Deputy Conor Lenihan was in possession.
Financial Resolution No. 5: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provisions in connection with finance.
–(Minister for the Environment and
Local Government.)
I appreciate the opportunity to speak on this excellent budget. Too much comment on it has inevitably focused on stay at home spouses because of the controversy and subsequent climb-down in which the Government engaged in regard to their tax treatment versus double income couples. There has been unhealthy debate on this issue, with Opposition Members trying to set so-called family values against double income couples.
Some constituents who contacted me adopted a tone which was quite insulting to such couples. They believed that somehow such couples of necessity could not bring up a child properly and were rearing a generation of neglected latchkey children. I am a member of a dual income couple, as are many others in our dynamic, growing workforce. Couples must work because Ireland is much wealthier today than it was 30 years ago.
What people could afford 30 years ago cannot be afforded now. This is why women are going out to work.
Another reason women are anxious to go out to work is that for years they were discriminated against. They were not allowed to work. They were subjected to the discriminatory Civil Service ban under which they had to cease work once they married. The Irish rate of female participation in the workforce is lower than the European average. I may not be entirely accurate but I suspect that the Irish rate is approximately 5% lower than the European average.
I congratulate the Minister, Deputy McCreevy, for his brave effort to address this problem through the tax code. A difficulty has existed in Tallaght in my constituency for the past two years. At almost every clinic in that time and also on the street, women have told me that they wanted to take up part-time jobs but they would be taxed to the hilt if they did so. This was unfair and a discrimination against women who wanted to go out to work because their families were reared or their spouses were ill. In one case, a woman wanted to work in a supermarket but if she worked a small number of hours to top up her family's income because her husband was on a disability allowance, she would lose many bene fits and also most of the money in tax. This was an unjust discrimination against women and the Minister attempted to address this inequity through the tax code.
There is an enormous disparity between the people that I meet as I do my duties in my constituency and those who telephone radio talk shows. The politics of the late 20th century is being driven by chat shows, talk show hosts and 'phone-ins. This is not appropriate or right. Although it is a term used by Marxists in the past, it is forcing and shaping a false consciousness. The talk shows are giving an unreal view of public opinion. As I go about my work in my constituency, I meet countless numbers of people who are happy with the tax provisions in the budget because they see money coming back to them. Nobody lost as a result of the budget. This important factor has been lost in the debate about the treatment of stay at home spouses.
I am glad the Minister, Deputy McCreevy, is an honest man. He proved his honesty over the years in, for example, championing real debate and opposition to policies then enunciated by the former Taoiseach, Mr. Haughey, within the Fianna Fáil Party. He made no secret of his opposition to those policies and outlined his views honestly. He made no secret of his aims and objectives in the budget. He wanted to get more women back into the workforce. He is not forcing them back to work; women are voting with their feet. They want to be in the workforce and they should be given every opportunity to participate in it. They were discriminated against in the past but they are not discriminated against in the budget.
When some members of my party were parading on the plinth, exercising their consciences and worrying about the budget's provisions, my principal concern was that these aspects would be unpicked in the deliberations and so-called debates on the radio talk shows which followed. I was particularly worried that the measure which favours women going back to work would be changed. However, I am glad that nothing has been unpicked. The budget's original provisions still stand.
Through his climbdown in relation to stay-at-home spouses, the Minister has added to the budget rather than subtracted from it. While I gave the Minister a certain amount of support at the briefing session, I told him I was worried that he would subtract from the budget rather than add to it. However, the Government has enhanced the budget. It has equalised in income and financial terms the treatment of those who go out to work and those who opt to stay at home. Initially, only 103,000 stay-at-home spouses were affected by the measure. By the addition to the budget through the Minister's climbdown, more women will benefit.
There are important items in the budget in relation to health care and the reduction in personal taxation. Some Opposition Deputies are deliberately misunderstanding our policy in this area. When we went to the country in 1997, we made a series of brave promises on the tax front, including a promise to reduce personal income tax rates to 20% at the standard rate and 40% at the upper rate. We are within striking distance of achieving that brave and well enunciated aim. This promise was not only an aspiration. It was written in cold print before the last election. It was dramatised ten days before the poll so the people would be clear about it. We said we would cut rates, lift allowances and try to bring more people out of the tax net. We have achieved those aims. As the Minister often points out, the budget is one of a series. The Government will present five budgets and I hope the Minister will present the final two in which the aim of a higher tax rate of 40% and a standard rate of 20% will be achieved.
The concerns of the lower paid must be addressed in the next two budgets in a much more focused way. I do not suggest that the concerns and welfare of the lower paid are not addressed in this budget. They are comprehensively addressed and I pointed this out to SIPTU president, Des Geraghty, when I took part in a radio show in recent days. He could not contradict me. In this budget 40,000 more people are being taken out of the tax net. They will not pay any tax. This number is in addition to the 80,000 people who were taken out of the tax net last year.
Over two budgets, a total of 120,000 people have been taken out of the tax net completely. One only enters the tax net after one earns £4,700 to £5,000. I agree with SIPTU that people on what should be the minimum wage of £5 an hour for a 40 hour week should be removed from the tax net completely. I appeal to the Minister, Deputy McCreevy, to take this proposal on board and perhaps implement it. He should make a promise in that regard and set it down as a Government objective in the next budget.
The Minister should press ahead with his plans. He has made two radical moves in the series of budgets he has presented, one of which is the switch to a tax credit system, which is democratic and egalitarian. It means that a person at the higher end does not gain disproportionately from a tax credit given at the lower end. This is an egalitarian move for democracy and will be of assistance to the lower paid. It will eliminate the situation which arose following many previous budgets where allowances were increased in an effort to help the lower paid, but high income earners, the richer section of our community, gained disproportionately from them. The tax credit system will address that problem.
The move towards individualisation will be the subject of discussion between the Government and the social partners. However, people are confused in thinking individualisation is a concept which relates to the tax code. The propagandistic notion being perpetrated by the Labour Party and the Fine Gael Party is that this is some sort of move towards the interests of the individual rather than society along the lines enunciated by Mrs. Thatcher in Britain. However, I assure them that this is not a Thatcherite Government and this is not a Thatcherite budget. The Fianna Fáil Party is committed to middle and low income earners and the next couple of budgets will ensure that vision comes to fruition. The Government will last its full five year term and implement the promises it made to the people in the 1997 general election.
I compare the budget to a business operation where a businessman is preoccupied with turnover. However, it is said that turnover is vanity and profit is sanity. There is a huge amount of vanity in this budget and people, particularly those on minimum wages who have to pay tax, have been excluded. The budget is completely focused on 17% of the electorate. The bulk of the electorate, including people who are heavily in debt, is ignored by the budget. A minimum wage of £4.40 an hour is set to be introduced and it is unreal that such workers are faced with paying tax on £67 a week.
The social welfare increases are most unfair. The children's allowance has only been increased by £2 a week. The expectation in the media and from the Minister and the Government before the budget was extremely high. People expected so much but, unfortunately, those who should have benefited most did not get anything like what they expected. In terms of development, there is a new poor class in Ireland whose problems must be addressed. There is much wealth in many areas but some people have not received any real gains. It is most disheartening for people to receive an increase of £2 a week or £104 a year in the children's allowance.
The Minister announced tax benefits for crechés. However, that benefit will not be taken up by those who have capital allowance benefits to build such facilites. A direct allowance, which people could see, would be better and would offset the huge cost factor in the care of children in homes.
This is a vanity budget driven by high expectations. The result is that many people are dismayed and saddened at the amount of exclusion.
Debate adjourned.