking and other habits that might endanger one's health. For many people on low incomes and many unemployed people the increased price of the packet of cigarettes will be a very severe burden. Effectively it is probable that it will more than wipe out any compensation in social welfare benefits. I am not sure how serious the Minister for Health is in the advice she offered to the Minister for Finance. The increase will be very badly received by smokers, who may well look for other options and find less expensive pastimes. The unemployed enjoy their few cigarettes and they will be very angry at what must be the largest increase for many years. In the past there was some outcry at increases of 3p or 4p but this increase will be very badly received.

Mr. Carey

Will the Taoiseach indicate the total yields from excise on petrol, excise on motor vehicles and annual road tax for 1991? Will he say how these increases will affect the total yield? Would the Taoiseach accept the necessity to consolidate all these measures?. The grouping together of these resolutions might indicate that in future the Department of Finance will group these areas together to give one yield. On the one hand they are concentrating on the green effect while on the other hand there are penalties on rural people.

Mrs. T. Ahearn

I regret the Minister for Finance has deemed it necessary to increase excise duty on cider. I speak with first-hand experience of the industry since Bulmers Showerings are located in Clonmel. Like my constituency colleague, Deputy Ferris, I was there last week when they received a very prestigious prize. They provide enormous employment in our area. The industry is environmentally friendly. The firm are very efficient and they treat their employees extremely well. They have been very beneficial to our local economy in that they continue to increase the numbers employed and employ local people. Much of their raw material is bought locally, providing futher employment

Recently representatives from the cider industry made a submission to the Committee on Crime and they buried the myth that cider is the root of all evil. They presented us with very convincing statistics indicating that the consumption of cider by young people is not as extensive as we are led to believe. The cider industry are very often blamed in the wrong. They are responsible as an industry in that on a monthly basis they circulate a news letter to schools and public bodies to ensure that their product is not abused.

I fear that this increase in excise duty will have a negative effect on the industry nationally and particularly in south Tipperary. I was given the impression at the beginning of the budget speech that the Minister for Finance was taking very seriously the problem of unemployment and that the budget would have job creation as its core theme. Surely this will do nothing for the creation of jobs within the cider industry from which my local community benefit enormously. I hope it will not have a negative effect on employment in south Tipperary.

The Taoiseach

I am awash with questions and information. It is very difficult for me to decide which queries I can answer because I shall not have time to answer them all.

First of all, let me deal with one question raised about dedicating revenue either from tobacco tax or from cider/perry tax to a specific health education purpose. Nothing of that kind is in accord with good financial administration or taxation practice. All the revenue must go into a central pool and be allocated from there in accordance with specific priorities. It would be a complete distortion to take tax from one section and allocate it to another. That is just by way of general comment.

I think Deputies are completely misreading the position in regard to cider. First of all, cider and perry consumption has been growing very strongly throughout the eighties, having grown by nearly 20 per cent in 1990 and a further 29 per cent last year. I do not think that is any reflection of abuse, not at all, but simply a reflection of better products, more attractive marketing and advertising. Traditionally cider and perry have been taxed at a very low rate having been regarded as a poor man's product or drink and because their consumption was very small. That position has changed completely and their consumption is growing substantially. Cider is very lowly taxed in comparison with other alcoholic beverages and something will have to happen about that. The Minister's proposal really springs from Community proposals. For example, there is a proposal within the Community that, under the 1992 regime, cider products would be charged at 50 per cent of the national wine rate. That would mean that, instead of the present 93p per gallon, cider would go up to £4 per gallon. That is what the European Commission is proposing. The cider industry is very perturbed at that and the Minister is very sympathetic to their case, but let us be realistic. As I have said, cider is rated much lower than any corresponding beverage and is growing substantially in its consumption and share of the market. Taking all those facts into account what the Minister proposes here is very reasonable indeed. Certainly it is very reasonable compared with what the EC Commission has in mind and, I am quite certain, will not have the slightest effect on employment.

On the question of leaded petrol, the reduction will apply to both leaded and unleaded petrol. The differential will be maintained. That is not unreasonable. It is one thing, when one is increasing the tax to give a differential to leaded petrol but, when one is reducing the rate of duty, unleaded petrol will still be cheaper to purchase though the differential will be the same. Things are moving considerably in favour of the use of unleaded petrol. The differential will continue but I might add that consumption of unleaded petrol is now almost 30 per cent and still increasing. Catalytic convertors are becoming increasingly standard in cars.

Mr. Quinn

They are known as political Progressive Democrats.

The Taoiseach

I am afraid that is a tendentious remark. They will be mandatory from 1 January 1993. Therefore, the use of unleaded petrol will increase even further. The position in regard to the relative consumption of leaded and unleaded petrol is moving very favourably indeed and this particular proposal will maintain the differential.

A question which has excited much comment here is that of motor vehicles generally. I should like to give a simple picture of that position. I will deal with 1992 only because to deal with a full year would only complicate the position. The reduction in hydrocarbons, petrol, will cost the Exchequer £13 million. The changes in excise duties on motor vehicles will reduce receipts to the Exchequer by £27.5 million and the changes in the car tax will yield extra revenue of £27.5 million. Therefore the changes in excise duties on motor vehicles and so on will exactly counter-balance the increase in car taxes. It will be seen that the motorist is not losing anything there. In fact the overall package will mean a loss of £13 million to the Exchequer. Slice it how one may, the motorist in 1992 will gain an extra £13 million at the expense of the Exchequer. There will be ups and downs within the motor industry but, by and large, the Minister, in an excessively generous gesture is handing back to the motorist public this year a net saving of £13 million. The changes being effected are sensible, particularly in view of preparedness in regard to the European Community and the single market.

The fascinating argument about cigarettes, health and the cost of cigarettes to employed persons has been going on for a very long time. I do not want to be politically tendentious about it but the Government of which Deputy Spring and others here were members imposed a 10p increase on a packet of cigarettes four years in succession, 10p on the packet of cigarettes each year. So let us have no crocodile tears or smoke about this.

Mr. Spring

I will bring in the files.

Mr. Carey

The Taoiseach has the same reply every year.

The Taoiseach

Cigarettes and beer were always known in budgetary terms as the old reliables. It is very easy to wax indignant here about them. My view is that the increases imposed by Ministers for Finance from time to time are accepted with a certain amount of resignation by the smoking public. Such increases have nearly come to be expected as a matter of course. I am a great authority on this question of the cost of cigarettes in relation to heatlh. When I was Minister for Health I had occasion to go into it in great detail. There is no doubt that increasing the price of cigarettes and tobacco has only a minimal effect as a disincentive. In fact the fall-off in consumption built into the figures this year is represented by 2 per cent only diminishing returns. I doubt if even that is realised. Therefore, there is no doubt that Ministers for Finance consistently increase the cost of cigarettes not for health reasons but to raise revenue. I am quite astonished that somebody should point the accusing finger at the present Minister and say: "Oh, you are behaving dreadfully; all you are doing here is raising money". That is what a budget is all about, to raise money.

(Interruptions.)

The Taoiseach

Let us not castigate a Minister because he imposes a tax to raise money. The extraordinarily surprising thing about this budget and this Minister is that, in a number of areas, he is actually giving away money, eliminating taxes.

(Interruptions.)

Mr. Carey

The Taoiseach forgot to say that there was a VAT increase on repairs to cars.

The Taoiseach

For those genuinely concerned about this question of smoking I want to make it absolutely clear that cigarettes are disastrous. Cigarettes are bad, are totally detrimental to health. Let us not be under any illusion about that. We should do everything in our power, first of all, to stop young people starting to smoke. That is the real target we should have. It is not very easy to get people who are addicted to smoking to stop, although we may get them to reduce consumption. Certainly, all our efforts should be concentrated on preventing and stopping young people from taking on the habit, because once they take it on it is very hard to desist.

Mr. McCormack

What about the county roads?

The Taoiseach

I do not think changing the price or increasing the taxes on any of these products affects consumption very much, particularly in the case of cigarettes. What is important and what I would concentrate on is stopping the advertising and glamourising of smoking. That is where the real effort should be made in regard to combating the pernicious evil of cigarettes and all tobacco from the point of view of health.

Tá

Ahern, Dermot.
Ahern, Michael.
Andrews, David.
Aylward, Liam.
Barrett, Michael.
Brady, Gerard.
Brady, Vincent.
Brennan, Mattie.
Brennan, Séamus.
Briscoe, Ben.
Browne, John (Wexford).
Burke, Raphael P.
Calleary, Seán.
Callely, Ivor.
Clohessy, Peadar.
Collins, Gerard.
Connolly, Ger.
Coughlan, Mary Theresa.
Cowen, Brian.
Cullimore, Séamus.
Daly, Brendan.
Davern, Noel.
Dempsey, Noel.
Dennehy, John.
de Valera, Síle.
Ellis, John.
Fahey, Frank.
Fahey, Jackie.
Fitzgerald, Liam Joseph.
Fitzpatrick, Dermot.
Flood, Chris.
Flynn, Pádraig.
Gallagher, Pat the Cope.
Geoghegan-Quinn, Máire.
Harney, Mary.
Haughey, Charles J.
Hillery, Brian.
Hilliard, Colm.
Hyland, Liam.
Jacob, Joe.
Kelly, Laurence.
Kenneally, Brendan.
Kirk, Séamus.
Kitt, Michael P.
Kitt, Tom.
Lawlor, Liam.
Lenihan, Brian.
Leonard, Jimmy.
Leyden, Terry.
Lyons, Denis.
Martin, Micheál.
McCreevy, Charlie.
McDaid, Jim.
McEllistrim, Tom.
Molloy, Robert.
Morley, P.J.
Nolan, M.J.
Noonan, Michael J. (Limerick West).
O'Connell, John.
O'Dea, Willie.
O'Donoghue, John.
O'Hanlon, Rory.
O'Keeffe, Ned.
O'Kennedy, Michael.
O'Leary, John.
O'Malley, Desmond J.
O'Rourke, Mary.
O'Toole, Martin Joe.
Power, Seán.
Reynolds, Albert.
Roche, Dick.
Smith, Michael.
Stafford, John.
Treacy, Noel.
Tunney, Jim.
Wallace, Dan.
Wallace, Mary.
Walsh, Joe.
Wilson, John P.
Woods, Michael.
Wyse, Pearse.

Níl

Ahearn, Therese.
Allen, Bernard.
Barnes, Monica.
Barrett, Seán.
Barry, Peter.
Bell, Michael.
Belton, Louis J.
Boylan, Andrew.
Bradford, Paul.
Browne, John (Carlow-Kilkenny).
Bruton, John.
Bruton, Richard.
Byrne, Eric.
Carey, Donal.
Enright, Thomas W.
Farrelly, John V.
Fennell, Nuala.
Ferris, Michael.
Finucane, Michael.
FitzGerald, Garret.
Flaherty, Mary.
Flanagan, Charles.
Foxe, Tom.
Gilmore, Eamon.
Gregory, Tony.
Harte, Paddy.
Higgins, Jim.
Higgins, Michael D.
Hogan, Philip.
Howlin, Brendan.
Kavanagh, Liam.
Kemmy, Jim.
Kenny, Enda.
Lee, Pat.
Lowry, Michael.
McCartan, Pat.
McCormack, Pádraic.
McGahon, Brendan.
McGinley, Dinny.
Connaughton, Paul.
Connor, John.
Cosgrave, Michael Joe.
Cotter, Bill.
Creed, Michael.
Crowley, Frank.
Currie, Austin.
D'Arcy, Michael.
Deasy, Austin.
Deenihan, Jimmy.
De Rossa, Proinsias.
Doyle, Joe.
Dukes, Alan.
Durkan, Bernard.
Mac Giolla, Tomás.
McGrath, Paul.
Mitchell, Gay.
Mitchell, Jim.
Moynihan, Michael.
Nealon, Ted.
Noonan, Michael. (Limerick East).
O'Brien, Fergus.
O'Keeffe, Jim.
O'Shea, Brian.
O'Sullivan, Gerry.
O'Sullivan, Toddy.
Owen, Nora.
Pattison, Séamus.
Quinn, Ruairí.
Rabbitte, Pat.
Reynolds, Gerry.
Ryan, Seán.
Sheehan, Patrick J.
Sherlock, Joe.
Spring, Dick.
Stagg, Emmet.
Taylor, Mervyn.
Taylor-Quinn, Madeleine.
Timmins, Godfrey.

Tellers: Tá, Deputies D. Ahern and Clohessy; Níl, Deputies Flanagan and Howlin.

Question declared carried.

An Leas-Cheann Comhairle

We will now deal with Financial Resolutions Nos. 7 to 15, inclusive, together.

Dáil Éireann díospóireacht - Wednesday, 29 Jan 1992

Financial Resolutions, 1992. - Financial Resolution No. 16: Excise Duties on Mechanically Propelled Vehicles

Tá

Níl

Dáil Éireann díospóireacht -
Wednesday, 29 Jan 1992