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Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019: Committee Stage (Continued)

Tuesday, 5 March 2019

Dáil Éireann Debate
Vol. 980 No. 4

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(Speaker Continuing)

[Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe] The UK will have to legislate to deliver that objective. That is why I am introducing an enabling provision whereby, in the event of that happening, the Government can respond with a commencement order. The UK's view, as publicly stated to its Parliament, is that it is not planning to introduce a duty free scheme. That would require legal change. I am just introducing a precautionary measure to deal with that.

Regarding the question of whether there has been other engagement with or contemplation by other member states on this matter, as far as we are aware, there has been little consideration of it because it is not as much of an issue for other countries as it is for us, given the volume of passenger traffic between the UK and Ireland.

As to the question on Northern Ireland, we anticipate that this scenario can only develop at ports and airports. Currently, we do not judge the duty free consequences of this measure across the Border as significant. That is one of the many reasons we believe we are better off having in place the legal ability to allow us to respond to different issues that may arise.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty Will the Minister outline the legal status? He stated that the duty free consequences across the Border were not deemed to be significant, but what would the legal status be in that scenario if the British Government did not reciprocate or a commencement order was not given to this section?

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe There are two levels to this. Current EU directives do not permit duty free shops on the land frontier. Ireland may not, therefore, operate a duty free shop on a land frontier. This is why I told the Deputy that, if this scenario developed, it would do so at ports and airports under EU law.

The next question relates to what the policy framework would be if we found ourselves in a situation where that did not apply. The policy framework operates on the basis of the World Customs Organization, WCO, which currently recommends that duty free shops operate at ports and airports and not on land frontiers. The UK is a member of the WCO. For these reasons, we believe it is unlikely that we will see the development in any way of a duty free centre or operation on the frontier between Ireland and what will then be a third country.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath On the policy point, is it the Government's position that, notwithstanding what other European countries may do on the question of duty free, it intends to align its position with the UK's? Is that the thinking at this point?

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe Yes, that is my current position in light of the significant passenger traffic between the UK and Ireland. That is what I will plan to do, but I wish to indicate that this section will be subject to a commencement order.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath If this scenario comes to pass, will the Minister be open to further assessment and evaluation of the question and the ramifications? What we have from his Department is just a one-page note that extrapolates the revenue forgone based on 50% of passengers travelling between Ireland and the UK buying tobacco and spirits. To make a policy decision, one would need a much more detailed analysis of what the overall consequences would be for the Exchequer, the ports, the airports and so on. Before a final decision was made in such a scenario, would the Minister be willing to undertake a deeper analysis of the consequences?

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe We have enough of an evidence base to know that, in the absence of this decision, there would be a significant tax base risk. It would not be appropriate for me to give an indication now, but if the UK were to decide to move into a duty free environment, the consequences for us would be so significant that my intention would then be to reciprocate. As is the case with any measure, we would then review its impact and policy consequences. It is important that I be clear with the House, though. If we found ourselves in a situation where for some reason the UK decided to bring in such a regime, it would create a significant issue for me and the Exchequer. I would look, therefore, to respond through the measures outlined in this amendment but I emphasise that they are precautionary. The chancellor of the British Government has indicated that it is not planning to do this and we have every reason to expect that will be the case. We are just noting that it would require legislative change by the UK.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty I wish to return to the issue of the island of Ireland and the Minister's statement that duty free shops would be at airports and ports. In the context of a no-deal scenario, our island would have a European frontier, and on this island there are well-established ferry crossings, for example, Greencastle to Magilligan in Derry, Carlingford to Portaferry and Omeath to Warrenpoint. I am referring to ports that would be deemed to be in different jurisdictions from one another. Could a duty free scenario not arise in respect of those points of crossing?

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe That would be dependent on whether any business interest or operator wanted to deal with any of those places.

Deputy Aengus Ó Snodaigh: Information on Aengus Ó Snodaigh Zoom on Aengus Ó Snodaigh Booze cruises.

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe That in turn would require authorisation from the Revenue Commissioners. A process would have to be gone through whereby the Revenue Commissioners would need to form an assessment.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty Would that necessarily be done by our Revenue Commissioners? Could it be done by the British authorities? The Minister referred to the reduced potential of the cross-Border element, but the scenario in question could be deemed an opportunity. One could set up a duty free shop right on the Border if one had the authorisation of the customs officials in London.

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe In that kind of scenario, the customs authorities would need to work together to form a view on the matter.

  Amendment agreed to.

  Section 53, as amended, agreed to.

  Sections 54 to 60, inclusive, agreed to.

NEW SECTION

Deputy Simon Coveney: Information on Simon Coveney Zoom on Simon Coveney I move amendment No. 42:

In page 38, between lines 8 and 9, to insert the following:
“CHAPTER 8

Excise
Amendment of section 104 of Finance Act 2001
61. Section 104 of the Finance Act 2001 is amended, in subsection (1)(e), by the insertion of “, other than the United Kingdom,” after “destination”.”.

  Amendment agreed to.

  Section 61, as amended, agreed to.

  Sections 62 to 66, inclusive, agreed to.


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