Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

It is another excise increase. There had been no general excise increase on alcohol products since 1994. In the circumstances in which we find ourselves it is legitimate to increase excise duty on alcohol. First, it involves discretionary expenditure. Rather than increase tax where people had no choice but to pay it, it was decided to tax items where there was real choice, as in the case of smoking or drinking alcohol. This is a better way to impose taxation. The yield is very significant on these increases, amounting to €180 million in a full year. When in our debates we realise how difficult it is to achieve a yield of €25 million, €30 million or €40 million, we must acknowledge that a yield of €180 million is significant, especially when there has not been a general increase since 1994 and considering that the market does not seem to be particularly price sensitive. The value of wine sales increased in February. Therefore, the increase did not seem to have any effect on sales.

One aspect of the rationale which the Deputy might describe as unfair or otherwise centred on my desire to have a policy that would restrict the sale of cheap alcohol in off-licences, particularly supermarkets. It has proved beyond my ability to come up with a policy. We tried every which way last year to determine whether we could do it, but we could not find a legal way of differentiating between on-sales and off-sales. We talked about closed containers and all sorts of matters. We ran through the whole gamut but could not find a solution. Our goal can be achieved through minimum pricing orders. That is the approach taken in Scotland, but it has been challenged in the Scottish courts. We will see how it works out. If the mechanism proves to be legal in Scotland, we might be able to move in that direction here. However, in the absence of a solution, one must acknowledge that the imposition of an extra €1 in excise duty on wine represents a greater imposition than that on other alcohol products, amounting to 10 cent. Very little wine is sold in the on-trade; it is the off-licence trade that counts. Certainly, it is skewed and this is not a proportionate imposition of excise duty across the trade. There is more excise duty on wine, but this is because it is largely associated with the off-licence trade.

I was amazed at the statistics and hope I am recalling them correctly. My officials can correct me if I am wrong. When we were making the decision, approximately 24% of all alcohol sales involved wine. I remember reading in the newspaper after the 1969 election that the late Conor Cruise O'Brien, on having his first meal in the Members' restaurant, ordered a bottle of red wine and the manager had to send someone to Mitchell & Son on Kildare Street to get one. There was no wine in-house in Leinster House in 1969. One can see the change in practice that has occurred. That is the thinking behind the tax.

The €1 increase includes VAT. All of the other excise increases also include VAT. Consequently, the 10 cent increase on beer or the unit of whiskey is VAT inclusive. I do not know what the calculation was, but I do know that the result is a straight increase of €1. There is a peculiarity, however. The excise duty on wine and other alcohol products is imposed by volume; therefore, there is no differentiation between a cheap bottle and a dear bottle of wine. A cheap bottle of wine purchased in the local garage attracts an extra euro in excise duty, while a bottle of wine worth €70 purchased in a good restaurant also attracts an extra euro. It is not price related but volume related. I believed this was a little peculiar, but I am not in a position to change it. I do not believe, however, that it is particularly worth changing. That is the only peculiarity I found in the imposition of excise duty on wine.