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Dáil Éireann díospóireacht -
Tuesday, 11 May 1999

Vol. 504 No. 4

Other Questions. - Duty Free Facilities.

Donal Carey

Ceist:

32 Mr. D. Carey asked the Minister for Foreign Affairs the role of his Department in the campaign to retain duty free facilities at EU ports and airports for internal EU travel. [12005/99]

I refer the Deputy to my reply to Question No. 47, reference number 4376/99, of 17 February 1999, and to Question No. 9, reference number 8938/99, of 30 March 1999.

As I pointed out in my earlier replies, the issue of duty free is a taxation matter which falls, in the first instance, within the remit of the ECOFIN Council and, therefore, of my colleague the Minister for Finance.

I can confirm that the Department of Foreign Affairs, including through its embassies in the capitals of other member states and the permanent representation to the European Union, has availed of appropriate opportunities to advance the case for a re-examination of the decision to abolish duty free. Several of our embassies have also been involved in assisting and facilitating industry representatives in establishing contacts in the other member states.

On how many occasions has the issue of duty free throughout the European Union been addressed by the General Affairs Council? What position did the Minister take during those discussions? How many jobs does he estimate will be lost in Ireland as a result of the abolition of duty free? Why is it taking so long to resolve this matter? Does the Minister agree that being an island economy, Ireland will suffer disproportionately to other economies and that job losses here will be very significant? What is the Minister's best estimate? Does he see the abolition of duty free sales going ahead as a fait accompli or does he hold out realistic hope for it? When will the matter be finally decided, I hope, in favour of the retention of jobs here?

I have argued very strongly along the same lines as the Deputy on the proposed abolition of duty free sales within the European Community. I do not wish to mislead the Deputy regarding the number of times I raised this matter with the General Affairs Council but I can get him a note on the time or times I raised the matter in that forum.

With regard to the duty free sales industry, Ireland has suggested potential job losses in Ireland as a result of the abolition of duty free sales, of the order of 11,000. The Department of Finance commissioned a KPMG consultants' report on the employment consequences of the abolition of duty free sales. This report was published by the Minister for Finance in March 1998 and he presented the results to his colleagues at the ECOFIN meeting in May 1998. The report concluded that the abolition of intra-EU duty free sales would not impact on employment levels overall but its impact was likely to be of a specific and local nature, mainly in the maritime sector. KPMG reported that not all the 466 jobs in the aviation sector would be at risk and few jobs would be lost by airlines. The total number of jobs reported as being at risk in the maritime sector is 700, a figure made up by Greek, British and Irish nationals. There will not be job losses in sea routes that continue. Indirect employment job losses were not considered. The budgetary impact of abolition was estimated as a Revenue gain in the region of £30 to £40 million.

The duty free sales industry estimates the direct impact on employment across the EU as 50,000 directly affected jobs. However, the sector estimates that as many as 140,000 jobs may be indirectly affected.

The Minister should tell the House, as he has not done so yet, if he sees the abolition of duty free sales going ahead, and if so, on what date?

I was going to give that answer.

Does the Minister see duty free sales being abolished and if so, on what date? Why is there such a conflict between what the trade unions are saying about job losses and potential job losses and the results of the report the Minister read? Surely the number of people who will lose their jobs, given the amount of duty free products sold, is substantially higher than the figures the Minister has given?

In March last year the Transport Council agreed on the initiative of the Minister for Public Enterprise to ask the EU Finance Ministers to have a study commissioned on the effects of the abolition of duty free sales. Last November the Commission published a paper identifying specific instruments available to member states to cope with the possible consequences of the abolition of duty free sales. This focuses on known EU rules and procedures and according to the Department of Finance is "of little relevance and no novelty."

In relation to the Deputy's question as to whether duty free sales will cease or be abolished, the issue will be considered again by ECOFIN on 25 May. On the basis of discussions so far there seems no prospect that agreement can be reached on a further stay of execution for duty free sales. Any further discussion is therefore likely to focus on the Commission's communication.

The Commission report was considered at the ECOFIN meeting of 15 March and France, Spain, the UK, Greece and Ireland expressed support for the Presidency proposal, while the Netherlands, Belgium, Italy, Portugal, Denmark and Finland were opposed to it. The Council took note of the Commission's report and the industry was invited to examine the Commission submission and report back to ECOFIN. Duty free sales was not discussed at the European Council in Berlin on 24 and 25 March. It was referred to by the British Prime Minister at the informal meeting of heads of State or Government in Brussels on 14 April but there was no further discussion of the matter.

What is the Minister's opinion as to whether duty free sales will be reprieved? Have any studies been done on the likely impact the abolition of duty free sales will have on the cost of travel between Ireland and the rest of Europe?

I do not have the answer to the Deputy's second question off the top of my head but if one is available I will communicate it to the Deputy. Regarding the possibility of the survival of duty free sales, according to the figures and substance of the replies I have, I would not be optimistic. However, that is only my opinion and perhaps there are people with a deeper knowledge of the subject with a more optimistic view.

Written Answers follow Adjournment Debate.

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