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Dáil Éireann debate -
Tuesday, 18 Jun 1968

Vol. 235 No. 8

Finance Bill, 1968: Second Stage.

I move that the Bill be now read a Second Time.

In accordance with the usual practice, I propose to give a brief review of the provisions of this Bill which are explained in the memorandum circulated with the Bill. The Bill contains measures for implementing the Financial Resolutions and Budget proposals as well as provisions on a number of other matters to which I shall draw attention.

Part I of the Bill deals with income tax.

Section I contains the customary charging clause for income tax and sur-tax. There is no change in the rates, but the slice of income chargeable to sur-tax at 6/- in the £ is reduced from £3,000 to £2,000 which means that the highest rate of 9/- will come into operation at £6,500 instead of £7,500. The purpose of this change is to recover some of the cost of raising the special sur-tax allowance for earned income made available by section 17.

Section 2 is designed to ensure that payments for the acquisition of industrial "know-how" will be allowed as deductions for tax purposes, thereby removing any doubts that may exist as to the position under the existing legislation. This is the first of a number of measures in the Bill which are intended to encourage industrial efficiency and assist the expansion of the industrial sector.

Section 3 deals with a new relief not referred to in my Budget speech. The purpose is to assist the implementation of industrial reorganisation schemes by removing an obstacle to them which exists at present. This section provides that, where a worker is paid a lump sum to compensate him for actual or potential loss of earnings owing to the reorganisation of his employer's business, the tax deducted under the PAYE system will, broadly speaking, be reduced to the total amount which would have been payable if the lump sum had been paid to him in three equal annual instalments. Under existing legislation, tax is payable on the full amount of the lump sum in the year in which it is received. The present position regarding the tax payable, therefore, on these payments makes employees reluctant to accept them in some cases.

Under the provisions of section 4, the rates of wear and tear allowance on certain plant and machinery are being rationalised. Only three rates of allowance will apply to such plant and machinery provided on or after 1st April this year. At present there are some 18 rates in operation and the reduction to three rates will simplify matters for all concerned. The consequential changes in respect of corporation profits tax are made by section 29 (1) of the Bill.

Section 5 provides for the termination with effect from 6th April, 1969 of assessments under Schedule A in respect of the ownership of property and under Schedule B in respect of the occupation of land. It will, however, be necessary to make detailed provision to remove completely the charge under these Schedules and I propose to introduce the necessary legislation in the autumn. In accordance with assurances which I gave during the Budget debate, the legislation will include specific provision to secure that farming profits, formerly chargeable under Schedule B, do not as a result become chargeable under Schedule D.

Section 6 obliges traders, professional people and anyone engaged in a profit-making activity to keep records to enable them to make true returns of income. I gave notice in last year's Budget speech of my intention to introduce this provision which accords with recommendations made by the Commission on Income Taxation and the National Industrial Economic Council.

Sections 7 to 11 contain measures which were not referred to in my Budget speech. Their broad effect is to enable the Revenue Commissioners, where an employer has made no remittance or an inadequate remittance under the PAYE regulations, to estimate the amount which they consider he should have remitted. The Commissioners' powers to require an employer to give particulars of wages paid have proved inadequate in practice. The additional powers now being provided are on the lines of those in force for turnover tax.

I announced in my Budget speech that I intended to grant a special increase of £100 in the personal allowance for a married man in the year in which he marries in order to help him meet the increased expenses he incurs in that year. Section 12 applies this increased allowance to men whose marriage takes place on or after 6th April, 1968.

Under section 13, which was not referred to in the Budget speech, banks and other financial institutions will not be required to make returns to the Inspector of Taxes of interest of £70 or less paid on deposits without deduction of tax. The present limit of £50 was fixd in 1965 when the first £50 of deposit interest was exempted from tax. The tax-exempt figure was raised to £70 in last year's Finance Act.

Section 14 widens the scope of the relief given in respect of expenditure by a trader on scientific research by removing the existing condition that the expenditure should be related to his trade. Section 29 (2) makes a consequential amendment in respect of corporation profits tax.

Sections 15 and 16 provide that in certain circumstances the Appeal Commissioners shall "determine" an appeal and thus secure to the taxpayer the right of rehearing before the Circuit Judge. My Budget speech did not refer to these provisions.

Section 17 increases from £1,250 to £2,000 the amount of the maximum earned income allowance for sur-tax purposes. This relief will, it is hoped, assist Irish enterprises in attracting and retaining persons of talent in the managerial and technological spheres. As I mentioned earlier, part of the cost of this relief will be met by bringing forward the stage at which the 9/- rate of sur-tax becomes payable.

Part II of the Bill relates to customs and excise. Sections 18 to 24 provide for the increases, announced in the Budget, in the customs and excise duties on beer, spirits, hydrocarbon oils, tobacco and wine.

Part III, which contains only one section, increases the existing reliefs from estate duty for widows and dependent children as well as the range of estates to which the reliefs will apply.

Part IV of the Bill is concerned with corporation profits tax. Section 26 relieves Irish investment trust companies from tax in respect of dividends paid to them out of profits which have borne British corporation tax. Its purpose is to encourage the development here of investment trust companies which will attract capital, both domestic and foreign. The relief will be available only to companies which meet certain specified conditions.

Section 27 raises to £4,000 the limit on the amount that may be allowed, in respect of the remuneration of a director of a director-controlled company, in computing the profits of the company for the purposes of corporation profits tax. The present limit of £2,500 was fixed in 1964.

Section 28 continues up to 31 December, 1970, the exemption from corporation profits tax enjoyed for many years by certain public utility companies, building societies and the Agricultural Credit Corporation.

I have already referred to section 29 which is related to the provisions of sections 4 and 14.

Part V relates to the notification required to be given to a supplier by a person registered for turnover tax in cases where tax is chargeable.

Part VI provides that the selective wholesale tax is payable in all cases where registration numbers are not quoted to suppliers.

Finally, I come to Part VII of the Bill which, though entitled "Miscellaneous", contains a number of important provisions. The purpose of section 32, which is a customary provision is two-fold. First, it adjusts the annuity fixed provisionally last year for a period of 30 years for the redemption of the debt incurred on the voted capital services in 1967-68 by relating the annuity to the actual instead of the estimated expenditure. In addition, it fixes provisionally a new annuity, also for 30 years, to redeem the estimated expenditure on the voted capital services in 1968-69.

Section 33 extends exports tax relief to profits from export sales of certain engineering services carried out in the State. This provision, which was not referred to in my Budget speech, will, it is hoped, encourage the establishment here of enterprises providing these services in connection with works executed abroad, thus enabling our engineers and draughtsmen to find suitable employment in Ireland.

Section 34 provides a measure of double taxation relief for companies which derive dividends or interest from the investment in subsidiaries in countries with which comprehensive double taxation agreements are not in force, of profits which have been relieved from tax under the exports tax relief provisions. It has been represented to me that the absence of double taxation agreements with a number of countries acts as a deterrent to foreign investment in industry here. This relief will go some way towards the removal of this obstacle pending the completion of double taxation agreements.

Section 35 is also designed to encourage foreign investment in export industries. It provides for "Shannon" or exports tax relief in respect of profits from sales between associated companies which otherwise manufacture solely for the export market. Some firms, particularly foreign ones, prefer for organisational reasons to establish subsidiary companies rather than branches and the effect of this relief is, as it were, to put transactions between such subsidiaries on the same footing for tax purposes as transfers of goods between branches.

Section 36 is consequential on the coming into operation of the Redundancy Payments Act. Its purpose is to exempt employees from tax on sums received by them under that Act and to provide relief to employers in respect of payments made under it. The Budget speech did not refer to these provisions.

Section 37 increases to 60 per cent the initial allowance for capital expenditure on new plant and machinery incurred in the period 1st April, 1968 to 31st March, 1971.

Under section 38, the existing initial allowance of 20 per cent for industrial buildings is continued for a further three years.

Section 39 abolishes the corporation duty which was imposed in 1885 for the purpose of compensating the Revenue for the non-liability to death duties of certain property of corporate and unincorporate bodies. The duty yields less than £1,000 a year.

As I announced in the Budget speech it is proposed to authorise trustee savings banks to introduce a new type of account, to be known as an "investment account", offering a higher rate of interest than that paid on ordinary deposits with these banks. Section 40 of the Bill enables me to determine from time to time the rate of interest on deposits in the new account.

Section 41 is designed to deal with a technical point arising out of the free radio and television licence schemes.

Sections 42 to 45, which are concerned with motor taxation, were not referred to in the Budget speech. Section 42 gives relief from the taxation payable by disabled persons on their vehicles. I am sure everyone will agree with the desirability of the concession. Section 43 is designed to remove difficulties which have arisen over the years in regard to the taxation of certain vehicles consisting of a combination of tractor and large trailer used in connection with such operations as land drainage, housing schemes and road construction. Depending on the design of the combination, the tax payable can vary from £31 10s. to £145. The lower rate will, normally, now apply to all these vehicles.

Section 44 abolishes concessionary rates of taxation for certain vehicles of which there are, in fact, no longer any models in operation. Section 45 confirms an Order made under the Imposition of Duties Act, 1957.

I appreciate that Deputies may wish to have further clarification of these provisions, many of which are, admittedly, of a rather technical nature and I shall be glad to deal at the Committee Stage with any points raised.

As the Minister remarked in his concluding sentence, a number of the matters dealt with in this, as indeed in all Finance Bills, are of a technical and detailed character. It has often struck me, and this might be the appropriate occasion to mention it, that the Committee Stage, whatever about the Second Stage, of a Finance Bill might be appropriate to refer to a Special or Select Committee of the Dáil. The normal discussions on the Finance Bill generally involve on the Second Stage a rehash of the Budget debate and in many cases a number of matters that are mentioned or facts that are brought before the Dáil have already been discussed in the Budget debate, and consequently are merely a repetition of what has taken place some few weeks earlier. On the other hand, it has been our general experience here, and what I say now does not apply only to the present Minister, that the Finance Bill is normally circulated at an advanced stage of the summer session and the debates on it have, for one reason or another, been compressed into a short period and a period in which a good deal of either end-of-the-session legislation or Estimates are being put through.

This Finance Bill is probably less complex and indeed has fewer sections than are normally included in the measure. One reason for that fact, which is mentioned in the explanatory memorandum and which was referred to by the Minister, is that the detailed legislation dealing with the proposed abolition of the provisions relating to Schedule A and Schedule B tax will later be dealt with in a comprehensive and more detailed piece of legislation. There is, I think, a general recognition that the short time which elapses between the introduction of the Bill and its discussion on Second Stage makes it difficult to engage in a detailed discussion of the actual terms of the measure itself, and while many of the individual sections deal with separate matters and are of a detailed character and normally lend themselves to a Committee Stage type of discussion, in considering a measure of this sort it is essential for Deputies to consult accountants very often to examine decided cases, and generally to have a discussion of a detailed and technical character with professional people and people with the necessary expertise. This places, not merely on individual Deputies but on an Opposition Party, the responsibility and duty of getting in touch with people at relatively short notice and expecting the kind of knowledge which is readily available to the Minister either from the Department or from the Revenue Commissioners.

It seems to me, therefore, that this particular measure might, if not this year, in the future be the subject of reference to a Special or Select Committee so far as the Committee Stage is concerned. It will have the advantage, which I think we found in dealing with some complex measures such as the Companies Act and Bills dealing with electoral reform, that it is possible for Deputies to get advice through the Minister in an informal way or the officials of the particular Department concerned. It would at the same time enable the Dáil to proceed with other legislation without holding up the passage of either this Bill or other legislation by absorbing Dáil time in discussing a measure which in fact is both technical and specialised.

The actual Bill itself in the main confirms the matters which were introduced in the Budget, with certain exceptions which the Minister referred to. He mentioned in particular the provisions in sections 7 to 11. Here again this emphasises the need for time to consider the details of it and to get the necessary information before the consideration on Committee Stage. There are, however, certain general matters which I wish to refer to and which are omitted from this Bill. The present rate of personal allowances in respect of income tax have remained virtually unchanged for ten years. They have been either static or almost static for that period, while at the same time the cost of living has increased to such an extent that there have been numerous wage and salary adjustments during that period not merely in respect of State and semi-State employees but through the economy generally where action has been taken to raise wages and salaries in order to compensate for the rise in the cost of living. The present rate of personal allowances is entirely out of line with the changes in the cost of living and is imposing in many cases very considerable burdens.

It is unnecessary to repeat the arguments that have been adduced here or to refresh the memory of Deputies on the facts of the situation except to say that the rate of allowances which was considered adequate, or, I suppose, accepted as adequate but which was decided as applicable a decade ago, cannot be regarded, because as far as I know there were only one or two minor changes, as sufficient to cover the problem of persons at present. Leaving aside the actual rate of the personal allowances, there are certain specific cases of hardship. Indeed, the change which the Minister makes in sections 42 to 45 recognise this problem in so far as vehicles used by disabled persons are concerned. At present a disabled person is not entitled to an allowance for a housekeeper. A number of cases have been brought to my notice, and I have no doubt to the notice of the Minister and Deputies generally, where a disabled person, because of his disablement, has to employ a housekeeper or a person to look after him. This applies particularly in relation to the ability of a family or an individual member of a family to cope with a disabled person and in these cases disabled persons have to employ housekeepers. At present the tax relief granted applies only where the housekeeper is employed in respect of the care and maintenance of a child, the child of a taxpayer who is a disabled person and who is entitled to the child allowance.

It is quite possible and quite feasible to draft a section which would exclude any possibility of abuse in cases of this sort. As I understand it, one of the arguments adduced against it was that the type of legislation that would be necessary could involve difficulties for the draftsmen or the Revenue Commissioners. If, as is obvious, most of these cases would only be concerned with a person who was disabled and where the housekeeper had to be employed because the person was physically incapacitated in some way, it ought be possible to frame a section. If it is possible to do so in respect of other matters, it ought be possible to do it in this connection. A great many people are suffering hardship and the amount involved could in no circumstances be regarded as considerable. There is a very strong case for granting this relief.

The other aspect of this question which has been discussed here on many occasions is in regard to medical expenses. A slight modification was made in the Budget last year in respect of this but even that is not sufficient, and so far as I know applies only to expenses incurred in respect of medicines over a certain sum. The Minister referred to reliefs granted in section 33 which so far as I can understand it, is designed to provide relief in respect of certain engineering services. This is in line with the incentive which was provided to attract to this country technological, scientific and engineering personnel and other qualified persons for whom there is a considerable need and for whom it is desirable that the necessary attractions should be provided. I would be interested to know whether this provision covers projects such as the Whiddy Island project and similar undertakings of that character.

Changes which are being made in the main follow the changes which were foreshadowed in the Budget, but over and above that there is a great need for the implementation of the NIEC recommendation in regard to a prices and incomes policy. For many years there has been a great deal of discussion about this and in recent times, possibly because of the experience of Britain, it seems to me that we have tended to go slow on it here. The emphasis which was formerly placed on the need for such a policy has slackened. Some reference was made in the Budget speech, and more especially in the Budget speech of last year, to this aspect of the matter but without giving any practical or detailed proposals. It is emphasised here by the reference in the explanatory memorandum as well as in the Minister's speech to the proposals to provide additional powers in sections 7 to 11 in respect of matters which were not discussed in the Budget but which are apparently necessary because of the inadequate powers under PAYE.

One of the attractions of the PAYE system when it was introduced was that it provided machinery for deducting at source and it extended the powers and operation of deducting at source which applied in respect of State and semi-State employees to a much wider section in the community. The fact that it is now necessary to provide additional power because of some suggestion that the terms have not been observed in practice and that the existing powers have proved inadequate indicates, in our view, the need for a definite Government commitment. This must be a commitment not merely in respect of State employees but which recognises as essential throughout commercial and industrial community the need for a prices and incomes policy.

The problem of adjusting wages and salaries can then be tackled on a comprehensive national scale. Due regard can be had to the problems involved and due consideration given to the needs of the lower paid workers, to the problems inherent in and the difficulties experienced by those sections, so that a scheme can be drawn up. Such a scheme will enable, by discussion and negotiation, by the laying down of guidelines, and the application of these guidelines in practice to a system of wage and salary adjustments, progressive and adequately worked out wage and salary changes to be operated, recognising that it is in the national interest and in the interests of all sections that these matters should be changed and improved rationally and carefully while, at the same time, placing the obligation on the State, on State Departments, on State and semi-State organisations to set a headline for other sections of the community.

As I said earlier, detailed consideration of individual sections of this Bill can be undertaken more fully on Committee Stage. Consideration should, however, be given to the setting up of a Select Committee to enable discussion of details of Finance Bills, details which are recognised by not only economists, accountants and other professional people but also by those who have to deal with the application of fiscal legislation generally and taxation proposals in particular as affecting many people but which, because of their complex and detailed nature, are outside the normal comprehension of those who have not up-to-date information available. It would expedite the consideration of Finance Bills as well as enabling Deputies and the public generally to have a fuller understanding of the changes involved if these details were discussed by a Select Committee.

The Bill proposes further relief for widows and children in respect of death duties. I am not certain at this stage whether this relief will go some distance towards alleviating what we considered a most objectionable provision in the 1965 Act, which was, indeed, modified last year. Is this a further extension of that modification? That would certainly be desirable because there was widespread recognition, shared by the Minister, that the proposals at that time were in the interests of neither widows nor children and were certainly contrary to the general interests of the community. If this change here extends that relief, then it is a change in the right direction.

I agree that this Bill, coming so soon after the Budget, puts us at a disadvantage because one tends to have the impression that anything said on it is simply a rehash of some argument made on the Budget. There are, however, a few points which did not arise specifically on the Budget. I agree that this is a Bill which could be dealt with more advantageously by a special Committee of the House. I am not sure whether Deputy Cosgrave meant a committee constituted of people other than Members of this House, but a Special Committee of the House could deal with this Bill and we would thereby save valuable time, time which could be used for the purpose of discussing the Third and Fourth Amendments to the Constitution, which we are anxious to have put before the country. We are even more anxious to see the results.

There are certain points on which I should like to touch briefly. I am glad the Minister has clarified the position following the proposed removal of Schedules A and B income tax. There was considerable doubt as to whether or not the position following removal would be worse than it was before and that farmers, in particular, would, in fact, find themselves dragged into the net of Schedule D. The Minister assured me during the Budget debate that this would not happen. He was very sure of it then, but I notice he proposes to make certain now that it will not happen.

With reference to the £100 allowance for those who get married after 5th April, I wonder by how much that will affect the issue?

The Deputy means the children?

A good point. The relief in income tax for those with good salaries could be a sizeable sum but those with low incomes would not benefit to quite the same degree. I wonder if, perhaps, someone will come along and ask where he is to get the £100? Who owes it to him? We had a case like that some years ago.

The really important point on which the Minister has missed out, as his predecessors missed out before him, is this question of the personal allowance under Schedule D. Surely no one in his right senses would suggest that what was good enough as a tax allowance 11 and 12 years ago should be good enough today. How can anyone argue that a tax-free allowance for a labourer, a single man, of £6 5s. is adequate today? It may have been adequate when he was earning £5 a week; labourers, except those employed by the State, are now receiving £10 a week and over. I would urge the Minister to do something about this next year because it is something which is crying out for remedy.

Again, there is the question—I am tired talking about it; I am sure the Minister is tired listening to me—of those who have to use their own vehicles for the purpose of travelling to and from their work. Why should they not be allowed tax relief in respect of those vehicles in the same way as their employers get tax relief? Why should not a single man, who has his mother housekeeping for him, and who is the sole provider, not get tax relief? Why should a single man who is providing for aged parents and for a sister who looks after those parents be treated as a single man with no dependants? Why should he not get tax relief? These are things at which the Minister must have a fresh look. They are, in my opinion, the really important matters.

It cannot be stressed too often that the person with the small income, who has a small amount of tax taken off, suffers more than the person who is paying surtax. A £10 note means more to someone earning less than £10 a week than does a couple of hundred to a man earning £10,000 a year. I cannot understand why the Minister and his advisers allow this situation to continue and why he insists he cannot alter the situation now. The reply he gave to me on two occasions was that, while recognising the validity of the claim, it was too much trouble. Nothing is too much trouble when one is dealing with human beings who are getting less than enough to live on.

Deputy Cosgrave referred to a prices and incomes policy. I presume we will have that elsewhere in the near future and it might be just as well not to go too deeply into it now except to say that, when we are talking about incomes and the way in which to fix them, God preserve us from having the State fixing them for anybody because the State fixed the incomes for the labourers employed by the Department of Lands, the Board of Works and what-have-you. What did they do last week? They offered an increase of 15/-a week on a minimum wage of £8 15s a week gross when every other employer was offering £1 a week upwards. The State said it could not afford to pay any more. In view of that attitude, how on earth could we trust the State with the fixing of a fair rate of wages or, indeed, with having anything at all to do with the fixing of wages? I know it is not the Minister's attitude but the Minister should take more interest in this matter. He should say to those who are responsible for fixing these standards that he is ashamed and would not be associated with the fixing of such a scandalous rate of wages for thousands of lower paid workers.

There is one other thing which I mentioned to the Minister here a few months ago when a proposal was put before the House and carried without a dissenting voice, that American pensions should be free of tax. Is there any hope that Irish old age pensioners would be free of tax? There are certain people who have been working all their lives and stamping insurance cards and who, on reaching the age of 70, find they cannot meet their commitments on the kind of pension paid by the State to themselves and possibly to their wives and, therefore, they must continue to work. It is just too bad that while we are prepared to agree that foreign pensions should be free of tax, these unfortunate old age pensioners must pay tax on what they are getting. There is an even more ludicrous situation. A man who has been working hard and who becomes ill and draws disability benefit until he is 70 years of age does not have to pay tax but if he has another income which brings him over the tax free allowance he is taxable on his old age pension. Until he is 70 years of age he does not have to pay tax but as soon as he reaches the 70 mark he is liable to tax. That case does not require any further elaboration on my part. The Minister would do well to have a look at this matter or get his advisers to do so with a view to seeing what can be done to improve the position.

I referred here some months ago— I do not want to go into detail now— to the fact that while we did not find it possible to give any relief to the ordinary income tax payer, the Government did find it possible in two successive years to give relief of sorts to sur-tax payers. The Minister has answered that by saying that we have done it at one end of the scale and are recovering what we lost at the other end of the scale. That might be fair enough but if there is any question of relief being given it should be given to those who really feel the amount being collected from them by way of income tax.

There is another matter which, again, was referred to by Deputy Cosgrave. It is the fact that since PAYE was introduced, it is very difficult—I might say impossible—for anybody who is earning a regular wage to escape. While it may be argued on behalf of the State that it is only fair that those who are earning money should pay tax on it, it is an extraordinary thing that of every wage increase granted now, the State collects roughly 5/- in the £. Anybody who is assessed for income tax under any heading must pay one-fourth of whatever increase he may get back to the State by way of income tax. There must be some way of adjusting this because it is becoming more and more evident from the growth of the amount collected under PAYE that it is the small taxpayer who is providing the bulk of the revenue from income tax. It is quite evident now that while the man with £20, £30, £40 and more per week is able to ensure that he will get the full value of whatever concessions are granted, the man at the bottom of the scale must pay every penny of his assessment.

The Minister has referred to some concessions. I agree for instance, that it was a good idea that under the Redundancy Payments Bill allowance is made in respect of the lump sum that is payable, both in the case of the person receiving the lump sum, spread over a three-year period, and in the case of the person who pays it because it will save them from having to pay tax which they would not have to pay if they received the money in a certain way. Has the Minister considered the case of the ordinary person who receives a pension or gratuity on retirement? Has he considered the case of a man who changes jobs and receives a refund of superannuation which he has paid over a long number of years? Before such a man can get a refund it must be cleared with the income tax authorities as to whether or not he is liable for tax on it. Very many such people are pretty sore when they find substantial slices being taken in income tax of money which they rightfully consider theirs, which they have earned pretty hard and on which they would not have to pay tax if the money had been paid every week. It is wrong that this money should be taxable and the Minister might consider doing something about it when the occasion arises.

I am glad to see that under section 13 banks and other financial institutions are not required to make returns to the inspector of taxes of interest of £70 or less: I was under the impression that the limit of £50 fixed in 1965 had been raised last year to £70. Are we to take it that there was no provision made for the alteration last year and that it is now necessary, legally, to raise the figure to £70? I suggest that the figure might be further increased because, at present rates, interest amounting to £70 does not represent a very big investment.

This is a Bill which must be discussed very fully in Committee. Because of the very size of the Bill—47 sections—and its technical and complicated nature it may take a considerable time to get it through the House. It is a Bill which a Special Committee might deal with in at much quicker way than we can here. I wish that those who are inclined to condemn the work of Members of the House would come in here and listen to the Committee Stage discussion of this or any other Bill and see how much they would like to have to make the effort which has to be put into it.

I should like to add a few words to what the Leader of the Opposition has said in relation to the Bill. May I express my agreement with both him and Deputy Tully in their view that this is largely a Bill that must be discussed in Committee?

I should like, first of all, to support the case that has been made and the claim that has been put forward by the Leader of the Opposition with regard to the urgency of providing an increase in the personal allowance from the point of view of income tax. Everybody can refer to that from many points of view and there are cases of difficulty in all walks of life but I have in mind, in particular, the case of persons who are living—existing—on an income the reality of which, in real terms, diminishes with changes in living costs. For them, the pretty static personal allowance has proved to be utterly inadequate. I agree also with Deputy Tully when he refers to the allowance of £6 5s as being certainly in need of adjustment.

All this indicates that the time is long overdue for a drastic overhaul of our taxation system. The present income tax code is always renewed each year on the basis that there is a good time to be had but it is just around the corner and it never seems to come. While successive Ministers for Finance have endeavoured, when they could at times, to make certain parts of the income tax code less exacting and hard, in fact the principle has remained the same and our taxation system continues to be the same year after year, although there may exist a profusion of promises that some day somehow the system is going to be overhauled and changed. Meanwhile the personal allowance has remained static and it has certainly resulted in hardship in many instances. I would like to express the hope that some day somehow that may be dealt with.

There is one other matter I want to raise at this Stage. My only other way of raising it would be to table an amendment for Committee Stage and you, Sir, would inform me that it would not be in order. This is a matter that has been endeavoured to be raised on some occasions before. It is to seek some increase or adjustment in the earned income relief which was originally provided in section 18 (2) of the Finance Act of 1920 in relation to a wife's earnings. That figure was originally provided as being an allowance of nine-tenths of the earned income, with a maximum of £45. Then to accord with PAYE, the fraction was reduced to four-fifths but the maximum of £45 was allowed to remain. It does appear not unreasonable to suggest that an allowance in the nature of relief in the case of a wife's earned income which has a maximum of £45 is utterly unrealistic. I would urge that the Minister might take that expression of view on Second Reading and consider whether something might not be done on Committee Stage.

I do not think there is anything else I wish to say, but may I compliment the Minister and the draftsman of this Bill on the imperial nature of section 34 which contains the expression:

This section applies to every territory other than—

(a) Northern Ireland and Great Britain,

(b) the United States of America, and

(c) a territory with the Government of which arrangements are for the time being in force by virtue of section 361 of the Income Tax Act, 1967.

That seems to indicate to this Dáil that we are now legislating for the entire world, excluding the United States of America and a few other named countries.

With whom we have double taxation agreements.

It is the use of the words "This section applies to every territory". Might I suggest something in a more republican cloak might be selected?

Something less pompous?

We might call this the real legislation on the Budget and refer to the Budget as legislation by presumption. This is necessary because prices and taxes have to be changed and on the Committee Stage of this Bill we come to the moment in time when we have to examine these changes in detail. With the imminence of added value taxation as we move towards Europe and all the matters binding in the Rome Treaty, this would appear to have been a time for change and for an opportunist approach in the matter of taxation. I agree with the Leader of this Party and with Deputy O'Higgins and Deputy Tully that the personal allowance is ludicrous, but the personal allowance cannot be viewed by itself. It must be viewed with all the other forms of taxation. You have to take into account also the turnover tax and special wholesale tax. You have to take into account the fact that the housewife whose husband comes home with one salary in a net wage packet finds that when she goes to buy the necessaries for the house, she is paying indirect taxation. I would have thought that in 1968 we would have an indication of what was the Government's thinking in this regard.

The fact that the figure of £6 5s stays static seems to indicate an approach that is stolid, stodgy and unimaginative and a lot of other things which I would never ascribe to the Minister himself but which I could in great friendship accord to his actions and the actions of his Department. We have reached a stage where there is an opportunity for the creation of a climate for growth. For the worker who is taxed on his car when he drives many miles to work, is there a change in legislation? Is the existing industrialist here—remember these existing industries will be subject to competition from Britain as to 75 per cent of their production in 1975—being shown that by re-investment he will be relieved of portion of his corporation profits tax and portion of his ordinary tax on companies? If so, then there would be the creation of this climate for growth, this feeling of opportunism, this feeling of being "with it". It might be perhaps a dangerous voyage. It might be that we would be on a rollicking ship that might not founder but might find difficulties in storms. But to think in 1968, as we move daily faster and faster towards the Common Market and Anglo-Irish Free Trade, that there is no major change in our taxation system seems to me to indicate—not only is there no change but not even an indication that there will be change next year—a stodgy approach by the Department of Finance.

Let us face the fact that added value tax is going to be a fact and we have the problem of fiscal harmonisation all over Europe to face. They are trying— and they are in difficulties—to produce the same sort of financial arrangements, direct and indirect taxation, in each country of the Common Market.

Whether it be France, Germany or any other country, the idea is there of harmonisation. All we have is a slight reference to it in the Budget speech of the Minister.

I want to suggest also that we have to view this whole financial taxation situation in the light of the fact that as far as the industrial structure is concerned—this is where we hope to employ more of our people—it appears to me from what I can read about it that we will not be allowed to give freedom from income tax to new exports but in certain instances, where we can prove there is a need in the whole country or certain areas for the creation of employment, we may be allowed to consider something closely approximating to our system of grants to new industries. This means that half of our incentive programmes for industry are gone when we reach this situation in the Common Market and in the Anglo-Free Trade Agreement. It means there should have been within the Budget and the legislation now proposed the indication that change was there. It does not appear as if that is so.

How many young people, for instance, who are not married and who are earning more than £6 5s. prefer not to do overtime and to be difficult with their employer and go surreptitiously to work elsewhere so that they will not have deducted 5/3 in every pound? What are the "bods" and the Ministers doing about that? I do not want to criticise civil servants as such; the responsibility is on the Minister but I do say that this Finance Bill, in my view, is a stodgy one, forerunner of a stodgy Budget which did not face up to the challenge, a Budget which was not prepared to accept the facts of life but which might be an election Budget and which might not. We do not know until we have a Fianna Fáil Party meeting tomorrow.

Let us consider where we stand on direct and indirect taxation. The Labour Party has set itself strongly against indirect taxation and in favour of direct taxation. The arguments are clear. On the one hand people will say that if the rich man spends more it is right that he should be taxed more and that the way to catch him, apart from all the advantages he has such as expenses and so on, is by turnover tax, added value tax, wholesale tax and so on. As he spends more money he pays more tax. The Labour Party view is different, and there are many who agree with it, that, in fact, all of us eat one breakfast, one lunch, wear one suit of clothes, wear one pair of shoes and if you take that view indirect taxation suits the rich. Surely, then, if the Government is going to take a middle line —the point about them is that they have never said one thing or the other —they should take a middle line fairly and the figure of £6 5s that a person may earn before being taxed should be changed to something realistic.

I am not saying which way is the better way: the middle of the road is probably the answer and we need direct and indirect taxation. It is conceivable that the Labour Party is too much inclined to speak ex cathedra when it says we are against indirect taxation and that, in fact, perhaps the Government have been too much inclined to rely on indirect taxation because of the facility with which they can extract money from people by this means. One thing is certain and that is that the the plea of the leader of the Opposition, the plea of Deputy Tully and of Deputy O'Higgins and my plea that the figure of £6 5s should be changed is a plea that must be answered. Nobody can produce any argument against that. If you want it that way, let the rate of income tax be higher but do not begin taxing boys and girls when they earn £6 10s a week. I know what they do. They would rather dig somebody's garden for £1 than pay 5/3 in the £ when they have over £6 5s. The Minister is making us a nation of tax evaders by refusing to accept the fact that £6 5s. is far too little.

Let us also consider arguments in regard to certain methods of direct and indirect taxation. In America you do not pay tax on your car but you pay tax on the fuel. In fact, if you motor more you pay more. I do 40,000 miles a year and to me, in relation to that figure which I must cover in connection with my business and my politics, the tax and insurance matter relatively little and what do matter are my garage expenses and fuel bills. But the unfortunate man earning £15 or £13 a week who must travel in his car at 8 o'clock every morning to the factory is probably doing 6,000 or 7,000 miles per year. His car and his insurance may be smaller but the sum involved approximates the cost in my case and his tax is not too far away from mine. Yet, he does only 6,000 or 7,000 while the man who does 40,000 on business —he cannot do that mileage just for fun; he does it to make money—has quite an advantage. Yet there is no change in this Finance Bill in this regard. Is it any wonder I regard it as a stodgy Finance Bill?

Neither is there any change regarding the provision introduced in the 1965 Act on the notification of deposits of £1,000 or more in banks. You can nail a man to a crucifix, if you like, in the name of right; you can do something just to let the people see the side you are on but this Government were very foolish because one of the scarcest things in the country is capital and the more capital remaining in the banking system here the more money there will be to lend for the benefit of industry and employment. The Government, to a certain extent, have adopted the Fine Gael policy of indicating to the banks via the Central Bank the avenues into which overdraft accommodation shall be directed. The evidence of this is that the Governor of the Central Bank wrote to the Governor of the Bank of Ireland not so very many weeks ago and indicated the increase in advances that might be made by them between now and this time next year.

The Minister while he held another portfolio said to me across the House that Government from one side of the House so long as we stayed over here suited him very well. Here is an indication of something they have adopted which was a point in our policy.

The notification of deposits which was made a feature of the law in the 1965 Act has resulted in a flow of capital from here. Many crude words have been used to describe that capital. It has been called funk money, money evading tax. I should like to quote an Irish saying: "An té nach mbíonn láidir ní foláir dó bheith glic." It means that those who are not strong must be clever. We are not Britain or France nor do we make legislative policy. We are a small nation doing our best for our people and I could not care less if there was a bit of funk money around if I could see more houses built—that is where it could go; into national loans by many means—more factories started, more money available for existing factories so as to rationalise their production and create more jobs to increase production and keep our balance of payments right with more effort all round rather than that we should sacrifice for a holy shibboleth an opportunity to get money from somewhere else by insisting on this notification of deposits.

Do not worry; there are plenty of places in which to put funk money if anybody wants to dispose of it. The Minister who is a qualified accountant with many tentacles in business in this city knows that as well as I do. Therefore, the fact that there is no provision in this Bill to countermand the provision in the 1965 Act under which notification of deposits of £1,000 must be given to the Revenue Commissioners is an omission which is serious and certainly one that is not of value to the country. The policy of this Party in regard to financial investment is quite clear. It is that private enterprise should be encouraged in every way to expand our production, to employ our people——

Did the Deputy say something to the effect that I have tentacles in many businesses in this town?

I am sorry; I did not mean to be offensive, and if the Minister took it that I was intending to be, he can immediately take my unqualified withdrawal on that. If I used the word "tentacles", I did not mean it. What I meant to say was that he had an enormous amount of knowledge, naturally. The Minister accepts my withdrawal in that regard?

I am sorry if he took it that way. I would criticise him politically pretty comprehensively, but I certainly would not attack him personally. I was saying that the policy of this Party was by every means to increase the amount of private enterprise investment, as long as it is going to employ more of our people and keep our balance of payments right which in a small country is the thing on which we can advance. When that is done, the policy of this Party is not to be afraid to institute public investment, and the evidence of that lies in the Sugar Company, the Shannon Scheme, the Voluntary Health Insurance Board—in a different way— and many other institutions which we were quite prepared to set on their way, even though one could describe them as public enterprise. These two things together could certainly profit this country.

Within this Finance Bill and within the Budget speech that preceded it, I can find nothing. I am absolutely convinced that because, in the words of the Minister for Agriculture, there are 200,000 fewer cattle to export from this country than there were last year, that there is a wage increase which was needed because of inflation which has gone on for the past few years, and presumably will go on for the next 100, and for other reasons, we will see a balance of payments difficulty within the next 12 or 18 months. I said this on the Budget speech, and I say it now. There should have been an effort to grasp the nettle seriously and firmly, an effort to face all the challenge of Europe, all the challenge of the Anglo-Irish Free Trade Agreement. This has not been done and, in my view, this Finance Bill is a failure.

As has been said by other speakers, this Finance Bill is the successor to the Budget and is for the purpose of implementing Budget policy. I expressed my views pretty clearly on the Budget and I regarded it as being much ado about nothing. The Finance Bill does not take us very much further. As I regard the situation, two things are desirable: to equate as far as possible over all the population the expenditure of money and the advance of commerce and trade among as many people as possible and also to endeavour to encourage the inflow of capital into the country. I think we are all agreed on those two points and that that is the main outlook of practically every Deputy in this Parliament who wishes to further the interests and the prosperity of the country as quickly as possible.

I am extremely disappointed that the Minister, who has himself said he is a reformer—in fact he said to this House the task of the reformer is often very difficult—has not really done anything about the turnover tax. The only thing to do is to remove it altogether, because it is one of the greatest disasters that have come to this country. Even before the days when we had student riots, before the advent of the disturbances that are breaking out in many other countries, there were marches and processions in relation to the turnover tax, and these were mostly among the business community. Of course, the business community is the foundation of the State, the commercial foundation of the State in any case. There is no getting away from the fact that ever since this tax was introduced, there has been a gradual fusion of small concerns into bigger concerns which is to the advantage of neither the tax gatherer nor the taxpayer. I think the Minister must agree with me that we have a great many co-operatives, not of the type one wishes to see. Many institutions like supermarkets are beginning to appear, and these supermarkets are gradually endangering the small businesses. They are gradually doing away with the smaller supermarkets and co-operatives. This gradual trend dates from the introduction here of the turnover tax.

The turnover tax was thought out in the higher financial circles, and when I say higher financial circles, I mean the Governmental financial circles in this country. It was opposed by the Revenue authorities who have been charged with its collection. Of course the present Minister for Finance is not responsible for introducing this tax, but I hazard a guess that if he had been there at the time, he might have had sufficient intelligence to withstand the pressure of those financial advisers who advocated it. As I say, this tax was opposed by the people who were responsible for collecting taxes, the Revenue Commissioners, on the ground that it would produce the result which it has produced. If the Minister looks at the situation, he will realise that there are far fewer business concerns than there were before the tax was introduced.

It is never too late to mend: there is a Committee Stage, a Report Stage and also a Fifth Stage of this Bill. Would the Minister not consider abolishing the turnover tax? It may well be argued that it is built into our tax system. While there is always the possibility of economies, nobody ever thinks of them. The important thing is to get more tax. Anybody initiating anything is taxed out of existence. As the four speakers who have spoken before me have pointed out, a man or woman earning £6 5s a week has to pay tax right away. It is a crippling of enterprise. The only reference in the Minister's speech and in the Bill to the turnover tax is to the possibility of collecting the money, to making it more certain that the tax gatherer will get his return from this ill-conditioned turnover tax.

I would seriously suggest to the Minister that he abolish this tax altogether. This would benefit practically every small business establishment throughout the length and breadth of this land. Furthermore it would be the greatest boost for private enterprise to which so many speakers have paid tribute.

The second great need of the State is the inflow of capital. I think this House knows my views pretty well on the question of estate duty, and I am happy to know that the Minister is travelling a little bit of the way with me. I am not clear in my own mind what exactly the position is with regard to estate duty, whether the Minister has conceded the point in regard to any relief there is that it is a deduction from the overall rate of the estate. Let me put it this way. Because of the confusion which exists in my mind in relation to estate duty, and not only in my mind but in that of a great many other people, I want to know will there be a deduction of the sum that is remitted from estate duty as against the overall sum? Let me oversimplify that so that when the Minister is replying he can make clear to me and to others the position in regard to this. If there is an estate of £20,000 and the relief that is due is £7,000, is that £7,000 going to be deducted from the £20,000 or not?

That is what I have been fighting for in this House with three or four successive Ministers for Finance. They have all, I am glad to say, given me a little help every year and have granted certain remissions. Has the Minister now accepted that principle? If he has, I will be quite happy but if he has not I want to tell him that I will put down my usual amendment and I hope certain other Deputies will be made to see this as I see it and that eventually I will get some support and not be a lone bird as I have been for the past three or four years on this Finance Bill.

Another point I want to raise is in connection with farmers and Schedule A and Schedule B tax. Schedule A tax applies to farmers and those of us who have to pay income tax on farms. Schedule B tax arises on profits. Schedule A tax also applies to house property and other assets. I think it was the present Senator, Dr. Ryan, who introduced the double taxation to deal with property such as that and dealt a devastating blow to those who were going into private enterprise in regard to the building of houses. This is a very serious problem. Before the introduction of Dr. Ryan's Budget, the taxpayer at that time, if he had a house built for the benefit of his own property and let that house, paid his tax on Schedule A.

This new tax came along and besides paying on Schedule A, there was a direct disincentive to people building private houses when they found they had to pay tax on their profits as well. Now I read in this Bill that Schedule A is disappearing and that Schedule B is disappearing as well. Perhaps the Minister can help me when he is replying. As I see it, Schedule A tax on farm property is disappearing.

It is the other way around.

The Deputy is not Minister for Finance. He may be if the Labour Party are as successful as they hope to be at the next general election.

It is as well if you are putting a case to the House to have the figures correct. I am trying to be helpful to the Deputy.

Do not let us have a rift in the Coalition.

There is no Coalition as far as I am concerned. Schedule A tax is paid on farms and Schedule B tax on profits. This Bill says that Schedule A and Schedule B will disappear, not immediately, but in 1969. Then the Minister is immediately challenged by some of my colleagues here who say that farmers are expected to pay under Schedule D but he says no. Am I to take it that in future farms are entirely free of tax altogether, that there is no tax? Am I further to take it that if I succeed in spite of the policy of the Minister for Agriculture in making a profit or if Deputy Tully owns a farm and succeeds in making a profit on it, there is no tax at all?

I will be paying it under Schedule B at the present time.

Farmers pay both.

I am talking about the future. Is there to be a tax on profits as there was?

No, the tax on profits will disappear next year. There will be no tax payable by farmers on husbandry or farming profits.

That is most reassuring. The reason I raise this point is that the matter was not clear to me or a number of other people.

(Cavan): There will be no new schedule introduced?

You are the most suspicious crowd I ever came across. There are some people at the moment, some companies, who pay Schedule D on farm profits. They are already paying on farm profits under Schedule D.

They pay under Schedule D as well as under Schedule B.

Some people pay under Schedule D on farm profits. Most people do not, they pay under Schedule A and Schedule B on farms and those people from now on will pay nothing.

At the present moment the only people paying under Schedule D are those companies.

Some companies pay under Schedule D at present.

They will still pay under Schedule D but the ordinary private landowner will be exempt from Schedule A and Schedule B.

The matter is now clarified.

Even I hope for Deputy Fitzpatrick.

The other point I want to raise is the question of bank deposits. This was raised by Deputy Donegan who said it was a retrograde step that bank managers have to disclose the assets of clients. Let me take that a little further. According to the speech of the Minister and in the Finance Bill the rate of interest is raised from £50 to £70 a year. That means that if I have in the bank a sum of money and if the profits do not produce more than £70 a year there is no income tax paid on it. Heretofore it was only up to £50. I want to put this to the Minister. When it was £50 the rate of interest paid by bank people was 1½ per cent but the rate of interest paid by banks now is 4¼ per cent. I think I am right in that.

The £50 was raised to £70 last year. If you had bank interest of less than £50 up to last year that was free of tax. Last year that was raised to £70 and all we are doing here is making provision to exempt the banks from giving returns of that interest to the Revenue Commissioners. In other words interest up to £70 is free of income tax. The banks at present have to make a return of any sum of more than £50 but the Bill raises that figure to £70. In other words they have not to give a return on any sum which is less than £70.

(Cavan): Any sum earning less than £70.

You have to pay income tax on over £70.

That change was made last year. There are two separate things here. One is the liability on a depositor to pay income tax on income he gets. For some time that was £50 and last year it was raised to £70. The other is the obligation on the banks to make a return to the Revenue authorities. For some time they have been compelled to make returns of any sums in excess of £50 a year. We are now in this Bill raising that £50 to £70 to bring the two into line.

Am I right in saying that income tax is payable on deposits over and above £50 or £70? Which is it now?

Would the Minister like to clarify the matter further and tell me what is the present capitalisation of £70? Would it be the same as £50 a year ago? It seems to me that we are not getting very much benefit out of this.

Different rates of interest are applicable.

The low rate of interest is 4¼ per cent now against 1½ per cent a year ago.

The rate of interest now is 4¼ per cent.

We will leave that for later on. The point I want to make is that the Finance Bill or the Budget proposals should encourage as much money as possible to be put on deposit in the banks. They should encourage the investors to do so. The purpose of that is to have it available for public use, for building houses and schools. For the Government's purposes it is necessary to have considerable sums of money available. A Finance Bill should encourage an increase in deposits in the banks. This is most desirable and most necessary for the furtherance of social welfare schemes such as housing and schools —which are so very much required in this country. I would prefer if the Minister had given relief on income tax payable on bank deposits, say, up to a rate of interest of £100 a year. That would encourage practically everyone in the income tax orbit to put money on deposit in the banks and there would be far greater funds available to the Minister for his capital Budget than he has at present.

I hope the Minister will take note of the points I have made. I want to stress that budgetary proposals and Finance Bill proposals should not only be directed towards spreading money over as many people as possible but they should also be in the interests not only of the Minister but of the taxpayers as well. They should be directed towards an inflow of capital. The only way the Minister will ever get this inflow of capital on a vast scale is by taking a decisive step in regard to estate duty. Until the Minister does that and accepts that principle, we will not really get an inflow of capital.

I want to take up the point Deputy Esmonde has been raising. I, too, feel that this business of compulsory disclosure of information with regard to bank deposits was essentially a mistake and something which should never have happened. It caused quite unnecessary damage to the banking system. I am not so interested as to whether bank deposits are to be tax free. I think there is a lot to be said for the confidential relationship between bank depositors and the banks themselves. I know there have been adverse comments about the hot money which is lodged anonymously in the banks in Switzerland. There may be certain reasons why we do not want to get into that market. At the same time, we want to make sure that sufficient funds are available on deposit in the banks to enable them to make the normal advances to private customers and to industry.

How much money was withdrawn from the banks is a matter which I have never been able to establish because the information which was flying around was very often quite contradictory. Some people said enormous amounts of money were withdrawn from the banks but to a great extent I think that was exaggerated, and that there was not any great flight from the banks at all. At the same time, it is a matter which should be kept under review to see if we can do something to restore the confidential relationship between the bank depositors and the banks themselves.

Is the Deputy aware that large evasions of taxes were brought to light as a result of this?

I imagine there is a lot to be said for that, but whether that in itself was a complete justification I do not know. I do not know what the actual amount of evasion was and if the Deputy can give me any information on that I will be interested to hear it.

Deputy Esmonde wondered what amount on deposit would earn £70. According to my calculations on the basis of the present rate of interest on bank deposits I worked it out that a bank deposit of approximately £1,600 would produce not quite enough to come within the compulsory disclosure provision. While £1,600 is quite a fair amount of money, at the same time in previous years there were a number of people who had considerably more on deposit than that. On the whole we should not discourage people from lodging money on deposit in the banks because at least that money is being put to some productive use.

Deputy Esmonde also commented on the turnover tax and on that point I find myself in complete disagreement with him. No one likes any form of tax at all, but I am absolutely convinced that the fairest form of tax is a tax on expenditure rather than a tax on income. Every effort should be made to discourage expenditure and to encourage savings. If the tax rate on earnings is high the possibility of saving becomes that much reduced. For that reason I feel the turnover tax is fair especially in so far as on very small expenditure the actual amount of tax is also extremely small. The real impact of the turnover tax does not come on the ordinary household articles but on the luxury articles. Admittedly, every penny counts where the social welfare classes are involved and, to that extent, we must make provision for them especially to compensate them for the marginal increases on the daily necessaries of life.

On the whole I am entirely in support of taxation on expenditure rather than taxation on income. For that reason I also welcome the possible introduction in a subsequent year of an added value tax. This would be infinitely preferable to the present form of selective wholesale taxes. I would sincerely hope that the Minister would keep in mind during the coming year the possibility of the added value tax replacing entirely the turnover tax and the selective wholesale tax. Multiplication of individual taxes is a quite unnecessary and uneconomic burden to place on the business community. The more we can ease that burden the better. At the moment, the ordinary businessman is collecting social insurance accounts, collecting income tax under PAYE, collecting turnover tax, collecting selective wholesale tax. Very often, he is collecting premiums on life insurance at the request of his employees. The amount of book-keeping a reasonably-sized employer now has to do is getting quite enormous by reason of all these deductions which have all to be carefully documented. I am absolutely convinced that the added value tax is the fairest and the simplest but I would ask the Minister, for heaven's sake, not to add that to the turnover tax and the wholesale tax. We have enough individual taxes as it is.

I think Deputy O'Higgins made some references to allowances for tax purposes but I got that only at second hand. I feel that the rate of allowances has not been adjusted sufficiently frequently and that allowances which were reasonable eight to ten years ago are certainly not reasonable any longer. My attention was recently drawn to the case of the only daughter of a fairly aged lady. The daughter was in employment and her mother was dependent upon her. However, her mother had a very small private income on her own account and, as a result of this very small income, her daughter was not allowed to claim any allowance in respect of having a dependant.

The amount of income a so-called dependant is allowed to have, without disqualifying the person upon whom he or she is dependent, is quite ridiculous and certainly needs reconsideration. That applies not only to those responsible for aged relatives but also to wage-earners, salary-earners, in a comparatively small way who yet have a considerable number of calls on their limited income. I would, therefore, ask the Minister to make a very detailed and comprehensive review of the rates of allowances so that they can be brought up to date and made more realistic in terms of present-day money values.

In general, I do not wish to comment on the Bill at this stage. I shall probably have some comments to make on Committee Stage in order to get certain points clarified. This is possibly a rather disappointing Finance Bill, from the point of view of debate, compared with some of its predecessors which got us all into quite a considerable amount of heat. This Bill is unexciting. However, it is efficient. I do not believe Finance Bills are the opportunity or should be treated as the opportunity for making drastic changes. I look forward to the White Paper on the added value tax. I hope the Minister will guide us more in this connection during the coming year and will be receptive to any comments which may be made to him as soon as the issues become clarified in our minds. I trust that, by this time next year, we shall have a very much simpler tax system, with an increasing trend towards taxation on expenditure rather than tax on income and, finally, that tax allowances on income will be very carefully reviewed.

I do not claim any great knowledge or experience of income tax but I rise to suggest that the Minister might consider a point. I understand that my colleague, Deputy James Tully, has already drawn to the attention of the House the fact that while £6 10s 0d a week may have been a realistic wage when it was introduced quite a number of years ago it has no bearing at all in the light of present-day money values. Even agricultural workers are today paid up to £10 a week. Take the case of a single man now working on a farm and whom we should encourage to stay on it. Consider the tax he has to pay on his earnings.

It is not inopportune for me to repeat what I have said here before that there are serious snags attached to the incentive bonus or overtime pay. We talk about encouraging workers in manufacturing industry to produce more to enable us to compete in foreign markets. Most industrial workers with whom I am in contact complain that not only must they pay income tax on their incentive bonus or overtime pay but they are further penalised inasmuch as holders of medical cards lose entitlement to them and, secondly, there is an adjustment of their rent as most of them are housed by local authorities and, everywhere, county managers are automatically increasing rents on the basis of income. On top of all that, they are subject to income tax. Would it be possible for the Minister to arrange that tax at a reduced rate be imposed on such extra earnings? That would encourage increased production throughout the country. I am referring here to overtime pay and to the incentive bonus.

In general, I agree with what Deputy Booth said. There should be an incentive for greater earnings. Tax should be imposed on expenditure rather than on earnings. When he is reviewing the situation, the Minister might consider my suggestion.

A number of speakers adverted to the continued existence of the imposition on the banks of a requirement to disclose deposit interest to the Revenue Commissioners. This Bill, as the Minister has explained to us, is raising the ceiling, above which the banks are required to disclose, to £70. I want to make it clear from the start, and for what it is worth, to the Minister that in so far as he is being criticised from this side of the House, I wholly approve of the continued existence of this particular power. It has brought to light a fair amount of evasion of tax in the past. Some people who had offended in this respect wisely availed of the amnesty terms of the Revenue Commissioners. Those who did not avail of this amnesty did so at their own peril and nobody in this House can express much sympathy with them. I hold no brief whatsoever for the evader of legitimate tax. I do not accept the argument that the power resulted in a frantic rush on deposits. I do not believe the banking statistics have shown this state of affairs to exist. In any event, what was done in the past is done and cannot be undone. If such a movement of deposits took place, that is over and done with. The continued existence of the power, in my opinion, has been amply justified and it is a power, it is worth knowing, which existed in Britain, from which we culled so much of our taxation legislation, long before it was brought into this country.

My main purpose in speaking is to join my colleagues who have pleaded with the Minister to raise the personal allowances for income tax which are quite out of step with the value of money to day. They have not been increased in any significant way for at least ten years. As a result of the rampant inflation we have had in the past ten years, we now have a situation whereby people are trapped in the tax net who ought not be trapped. In particular wage and salary earners, those who are taxed under Schedule E, are particularly severely affected by our tax code. They are taxed under a set of rules which are harsh, rigorous and archaic, a set of rules which have been condemned many times in the courts as being inequitable.

I believe a Minister such as Deputy Haughey—one has to give him credit where it is due—has shown in some respects an imaginative approach in regard to tax reforms. One must take account of this manifest initiative. Deputy Kyne has spoken of the worker with £6 10s per week paying tax on 5/- of this income. Other speakers have referred to the disincentive nature of taxation on overtime and on wives' earnings. It has often amazed me to find how stubborn workers are in refusing to do overtime because they are taxed on their overtime earnings at 5s 3d in the £. As somebody said here earlier today, they will more often than not arrange a fiddle, a "nixer", outside of their official working arrangements so as to avoid taxation.

I believe this has a greater disincentive effect on productivity and should be noted very gravely by the Minister. The Minister knows full well that in our mutual constituency, the washing-machine, the television or the radio which householders living in corporation estates have is paid for out of the wives' earnings, part-time earnings in some cases, and the allowance of £45 for wives working is grossly inadequate. We may deplore the fact that wives have to go out to work to maintain the standard of living, but deplorable as it may be, we must face up to its existence realistically and act accordingly.

I have a great hankering for special treatment for wage and salary earners by reason of the fact that they are so harshly dealt with under the taxation rules as compared with other sectors. We should compare them with farmers who are exempted. There is inequity in this state of affairs. I have a hankering for a higher wage relief for wage and salary earners, and not only on realistic and practical grounds. A doctrinaire case can be made for earned income relief by reason of the fact that the individual working in one job or another incurs wear and tear on his mental equipment and his physical capacity for work and he has no capital allowance which the capitalist or industrialist enjoys.

In three successive years before Deputy Haughey became Minister for Finance, I proposed an amendment on Committee Stage providing for the abolition of Schedule A taxation. For that reason, it is proper that I should welcome the Minister's initiative in this respect and compliment him on doing something which his predecessors failed to do. Indeed, I recall the emphasis and the toughness shown by the former Minister for Finance, then Deputy Dr. Ryan, who gave the impression on the various discussions on the amendment I had put down that the skies would fall around us if it were accepted and our whole tax structure would be completely torn asunder. The ease with which the present Minister has effected the change shows how wrong his predecessor was in this respect. This is a step which I welcome. It is worth noting that we are several years behind Britain in abolishing a tax which is archaic and inequitable with regard to the householder, the person who owns his own house, the person who for social reasons it is highly desirable should be encouraged.

The Minister has given a further relief to surtax payers. Without expressing in detail an opinion on it, I must say quite frankly that I could see more urgent priorities in our tax code than relief for surtax payers. I deplore the rather glib manner, in my opinion, in which the Minister endeavoured to give the impression that this surtax relief is confined to technological workers. Introducing the Bill today, he said:

This relief will, it is hoped, assist Irish enterprises in attracting and retaining persons of talent in the managerial and technological spheres.

Let us hope it does, but let us frankly and honestly face up to the fact that there is need for relief just as validly and significantly for the publican and the shopkeeper, the professional man, the doctor, the lawyer and the Dáil Deputy. It is just as materially relevant to those people as it is to technological executives whom we wish to encourage. The Minister has been less than frank with the Dáil in giving this false impression both in his Budget Statement some time ago and in his remarks on section 17 today.

Referring to section 33—the extension of export relief to engineering services—the Minister has certainly shown initiative. I should like to hear from him, if not today, then on Committee Stage, a lot more about the purpose of this extension of export relief which, of course, I welcome. It must be very heartening to Deputy Sweetman who, when he was Minister for Finance, introduced export relief, to see how valuable it is in the development of our economy and how significant a relief it is to individual taxpayers. In broad terms, we welcome its extension now to engineering services. I wonder if such services include design and planning work—quantity surveyors, architects and engineers. I have heard of a firm of surveyors in Dublin, a branch of a foreign concern who employ a very significant number of draftsmen and surveyors here, planning oilwells in the Middle East. The result of their plans is shipped out of the country.

It is an interesting development and I wonder if it is for this particular operation that the Minister is providing this relief, thinking in terms of its expansion. If we could have, so to speak, a reverse brain drain and have British and American employers coming into this country to employ skilled people here to provide these technological planning services, it would be a very desirable development. Speaking on a personal note, which the Minister might have some sympathy for, I should like to see the extension of the same principle to, let us say, management consultancy services—to have a situation where skilled engineers and accountants and such people who take up employment with British consultants, perhaps in London or Manchester or some such place, could perform this service from a Dublin base. Certainly the Minister has shown imagination in bringing in this proposal.

Sections 7 to 11 of the Bill require much further elaboration by the Minister. These sections were not referred to in the Budget Statement and they represent what appears to me at first sight to be a further tightening of the PAYE screw particularly as it effects the employers. Between turnover tax and wholesale tax and PAYE, statistical returns and what have you, employers of labour in this country today, if they are of any size at all, need a full-time clerk working for the Government.

I deplore any extension of arbitrary powers to the Revenue Commissioners in respect of PAYE. I am not at this stage necessarily saying that such arbitrary powers are being conferred by sections 7 to 11 but I am putting the Minister on notice of the fact that we wish to have much fuller justification of these sections than has been advanced, a much clearer illustration of the need than is manifested by the sections as drafted. PAYE is a constant headache to many small employers who are at their wits' end to handle the impositions put on them by the Government in the form of clerical chores and obscure and difficult regulations which they have to study and interpret for themselves.

Deputy Esmonde climbed on his favourite hobbyhorse again here today in respect of death duties. I welcome the provisions of Part III of the Bill extending the death duty relief for a widow and her dependent children. This relief, which was, as far as I can recall, first brought in in 1965, is one which is particularly well tailored to Irish conditions. It is a form of relief which does not exist in the parent British legislation from which we have taken ours. This legislation is particularly well tailored to Irish conditions in that it caters for the larger families which we have here. I believe that our tax legislation, as indeed all our legislation, should have social objectives, and this form of relief for the family man is very desirable. In respect of death duties, I wish to say that they have now clearly been built into our tax code as a significant revenue raiser which was not at all contemplated when introduced 60, 70 or 80 years ago.

We have now a type of person being fleeced for death duties, as a result of the impact of inflation, in circumstances where, up to 15 or 20 years ago, it was only those who were really wealthy who were involved. As the Minister knows very well, the Estate Duty Office demand their pound of flesh in full and even a modest dwelling in the Dublin suburbs which was, perhaps, built 50 years ago and put on the market for £300 or £400, and which changed hands ten years ago for £2,000, will now be assessed for death duties in a sum of £6,000, £7,000 or £8,000. The effect of this inflationary impact is just one illustration of the fact that persons are now being subjected to death duties whom it is undesirable so to tax.

I suggest to the Minister that this provision of Part III—this extension of existing relief—must keep pace with inflation. The relief should be scaled upwards every year. He must in respect of death duties avoid the situation which he is in in regard to the personal allowances for taxation where, by reason of the fact that they were not increased by a tenner a year for the past 15 or 20 years, the Minister now has to come to us and say that if he were to add £10 to the present allowances, it would cost £1 million. That is due to the default of the Minister's predecessors in not giving a first priority to the equity consideration. We too readily live with the maxim that equity is a stranger to taxation and previous Ministers have been too ready to accept that. It is extremely desirable socially that our tax code should be a fair one and should appear to all to be a fair one. It is not a fair one. As I have said, it is particularly inequitable in its impact on wage-earners and salary-earners.

We all have our favourite hobbyhorses. For quite a while Schedule A was one of mine. Now the Minister has taken the wind out of my sails by abolishing it. Good luck to him. I am prepared to give him full credit where it is due for his enterprise in this connection but apropos this question of widows and dependent children, I want to point out to the Minister that a common form of provision for one's children is to arrange with an insurance company to provide them with a family protection policy in the form of an annuity payable after one's death to young children. How frequently nowadays does one hear of one's contemporaries, people under 50, being cut off in their prime due to the pace of life today and leaving young families to be looked after and educated. In the past a civil servant, a professional person, the middle-class person could provide for this contingency by covering himself with insurance for about £5,000 and he thought he was doing well by his widow and children. Nowadays such a sum is only chickenfeed when it comes to educating children and bringing them up.

The case I am trying to make is that the widow is very deserving of special consideration by the Minister for Finance in respect of her income. This annuity which she may be paid is treated as unearned income and is taxed at the full rate. If one provides for a capital sum for one's widow and children which may be invested in Government securities, a common form of provision, this form of income again is taxed at the full standard rate. I believe that it would not cost much and it would be very desirable to make available to a widow with dependent children the reduced rate of taxation in respect of an investment income or annuity income which she may have to be provided with.

The Bill is one which of course is much more suited to a Committee Stage discussion but because we have had useful discussions here is open debate in Dáil Éireann in the past on Committee Stage, I for one would not go with the suggestion that Committee Stage discussion should be referred to a Select Committee. I believe this matter of tax policy is one which affects so many people that what is done in Dáil Éireann must be done in the full glare of publicity for the purpose of informing public opinion as to our activities. We have had very useful debates in the past on Committee Stage on such matters as the one Deputy Tully spoke of, the question of travelling expenses for wage-earners and salary-earners, medical expenses, the harsh and severe tax rule affecting wage-earners and salary-earners. I hope that as long as these injustices exist in our tax system, we will continue to subject them to close scrutiny here openly in Dáil Éireann and not behind closed doors.

I spoke of death duties. I said that the Minister was well aware that the Estate Duty Office seek their full pound of flesh in terms of death duties. I am not criticising them for this. It is their job to implement the legislation as they find it but I am putting the Minister on notice here and now that I intend to give him an opportunity on Committee Stage of considering the need for bringing in a simple, inexpensive form of appeal from the decisions of the Estate Duty Office in respect of valuations for death duty purposes. I believe that by reason of the impact of inflation the limit of £10,000 over which one must now appeal to the High Court is too low. It has been there for 50 or 60 years and in the past there was available a simpler and less expensive form of appeal. I believe it is very necessary to restore this and I intend to table an amendment accordingly on Committee Stage.

Our tax revenue depends to a significant extent on the smoking and drinking habits of our people, the utilisation of transport, the consumption of petrol and of course the turnover tax. Fortunately for the State our people smoke a lot. We also drink a lot. We are told by Ministers and by Departments, particularly the Department of Health, that smoking is not good for us and neither is drinking good for us. I wonder what kind of a debate would we have here today if this advice had been accepted and if the consumption of cigarettes and tobacco declined significantly or indeed the consumption of drink. This applies possibly to other countries but more so here having regard to the published figures that our income from smoking, drinking and petrol consumption combine to make up a significant percentage of our total revenue.

Money must be got and possibly the Minister may say, and justifiably, that if reliefs are given with one hand, they must be taken from some other source with the other. I appreciate the Minister's problem in trying to give reliefs where he thinks they are necessary because he must couple with that the collection of an amount to offset the reliefs that are given, but I am in agreement with the previous speakers that there is no doubt that there is an unanswerable case for an increase in personal allowances. It has been referred to at some length by Deputy Byrne and Deputy Kyne and wherever the money is found, it is time a change took place in the personal allowance. I believe no such change has taken place since this Government came into office in 1957. The standard allowance at that time for single men of £6 a week was somewhat significant, having regard to the value of £6, but it is meaningless today. I know what the Minister's reply will be. Some months ago I asked him about the desirability of a change and he told me that it would cost £1.2 million to make an adjustment of £10 in the personal allowance of each income tax contributor.

Take the case of a single man. His tax free allowance is only £6 unless he has dependent relatives. It is completely out of place to ask a man employed by, say, a local authority or a private employer, to contribute £1 from his £10 a week directly by way of income tax to the State. He is also contributing substantially indirectly if he smokes or if he drinks, and as all commodities come under the range of the turnover tax, he is contributing directly by way of that tax also. It is very difficult to start drawing lines because no matter where you draw the line, people will be aggrieved. Allowing the Minister's claim that a small improvement would be of small advantage to the individual while the disadvantages to the State would be sizeable, as I understand the Minister's case to be, should we then draw a line? Ought we to say to the young man who has started in employment and has a small wage, who possibly is saving to buy a house, or who is trying to provide a nest egg for marriage, that we will exempt him? I am particularly interested in the case of single people, particularly men because they are trying to build up savings to start married life. A similar case of course could be made for married people with small incomes.

Granted that the Minister cannot give a blanket relief, we must accept that there are sections whose tax contributions do not create any great hardship for them. As citizens, they have to pay towards State administration, towards the public services provided by the State and they are fortunate in having incomes which enable them to do so. Should we then be selective? I know it is difficult to be selective but this is a difficult problem and the solution must be difficult because no matter where you draw the line, you will have opposition. I am advocating that our workers, skilled workers whose earning capacity is relatively small, but who have to pay the same price for their bread, butter, tea and sugar and for their children's school books as the people in higher income groups, are entitled to some attention.

I have had many representations made to me about this matter from wage earners in the lower income group, and, judging by the contributions of previous speakers from the Opposition benches, it seems to be a national pastime. The consensus of opinion is entirely in favour of an adjustment in the personal allowance. I would ask the Minister to address himself to this question. I appreciate the problems that will confront him but now is the time to do it. If we were to address a question to the Minister later on about the necessity for such an adjustment, we would be told that it was dealt with annually on the Finance Bill.

Deputy Byrne mentioned travelling expenses, and he has a good case. I do not see why some allowance should not be made for the maintenance of a vehicle taking a person to and from work. A man who lives some distance from his work may have to get an autocycle or a motor car, or sometimes a number of workers might combine to buy a motor car, and these people are entitled to some income tax concession towards the maintenance of such a vehicle. I should like to illustrate such a point. In my constituency of South-West Cork, a factory closed down in Macroom and a number of workers became redundant. They were offered employment 24 miles from their homes in Cork and they had no alternative but to go on the exchange or accept the offer. They had to get together to pool their resources to purchase a second-hand mini-bus to take them to and from work.

It is not easy for a group of workers to pull up their roots, change their residences and move into an area in which housing accommodation is not readily available. In such cases and in others that possibly would not be as extreme, there should be an allowance towards travelling expenses. Viewing the matter on a commonsense basis, these 12 workers, travelling to and from their work 48 miles daily, should get some relief in their income tax assessment and I am asking the Minister now to examine such cases and to examine the advisability of making a regulation whereunder travelling expenses could be claimed for the purpose of seeking relief from taxation. Some allowance should be granted.

Many people, of course, complain about income tax. It is a tax no one likes to pay but, if we abolish it, what will take its place? That is a question it is not easy to answer and I certainly shall not try to answer it. I sometimes wonder, however, can we take taxation too far? Consider the position of the progressive business, capably and efficiently managed, giving good employment, in some cases a family business; the family may like to extend their activities and, by extending them, give increased employment. Immediately the incidence of tax enters into the proposed expansion. If the venture proves successful, they will have to pay additional taxation. Now there is always an element of risk in any expansion. The expansion may be successful or it may prove a failure. If there is no likelihood of success, it is unlikely there will be any expansion. But, if expansion takes place, the question then arises as to whether the State will not come along and take the bulk of the profits from such expansion. Of course, if the expansion proves a failure, there will be no aid from the State. This is something that deserves attention because the State could take from a successful firm as much as 16/-in the £ by way of taxation on profits above a certain figure.

People must be given incentives to expand and I should not like to see hindrances placed in the way of progressive firms, whether they be cooperatives, limited companies or family business, which want to expand in order to provide employment. I am a firm believer in placing no hindrances before such people. Side by side with national enterprise, such as CIE and the ESB, private enterprise is conducive to the advancement of our people and their standard of living. That is why I would not like to see any hindrances put in the way of those who want to expand. I should not like exorbitant taxation to militate against their doing so. I believe that progressive business people who go abroad in search of know-how and markets are entitled to a fair return for their work just as the small man is entitled to a fair return for his contribution to the economy.

I mention this on this Bill to ascertain from the Minister whether, in his opinion, and he is the man who should know most about this, our taxation on industrial activity is hindering the expansion of such activity. If it is, then we should have another look at the situation because I believe that type of taxation does not help, much as the money may be required.

I am pleased that the Minister intends to make more use of the Post Office Savings Bank. A few months back I addressed a question to him on the rate of interest currently obtainable. I am glad to note that he is satisfied now that that rate of interest is not in keeping with the ordinary banking rate or, indeed, the rate obtainable from private investment or investment in Government securities. Since we are encouraging savings, it is only right that the small investor should get as fair a return for his money as we can afford to give him. I understand the regulations will go further than that and will permit loans to be made by the Post Office Savings Bank. I do not know whether that will cut across the activities of the commercial banks, but I think it is a good idea. I am sure those charged with drafting the regulations are fully conversant with the situation and will draft the regulations to ensure that everything goes smoothly. If any mistakes are made initially, they can be corrected as time goes on.

I should like again to appeal to the Minister to heed the consensus of opinion in regard to increasing the personal allowance, particularly for those in receipt of small incomes. This may present some difficulty but, irrespective of the fact that the loss sustained will have to be made good in some other way, there is an unanswerable case for giving those with small incomes greater taxation relief because of the depreciation in the value of money. I would ask the Minister also to bear in mind the question of travelling expenses justifiably incurred in taking people to and from their work.

I have listened to the speeches made by Deputy Byrne and Deputy Murphy. Of course, we all agree that the points they have made are most laudable but we must bear in mind that the Minister for Finance, as housekeeper for the nation, has to be as fair as possible. The Minister knows that, politically, it would be a very popular thing to increase the allowances as I and everyone here would like him to do and are most anxious that that would happen but we must consider the huge problem facing the Minister. He is trying to carry out the policy of the Fianna Fáil Party, that Christian socialist party, namely, to look after the weaker sections of the people.

"National socialists," the Deputy meant.

The Minister wants to put money into housing, hospitalisation, unemployment allowances, increased old age and other pensions. It is a huge problem for any Minister for Finance. Personally, I feel that I am paying too much in income tax and I suppose everybody else feels the same way about it. Nevertheless, my colleague, the Minister for Finance, wants to be as fair as possible to every section. There is not a man or woman who has to pay income tax who would not pay it and does not want to pay it but for the fact that it is the law of the land that it must be paid. That is the general feeling about income tax. The problem is, where is the money to come from? Whom are we to leave short if we increase old age pensions? On the other hand, are we to give these people no increase? Are we to cut down on housing, unemployment allowances and so on?

I am sure my friends on the other side of the House realise the difficulties. The sentiments they have expressed are most laudable and I would subscribe fully to them, but we have to ask ourselves the questions I have already posed as to where the money is to come from, from whom it is to come and how we are to meet the various demands on the State for social services.

The Minister has provided relief in respect of death duties. He has tried so to arrange matters as to be able to provide for the derating of agricultural land, free secondary education, free university education. All these schemes involve a great deal of money. Candidly, I must say that the Minister has done a very good job. He has helped the weaker sections of our people. He has tried to provide that every child will have educational opportunities. He has made it possible to help a child, whose parents cannot afford it, to attain a decent standard of education. In that way we have gone a long way in the last few years. I hope the trend will continue and that we will be able to do more. I am looking forward to the day when our balance of payments position will permit of our asking the Minister to increase income tax allowances.

There was a suggestion made here about travelling allowances and there were other very laudable suggestions, to which we all subscribed. When one reads the Minister's Financial Statement and the Finance Bill and realises the reliefs that have been given, one must say that great tribute must be paid to the Minister for his ability and his wisdom in trying to look after the people most in need. There is nobody in Ireland today who would not gladly help, perhaps even to a greater extent than he has been doing, to attain to the position that we have set out to attain to, that is, the position wherein all those who need housing and improved social conditions will have them.

There is another huge problem in this developing society of shortage of services. The provision of services in Dublin city and county is costing up to £90 million. Where is this money to come from? The people are crying out for these services. There is need for better schools, better hospitals, better social services. All these things must be taken into consideration.

I do not want to delay the House at this stage but will have a few words to say on Committee Stage. However, I do want to emphasise that, in my opinion, the Minister has been very fair and impartial. I should like him to tell us what it would cost to raise the present income tax allowance by, say, an amount representing £1 or £2 a week and from whom he would take that money if he had to do it and who would suffer as a result. It would be enlightening for all of us to hear that. If I were in the Minister's shoes, I would carry on as he has done. I have no doubt that he is wholeheartedly in sympathy with the sentiments expressed but he has to be fair and impartial to all sections. In my opinion, he has succeeded in being fair and impartial and, therefore, we are very proud of him.

(Cavan): I do not intend to delay the House very long on this Second Reading of the Bill. I have a few points to make in the hope that the Minister will listen to them and, perhaps, do something about them before Committee Stage. I welcome the further relief contained in this Bill in respect of death duties. The Minister and the Government appear to be gradually accepting the argument that there is more to be gained by abolishing death duties than by retaining them. I am one of those who believe that it would in the long run be in the financial and economic interest of the country to abolish death duties. I believe if that were done, people would be encouraged to come and reside here, transfer property and wealth here, spend it here and die here. As I say, in the long run that would be in the interest of the country as a whole.

Certain people who retire in the United States, who come to reside here and to die here have a genuine grievance that death duties should be payable on money earned by hard work in the United States and other countries. I know of three of a family who left this country 50 or 60 years ago penniless. Since then they accumulated something like £30,000. All three returned to this country within the past few years and built a house. One of them died recently. The remaining two are expected to pay fairly substantial death duties on the estate of the brother who died. An argument is going on as to whether the money was owned jointly by the three or whether the brother who died owned most of it. The survivors take the view, not unreasonably, that since they earned this money in the United States by hard work and brought it home here, they should not be called on to pay death duties.

However, that is not the point I rose to make on the death duty section of this Bill. I welcome the provisions which increase the relief in respect of a widow from £350 to £1,000 and in respect of dependent children, from £250 to £500. But there is a hardship which can occur in respect of these reliefs which I would ask the Minister to attend to. As I understand it, if a man leaves a widow and two or three dependent children and bequeaths the bulk of his estate to his widow in the hope that she will provide for the children but also bequeaths a small sum, say £500 or £1,000, to each of the children, the £500 relief conferred by this Bill is for all practical purposes lost to the children and to the estate in general. If an amount of the estate on which only £50 duty is payable is left to each of the dependent children the remaining £450 relief granted is lost. That is the position as I understand it.

If that is so, the Minister should do something to see that the benefits conferred by this Bill—a relief of £1,000 for a widow and £500 for each dependent child — should be effective and that any balance over after wiping out the duty on a bequest to the child should go to the benefit of the widow. I do not think that is an unreasonable request and I think the Minister should bring in an amendment to deal with it on Committee Stage. I had a case myself within the past couple of years where in fact this could have operated to work what I consider an injustice on the dependent child. So much for death duties. My advice would be to wipe them out altogether. I do not think the Exchequer or the country would in the long run be at any financial loss.

I agree with Deputy Burke that money must be found to run the State and that no one likes paying income tax, but in operating any tax code we should lean over backwards to ensure that a tax code such as the income tax code is operated equitably and fairly and is seen to be so operated. Last year and this year the Minister has been guilty of abuse in this respect. The personal allowances for income tax payers have not been altered for approximately ten years. The result of that is of course that the people who pay income tax are in fact in real money paying more income tax each year. The value of money is going down and the personal allowances are remaining the same.

I believe the Minister for Finance should therefore increase the personal allowances and children's allowances, but if he cannot see his way to do that he should not grant any reliefs to surtax payers. I believe that if any reliefs are being granted or concessions made they should begin at the bottom. Last year we gave a relief to surtax payers by virtue of which on earned income surtax did not come into operation until the earned income of the payer reached £3,750. Prior to that it had been £2,500. This year we have gone further and in fact the earned income relief now given to surtax payers means that a person in receipt of earned income will not commence to pay surtax until his income reaches £4,500.

I know perfectly well the Minister says when you go up the scale a bit, he has made a certain adjustment, but I certainly think that is an undesirable type of relief. I say so in particular when the relief will be a relief—I am not saying this in any personal way— to the Minister and the members of the Government who introduced this tax and when it will be a relief to the Minister's advisers in the Civil Service who advise him on these matters. I would say that is a dangerous trend— the Minister may get annoyed if he likes. Let him defend it. I am making the case as I see it—especially at a time when the Minister cannot afford to give any relief to the income tax payer on £10 a week. I say it is wide open to complaint from the general public and the general tax payer. I raised this point last year and I make no apology for spotlighting it again and saying that I think it is nothing less than an abuse. The argument is in the Minister's brief:

Section 17 increases from £1,250 to £2,000 the amount of the maximum earned income allowance for surtax purposes. This relief will, it is hoped, assist Irish enterprises in attracting and retaining persons of talent in the managerial and technological spheres.

That is the case for it, but the Minister could find a more equitable way of giving the relief to those special cases or to the employers of those people than by introducing this blanket relief which in effect will give relief to the higher bracket of income tax and surtax payers while no relief whatever is being provided for the lower income groups. The Minister is hardly likely to change that but I think he should, even at this stage.

There is another case of hardship under the income tax code which I want to bring to the attention of the House. For some time past I have been advocating that the problem of the retarded child should be tackled and dealt with. Even in the income tax code not enough is being done for such children. A retarded child up to 11 years of age, I think, qualifies for a child's allowance—or the parents do— of £135. Between 11 and 16 years of age they qualify for an allowance of £150 but when the unfortunate badly-retarded child, who cannot be institutionalised because there are not enough institutions, reaches 17 or 18 or 20 years of age and is still as much a child and as dependent as when he was two, the allowance in respect of him drops from £150 back to the dependent relative allowance of £60. That is something that could and should be dealt with on the Committee Stage of the Bill.

They should get higher priority than relief for surtax payers.

(Cavan): That is the point I was making, that where any money is available for relief or distribution, it should be applied to cases like that. I know there is difficulty in allowing travel expenses from a place of residence to a place of work and I know it could lead to abuses, but I also know that a case can be made for such allowances because many people now must travel ten or 12 miles per day to and from work. I do not think it would be reasonable to allow vouched travel expenses in all cases as it would probably lead to abuses and to people who could reside near their work refusing to do so and claiming liberal travelling expenses but I think the Minister should consider introducing a flat rate to cover travel expenses to enable people to travel to and from work. I believe a modest flat rate would probably indemnify the people who are suffering the greatest hardship and who, in my opinion, are entitled to consideration.

I was glad to see the Minister's assurance in respect of Schedules A and B tax. On the Budget, I welcomed the abolition of Schedule A tax and I renew that welcome on the Bill because I think it was an annoyance to many people and did not bring in much money. The Minister has told us that as from 6th April, 1969, he is abolishing Schedules A and B tax. He is abolishing the income tax on farmers under Schedules A and B. The position at present is that farmers pay their income tax under Schedules A and B unless they elect to be taxed under Schedule D. Apparently, the situation is that when Schedules A and B are abolished the Minister fears farmers could then fall to be taxed under Schedule D unless he introduces a section in an Act in the autumn to deal with that position.

I do not think we on this side need apologise to the Minister for asking his assurance that no tax on farmers will be substituted in lieu of tax under Schedules A and B and I accept what I take as an unqualified assurance from the Minister given in the House this evening that no such tax will be imposed on farmers. I am glad of his unqualified assurance because I do not think his brief speech in introducing the Bill put the matter beyond doubt. He said:

In accordance with assurances which I gave during the Budget debate the legislation will include special provision to ensure that farming profits formerly charged under Schedule B do not as a result become chargeable under Schedule D.

The Minister has said this evening that no substitute tax will be introduced in lieu of Schedules A and B tax and with that I am satisfied.

That is all I have to say on this measure. I certainly hope that the Minister will accept my appeal on the death duty problem and on the allowance for a retarded child. I hope he will accept my suggestions in general. They are meant to be helpful.

Mr. O'Malley

The past few weeks have been for me somewhat frustrating, pregnant with my maiden speech about to be delivered, and it feels as if I had to wait nine months. I did not have an opportunity of saying anything about the Budget in this House, on what I consider to be the remarkable nature of the Budget. I should like to avail of this opportunity now of saying something about its provisions in so far as they are relevant to the provisions of the Bill before us today.

The Budget we have had this year was, by any standards, a good Budget. It was one which was generally very well received throughout the country because of the small additional taxation that was imposed almost entirely to give relief to social welfare recipients. I am very glad to see that. It is the best possible place it could go, and I am happy to know that I am a member of a Party who, while they are in office, will continue to give priority to social welfare recipients. The small additional taxation imposed in the Budget was a very small price to pay for the reasonably substantial increases which have been given to social welfare recipients this year and must be looked at in the context of the similar increases given over the past few years.

While this Budget was one which, by any standards, was good, to appreciate its real merit, we have to look around us in the world today and, in particular, to look at our neighbours and at their economic and political state. Our closest neighbours in the east are Britain. Britain has just had a Budget this year which was the most cruel and the most savage Budget that was ever imposed. It exceeded even the war-time Budgets which were unparalleled for their severity, of necessity, at that time. Her economic and political situation rendered it necessary for the present Government in Britain to bring in a most appalling Budget. When one compares the Budget the Minister for Finance introduced here a couple of months ago with the British Budget, one begins to realise somewhat more clearly the great merits that lie in this Budget and in the economic situation in this country of which the Budget is but a reflection.

Some years ago there was an unhappy tradition in this House during Coalition Governments that a Budget was brought in here a week or two after the British Budget and that it tended to follow Britain's example often down to minute details. That was the time when we were economically dependent on Britain, when we had achieved political independence but not economic independence. We had not, therefore, achieved true independence. The provisions of our Budget compared with those of the British Budget are great and lasting proof that this country has at long last consolidated political independence with economic independence and has therefore achieved the true independence the men who fought and died for the establishment of this State would wish.

That is to compare our economic situation with Britain's only. We can also profitably compare it with that of our closest neighbour in the south, France. Her economic situation was such that it went beyond just economic trouble. We have seen in the past couple of months an economic crisis of such magnitude that it brought with it political anarchy and has very nearly lead to the overthrow of the French State, something that might still possibly happen. That situation in France is not caused so much by political unhappiness or difficulties as by purely economic trouble.

People of my generation, particularly, who have never seen political anarchy in this country, who were born after all those troubles were over and who do not realise how disastrous they can be, should be grateful to a Government whose Ministers have over the past ten years or so maintained our economic progress so well in spite of difficulties all round us that we are politically as stable as any country in the world, far more so than our much wealthier, larger and more powerful neighbours whom I have mentioned.

The long term benefit of that situation, our political stability, will be immense, because political stability more than anything else is what foreign industrialists will look for in a country. They now regard it as more important than grants, loans or other facilities. No matter what grants or loans the American or German or any other foreign industrialist will get, he does not want to come into a country where he will run the risk of being faced by a situation like that which exists in France today.

In the United States of America, our closest neighbour in the West, we have seen a tragic political situation in the past few months. Again there is an economic background to all these unfortunate happenings. There is economic unhappiness and economic instability there because the wealth of the country is not spread as it should be. There is a basic cause for all these unfortunate happenings in America; all the chaos that exists now, all the violence and all the trouble, is basically economic. We have been spared not alone all that political anarchy and its associated trouble but even economic difficulties to a great extent. We have been spared that by the extraordinarily good work of the Fianna Fáil Government, of the present Minister and his predecessors over the past ten years.

It is only when we compare our situation with that of our neighbours around us who are much bigger, wealthier and stronger, that we realise the merit of the achievements of the Fianna Fáil Government since 1957. There is a lot of cribbing in general in this country, particularly among younger people, about the cost of things and so on, but I would point out to them—and I think it is something worth reflecting on by people of my generation who did not see political trouble—that it is no good living in a country where stout costs 1/- a pint if you are liable to get shot when you go out to drink it.

On the question of death duties, there is a section in the Bill, section 25, which gives a very valued and widespread relief from these duties to the people who need it most, to widows and dependent children. The size of this relief is not generally realised throughout the country. Death duties unfortunately, or perhaps fortunately, are something most people know nothing about until someone close to them dies. Then they find out very quickly and tragically what it is all about. For that reason I do not think death duties are discussed in this House sufficiently widely. Therefore, I would like briefly to say something on the matter.

For some time I subscribed to the theory that has been advanced in this House today and many times previously, and also throughout the country, that in the long run this country would benefit by the total abolition of death duties. I thought for a time that was so but I am now convinced it is not so. The reason I believe it is not is that the maximum rate of duty in this country is 40 per cent, that is, on estates of £100,000 and upwards. The maximum rate in Britain and in Northern Ireland is 80 per cent on similar estates of £100,000 and upwards. The differential is enormous. If what the advocates of the abolition of death duties said were true, there is no doubt that that differential of 40 per cent would bring in a vast number of people from England and Northern Ireland who would wish to change their domicile to this country.

In fact, that differential has existed now for about eight years and despite it, I cannot see any evidence of any large-scale emigration or in fact even any slight emigration of such people who would wish to avoid the very penal 80 per cent rate in England or the North. If they are not prepared to come in in very small numbers to get the benefit of the differential of 40 per cent, I cannot see that they would be prepared to come in in such enormous numbers as would be necessary to justify the total abolition of death duties. For that reason I believe the Minister is right in sticking to death duties. They are an important form of tax. They are the greatest social equaliser that is at any Minister's disposal in imposing taxation because more than any other form of taxation, they tend to take off the very rich what would not otherwise be taken from them and put into the general pool principally for the benefit of the poor of the country. For that reason I consider it would be socially as well as economically undesirable that there should be any question of the total abolition of death duties.

There are, however, certain suggestions I might make to the Minister with regard to them. This principally concerns the question of legacy duty and succession duty. As I understand the position, they have been abolished for a number of years in Britain. They were compensated by a very marginal increase in estate duty. I know that the product in money terms from legacy duty and death duty in this country is very small. It is a difficult tax to collect and it is often an unfair tax. The Minister and his predecessors very properly abolished the one per cent rate but the five per cent and the ten per cent rates still exist. The five per cent rate which is very often payable on top of estate duty is rather penal. It is very tough on a very limited number of people. It does not produce anything significant in death duties but creates appalling difficulties for a very small number of people because there must be instances throughout the country of a nephew working perhaps all his life in a business the property of his uncle, on the understanding that he will succeed to that business on the death of his uncle. That person finds, having paid a very large sum in estate duty he is called on to pay a further five per cent on everything he gets. This strikes me as a form of taxation which hits a very limited number of people very hard indeed. They are not very rich people and they are not people who are able to absorb taxation of that kind.

The value of legacy duty as a producer of money must be very limited and exactly the same consideration applies to it as to succession duty. There must be many instances of fairly large farmers who have not married and who have nephews working with them for ten, 20 or 30 years. When such a farmer dies, the nephew finds himself in the difficulty of having paid substantial estate duty and then being expected to pay succession duty of five per cent on top of that. Much the same arguments apply to the ten per cent rate, although perhaps not as forcefully, but the number of substantial bequests or legacies to strangers in blood who would be caught by the ten per cent rate must be very small. They would be caught by the ten per cent rate only if they were already liable for fairly high estate duty. When you add a further ten per cent duty to that burden, it is scarcely equitable, to my mind. I would suggest to the Minister that he might take the opportunity now or at some future date of considering following the English principle of abolishing those two difficult and rather unproductive taxes and that he would possibly be compensated for this by a marginal increase in estate duty.

The Minister might also bear in mind that it is now eight years since the limit of £5,000 was fixed. In view of the decreasing value of money during those eight years, the question of raising that limit is something which might well have the Minister's consideration. I know he has given reliefs, particularly in section 25 and earlier sections on which it is based, that tend in effect to raise the limit but I would suggest to him that he might well raise it for everybody rather than just for widows and dependent children from the present extremely low figure of £5,000.

The third topic on which I want to say something is one which possibly is not of great interest to most Deputies. I refer to the question of trustee savings banks which are dealt with in, I think, section 40 in this Bill. There is reference, I am glad to say, to the Minister allowing special investment accounts to be opened by trustee savings banks. They will of course be opened at a very greater rate of interest than the ordinary 3½ per cent paid on ordinary accounts. This is something which the trustee savings banks have wanted for a long time. They have had it for a long time in England and the North and I am sure we are very grateful to the Minister for putting in this section. I am sure he is well aware that this is one of a number of things which the trustee savings banks very urgently need, to expand their activities and provide better services for the community and the people they are designed to serve, the small savers.

The most important further facility, to my mind that is needed is allowing trustee savings banks to make small suitable advances to customers. That would be a great boon to many small people who find it difficult to walk into a commercial bank and ask for some small sum of money like £50 or £100, who would be laughed out of the commercial banks very often, or who are not in a position to offer any real collateral security. These people should be entitled in order to meet emergencies and small necessities to have an institution such as a trustee savings bank which would be prepared, if legislation permitted, to make small advances of £100 or £200 on limited security to people with whom they have been dealing for many years. That would not in any way cut across the activities of the commercial banks, and would provide a much-needed service for small men and wage earners.

I do not think there is any indication in the Bill of the rate of interest which the Minister proposes to pay on these investment accounts, or what rate is to be paid by the trustee savings banks. I would hope that the Minister will allow the present savings banks somewhat more than the one-eighth per cent which is all they have at present. That is the difference between what they pay out on deposits and what they get from the moneys they invest with him. I am sure the Minister will agree that he is getting that money very cheaply indeed. If he had to raise it elsewhere, he would have to pay a great deal more than the three and five-eighth per cent which he pays at present. I say this in particular because the smallness of the margin allowed to the trustee savings banks has meant that their annual surplus and accumulated surpluses are too small to enable them to carry out much needed modernisation in order that their activities might be expanded and that the amount of money which they hold on deposit might be increased.

We are in the happy position that two of the savings banks operating under this rather restrictive legislation have attained a fair measure of financial success. In the Dublin and Cork banks, they have carried out fairly extensive extensions and alterations. They have still on hands a surplus which would be more than adequate to enable other smaller banks to carry out these much-needed extensions. Unfortunately while the Dublin and Cork banks are willing to lend money at low rates to the banks in Limerick, Waterford and Monaghan, they are precluded by legislation from doing so. I would urge on the Minister that he might at no cost to himself or the taxpayer allow the better-off trustee savings banks to come to the assistance of the smaller and weaker ones so that they may increase their activities and accordingly their deposits.

The fourth and last point I want to deal with is the question of income tax. Deputy Murphy, among others, today made a very strong plea for an extension or enlargement of the personal allowance. I should like to add my voice to his. This is possibly the greatest cause of injustice in income tax today. I know everyone feels they are treated unjustly in the dealings they have with income tax but the personal allowance has not been increased for eight or nine years, I think, and possibly slightly longer. The value of money has decreased greatly. We now have the situation that a single person earning the paltry sum of £6 and a few shillings has tax deducted from him or her. That is the cause of very considerable hardship. Possibly it was all right when the allowance was fixed at the present figure eight, nine or ten years ago because £6 odd was worth a lot more than it is now. For a single person, no matter what his station in life is, it is difficult to try to live and still have income tax deducted from him.

I think the figure for a married man with no children works out at £11. It is very difficult for any married man to live anyway reasonably on £11, and his difficulties are grossly increased by the deduction of income tax at that figure. I know it is very easy for me, as it is for other Deputies, to come in here and give gratuitous advice to the Minister, tell him what he should do and let him work out how it is to be done. Obviously this is the kind of thing he would do if it could be done overnight or easily. We must apply our minds not so much to cribbing about this but to trying to solve the problem.

As I see it, the Minister has two alternatives if he proposes to increase the personal allowance. The first one that springs most easily to mind is that he should increase the standard rate. I do not think that is socially or economically desirable. In the long run we are bound to suffer as a country if that is done, because to increase the standard rate in order to increase the personal allowance will result in very considerable disincentives to industry and trade in general.

The other alternative the Minister has, as I see it, is to introduce here what I might call a selective turnover tax, that is, to increase the existing turnover tax on certain commodities only, or perhaps more accurately, to increase it on all commodities other than foodstuffs, clothing and other basic essentials. The Minister might be well advised to try to divert his tax gathering away from income tax and more towards forms of taxation which we will have to cope with in the Common Market. The basic major form of taxation in the Common Market countries appears to be what they call a sales tax which is something akin to our turnover tax. I would make the suggestion to the Minister that it might be for the benefit of the country if he started thinking in other terms as soon as possible so that our people and our general financial outlook can become adjusted to the changed situation we will meet.

If the Minister were to increase the personal allowance for a single man to, say, £500 or £10 a week, and for a married man to £800 or £900, there would obviously be a loss of many millions of pounds in taxation, but the yield from turnover tax is constantly increasing. If the turnover tax were increased, perhaps substantially, on luxury items that are not already taxed by heavy customs or excise duty, the Minister would find the money to recoup himself for what he had given away in increasing the personal allowance. While I appreciate the Minister's difficulties, the present low rate of personal allowance is a disincentive to many people to work hard. There are many people who tell me. "On my basic wage, I bring home £12, and if I work ten hours overtime, after taxation I bring home only £13 10s. I will not do ten hours for a difference of 30/-." It would breed a healthier approach to work if what Deputy Murphy and other Deputies have suggested could be brought about. I can assure the Minister that I certainly appreciate his difficulties in this respect. I have made suggestions to him as to how those difficulties might be overcome. I hope that they may perhaps be of some use, or merit some consideration, or some study, in working out the figures to see if they would be economically feasible.

If that is Deputy O'Malley's maiden speech, it gives me great pleasure to compliment him upon it.

Hear, hear.

Mr. O'Malley

Thank you.

I hope Deputy O'Malley will not take it amiss if I go on to deal with certain points he mentioned. He spoke of Britain's appalling Budget. Perhaps he will bear in mind that it is the sequel to: "You never had it so good."

I could not help wondering, as I listened to Deputy O'Malley's admirable contribution, if he is perhaps living in the euphoria that begot those fatal words not so long ago in Great Britain. I think his diagnosis of the present problems of France was slightly superficial and perhaps illusory. France has her difficulties. I believe the anarchical attempts upon her integrity have a political source rather than a genuinely economic one. I cannot call to mind the economic problems of the occupants of the Sorbonne but I am struck by the fact that it was they who tore up the stones from the streets of Paris with which they built the barricades whereas it is the workers of France and the farmers of France who I think will choose political stability in preference to anarchy. I was, however, gratified to hear in so young and so new and so admirable an entrant to our public life Deputy O'Malley's tribute to the political stability into which he has had the good fortune to be born and in which he has the happiness to live. I trust he will not overlook the fact that the tree under whose spreading branches of stability he was born and reared was rooted in proportional representation.

I was glad to hear Deputy O'Malley speak of the problem of death duties but, as so often happens, public memory is short. There was a very constructive discussion of death duties in this House two or three years ago. I think the Minister for Finance or his predecessor, the present Taoiseach, will remember my refreshing their memory as to the source of that tax. It was devised, I said, by the late Sir William Harcourt, I think in 1898, in his Budget of that year, very largely to control the follies of decrepit Dukes making improper provision for dissolute doxies, and we were taking it over and were now applying it to respectable publicans, shopkeepers and citizens of this State to remedy an evil that never existed here and is highly unlikely to manifest itself in the utilitarian society in which we live. I like to believe that those words, supported as they were by Deputy Gerard Sweetman and others from these benches, fell on fertile soil—I think they did—and caused the then Minister for Finance and his successor to re-examine the whole problem with the result of what I consider to be the admirable reforms that have been produced in this Bill in favour of the widows and children of deceased citizens of this State.

I want to say to Deputy O'Malley that if I seem to try to score a point off him it is the highest tribute I can pay him because the ordinary convention of this House is to pay a new entrant a respectful compliment and then to pass indifferently from the context of what he had to say. I want now to turn to three or four points in regard to this Finance Bill which I wish to present for the attention of the Minister for Finance. I do not know if his attention has recently been directed to a statement by Lord Shawcross in Great Britain. As the Minister knows, Lord Shawcross was for many years Attorney General. He subsequently left politics to go into the City of London and has occupied a respected position as legislator, lawyer and a figure in the higher echelons of business at the present time.

During the earlier Budget debate, I directed the attention of the Minister to the growing anachronisms created by expecting—as has been the traditional practice of this House—on the occasion of the issue of a national loan the Leaders of Opposition Parties to rise in support of the loan and to recommend it to the country as a desirable investment for small investors. I pointed out that, over and above the individual investments made by small investors, the normal course was that the bulk of the funds finding their way into these loans derive from industrial insurance companies, from pension funds, from semi-State bodies and, as Deputy O'Malley pointed out, from savings banks, and that, in my judgment, the time had come when I felt this annual exercise was no longer one in which one could participate in good faith—and, for this reason. No fixed interest security at present, in the judgment of mature financiers, is an attractive long-term investment for the simple reason that it is now the avowed policy of this Government, and of many other Government who accept the Keynesian dialectic, to invite the annual depreciation of the currency by anything from three to five per cent and accept that as the norm.

The result of this is that when six per cent interest securities are issued now to the less sophisticated elements of society what we are in fact doing is attaching to a fixed interest security what looks like an attractive annual rate of interest but which every sophisticated financier in the world knows is including an invitation to such investors perenially to live on their capital. While the money and the wealth of the well-informed fall into equity investment, the money of the small investor, the money of industrial insurance companies, the money of the savings bank pour into the coffers of the Exchequer bearing an interest rate now of seven per cent but, in fact, yielding to the investor a true return of something like three per cent because he is paying in a currency that is annually depreciating at the rate of three, four, and five per cent per annum and at the end of the term of the loan when his capital is returned to him its purchasing power is reduced immeasurably. It is an astonishing fact that in the past 20 years the value of the £ in this country has declined by almost one-half. I think the purchasing power of the £ today corresponds to 10s 8d in 1948. There were national loans issued at that time, some of the investors desirous of helping the country, borrowing money from the bank; others having accumulated modest savings and determining to invest them in the country's interest and when their capital is repaid at the end of a 30-year term, that which would have bought, if we measure it in terms of good 100 sacks of flour the day they invested it, will now purchase not more than 50.

Side by side with that investor, there was another better advised financially who had his money in industrial equities or investment trusts and if he realised his securities after 30 years he would find that instead of purchasing 100 sacks of flour, as it would have done the day he invested it, the product of his investment 30 years later will purchase not possibly, unless he has been peculiarly fortunate, 200 sacks, but over and above the interest he has got down through the years, his money will buy 150 or 180 sacks of flour. Its value will not only remain intact but will have multiplied in his hand.

I suggest to the Minister for Finance that to meet that situation we should adopt the procedure adopted in Finland. They issue a series of national loans recognising this devaluation and say—if we ask the citizens of the country to lend us money we guarantee to pay them back in money of equal value. Therefore, we attach the value of the capital lent to the cost of living figure. The Minister for Finance may brush that aside by saying that the Government of Finland have stopped issuing loans. I am not impressed; I am not surprised. They found out how costly it was.

What I am protesting against is that we are transferring the cost of this transaction off the shoulders of the State onto the relatively undefended shoulders of the individual small investor. Sooner or later that dilemma will have to be faced if we are to proceed with our traditional methods of raising capital to finance Government enterprise.

I do not want to over dramatise that dilemma. I have spoken of it twice. I shall return to the topic, if we do not find the means of remedying what I can see to be a grave injustice to a very vulnerable sector of our community. I think it is right to say to the Minister that when I return to it again, I must do so in abrasive language because, stating the dilemma as I have stated it here today, 90 per cent of those who hear me do not fully understand it and regard it more or less as a formal protest. I think the Minister will agree with me that, when the voice of so experienced a person as Lord Shawcross is added to mine, and when in pursuit of that advice, he takes the responsibility of launching on the money markets of London a new security designed to provide an alternative for this kind of investment, it involves for us here a pretty urgent responsibility to recognise that the existing procedure for the raising of national capital finance is becoming unsatisfactory if we are to go on living by a Keynesian economic ethic. I put in the words "economic" because ethic in connection with that gentleman in any other context would seem fantastic. Deputy Byrne has mentioned it already.

It is a matter to which my attention was directed as a result of a reply by the Minister for Finance to a question addressed to him by a Deputy. It related to some activity of the Commissioner of Valuation and the Minister, I thought with perfect courtesy, furnished the information but added to his answer a codicil stating: "I am giving this information today but I am notifying the House that I do not propose to answer any further questions relative to the Office of the Commissioner of Valuation because I think it is inappropriate that I should do so."

This gives rise to a very important issue. The whole basis of the financial control exercised by Dáil Éireann over the Government is founded on the proposition that any money here voted shall be answered for to the Committee of Public Accounts by an Accounting Officer, and the procedure is that the individual account of each Department of State is examined by the Comptroller and Auditor General who is an officer of the Constitution. There is only one Committee of this House which has a standing majority of Opposition Deputies, that is, the Committee of Public Accounts. That is done deliberately in order to ensure that there will be a constant invigilation of the Government for the time being to secure that such moneys voted by this House (1), will be spent within the ambit of the Vote and (2), that expenditure within the ambit of the Vote will not exceed the authorisation provided by this House.

Among the other divisions of the Department of Finance for which the Secretary of the Department of Finance is the Accounting Officer is the Office of the Commissioner of Valuation. The Leas-Cheann Comhairle and I and other Deputies have in our time presided over that Committee and there is a convention that when the Accounting Officer in respect of a group of estimates such as those of the Minister for Finance finds himself in a position that certain sections of the Department are of a specialised nature, he will bring with him, as Accounting Officer, a number of specialists and when the section of the Minister's Department under the direct supervision of that specialist has to be accounted for to the Committee of Public Accounts there is a convention that the Accounting Officer, who is Secretary of the Department, may say to the Chairman: "I think it would be for the convenience of the Committee and certainly for mine if the Committee would allow me to delegate to so and so my obligation to answer any questions that may be addressed to me in regard to this division on the Department of Finance." There and then the concession is forthcoming but the ultimate responsibility is on the Accounting Officer.

I suggest that the more it becomes manifest that there is a responsibility on the Accounting Officer to answer to the Committee for the proper disbursement of the moneys voted by the Oireachtas, there is a consequential obligation on the Minister for Finance to answer to this House in respect of any administrative act that has been done during the financial year by that section of his Department. I understand there is some problem in the Minister's mind to the effect that the Commissioner of Valuation has implicit in his duties a quasi-judicial function and that therefore it would be inappropriate for a Minister to answer to Dáil Éireann for what the Commissioner has done.

I suggest that this is a misconception and that the Minister should review his position in this matter and resolve that like every other Department it can be truly said that there is no Department which cannot be called to render an account of their performance in Dáil Éireann, not only by Parliamentary question but if necessary by the movement of the Adjournment and that that in itself is an essential and important element in the Parliamentary institutions to which so young and inexperienced a Deputy as Deputy O'Malley today paid so glowing a tribute.

The last matter I wish to mention is that I am happy to think the Minister for Finance is minded to turn his back on the loathsome turnover tax which has become the root of more evil than any single thing that has been done in my recollection in the economic life of the country. It is an inequitable tax, it is a tax which has begotten more dishonesty and fraud since its introduction than any other tax in my memory. It is a thoroughly evil tax. It contains no facility for adjustment as between essentials and luxuries. It is in every sense a bad tax and on the only occasion on which it was made the issue of an appeal to the people, in the Minister's constituency, it was emphatically and categorically rejected by the electorate who were asked to consider it. The commonsense of the common people is often a standing rebuke to the ingenuity of the sophisticated.

It is now clear that the source of revenue by what is generally described as a sales tax is pretty well indispensable to the modern scale of Government expenditure. I understand the Minister is looking at the desirability of substituting the turnover tax with an added value tax, related in form to some of the taxes which are already operating on the Continent. All I can say to him is that the sooner he produces a White Paper giving the House as much information as may be available to him on the full operation of the added value tax the better it will be for us all and for the Minister. The House will be then equipped intelligently to advise and discuss on these matters.

I freely concede and admit publicly that I did not know enough about the added value tax to do what I wanted to do in the General Election of 1965. I wanted to say in the General Election of 1965 that if we were elected the turnover tax would disappear overnight because I knew how thoroughly evil it was; but I did not know enough about the added value tax to tell the people that we would replace the turnover tax with it and I was not prepared to go before the people to announce that we would abolish the turnover tax unless I was prepared to suggest an honest alternative and to give the people due notice of the alternative they would be asked to accept in the light of the operation of the turnover tax. At that time I was too scrupulous and possibly I paid a political price for it.

However, water under the bridge is of no significance. It is to the future we must have regard and I think the new tax, to take the place of this cursed instrument with which we have lived, should be entirely understood by us all before we adopt it. I trust in the preparatory work of the Minister and that he will make all the information available which I am quite certain is requisite to an intelligent understanding of the legislation that it will be necessary to implement.

The last thing I want to say, Sir, is this, and here I believe there is a fundamental difference in principle between myself and the Minister for Finance. I believe the Minister for Finance is a Keynesist: he believes in inflation. I believe the Minister for Finance accepts the philosophy that there is such a thing as controlled inflation. I want to go on record in public once again as saying with emphasis that inflation is the greatest instrument of oppression that ever was conceived by the mind of man and that its inevitable consequence is to rob the poor to enrich the rich. There is no sophisticated dealer in money who cannot avoid the consequences of inflation, depreciation of the currency, call it whichever you will. There is no wage earner, there is no widow, there is no small saver, there is no pensioner, there is nobody trying to live in dignity on the strength of the fruits of his own work, who can avoid the plunder of perennial inflation.

There is no more accursed concept that ever entered into the mind of man since Rousseau conceived the loathsome delusion of the perfectability of human nature in the natural man than the monstrous delusion which Lord Keynes sold the world in the form of controlled inflation. There is truth in what young Deputy O'Malley said today, that it not only operates to rob the poor but, what is even worse, it operates to erode the very foundations on which individual liberty and freedom depend given the kind of economic perennial earthquake that inflation involves, the unceasing trembling in the value of money in its role as a safe repository of saving. There is inbeaten in society an instability and unconscious anxiety which manifests itself in the traditional Fischer equation, when money is unstable the velocity of its circulation grows apace.

And so you have the universal passion for burdening yourself with debt —better have a dishwasher that it will take three years to pay for today than to wait until you have the money to pay for it because by the time you have the money saved to pay for it it will have grown dearer; better to burden yourself with an ever mounting burden of debt and pay for it in instalments when the money with which you are paying for it is shrinking in value. So emerges the whole horrible social pattern. Instead of the independent, proud, property-owning families in countries like Britain and the United States of America, there are the neurotic, despair-ridden family units spending their lives struggling to keep up with the Joneses, burdening themselves from the day of their return from their honeymoon with the monstrous pyramid of debt which hangs around their necks like a lodestone for the rest of their days.

I know all the arguments about the neccesity for the promotion of this kind of consumer activity in order to keep the economy expanding but I do not think it would be appropriate, Sir, on the occasion of this Finance Bill to search these questions as exhaustively as we might on the occasion of a budget or elsewhere but when we look at the growing size of Government expenditure, when we realise that a greater and greater percentage of the gross national product of our community is being absorbed every year in Government expenditure, let us not forget that so long as it is possible to keep the expansion expanding everything seems like wedding bells but if one single prop breaks down—and not in this country but in some distant land over which we have no control— the whole mighty structure comes crashing about our ears and the further it has been built up and the larger it has grown the more catastrophic is the disaster which ultimately ensues with this extraordinary feature, and I have lived through two of them and in both of them the money changers came through unscathed.

It was the little people, the simple people, who were walking the streets of New York with their tin cups asking: "Brother, can you spare a dime?" It was the simple people, the working people, whom I saw marching from Jarrow to London while "Chips" is recorded in his memoirs as staging parties in Belgrave Square unparalleled in their magnificence. It is hard to get people who are living in the period of expansion to envisage its consequences if common prudence is not used. I was there when President Hoover foresaw for the American people a chicken in every pot and two cars in every garage and within two years I was there to see the simple people walk the streets begging for dimes. The point of what I am earnestly concerned to communicate to this House is that all that dialectic was initiated not in New York, not in London but the spark that set it off was the collapse of the Kredit Anstalt of Vienna. One tiny stick in the vast complex of economic expansion throughout the world snapped and all the resources of the world were mobilised to shore it up and to try to stop the rot but it gradually spread across Europe like the black death and then jumped the Atlantic to devastate what was then regarded as the most affluent country in the world.

In that period a miracle occurred because as that economic black death swept over the world with its selective destruction of the poor, there was one country in the world it never touched. As that tornado grew when it reached the shores of Ireland it was as if the waters of the Red Sea had parted and it passed us by and overwhelmed the United States of America. But do not forget that shortly after that we engaged in the Economic War and we had the resources there not only to cure the consequences of the world's catastrophe but to face the appalling and particular consequences of the Economic War. Why? Because in the previous eight years we had had in this country perhaps an excessively conservative financial approach to the national finances. Now, I do not want to push things to extremes and what was appropriate to 1938 might not be appropriate to 1948—and it might not be appropriate to 1958 or 1968—but there is a lesson to be learned that in 1929, 1930 and 1931 there was no country committed to the policy of inflation which had resources sufficient to resist the tornado that swept the world at that time. There was no country in the world in which the first victims were not the poor, the widow and the defenceless and thousands of them died unrecorded and unremembered from hunger and destitution. At the same time this tiny island weathered the storm and for five weary years assumed the additional burden of the Economic War and still remained afloat.

Surely there is a lesson to be learned from that? I hope and pray that lesson will be learned in time and that this country will be spared the catastrophe of having to tell the tale of itself, as Deputy O'Malley said today, that we never had it so good, only to wring their hands five years hence and join with Deputy Brian Lenihan, the Minister for Education, to weep salt tears and wring their hands in London for being the appalling example from which Scotland and Wales should take a warning and never perpetrate the folly that Ireland perpetrated when it asserted its inalienable right to be free. I want to go on record as saying, pace the Minister for Education, I never regretted for a single second the decision to be free. There is no cost this country could pay too high for deliverance from the humiliation of being the unwilling serf of a foreign Government. All I am anxious to ensure is that with that freedom so dearly won we will not plunge into economic chaos and persuade the more easily deluded sections of our people to listen with sympathy to Deputy Lenihan when he goes in sackcloth and ashes to London to deplore the repeal of the Act of Union.

As a number of Deputies mentioned this is very much a Committee Stage Bill and perhaps I should begin by mentioning the point that was adverted to by a number of Deputies to the effect that this Bill should and could with advantage be sent to a Select Committee of the House rather than be discussed here by a Committee of the whole House. I agree with Deputy Paddy Byrne in his approach to this matter. There may be Bills which come before us which could be effectively dealt with by Select Committees but I think this Bill at any rate is one which should be debated here on the floor of the House fully——

Hear, hear.

——on Committee Stage. I will go as far as to say that as far as I am concerned I would rather see far more business done here on the floor of the House than less, that I think that the Dáil is definitely at its best when it deals here in detail with the Committee Stage of a Bill. There are so many people vitally interested in, concerned with and affected by the provisions of this measure that it is almost essential that it be discussed here with all the attendant publicity of not alone what is in the Bill but what is said about the Bill by different Deputies. Apart from anything else I know there are many people from different walks of life and different areas of activity who are anxious to be in the Public Gallery when the measure is being discussed. So that I, for one, would certainly be very much against taking this particular measure away from the House to a Select Committee, unless there was a great deal of evidence to convince me to the contrary.

A number of Deputies spoke about the fact that the Bill does not provide in any way for a general increase in personal allowances. It is, of course, easy to make the case that these allowances have been static, or practically static, for a long time now. Indeed, I myself adverted to that situation in my reply on the Budget debate. The fact is that any improvement in the area of personal allowances would be very expensive indeed.

Not to make any improvement is extremely expensive on many unfortunates in the country.

I do not think the ordinary taxpayer would be at all appreciative of minor changes in these allowances and, if one were to contemplate doing anything significant, one could only contemplate that in the context of some fundamental re-structuring of our total taxation system, such as the introduction of added value tax or a major increase in indirect taxation. It is not, therefore, valid to argue at length about the inadequacy of personal allowances without, at the same time, going to the root of the problem and suggesting where the major fundamental change should be made in our taxation structure to enable something significant to be done in personal allowances.

I want to assure Deputy Dillon that the White Paper on the added value tax is practically ready. It will be published shortly. I hope it will be sufficiently comprehensive to enable Deputies and the general public to appreciate exactly what would be involved in the introduction of this type of tax, what the advantages and disadvantages are and what changes it would mean in our economic and commercial life. If the White Paper does not give all the information Deputies require, we can always add to it. We have made a very thorough investigation. A great deal of travelling was undertaken in connection with the investigation to find out what is happening in other countries and to study the situation in as great detail as possible and we have accumulated quite a volume of information about the tax.

I was very interested in the discussion on the abolition of estate duty. Deputy O'Malley was, in my opinion, quite right in a great deal of what he said; it is a very popular concept to suggest that the abolition of estate duty would result in all sorts of benefits, that capital would flow into the country from all over the world and all our troubles would be ended. It is heartening to note that a young Deputy like Deputy O'Malley was sufficiently astute to see that much more than this was involved and it augurs well for the future contributions he is likely to make in this House.

The fact is that death duties at the moment bring in £6 million a year. That is a fairly sizeable sum in our Budget and we should have to think very seriously from what source we would replace that £6 million if we decided to abolish these particular duties. If we were to abolish them could we be sure that the anticipated results would follow? It is quite true that the reduction made in the higher rates on an earlier occasion did not have any appreciable effect as far as we can see. Furthermore, we had last year and in previous years a very substantial capital inflow, the sort of capital that we really want, productive capital seeking active investment as distinct from what might be called the rentier type of capital which might flow in in the wake of the abolition of death duties.

I will be happy to deal in greater detail with the concessions made in this Bill from the point of view of death duties in the case of widows and orphans on the Committee Stage. The concessions are fairly substantial and should take care of the main problem which has arisen in recent years in this regard. The problem arose, I think, in the case of a husband who died leaving a widow and children; very often he left a house and some pension or insurance provision for his widow and children and it was the aggregation of these that caused a great deal of difficulty. The concessions set out in this Bill, which will take effect from the date of the passing of the Bill, should do a great deal to solve the problem as it exists at present.

Deputy Dillon made a very eloquent speech about inflation and its evils. I could not possibly attempt to reply to it on this occasion, but I do not think that any Minister for Finance in any country in the world could take it upon himself to reverse the trend. To give an indication of how difficult it is to achieve any sort of progress in this area, I would point out to Deputies what happened in regard to the establishment of the special drawing rights in the International Monetary Fund. It seems quite clear, from every point of view, that something new is needed in this regard if the expansion of world trade is to be financed and encouraged but it is one thing to be able to decide on what is desirable and what would be beneficial, and it is an entirely different thing to be able to put the machinery in motion to achieve that. This is very clearly illustrated by the difficulties which have been experienced in trying to create these new special drawing rights. So that, whatever Deputy Dillon may say about the evils of inflation and all that follows from inflation, I do not know that he can validly expect me to do anything significant in changing this world-wide trend, at any rate, in the context of this Finance Bill.

Question put and agreed to.

I suggest this day fortnight.

Will the Constitution Amendment Bills be finished by then?

That depends on the Deputy, I would say, to some extent.

Committee Stage ordered for Tuesday, 2nd July, 1968.