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 Header Item Financial Resolutions 2020: Motion (Continued)
 Header Item Financial Resolution No. 2: Excise - Mineral Oil Tax: Motion

Tuesday, 13 October 2020

Dáil Éireann Debate
Vol. 999 No. 2
Unrevised

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(Speaker Continuing)

[Deputy Stephen Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly] The answer to both questions is "Yes". One of the things we have done in the budget is to increase the Healthy Ireland budget by €20 million. It has quite effectively tackled issues around alcohol, tobacco and addiction. I fully agree that it cannot just be about pricing. What we know about increasing pricing is that it works. It is an elastic product and the evidence from Ireland and around the world shows that pricing is a very effective way of reducing its usage. It is particularly effective among younger people, who are one of the groups we wish to target. I fully agree with the Deputies that it should not be the only measure. We need to invest in Healthy Ireland and preventative care.

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin People who do not wish to pay the tax may choose to purchase illicit cigarettes.

Deputy Stephen Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly That is a fair point. I have figures before me relating to the illicit trade. Deputy Duncan Smith asked whether the Government has considered the point at which the benefit of the revenue brought in by duties on tobacco is outweighed by the increase in counterfeit tobacco and the associated effects. Health officials and finance officials consider the fact that when we increase the tax and the price goes up, it increases the volume of illicit trade. The briefing note I was provided for this session shows that the volume of illicit trade in roll-your-own tobacco is increasing. That is something we need to consider. Tackling it probably involves an investment in customs, justice and enforcement, as well as in Healthy Ireland and awareness.

On the facts and figures, the consumption of illicit and non-Irish duty paid cigarettes in 2018 stood at 22% of the market, which is a sizeable chunk. That figure comprises 13% illicit cigarettes and 9% illegally imported. In 2019, the Revenue Commissioners seized 13.4 million cigarettes worth approximately €8.59 million, which is a sizeable amount. The total cigarette consumption in Ireland last year is estimated to have been 2.769 billion cigarettes or 138 million packs. An estimated 15% of cigarette packs or approximately 415 million illicit cigarettes were consumed last year, representing a notional tax loss of €242 million. This is serious stuff. Furthermore, there has been an apparent increase in the illicit market for roll-your-own tobacco. It is estimated that illicit roll-your-own cigarette packs accounted for 12% of the market in 2019, at a cost to the Exchequer of €22 million in excise and VAT.

On the point made by Deputy Howlin, what is also relevant is that the estimated tax loss for cigarettes and roll-your-own tobacco is viewed as a notional loss in Exchequer tax revenue as it assumes that the illicit cigarettes consumed would displace the equivalent quantity of full duty-paid cigarettes, which is unlikely to be the case.

I am happy to provide the Deputies with any further briefings on the taxation side, the illicit trade, or indeed, my own area of Healthy Ireland. There is much good work that could be done. If Deputies Boyd Barrett or Duncan Smith have ideas about ways in which we could reach other groups and support them in public health ways, I and the Healthy Ireland team would be very interested to hear those ideas. If they wish to meet me in the coming days, I am more than happy to set something up.

  Question, "That Financial Resolution No. 1 be agreed to", put and declared carried.

Financial Resolution No. 2: Excise - Mineral Oil Tax: Motion

Minister for Children, Disability, Equality and Integration (Deputy Roderic O'Gorman): Information on Roderic O'Gorman Zoom on Roderic O'Gorman I move:



    (1)THAT for the purposes of the tax charged by virtue of section 95 of the Finance Act 1999 (No. 2 of 1999), that Act be amended, with effect as on and from 14 October 2020—
      (a) in section 96(1B), by substituting “A is the amount to be charged per tonne of CO2 emitted, being €33.50 in the case of petrol, aviation gasoline, and heavy oil used as a propellant or for air navigation or for private pleasure navigation, and €26 in the case of each other description of mineral oil in Schedule 2A” for “A is the amount, €26, to be charged per tonne of CO2 emitted”,

      (b) by substituting the following for Schedule 2 to that Act:
    “SCHEDULE 2

    Rates of Mineral oil tax

    (With effect as on and from 14 October 2020)
    Description of Mineral Oil Rate of Tax
    Light Oil:  
    Petrol …. .... .... …. …. …. …. ….

    Aviation gasoline …. .... .... …. …. …. …. ….
    €619.36 per 1,000 litres

    €619.36 per 1,000 litres
    Heavy Oil:  
    Used as a propellant …. .... .... …. …. …. ….

    Used for air navigation …. .... .... …. …. …. …. ….

    Used for private pleasure navigation …. ....

    Kerosene used other than as a propellant …. ....

    Fuel oil …. .... .... …. …. …. …. ….

    Other heavy oil …. .... .... …. …. …. …. ….
    €515.38 per 1,000 litres

    €515.38 per 1,000 litres

    €515.38 per 1,000 litres

    €65.74 per 1,000 litres

    €95.05 per 1,000 litres

    €117.78 per 1,000 litres
    Liquefied Petroleum Gas:  
    Used as a propellant …. .... .... …. …. ....

    Other liquefied petroleum gas …. .... .... ....
    €106.07 per 1,000 litres

    €42.48 per 1,000 litres
    Vehicle gas: …. …. .... .... …. …. …. …. …. €9.36 per megawatt hour
”.
    and
      (c)by substituting the following for Schedule 2A to that Act:
    “SCHEDULE 2A

    Carbon Charge

    (With effect as on and from 14 October 2020)
    Description of Mineral Oil Rate
    Light Oil:  
    Petrol …. .... .... …. …. …. …. ….

    Aviation gasoline …. .... .... …. …. …. …. ….
    €77.52 per 1,000 litres

    €77.52 per 1,000 litres
    Heavy Oil:  
    Used as a propellant …. .... .... …. …. …. ….

    Used for air navigation …. .... .... …. …. …. …. ….

    Used for private pleasure navigation …. ....

    Kerosene used other than as a propellant …. ....

    Fuel oil …. .... .... …. …. …. …. ….

    Other heavy oil …. .... .... …. …. …. …. ….
    €89.66 per 1,000 litres

    €89.66 per 1,000 litres

    €89.66 per 1,000 litres

    €65.74 per 1,000 litres

    €80.27 per 1,000 litres

    €70.42 per 1,000 litres
    Liquefied Petroleum Gas:  
    Used as a propellant …. .... .... …. …. ....

    Other liquefied petroleum gas …. .... .... ....
    €42.48 per 1,000 litres

    €42.48 per 1,000 litres
    Vehicle gas: …. …. .... .... …. …. …. …. …. €5.22 per megawatt hour
”.
    (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 provides for an increase in the carbon charge component of mineral oil tax on petrol and auto diesel with effect from midnight tonight. The increase amounts to €7.50 per tonne of CO2 emissions. Assuming the full increase is passed through to the final retail price, this will result in a VAT-inclusive increase of 2.1 cent on the price of a litre of petrol and 2.4 cent on the price of a litre of auto diesel.

  The carbon tax was implemented on a phased basis from 2009. The current rate is €26 per tonne of CO2 emission and is applied to fossil fuels. This increase will bring the rate to €33.50 per tonne. There is a commitment in the programme for Government to increase the carbon tax to €100 per tonne by 2030. This is to be achieved by a series of annual increments of €7.50 from 2021, with a final increase of €6.50 in 2030. In terms of revenue raising, the increase in the carbon tax is estimated to contribute €108 million in 2021 and €147 million in a full year.

An Leas-Cheann Comhairle: Information on Catherine Connolly Zoom on Catherine Connolly There is a limited amount of time and ten speakers have indicated, so I ask Deputies to be brief.

Deputy David Cullinane: Information on David Cullinane Zoom on David Cullinane In that spirit, I will keep my contribution to approximately two minutes in order to allow other Members in. I oppose the resolution on the basis that it includes an increase in the carbon tax. I wish to see this State and, indeed, this island become greener and cleaner, but I do not wish for that to be done at the expense of hard-working families, those who are in fuel poverty or those at risk of fuel poverty. The problem I have with the resolution and, indeed, the proposal of the Government in respect of the increase, is that if the increase in the carbon tax is locked in, it will be locked in for each year for several years, but what have not been locked in are the mitigating measures referred to by the Green Party in the course of the general election campaign.

I am especially concerned for those who live in rural Ireland. They do not have access to public transport and, as such, depend on the car. I am concerned about older persons who need to heat their homes, but will do so to a lesser extent if the Government keeps increasing the carbon tax. I am concerned that, once again, nowhere near enough funding is provided in the budget, despite some advances, for public transport, retrofitting and all the alternative measures which need to be put in place. I am afraid this carbon tax increase will hit many hard-working families hard. It will be a regressive measure. The Economic and Social Research Institute, ESRI, has repeatedly stated it is regressive. Nothing in the budget that I can see makes this a progressive measure. It will hit the lowest income families hardest and that is something neither I nor my party can support. For that reason, we will be opposing this financial resolution.

Deputy Pádraig Mac Lochlainn: Information on Pádraig Mac Lochlainn Zoom on Pádraig Mac Lochlainn I urge the Minister to think about the average working family in rural counties such as County Donegal. Such a family typically has a car that is six, seven or eight years old. Those living in Donegal who wish to travel to a job or a place of study cannot do so by public transport. As such, they must drive a car and fill it with diesel or petrol. The average family in such areas cannot afford an electric car. God forbid. It is just out of reach. Even if they could afford such a car, it would not be practical because of the infrastructure in Donegal. The Government is penalising people who do not have an alternative.

Many people whose home is heated by oil, coal or turf do not have the money to retrofit their home, such as by installing solar panels. In this case, the Government is again penalising people who do not have an alternative. The objective which the Government wishes to achieve is not affordable, so it is penalising people who cannot afford it. The people who will benefit from the increase are the wealthier in society.

This is an ill-thought out and lazy policy. The Government could go after the heavy polluters in society but it is not doing so in an effective way. Any representative of rural Ireland worth their salt who looks at the full spectrum of options available to people in rural Ireland must oppose this proposition. It is a no-brainer for a representative of rural Ireland to oppose this financial resolution.


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