Dáil Éireann debate -
Tuesday, 1 Oct 2024

I move:

(1) THAT for the purposes of the tax charged by virtue of section 72 of the Finance Act 2005 (No. 5 of 2005), that Act be amended, with effect as on and from 2 October 2024, by substituting the following for Schedule 2 to that Act (as amended by section 53 of the Finance (No. 2) Act 2023 (No. 39 of 2023)):

“SCHEDULE 2

RATES OF TOBACCO PRODUCTS TAX

(With effect as on and from 2 October 2024)

".

(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).

I have to confess that I only have Financial Resolution No. 1 here. I am more than happy to move Financial Resolution No. 2, if I can get the relevant paperwork. Will I move Financial Resolution No. 2?

Financial Resolution No. 1 provides for the excise duty increases on tobacco products with effect from midnight tonight. The increase amounts to €1, inclusive of VAT, on a packet of 20 cigarettes in the most popular price category, together with pro rata increases for other tobacco products. The price of a packet of 20 cigarettes in the most popular category, assuming the full increase is passed through to the final retail price, will increase to €18.05. The excise duty component of this will be €10.89 and the total tax, inclusive of VAT, will be €14.27. This represents approximately 79% of the price of a packet of 20 cigarettes. The pro rata increase on the price of a typical pouch of roll-your-own tobacco will increase by €1.38 to €26.34.

Ireland is committed to a policy of high taxation of tobacco in order to encourage people to quit smoking, especially younger people. The policy is working. In 2007 almost 30% of people were daily smokers and, by contrast, the Healthy Ireland survey for 2023 showed the figure then was 18%. There has been a significant drop from 29% to 18%. Obviously, we have a ways to go but it is a very important reduction.

Increasing tobacco product taxation is an important public health policy measure to continue this downward trend in smoking rates in Ireland. The increase in tobacco products tax is estimated to yield €69.7 million in a full year. I see this financial resolution as a central part of the Government's policy to encourage people to give up smoking.

I will speak to Financial Resolution No. 2 on the VAT on gas and electricity. Households continue to struggle under the weight of high energy bills. We know that electricity prices over the past three years have increased by almost 50% and gas prices have increased by more than 84%. Irish electricity prices remain among the highest in the European Union. All the while this is happening, the Government has refused to apply a windfall tax on electricity companies, allowing them to keep record profits at the expense of workers and families. Workers and families are seeing their bills go up time and again but there is no windfall tax, as we know, on the electricity companies. Figures released to my party show that 230,000 households were in arrears on their electricity at the end of April. We have provided for electricity credits of €450 for the autumn and winter but the Government really needs to do more with regard to the energy companies themselves. Look at a windfall tax and then make sure the money is ring-fenced to provide greater cost-of-living supports for workers and families.

I will move a Labour Party amendment to Financial Resolution No. 2. The Government motion intends to extend the 9% rate of VAT on electricity and gas until 30 April 2025. The measure is projected to cost €110 million, inclusive of November and December 2024, as it expires on 31 October. In our alternative budget, published last week, the Labour Party proposed this measure should be extended until the end of 2025. This would cost a total of €231 million or €120 million extra above what was allocated. As we know, bills remain 70% to 80% higher than pre-crisis levels. We do not have any proper measurement of energy poverty in Ireland but research by the Vincentian research centre shows the need for more supports and how even some A-rated homes cannot afford to cover their minimum needs.

As Sadhbh O'Neill writes in The Irish Times today on another measurement by the CRU, its data shows domestic electricity prices were the ninth most expensive in Europe and gas prices were the fifth most expensive. As we know, it is the poor who pay more for energy. The Corrib gas field supplies us with approximately one third of our own gas but we have the fifth most expensive gas prices. One of the key reasons for this, as the Minister knows, is the explosion of data centres which are soaking up excess renewable energy added to the grid.

It is clear that Ireland can afford an extended VAT rate. Prices remain far too high. The new PSO levy came into force today and will add €3.23 per month excluding VAT. Over a year it will add approximately €42. Further network charges could add an extra €100 to bills. A question the Minister might now also consider is whether, if the State is putting €750 million into the grid from AIB share revenues as was announced today, why will extra charges be passed onto consumers at all?

To put it simply, our electricity and gas prices remain way above the EU averages. Energy poverty remains a big problem. State charges will add well over €100 a year to bills next year. Extending the 9% VAT rate on gas and electricity for all of 2025 would be a small but important step to help families throughout the country through this difficult time. I ask the Minister to accept our amendment.

I will try not to. I want to speak to Financial Resolution No. 1 on the increase in the price of cigarettes and tobacco products. This is not a popular thing to say but I am completely opposed to such a hike in the cost of cigarettes. I believe it is vindictive. It will not deliver the stated ambition of the Government. Yes, rates of smoking dropped from 27% in 2024 to 17% in 2019. This was due to the smoking ban, increased costs and other societal factors. Between 2019 and 2024 the rate increased by 1% despite the fact that prices increased by more than 34%. When we take into account that smokers suffer from the cost of living also, we are getting to the point of diminishing returns. I do not see how the Minister can justify a measure that will undoubtedly lead to increased prevalence of the black market and will penalise those people who are already smoking and who need our support rather than being penalised. I must also put on the record that the decision by the Government to put a charge on vapes is daft. I am a former smoker myself. Vaping helped me to come off cigarettes. It is a benefit. Yes, we want to prevent young people from beginning to vape but for those who smoke vaping is the best route out of it. We should support it as a better alternative rather than penalising people for making that choice.

On behalf of every adult person in Ireland who smokes I absolutely object to this massive increase. Of course we want to see a society where people do not smoke but there are people who are dependent on cigarettes. It is not so much that they enjoy it but it is part of what they do. I totally disagree with what the Minister said earlier, whereby he said it was the continuous increase in the cost of tobacco that has curbed smoking. I do not agree with this. Of course people are opting for a better and healthier lifestyle, and rightly so. I would be a lot happier if every young person never put cigarette into their mouth but among the people who are taxpayers and who are working perhaps there are people who have a nervous disposition and smoking cigarettes is something that they do.

We are not a nanny state. We can encourage people not to smoke, but for God's sake-----

I thank Deputies. I appreciate that it is an imposition on those who already smoke and who have an addiction. One of the things we are doing is increasing the supports to help people stop. For example, nicotine replacement patches have been made free of charge. There is progress being made. I appreciate that it is a burden. Ultimately, however, the biggest burden for anybody is to be caught by these tobacco companies and to be addicted. We know and we have very strong evidence that price is linked to reducing the prevalence of smoking.

Hold on. An order of the House has been made. There are 20 minutes available for the next item. I will be very flexible.

The Minister has moved Financial Resolution No. 1. Is the resolution agreed?