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Home > Dail Eireann debate. Finance (No. 2) Bill 2013: Report Stage (resumed) (continued).

[Oireachtas] Dail Eireann debate. Finance (No. 2) Bill 2013: Report Stage (resumed) (continued). (05 Dec 2013)


 Debate resumed on amendment No. 31:

In page 69, between lines 18 and 19, to insert the following:
“48. Section 119 of the Finance Act 2001(as amended by section 99 of the Finance Act 2010) is amended by inserting the following new subsection (5) into section 119 (penalties for certain excise offences):
“(5) where the offence referred to in subsections (1) and (2) relates to tobacco, a person convicted of such an offence shall be liable—
(a) on summary conviction to a minimum fine of €5,000 or at the discretion of the court, to imprisonment for a term not exceeding 12 months or to both,

(b) on conviction on indictment—
(i) to a minimum fine equal to 5 times the value of the excisable products concerned, including any duty or tax chargeable thereon, or €130,000 whichever is the greater, or, at the discretion of the court, to imprisonment for a term of not less than 5 years or to both, or

(ii) where the value of the excisable products concerned including any duty or tax chargeable thereon, is greater than €250,000, a minimum fine equal to 5 times the value of those products, or, at the discretion of the court, imprisonment for a term of not less than 7 years or to both.”.
- (Deputy Michael McGrath).
…….Deputy Michael McGrath:  This amendment is intended to deal with the issue of cigarette smuggling and the illegal sale of cigarettes. In a recent reply to a parliamentary question the Minister, Deputy Noonan, confirmed that in 2012 there were 57 convictions for cigarette smuggling resulting in 26 custodial sentences, some suspended, and fines amounting to €93,550. The total amount in fines for 57 convictions was €93,550, which is completely inadequate.
With regard to the illegal sale of cigarettes, the fines were equally derisory. The fines had been increased quite significantly through the various Finance Acts, as recently as 2010, but they need to be increased further. The deterrent against the smuggling of cigarettes into this country and the illegal sale of cigarettes, which is quite open in many parts of this country, particularly in Dublin - I have always found it quite unbelievable that on certain streets in Dublin anyone can walk around and buy illegal cigarettes - is just not good enough. The penalties enshrined in the legislation are simply not strong enough and they need to be strengthened. That is the reason we have proposed this amendment - to seek to strengthen the penalties, increase the deterrent and, hopefully, deal with the issue of smuggling and the illegal sale of cigarettes.
Deputy Pearse Doherty:  I endorse this amendment. I have spoken about smuggling, black market activity and tax increases on cigarettes during the debates on the last few budgets. Our party does not oppose an increase in taxation on cigarettes, but we would have gone further than the Government has gone. We argued for a 20 cent increase, but we would not have gone as far as Fianna Fáil and argued for a €1 increase.
The key point is that any increase in the price of cigarettes and tobacco products needs to be made hand-in-hand with a number of measures to deal with black market activity. Deputy Michael McGrath's amendment is one such measure dealing with the end product where someone has been caught. It could be used as a deterrent. The missing element is the resources to tackle black market activity. That is where the Government falls down in its proposals, with which we will deal in the next section, to increase the price of tobacco. It has not used that resource to deal with the fact that a large number of cigarettes consumed in the State are purchased on the black market. It is an illegal practice, but for many, it has been normalised. People who never think of breaking the law do not see it as breaking the law, defrauding the State or Revenue when they buy packs of cigarettes for €3 or €3.50.
I commend the amendment in looking at one end of the issue. It is part of a bigger jigsaw with which we must deal and the Government's focus heretofore has been on grabbing more money from people who smoke tobacco. There are health benefits; we know that increasing the price of tobacco has consequences in terms of consumer behaviour. If so many tobacco products are available at a lower price, there must be action to deal with the issue. Enforcement deterrents are more welcome, but there is also the question of how to deal with the issue on a practical day-to-day basis in ports and Garda Síochána and Revenue operations. That question must also be dealt with.
Deputy Fergus O'Dowd: The fines applicable to an offence of evasion or attempted evasion of excise duty on excisable products were increased significantly in the Finance Acts 2008 and 2010. For a summary conviction, the set fine was increased to €5,000. For a conviction on indictment, the maximum fine was increased tenfold to €126,970, or where the value of the goods concerned, including duty and tax payable thereon, is greater than €250,000, the fine can be three times the value of the goods. The Deputy's amendment seeks to separate the penalties and fines for offences regarding excise duty on tobacco from offences relating to other excisable products such as mineral oil and alcohol products. Second, the Deputy seeks to set new minimum fines and penalties. For a summary conviction, he suggests a minimum fine of €5,000 and for a conviction on indictment, he suggests a minimum fine of €130,000 or five times the value of the excisable product concerned, whichever is greater, or a minimum term of imprisonment of five years. Where the value of the excisable products is greater than €250,000, he suggests a minimum fine of five times the value of the excisable products or a minimum term of imprisonment of seven years.
With regard to the Deputy’s suggested minimum fine of €5,000 for a summary conviction, the current fine of €5,000 is already equal to the maximum applicable to the District Court. With regard to the Deputy’s suggested minimum fine of €130,000 for a conviction on indictment, the courts can apply a fine of up to €126,970. I am reluctant to introduce radical changes to the current penalties and fines regime without a thorough analysis of the issues involved. The amendment, as structured, would severely curtail the powers of discretion of the courts in all cases and I am concerned that it might have unintended consequences. For example, if trial judges believe defendants do not have the ability to pay the full fine, they would be forced to impose long custodial sentences and it is likely that these would be suspended in most cases. The result would be that no fines would be imposed or prison sentences served.
I am not convinced that penalties and fines for offences concerning excise duty on tobacco products should be set at different levels than offences concerning excise duty on mineral oil and alcohol products. On that basis, I cannot accept the amendment.
Deputy Michael McGrath: The reply of the Minister of State sets out what the courts can do, but the reality is that they are not doing it. I have outlined some of the figures. Last year there were 57 convictions for smuggling and fines of €93,550. That amounts to a typical fine of less than €2,000 on average. For illegal sales, there were 75 convictions and total fines of €153,050, which amounts to less than €2,000 on average. The legislation is not bad and the courts have the power to impose fines greater than are being imposed, but larger fines are not being imposed, which is why the amendment seeks to increase what are inadequate fines. I encourage the Government to look at this amendment favourably because the deterrents are not strong enough. That is why smuggling and illegal sales are rampant. People are not fearful of the law and this amendment would go some distance towards addressing the issue.
Deputy Fergus O'Dowd: On the face of it, there is an issue, but I do not believe the amendment, as structured, would resolve the issue. There could be unintended consequences. If trial judges believed defendants did not have the ability to pay the full fine, they would be forced to impose sentences or, more likely, suspended sentences in all cases and no fines would be paid. .....  
Deputy Richard Boyd Barrett: I move amendment No. 32:
In page 75, to delete lines 12 to 38.
This measure relates to the increase in tax on tobacco products, including cigarettes. Some of us are in a minority in opposing it but, as we indicated in previous discussions, while we accept fully that cigarettes are bad and that we need to do something about them – I say that as a smoker – I do not believe that is what this measure is about. I do not think it is a health measure; it is a budget measure to grab money and it is one that largely hits the least well-off, as do so many tax increases on commodities people buy, whether they are good or bad for one’s health, such as cigarettes and alcohol. Such taxes increase the cost of living for ordinary people in a way that is regressive because it disproportionately affects people on lower incomes.

In so far as we need to deal with smoking, it should be dealt with through education and other health promotion measures which should be funded properly, but of course we are not funding such approaches properly. This is just a grab for money and I do not accept the logic behind it. I wish to record my opposition to the increase.
Deputy Fergus O'Dowd: Section 52, which is opposed by Deputy Boyd Barrett, confirms the budget increases in the rates of tobacco products tax which, when VAT is included, amount to 10 cent on a pack of 20 cigarettes in the most popular price category with pro rata increases on other tobacco products.

As a result of the budget increase, the price of a pack of 20 cigarettes in the most popular price category has increased to €9.50. These measures are estimated to yield €2.5 million in 2013 and €15.4 million in a full year.
Question, "That the words proposed to be deleted stand," put and declared carried.

Amendment declared lost.
Deputy Pearse Doherty:  I move amendment No. 33:
In page 75, to delete lines 39 to 41, and in page 76, to delete lines 1 to 35.
One can see the fear the Minister for Finance, Deputy Noonan, instils even in his ministerial colleagues at the thought of his returning to these shores to find an amendment has slipped through.

Amendment No. 33 deals with the increase in excise duty on alcohol. We had a lengthy debate on the issue on budget night when the budget resolutions were passed and also on Committee Stage. It is clear the Government will not reverse its position at this late stage but I tabled the amendment to put down a marker that this is an unfair measure. Alcohol duty should not have been increased to its current level. Clear commitments were given by at least one Government party in terms of increasing alcohol and excise duty on wine, for example. Not only has that been breached once, but this is the second occasion. If a person were to pay €8 today for a bottle of wine, more than €4.80 would go directly to the State in revenue. That is 60% of the current cost of a bottle of wine. We levy the highest rate of excise duty and tax on alcohol anywhere in the European Union. The reason I am concerned is that not only does it dip into the pockets of ordinary consumers, but if one buys a more expensive bottle of wine - I use wine as an example – then the portion one pays to the State is a lot less.

There are concerns about the measures from a cross-Border point of view. An issue arises in terms of cross-Border shopping of which we must be mindful. As a member of an all-Ireland party I do not have a problem with where anyone shops, but I wish to see a level playing field. That is why I would like to see harmonisation of the taxation code in other areas across the island.

I am opposed to the measure. We have shown that it is not required in our alternative budget. It is wrong on a number of levels.
Deputy Richard Boyd Barrett: Oddly enough, the point made by Deputy Doherty that the State makes a lot of money from the measure is the only good thing about it. My problem with the measure is that it is regressive. I make the same argument about it that I made about tobacco in that it is another disproportionate hit for the less well-off - those on lower incomes who are being hammered from every quarter. This is symptomatic of the problem with the Government’s approach to taxation generally - not just this Government but successive Governments. Rather than opt for truly progressive redistributive taxation, they keep hitting the same group of people and effectively reducing their disposable income by loading taxes on goods they buy. That is why I am against the measure. In so far as there is a public health issue with alcohol abuse, this does not make a damn bit of difference, so I urge the Minister of State to please not waste our time with that spin. This is about money. That is fair enough, as the Government needs money, but there are more progressive alternative ways to raise money, as we have outlined on many occasions. I will not labour the point now but I pose the question of why we do not start taxing corporations, those on very high earnings and speculators, instead of giving them tax breaks. Let us go to that well instead of constantly going back to the same well of ordinary working people.
Deputy Thomas P. Broughan: I wish to speak along the same lines as the previous speakers. The real challenge facing the Government was to do something about minimum pricing. That was one of the foundation stones of Deputy Shortall’s public policy on health when she was Minister of State. She will arrive shortly for the debate. The very low price of beer and other alcohol products is a public health matter and the abuse of alcohol can often lead to serious anti-social behaviour and criminality.

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