Home > Seanad Éireann debate. Finance Bill 2013 [Certified Money Bill]: Committee and remaining stages (continued).

[Oireachtas] Seanad Éireann debate. Finance Bill 2013 [Certified Money Bill]: Committee and remaining stages (continued). (21 Mar 2013)

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SECTION 58

Question proposed: "That section 58 stand part of the Bill."
 
An Leas-Chathaoirleach: This section is opposed by Senator Kathryn Reilly.
 
Senator Trevor Ó Clochartaigh: This section deals with the rates of tax on alcohol products and alcoholic beverages. We had a similar argument in the case of cigarettes. This is another revenue grabbing exercise against people who drink alcohol. I would be one of the most vocal Senators on these issues and raised on the Order of Business today the cost in respect of those who drink to excess or have problems with alcohol. Although we would all support measures to decrease drinking, the problem with this tax measure is that it is not proportionate. Those on lower incomes will pay the same extra amount on their alcoholic beverages as those on much higher incomes. It is more punitive for those on a lower income who have suffered many other cuts. It defeats the purpose in trying to kick-start the economy because money is being taken from the pockets of those consumers in the lower income brackets who spend what they have in the local economy and, therefore, less will be spent in local communities. It is a very unimaginative proposal to go back to the old reliables and hit those who have paid enough already. It will be easier for a person on a higher income to continue drinking as much as he or she wants, whereas it will be a deterrent for those on lower incomes because they will not be able to afford to drink as much. I, therefore, ask the Minister of State to reconsider the issue and consider more imaginative proposals to bring in the income he wants to raise.
 
Senator Michael D'Arcy: I disagree with the Senator. It is good that higher rates of tax will apply to higher volumes of alcohol. The same applies to smoking. There is the argument that we should ensure, if does more damage, that it will cost more. It is a prohibitive way of trying to prevent people from doing damage to themselves, even though they choose to do it. I do not agree with the Senator, but it is a flat statement that only persons in a certain socioeconomic group drink or smoke. People in every socioeconomic group smoke.
 
Senator Trevor Ó Clochartaigh: I did not say that.
 
Senator Michael D'Arcy: From this Chamber to the wealthiest and the poorest, people drink and smoke. It is welcome that one will pay a higher rate of tax on alcohol products.
 
Senator Sean D. Barrett: I welcome the recent decline in the level of alcohol consumption and, in particular, the benefits in terms of road safety. As the Minister of State is aware, about 650 people used to be killed on Irish roads each year, but we got this down to around 160 last year. The more responsible use of alcohol and the price increase will help in that regard. I support the Minister of State in this instance. The minimum pricing proposal will enrich the industry. If we are to increase the price of alcohol, the Minister of State and the Minister for Finance, Deputy Michael Noonan, should be the recipients, not the industry. The industry campaigning with abstainers for a minimum price of alcohol is bizarre. I think the original pub licensing regime was based on the fact that the Irish Parliamentary Party had persuaded the British Government that as there were fewer pubs in Ireland, the Irish were more sober. It certainly made the publicans much richer. If there is money to be raised in this area, it should go to the Exchequer and no minimum price advocate should be entertained.
 

Senator Marc MacSharry: The Minister for Finance, Deputy Michael Noonan, mentioned when discussing an earlier section, in respect of a proposal made in our budget submission, of which the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, appeared to be in favour at the Cabinet, the possibility of a levy on lid-on or off sales, but it did not materialise. My personal view - Senator John Gilroy agreed with me - is that the money should go towards suicide prevention measures and dealing with mental health issues. The Minister said there was a European dimension that prevented us from doing this, which is a matter of concern. This is an area in which, not necessarily to penalise the drinks companies or consumers, harnessing what might be positive consumer sentiment would contribute to the ring-fencing of an amount of money when, effectively, people were making a purchase to enjoy themselves. A general vox pop I have carried out demonstrates very positive views. Various figures have been bandied around as to what amounts of money would be raised. The vintners say it would be up to €200 million, but I think it would be closer to €120 million. That €120 million would cover the entire €88 million required for the suicide prevention policy which we submitted in recent weeks and €22 million would be left over for the accelerated roll-out of A Vision for Change. I am sure the Minister of State at the Department of Health, Deputy Kathleen Lynch, would be delighted with that amount of money and I genuinely believe the public at large, if informed, would listen. This is not a tax forgone issue, rather it would be a levy that would be specifically ring-fenced for this area. Senator Sean D. Barrett spoke about the success of the National Roads Authority in reducing the number of deaths on the roads. This could form part of the panacea or solution to this problem. If there is a European Union angle that prevents it from happening, the issue should be prioritised at the Council of Ministers. I am sure the proposal would find favour Europe-wide if we were to say this was a measure we could embrace. If there is an aspect of an EU directive on competition or other law that would prevent it, the Council of Ministers, during the Irish Presidency, could remove it and harness what could be a vehicle to harness public sentiment by ring-fencing a contribution specific to an area, while people enjoyed themselves in the depths of the recession. This proposal could find favour and raise much needed funds for a critical area.

 

Senator Trevor Ó Clochartaigh: In the light of some of the statement made, I do not think the statistics show that less alcohol has been consumed in recent years. However, the trends in drinking alcohol have changed. What they show is that people are not drinking in bars as much as they used to, but that there has been a huge increase in off-sales and sales through retail outlets. What has increased dramatically in the past couple of years is the abuse of alcohol and the number of people presenting at alcohol addiction services. As I mentioned on the Order of Business, it is great when two Department come together, in terms of their thinking, such as the Department of Health and the Department of Finance in dealing with certain issues. I wish that could happen in dealing with finance issues now and again. Certainly Departments do not think on the same lines.

 

In the HSE west, for example, some €22 million has been spent on acute services in Galway hospitals because of the increase in people showing up with alcohol related problems and the number of bed nights these people have had to be kept in hospital. However, the money being spent on the preventative aspects of this problem is being cut back and the services are being curtailed. As a result, the problems increase. Senator MacSharry suggested some form of ring-fencing for these funds and I agree the Department needs to consider that. Perhaps there are initiatives that need to be put in place. If we are serious about reducing the amount of alcohol related problems in communities, funds must be made available to them. However, once again this proposal is a blunt instrument that is being used, purely in order to bring in moneys for the Exchequer.
 
I appreciate that people all across the socioeconomic spectrum drink and that people with problems are not limited to any specific group. However, the point I have been trying to make is that the proportionate amount of tax a person pays relative to the amount of money he or she has in his or her pocket is greater if the person has less money in his or her pocket. If people are on a lower wage and the tax on their drink is increased, that will hit those people harder than those on a higher wage. That is the reason we believe it is a disproportionate tax and that to try to cloak this increase as a measure to curb drinking is a fallacy. The increases in the cost of drink over the past number of years have not caused a reduction in the number of people showing up at alcohol addiction centres across the country.
 
An Leas-Chathaoirleach: There is so much talk about alcohol on this Bill that we are in danger of becoming inebriated.
 
Deputy Brian Hayes: With regard to the remarks made by Senator MacSharry, the Minister has spoken about this publicly and would like to find a solution to the issue. He makes a compelling case with regard to what would happen if we were not able to obtain funds in this area which could be used for the purpose of running the type of campaign he would like to run. The legal advice is that the lid-on argument or some kind of tax on container use would lead us to fall foul of the EU directives in this area. Needless to say, we cannot move in a direction where legal advice is clear we would not be successful. However, we are looking at other means of doing it. We have asked the industry to look closely at the issue also. I assure the Deputy we have an open mind as to how we can achieve the objective all sides would like to achieve here, because this is a serious issue which affects every part of our country. On Senator Barrett's point, the Minister has put on the record his strong opposition to below-cost selling, which fuels the consumption of alcohol in an irresponsible and disproportionate way. We have a responsibility to address this, but the issue is how to address it and we are examining that closely.
 
This section has provoked an interesting discussion on the objective of section 58. The expected yield from the increase is approximately €180 million in a full year. That is a lot of money in any man's language and is a significant amount of additional revenue. Therefore, if one was to go against this, one would need to provide an alternative source of income. Excise duty on beer has not increased since 1994. Budget 2010 reduced the excise duty on a pint of beer by 12 cent, so this increase of 10 cent leaves the excise duty on beer below the pre-budget 2010 level. The increases in the tax on alcoholic beverages are proportionate. Wine goes up by €1 and beer has increased by 10 cent, but I will not draw any conclusions with regard to who drinks what.
 
There has not been an increase in this area for some time and we believe that in the context of where the country is, it is necessary in trying to close the deficit that this sector makes some contribution. The additional revenue raised from this increase is not insignificant, at €180 million for a full year.
 
Senator Trevor Ó Clochartaigh: I thank the Minister of State for his response. I would like to come back to him with his logic on a previous section, where he rightly pointed out there were no tobacco companies in Ireland. However, there are alcohol companies here which are making substantial profits. Has the Minister considered taxing companies as opposed to taxing consumers directly? Would that bring in the projected €180 million? We understand that certain amounts of revenue must be raised from different sources. However we suggest that this measure directly targets consumers and takes the money straight from their pockets, leaving them no choice in the matter. If the Department is going after the money made in the drinks industry, why does it not go after the companies themselves?
 
Senator John Gilroy: We have seen in the past how the drinks industry has used increases in excise, VAT and so on to add its own additional surcharge also. Therefore, even if we taxed the industry, it would pass those increases on to the consumer. All we would be doing would be adding another level of administration and offering the drinks industry the opportunity to add its own surcharge on top.
 
Deputy Brian Hayes: Exactly. This is the historic argument. Recently I visited Midleton and I noted that the sale of Irish whiskey, in the context of the export market, is up by 30% in a year. A new vat has been ordered in Midleton and there is to be more production in other parts of the country. A whole cottage industry has been established around Irish whiskey and the branding of it. This brings us back to the point made by Senator Barrett. He spoke about the poor old Irish Parliamentary Party and there was a lot of sympathy for what it had to put up with at the time - all these new fellows who turned up in 1918 and so on. What happened was that when we gained our independence in one fell swoop, the British Empire turned upon us. Irish whiskey was the dominant brand at the time, but Scotch took over as a consequence of our independence. Of course, we were not helped by prohibition in the United States. I am glad to see that in the context of the export market, Irish whiskey is now taking a much more substantial part of the international whiskey market. As a result, this will bring more tax revenue to this country and more jobs and once again Irish whiskey will regain the place it lost in 1921.
 
Question put and agreed to.
 
Sections 59 and 60 agreed to.
Item Type:Dail Debates
Source:Oireachtas
Date:21 March 2013
EndNote:View
Subjects:VA Geographic area > Europe > Ireland
G Health and disease > Substance use disorder > Alcohol use
B Substances > Tobacco (cigarette smoking) > Tobacco smoke (cigarette law / policy)
B Substances > Alcohol
A Substance use, abuse, and dependence > Prevalence > Substance use behaviour > Alcohol consumption
L Social psychology and related concepts > Economic availability or accessibility
MP-MR Policy, planning, economics, work and social services > Economic policy
MP-MR Policy, planning, economics, work and social services > Economic aspects of substance use (cost / pricing)

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