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Financial Resolution No.1: Alcohol Products Tax and No. 2: Tobacco Products Tax

Vote from 05/12/2012

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The Taoiseach: I move the following Financial Resolutions:

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Background information

The Taoiseach: I move the following Financial Resolutions:

Financial Resolution No. 1: Alcohol Products Tax
The Taoiseach: (1) THAT for the purposes of the tax charged by virtue of section 75 of the Finance Act 2003 (No. 3 of 2003), that Act be amended, with effect as on and from 6 December 2012, by substituting the following for Schedule 2 to that Act (as amended by section 88 of the Finance Act 2010 (No. 5 of 2010)):

“SCHEDULE 2Rates of Alcohol Products Tax(With effect as on and from 6 December 2012)

Description of Product
Rate of Tax
Spirits:

Beer:
Exceeding 0.5% vol but not exceeding 1.2% vol
Exceeding 1.2% vol but not exceeding 2.8% vol
Exceeding 2.8% vol

Wine:
Still and sparkling, not exceeding 5.5% vol
Still, exceeding 5.5% vol but not exceeding 15% vol
Still, exceeding 15% vol
Sparkling, exceeding 5.5% vol

Other Fermented Beverages:
(1) Cider and Perry:
Still and sparkling, not exceeding 2.8% vol
Still and sparkling, exceeding 2.8% vol but not exceeding 6.0% vol
Still and sparkling, exceeding 6.0% vol but not exceeding 8.5% vol
Still, exceeding 8.5% vol
Sparkling, exceeding 8.5% vol
(2) Other than Cider and Perry:
Still and sparkling, not exceeding 5.5% vol
Still, exceeding 5.5% vol
Sparkling, exceeding 5.5% vol

Intermediate Beverages:
Still, not exceeding 15% vol
Still, exceeding 15% vol
Sparkling
€36.85 per litre of alcohol in the spirits

€0.00
€9.56 per hectolitre per cent of alcohol in the beer
€19.13 per hectolitre per cent of alcohol in the beer

€123.51 per hectolitre
€370.64 per hectolitre
€537.81 per hectolitre
€741.28 per hectolitre

€40.08 per hectolitre

€80.16 per hectolitre

€185.36 per hectolitre
€262.92 per hectolitre
€525.85 per hectolitre

€123.51 per hectolitre
€370.64 per hectolitre
€741.28 per hectolitre

€370.64 per hectolitre
€537.81 per hectolitre
€741.28 per hectolitre
(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: Tobacco Products Tax
(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 6 December 2012, by substituting the following for Schedule 2 to that Act (as amended by section 69 of the Finance Act 2012 (No.9 of 2012)):

"SCHEDULE 2 RATES OF TOBACCO PRODUCTS TAX(With effect as on and from 6 December 2012)

Description of Product
Rate of Tax
Cigarettes …. .... .... ….

Cigars .... .... .... ….

Fine-cut tobacco for the rolling of cigarettes .... .... .... .…

Other smoking tobacco .... …. Rate of tax at­-
(a) except where paragraph (b) applies, €237.69 per thousand together with an amount equal to 8.83 per cent of the price at which the cigarettes are sold by retail, or
(b) €271.91 per thousand in respect of cigarettes sold by retail where the rate of tax would be less than that rate had the rate been calculated in accordance with paragraph (a).

Rate of tax at €275.342 per kilogram.

Rate of tax at €248.608 per kilogram.

Rate of tax at €191.022 per kilogram.
".

(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.1 provides for increases with effect from midnight tonight in the rates of alcohol products taxed across the full range of alcohol products. The increases when VAT is included amount to €1 on a standard bottle of wine, 10 cent a pint of beer, 10 cent on a pint of cider and 10 cent on a standard measure of spirits, with pro rata increases for other products. The expected yield from these increases is approximately €180 million in 2013 and a full year. The measures will increase the consumer price index by approximately 0.325%.

Financial Resolution No. 2 provides for excise duty increases on tobacco products with effect from midnight tonight. The increase amounts to 10 cent, inclusive of VAT, on a pack of 20 cigarettes together with pro rata increases for other tobacco products. An additional 50 cent increase will apply to 25 g of roll-your-own, RYO, tobacco. The price of a pack of 20 cigarettes in the most popular price category will increase to €9.30. The excise duty component of this price will be €5.57 and the total tax, inclusive of VAT, will be €7.31. The increase on RYO amounts to an increase in total tax, inclusive of VAT, of approximately 60 cent per 25 g pack. The excise duty component of this increase will be 49 cent.

The price and tax component of cigarettes in Ireland are among the highest in the EU. The high tax here reflects the long-standing commitment by successive governments to use taxation as an instrument to discourage smoking. While consumption of RYO tobacco is relatively small by comparison, there has been something of a movement towards this product in recent years. The additional increase in the tax on RYO will bring the tax on that product more in line with that on cigarettes. These latest increases will ensure that tobacco tax continues to play an important role in discouraging consumption of tobacco products.

Unfortunately, high prices and taxes also make Ireland an attractive location for cigarette smugglers. The Revenue Commissioners, who have responsibility for tobacco products tax, are very conscious of the threat that this poses to legitimate business and to the Exchequer and they continue to make tackling the problem a priority. Revenue has achieved notable successes in seizing illegal products and in bringing people involved in this criminality before the courts. This important work will continue.

This measure is estimated to yield €25 million in a full year.

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