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Home > Dáil Éireann Debate. Finance Bill 2013: Report Stage (resumed) (continued).

[Oireachtas] Dáil Éireann Debate. Finance Bill 2013: Report Stage (resumed) (continued). (13 Mar 2013)

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….Deputy Pearse Doherty: I move amendment No. 24:
In page 121, to delete lines 21 to 46 and in page 122, to delete lines 1 to 20. 

This is the Minister of State's moment. He has put up the posters, distributed the leaflets and taken out the advertisements and can now announce that the €1 increase in the price of a bottle of wine is no more. He is sitting in the chair that matters and should not allow Fine Gael to bully him anymore. He can accept the amendment and live up to the commitment the Labour Party gave to the electorate just two years ago. That is the sum total of what I have to say. The Minister of State knows that it was wrong to increase the cost of a bottle of wine by €1. The Labour Party led the campaign on this matter and I ask him to respond appropriately.
Deputy Alex White: I notice the Deputy has offered no suggestions as to how we might circumvent the greatest difficulty in this regard, namely, the fact that the expected yield from the increases in question is €180 million in a full year. If there is a serious proposal to the effect that these increases should be removed, there would have to be at least some marginal effort on the part of the Deputy - the House and the Minister would ultimately have to become involved - to explain how the resulting hole of €180 million in our finances could be filled. As the House is aware, section 58 confirms the increases in the rates of alcohol products tax announced in the budget. When VAT is included, these increases amount to 10 cent on a pint of beer or cider, 10 cent on a measure of spirits and €1 on a bottle of wine, with pro rata increases in the case of other products. It is not proposed to accept the amendment.
Deputy Peter Mathews: Is this, perhaps, the NAMA wine lake?
Deputy Pearse Doherty: The Minister of State is well aware that there is a raft of alternative proposals and measures which could bring in similar amounts of money. If we are to believe the media, his party has argued for the introduction of some of these measures in order to bring in additional revenue.
I was being genuine when I made my opening comments. What is being done is simply wrong. I refer, in particular, to the €1 increase in the price of a bottle of wine. That is a massive increase which will affect those who have been hit really hard up to now. The increase is also disproportionate. For someone with a large income who can afford to spend €20 or €30 on a bottle of wine, an increase of €1 does not constitute a major burden. However, for a person who likes to drink wine on a special occasion and who can afford to spend €7 to €10 on a bottle - as, in the light of the pressures they are under, is the case for the majority of people in the country - this is a 12% increase. That is just wrong and I cannot support the measure. This matter has been well ventilated, but I still find the Minister of State's defence of the €1 increase in the price of a bottle of wine quite amusing.
Deputy Peter Mathews: In technical terms, can vinegar be categorised as wine?
Deputy Róisín Shortall: Notwithstanding any election promise, I do not have a major problem with the price of alcohol being increased. I hope further proposals in this regard will be forthcoming from the Minister in the near future. Such proposals are very much overdue. Will the Minister of State address the issue of claims made for VAT rebates in respect of below cost sales of alcohol? In effect, the State, through the Department of Finance, is subsidising the low cost of alcohol. That low cost is giving rise to so much trouble in society. It should not be beyond the wit of the Department to bring forward proposals, whereby the big multiples, in particular, could be prevented from claiming VAT rebates in respect of below cost sales of alcohol. I understand the grounds on which VAT rebates are allowed in cases where, for various market reasons, products are being sold below cost. However, the multiples have made a conscious decision to sell below cost - this is a marketing tool - and they should not be allowed to claim rebates in respect of this. The State should certainly not be subsidising the sale of cheap alcohol through VAT rebates. Will the Minister of State raise this matter with the Department and request that the serious loophole to which I refer and which is contributing to much of the damage being done in society be closed off?
Deputy Denis Naughten: We all agree that the below cost sale of alcohol must be addressed. The challenge we face is how to go about addressing it. I ask the Minister of State, particularly in the context of his portfolio in the Department of Health, to consider a proposal made by the vintners before Christmas in respect of the introduction of a lid tax. That proposal has a great deal of merit. The Department of Finance has indicated that because of EU law, it is not possible to proceed with a lid tax, but I do not believe that is the case. Such a tax could allow us to circumvent the challenges we face in the below cost sale of alcohol. It could also allow us to circumvent some of the challenges relating to minimum pricing, while bringing in additional revenue for the Exchequer. There is huge merit in the proposal to which I refer, about which I spoke on the night the budget was introduced. I am disappointed that provision has not been made in this regard. I would like a detailed justification to be provided as to why the proposal was not progressed. It may not be possible for such a justification to be provided now, but I would like the officials from the Department to indicate at some point exactly where the challenges and difficulties relating to the proposal lie.
Deputy Alex White: I am very aware of the VAT issue to which Deputy Róisín Shortall refers. I suspect that she and I are quite close in our views on the matter. I am very interested in pursuing this issue. I am standing in for the Minister for Finance, but, in my capacity as Minister of State at the Department of Health, I assure the Deputy and the House that I am aware of and propose to pursue this important and serious issue.
In the context of Deputy Denis Naughten's point, I am advised that the Minister for Finance met those who brought forward the proposal on the introduction of a lid tax. The matter was considered and I understand significant legal obstacles came to light. I do not believe the door is entirely closed on proposals of this nature. It is an interesting proposal, but it is probably not workable in its current form. An opportunity to re-examine it may arise in the future.
[For the full debate, click here]

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