Budget passes first hurdle

 

The Government had a comfortable majority of five in the first vote on the Budget’s financial provisions.

Former Progressive Democrat and now independent TD for Galway West Noel Grealish abstained and former Fianna Fáil Wicklow TD Joe Behan voted with the Government to give them a 82 to 77 vote victory on the first four financial motions.

In a later vote on subsequent financial motions Mr Grealish voted with opposition.

Independents Jackie Healy-Rae (Kerry South) and Michael Lowry (Tipperary North) voted as expected with the Government while Dublin North Central independent Finian McGrath and Maureen O’Sullivan (Ind, Dublin Central) voted with Fine Gael, Labour and Sinn Féin against the Budget provisions.

The issues dealt primarily with excise matters including changes in vehicle registration tax and a provision to increase petrol by 4 cent a litre and auto diesel by 2 cent a litre.

Introducing the measures Taoiseach Brian Cowen said the expected yield from these increases “is about €106 million in a full year. They will increase inflation by 0.13 per cent.”

He said that “compared to Northern Ireland the price of petrol was around 10 cent in the State and auto diesel around 20 cent cheaper. And while the increases will narrow the differential it will still remain significant.”

Mr Cowen said the Government did not go the carbon tax route because it would have resulted in increases in taxes in areas such as home heating oils.

A reduction in the air travel tax will go into effect from March 1st 2011 with a single rate of €3 per departing passenger on a temporary basis.

Mr Cowen said it was a reduction from €2 (trips of less than 300 miles) and €10 for more than 300 miles.

“This will cost the exchequer of €56 million next year. The rates of tax applied by many other countries is substantially more than in Ireland,” he said.

“The impact of the air travel tax has been overstated,” he said.

“The number of factors were more related to economic activity.”

He warned that “the rate will be increased unless clear and decisive evidence of an appropriate response from the airlines of increasing capacity”.

The provisions also extended the car scrappage scheme until June 30th 2011 and extend until 31st December 2012 the vehicle registration tax relief available with a lower threshold for certain hybrid and flexible fuel vehicles.

Fine Gael (FG, South-Central) said he did not understand why they were not increasing the cost of fuel by applying an increase in carbon tax but choosing excise instead, particularly when in the last few budgets the Government had specifically introduced carbon taxation.

He said it was “insane to charge people for the privilege of coming to Ireland while we’re trying to stimulate activity in the tourist sector”. And they were going to continue to charge €10 until March “even though we know it doesn’t work” and even after that to continue the “folly” of charging €3.

Labour leader Eamon Gilmore said that while the Government had made a move in reducing the air travel tax and applied some conditionality to it.

“This is one of the taxes the disincentive of which is the fact of the tax as much as the amount.”

Sinn Féin Dail leader Caoimhghín Ó Caoláin said the Government should have gone the whole way and abolished the tax altogether. “A golden opportunity was lost” for the tourist sector.

John O’Donoghue (FF, Kerry South) said “the old Sinn Féin philosophy of ‘even our rivers run free’ has now been extended to our petrol runs free, our diesel runs free and even our drink should free’. The world doesn’t work light that.” He said Sinn Féin was “stranded at a crossroads somewhere between Paradise Lost and Utopia and you’ve never returned from there”.

Earlier the Government had another comfortable majority in the first vote after the Budget in a procedural row. This was about the grouping of motions for decision and the Government won by 82 votes to 78.

Labour leader Eamon Gilmore had said it was fine to debate the four motions together on petrol and diesel increases, the VRT changes and the reduction in air travel tax. But he said it was not correct to vote on all four together. They were effectively voting on a Finance Bill tonight, he said.

Fine Gael’s Brian Hayes (Dublin South-West) said some of the issues to be decided would not come into effect until January 1st and there was no need to vote on them tonight.

The first group of issues to be debated were excise-related and included an extra 4 cent on a litre of petrol and 2 cent on a litre of diesel and changes in vehicle registration tax.

Taoiseach Brian Cowen said that everybody wanted certainty and this was bringing certainty.