The controversial carbon tax, which increases the cost of petrol, diesel and other fuels from midnight tonight, has passed in the Dáil tonight by 82 to 58 votes with the abstention of the Labour party.
It follows the first Budget vote earlier this evening reducing excise rates on alcohol in which the Government had a comfortable 88 to 75 majority.
Sinn Féin and Independents Noel Grealish, Jackie Healy-Rae and Michael Lowry supported the Government as did the three Fianna Fáil deputies who are outside the parliamentary party – Jim McDaid, Jimmy Devins and Eamon Scanlon.
Independents Maureen O’Sullivan, Finian McGrath and former Fianna Fáil TD Joe Behan voted with Fine Gael and Labour who opposed the alcohol tax cut, which comes into effect at midnight.
Mr Behan said he would oppose all measures in the Budget because it was “a bad day for the country and a bad day for Fianna Fáil”.
During very noisy exchanges with the Opposition, Minister for the Environment John Gormley strongly defended the carbon levy and said “this is an historic and proud day for those of us who care about the environment”.
“My only regret in relation to this is that it was not introduced many years ago. We have been talking about this for over 20 years.’’
He said that it was disingenuous of those on the Opposition benches who favoured the levy but could not vote for it. “There is a lot in this carbon levy for ordinary people, because it, as the ESRI has said for many years, will make our economy much more competitive,’’ he added. “It will provide for those people who are suffering from fuel poverty.’’
Labour’s Joanna Tuffy said that the levy was a tax which would not change people’s behaviour. “It really is just a tax to raise money,’’ she added. Ms Tuffy said the Minister should think of people living in remote rural areas or commuting from areas where there was no decent public transport system.
Introducing the reduction in alcohol taxes Taoiseach Brian Cowen said: “The expected cost is about €90 million in a full year” and would reduce the consumer price index by about 0.3 per cent.
Mr Cowen said the measure was “being introduced in order to protect revenue flows and to tackle the phenomenon of cross-Border shopping which is having an increasingly negative effect on our economy.
He added that “Ireland will still have the highest excise rates for sparkling wine in the EU, the second-highest rate for still wine after Finland, and the third highest excise rate on spirits after Sweden and Finland, and fourth highest excise rates on beer after Finland, the UK and Sweden”.
The Taoiseach insisted that “responsible drinking is not determined by the level of excise. If it were then we wouldn't have the alcohol problems that we do have in this country because we have the highest excise levels in many cases across the whole European Union. It is a nebulous argument.”
Fine Gael deputy finance spokesman Kieran O’Donnell said there was merit in reducing the excise because it was “loss leader” across the border. But he said the Budget itself was very short on “proper fiscal stimulus”. He asked if bringing down excise duty on alcohol constitute an “integrated policy in terms of generating jobs”.
His party colleague Alan Shatter said that with the cut in child benefit and a drop in the price of drink “this could best be described as a beer for children budget”.
Labour leader Eamon Gilmore said: “If this was a stand alone measure I could see merit in it. A reduction in excise might rebalance things. This is not a stand-alone measures. It has to be seen in the context of the wider Budget.”
Mr Gilmore added: “I cannot see how the Government can justify reducing child benefit which puts on food on the table for children and at the same time reducing excising to put drink on the counter for adults and I think it has to be evaluated against the entire Budget and the lack of fairness contained in it.”
Sinn Féin finance spokesman Arthur Morgan welcomed the proposal. The Louth TD said “I’ve seen firsthand the exodus of cars on the road to Newry. I’ve heard many of my neighbours in relation to the impact of excise costs on alcohol, which is one of the main attractions for incentivising people to cross the Border.”
Labour’s Pat Rabbitte said a report published just yesterday showed that “Irish people are the second highest consumers of alcohol in the OECD”. He added: “You kick away the blind man’s stick, cut the blind man’s pension. And what to do you do on the other side of the balance sheet? - cut the price of drink. That is a terrible epitaph for this dying Government.”
Fine Gael Cavan-Monaghan border TD Seymour Crawford said “a drop in Vat from 13 per cent to 10 per cent would have been a much better way to go”.
His constituency colleague Sinn Féin Dáil leader Caoimhghín Ó Caoláin supported the measure. He said he was in favour of cross-Border shopping, but what they were witnessing was an “unprecedented exodus from the southern Border counties and further south”.
Labour health spokeswoman Jan O’Sullivan described the measure as “the worst Irish solution to an Irish problem we’ve ever seen”.
Responding to the debate the Taoiseach said “the further people are away from the Border the less informed they appeared to be” about the consequences of the exodus of shoppers cross-Border.
He added that “it is not correct to suggest that this measure is a major economic stimulus. It is not a panacea but something positive needs to be done.”