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Home > Dáil Éireann Debate: Financial resolutions 2013: Alcohol & Tobacco products tax.

[Oireachtas] Dáil Éireann Debate: Financial resolutions 2013: Alcohol & Tobacco products tax. (05 Dec 2012)

External website: https://www.oireachtas.ie/en/debates/debate/dail/2...


Financial Resolution no. 1: Alcohol products tax.

The Taoiseach: (1) THAT for the purposes of the tax charged by virtue of section 75 of the Finance Act 2003 (No. 3 of 2003), that Act be amended, with effect as on and from 6 December 2012, by substituting the following for Schedule 2 to that Act (as amended by section 88 of the Finance Act 2010 (No. 5 of 2010)): 

“SCHEDULE 2Rates of Alcohol Products Tax (With effect as on and from 6 December 2012)
 
Description of Product
Rate of Tax
Spirits:
€36.85 per litre of alcohol in the spirits
Beer:
 
Exceeding 0.5% vol but not exceeding 1.2% vol
€0.00
Exceeding 1.2% vol but not exceeding 2.8% vol
€9.56 per hectolitre per cent of alcohol in the beer
Exceeding 2.8% vol
€19.13 per hectolitre per cent of alcohol in the beer
Wine:
 
Still and sparkling, not exceeding 5.5% vol
€123.51 per hectolitre
Still, exceeding 5.5% vol but not exceeding 15% vol
€370.64 per hectolitre
Still, exceeding 15% vol
€537.81 per hectolitre
Sparkling, exceeding 5.5% vol
€741.28 per hectolitre
Other Fermented Beverages:
 
(1) Cider and Perry:
 
Still and sparkling, not exceeding 2.8% vol
€40.08 per hectolitre
Still and sparkling, exceeding 2.8% vol but not exceeding 6.0% vol
€80.16 per hectolitre
Still and sparkling, exceeding 6.0% vol but not exceeding 8.5% vol
€185.36 per hectolitre
Still, exceeding 8.5% vol
€262.92 per hectolitre
Sparkling, exceeding 8.5% vol
€525.85 per hectolitre
(2) Other than Cider and Perry:
 
Still and sparkling, not exceeding 5.5% vol
€123.51 per hectolitre
Still, exceeding 5.5% vol
€370.64 per hectolitre
Sparkling, exceeding 5.5% vol
€741.28 per hectolitre
Intermediate Beverages:
 
Still, not exceeding 15% vol
€370.64 per hectolitre
Still, exceeding 15% vol
€537.81 per hectolitre
Sparkling
€741.28 per hectolitre
(2) 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).

Financial Resolution No. 2: Tobacco Products Tax 

 (1) THAT for the purposes of the tax charged by virtue of section 72 of the Finance Act 2005 (No. 5 of 2005), that Act be amended, with effect as on and from 6 December 2012, by substituting the following for Schedule 2 to that Act (as amended by section 69 of the Finance Act 2012 (No.9 of 2012)):
 
"SCHEDULE 2 RATES OF TOBACCO PRODUCTS TAX (With effect as on and from 6 December 2012)
 
 
Description of Product
Rate of Tax
Cigarettes …. .... .... ….
Rate of tax at­-
(a) except where paragraph (b) applies, €237.69 per thousand together with an amount equal to 8.83 per cent of the price at which the cigarettes are sold by retail, or
(b) €271.91 per thousand in respect of cigarettes sold by retail where the rate of tax would be less than that rate had the rate been calculated in accordance with paragraph (a).
Cigars .... .... .... ….
Rate of tax at €275.342 per kilogram.
Fine-cut tobacco for the rolling of cigarettes .... .... .... .…
Rate of tax at €248.608 per kilogram.
Other smoking tobacco .... ….
Rate of tax at €191.022 per kilogram.
".
(2) 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).
Financial Resolution No.1 provides for increases with effect from midnight tonight in the rates of alcohol products taxed across the full range of alcohol products. The increases when VAT is included amount to €1 on a standard bottle of wine, 10 cent a pint of beer, 10 cent on a pint of cider and 10 cent on a standard measure of spirits, with pro rata increases for other products. The expected yield from these increases is approximately €180 million in 2013 and a full year. The measures will increase the consumer price index by approximately 0.325%.

Financial Resolution No. 2 provides for excise duty increases on tobacco products with effect from midnight tonight. The increase amounts to 10 cent, inclusive of VAT, on a pack of 20 cigarettes together with pro rata increases for other tobacco products. An additional 50 cent increase will apply to 25 g of roll-your-own, RYO, tobacco. The price of a pack of 20 cigarettes in the most popular price category will increase to €9.30. The excise duty component of this price will be €5.57 and the total tax, inclusive of VAT, will be €7.31. The increase on RYO amounts to an increase in total tax, inclusive of VAT, of approximately 60 cent per 25 g pack. The excise duty component of this increase will be 49 cent.

 

The price and tax component of cigarettes in Ireland are among the highest in the EU. The high tax here reflects the long-standing commitment by successive governments to use taxation as an instrument to discourage smoking. While consumption of RYO tobacco is relatively small by comparison, there has been something of a movement towards this product in recent years. The additional increase in the tax on RYO will bring the tax on that product more in line with that on cigarettes. These latest increases will ensure that tobacco tax continues to play an important role in discouraging consumption of tobacco products.

 

Unfortunately, high prices and taxes also make Ireland an attractive location for cigarette smugglers. The Revenue Commissioners, who have responsibility for tobacco products tax, are very conscious of the threat that this poses to legitimate business and to the Exchequer and they continue to make tackling the problem a priority. Revenue has achieved notable successes in seizing illegal products and in bringing people involved in this criminality before the courts. This important work will continue.

 

This measure is estimated to yield €25 million in a full year.

 

Deputy Michael McGrath: Are we speaking to Financial Resolutions Nos. 1 and 2?

 

An Ceann Comhairle: That is correct. I meant to mention we are discussing this in committee of the whole Dáil.

 

Deputy Denis Naughten: I welcome the opportunity to speak on this matter and I wish to deal specifically with Financial Resolution No. 1 concerning the tax on alcohol products. A detailed proposal was put to the Department of Finance to introduce a lid levy which would bring in about €240 million. The proposal before us will bring in about €180 million. The difficulty is that, while a detailed report was published earlier this year by my colleague, Deputy Shortall, on the national substance misuse strategy, there is nothing in the proposal before us to deal with the demand aspect of alcohol.

 

There is a precedent for this. A few years ago, there was a proposal to increase excise duty on alcopops because of the health issues involved. At present, over half of Irish 16-years-olds have been drunk and one in five is a weekly drinker. According to the latest available statistics, from 2008, there were 88 alcohol-related deaths per month. It is also a significant contributing factor in suicide. Every night, about 2,000 bednights are tied up by alcohol-related conditions. It is, therefore, having a major impact on the economy and is costing about €3.7 billion, half of which is taking money directly away from the health budget. There was an opportunity to nuance the proposal before us. The steering group report refers to increasing excise across the board thus making alcohol more expensive, but it also highlights below-cost sales of alcohol and suggest proposals in that regard.

 

The strategy examined minimum pricing and suggested that it should be introduced. It has already been introduced in Scotland. All it is doing here, however, is increasing the profits of the drinks industry. The proposed lid levy on the other hand would increase revenue coming in to the Exchequer that could be put into other diversionary tactics on alcohol and substance abuse. It would have helped to implement the strategy as set out in the substance misuse report. I am disappointed that it has not been addressed here today.

 

Deputy Micheál Martin: As regards the alcohol proposal, I concur with our finance spokesperson, Deputy Michael McGrath, that the emphasis is the wrong way around. There is a fundamental problem with how alcohol is sold in this country. It is having a major impact on our young people. There is not a Deputy in the House who would not agree with me when I say that something has to be done about it. It means our taxation structure must be reorientated in a way that disincentivises the purchase of alcohol in the off-trade sector, particular in large multiples.

 

The safest place to have a drink now is in a pub. We must re-examine this matter again but the problem is that the public house has been outbid on pricing by other centres. We have youngsters buying big slabs and ending up on the greens. At home, there is no proper measure of what one is drinking, be it wine or spirits. One of the safest places to have a drink, therefore, is in a pub. I am talking about quantity and the public health perspective. The emphasis in the Government's approach is wrong. We had a different approach by putting the emphasis on the off-trade, and particularly trying to counteract the situation where large multiples have become significant players in the sale of alcohol, which was never intended. The taxation proposal before us misses a fundamental opportunity to redress that situation in addition to other proposals.

 

Our document contained an interesting proposal on tobacco which we received from the Irish Cancer Society and the Irish Heart Foundation. They made the point that the tobacco sector's revenue from a packet of cigarettes has increased from €1 to €1.84 in the decade to 2010. Therefore, despite all the increases in tobacco taxes, the industry itself has increased its take from the consumer over that decade. Essentially, the industry has used the opportunity offered by tax increases on tobacco to increase its own profits.

 

We have endorsed the proposals of the Irish Heart Foundation and the Irish Cancer Society that tobacco prices should be controlled in the same way as energy prices and taxi fares. With such a change, the proportion of the retail price of tobacco going to the Exchequer would increase. Without imposing hardship on individual smokers, the Exchequer could get a far greater yield if the proposal of the Irish Heart Foundation and the Irish Cancer Society was to be adopted. It could raise in the order of €100 million in the first year and €150 million in subsequent years. The measure that is being proposed today is completely inadequate from a public health perspective. It lacks innovation and a targeted approach which would target the industry and the profit share it garners annually, to such an extent that it has gone from €1 to €1.80 per packet over the past ten years.

 

An Ceann Comhairle: I remind Deputies that there are only five minutes left in this slot.

 

Deputy Robert Troy: I wish to raise my concerns about the increase in and excess of off-trade drink consumption. Everyone is concerned by the increase in alcohol consumption in recent years but the Government is tackling the wrong section on this matter. Over the last five years, turnover is down by 34% and we are losing licensed premises at the rate of one pub per day. The on-trade sector is far more labour intensive than the off-trade one and supports 50,000 jobs.

 

There seems to be no regulation of the quantity that people are drinking, and young people in particular. Young people are getting drink for as little as, or less than, €1 a bottle, yet nothing is being done to tackle this problem. We were led to believe that the Government was bringing forward proposals on below-cost selling. Young adults can buy alcohol for as little as 70 cent a bottle, yet nothing is being done to tackle this. At the same time, we have pubs closing day by day and there is no support from the Government.

 

The pub was always the lifeblood of rural communities where people could socialise. It was a way in which older people could deal with the problem of isolation. However, nothing is being done to tackle the real problem of alcohol consumption, which is that multiples are using alcohol to attract customers. They do not care who drinks it or what happens to them as a result. The wrong emphasis is being placed on this matter. What will the Government do about the number of jobs this measure will cause to be lost in the on-trade sector? Nothing is being done to support rural pubs.

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