Finance Bill, 1970: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time".

First of all, I should in all fairness like to welcome the Minister for Finance but I am afraid there is a slight element of malice in this because his predecessor, though obviously he had some difficulties, really understood his finance and it was not easy to score a bull's eye off him. I am not without hope that it will be easier to score the occasional bull's eye off the present Minister. I said before it is a tougher job being Minister for Finance than being Minister for Industry and Commerce. The Minister, a couple of weeks ago, five times in a short space of time spoke about the slick talk of the Labour Party. I should like to say there is no slick performance possible in the Department of Finance.

Did I say this?

About the Labour Party?

Yes, I noted it down specially.

I think the Deputy is mistaken.

I am not mistaken because I made special note of it with the intention of throwing it back at the Minister. I am not making a major point about this. As I intend to say certain critical things about this Finance Bill I should like to say that not everything in this Bill is bad. Let me start with that. I do not intend to go into detail about the sections as that is for the Committee Stage.

I want to talk about taxation and, above all, I want to talk about direct taxation as it affects the people with reasonably low incomes. This will be the major theme of what I have to say. The change since 1939 in direct taxation is outrageous in the way it has increased the burden on the people I would call the ordinary workers. Those are the men who today have an income of £1,000 a year or less, equivalent to £200 a year or less in 1939, which was about the income a craft worker had at that time and is still about the income the average craft worker has in this community.

This Bill reminds me of the Finance Bill which came in with the introduction of PAYE. It was of enormous size, consisting of 25,000 words. The White Paper explaining it consisted of 3,000 words and, although the Minister took in section by section in his Second Reading speech, all he had to say on it was contained in 2,000 words. One of the significant things about a Bill of this size, a Bill of 25,000 words, is the amount of work it creates for other people. I remember quite well that when I protested in the Seanad in 1959 about the Finance Bill introducing PAYE it seemed to me—one is closer to the officials there than in this House—that the then chairman of the Revenue Commissioners, who is an old friend, was extremely sore with me. I said at that time that the Revenue Commissioners were creating an awful lot of work for other people to do. I am afraid this happens continuously. There are certain people in the community such as chartered accountants and other accountants, who have no objection at all to the Revenue Commissioners creating plenty of work because they are remunerated for it. Those things could be simplified without a great deal of work.

Deputy Briscoe in his speech on this Bill told us that if the workers did not behave themselves we would be pricing ourselves out of business. I quote from the Official Report, Volume 247, column 1365:

We must try to get the people to see that by making unnecessarily large claims for increases they may put themselves in an uncompetitive position in relation to other countries and eventually we may put ourselves out of business.

By a coincidence the previous week I was in Kilkee and the president of the International Federation of Chemical Trade Unions said: "You know you will be told this kind of thing. You will be told that you will put yourselves out of business if you insist on getting increased wages". Of course, we were constantly told this. I fear, however, that we will put ourselves out of business by the enormous increases in direct taxation which are imposed on the people by the vast amount of money which the Government are taking from ordinary incomes. This is effective in the sense that it increases GNP because you are including it both ways and you push up the amount of the gross national product.

When I looked at the amendments of the Income Tax Acts, contained in sections 5 to 16 of the Bill, giving minor concessions, I asked myself the question: "How many people paid income tax in this country in 1969-70 compared with 1939-40?" Strangely enough I found great difficulty in getting anything more accurate than what I had in my head, which was that in 1939-40 there were about 180,000 paying income tax in this country and, unless I am mistaken, in 1969-70 close on 700,000 people paid income tax in this country, that is to say, four times as many. Is anybody going to suggest to me that four times as many people are so much above subsistence level in this country compared with 1939-40 that they now have to pay income tax?

The comparison I want to make is between 1939-40 and 1969-70 because of what is supposed to have happened in increases in income compared with pre-war. I did some research in the reports of the Revenue Commissioners, which reports, however informative they may be to the Revenue Commissioners, are very uninformative to the public. I will not go into this matter in detail although there would not be any difficulty in doing it. There are all kinds of tables which are of no significance to the ordinary person. The report itself is a miserable document from the point of view of genuine information: the 46th Annual Report of the Revenue Commissioners for the year ended 31st March, 1969. The reports of the Irish Land Commission should be used as a pattern. I notice that, in the last report, they have a number of rather high class graphs about wines imported, consumption of spirits, and so on. There are no graphs about income tax or about the relative weight of taxation on the people. There are particulars about mineral hydrocarbon light oil, and all kinds of things of that sort, but nothing about income tax. Let me fill in the picture.

From 1936, 1937, 1938 and 1939 the rate of income tax was 4s 6d in the £. Earned income relief was one-sixth and the personal allowance was £125 a year. Therefore, the first £150 of earned income was free of income tax. What is the equivalent amount today of £150 in 1939? It is £750. As a matter of fact, if one wanted to be difficult about it, one could prove a case that it is more than £750, but let it go at that. In other words, Is in 1939 would buy as much as 5s would buy today.

In 1939, a half rate applied to the first £100 of taxation after that on a single man. That is to say, 2s 3d in the £. So that, on his first £100, he paid £11 5s in tax, i.e., he paid taxation of £52 10s or £55. Today, on £500, what would he pay? He would pay—make the same allowance of one-quarter— £125: i.e., he would pay 2½ times as much. This applies with even greater force to married people and people with a number of children.

A single man on £200 in 1939 paid £5 a year tax. He paid it at the rate of sixpence in the £: the reference is the 17th Annual Report of the Revenue Commissioners, page 134. We have moved on quite a bit since then—from the 17th report to the 46th report: the next one will be the 47th report. We have moved on quite a bit in the way we tax the people. The sixpence in the £, with £5, pre-war which he paid on his £200 would be equivalent to £25 today.

What does the single man on £1,000 a year pay today in income tax? He pays £150 a year, i.e., three-twentieths of his income so that, in real terms, he pays six times as much today as he did in 1939. Let nobody tell me that workers are paid proportionately so that they are no worse off than they were in 1939.

I did one other piece of comparative work. I thought I would have a look at the comparison between a man on £1,000 a year—the other side of the coin for the kind of financially conservative Government we have here in certain respects; most unconservative in other respects considering the remarks today about devaluation of the Irish £—and the amount of tax a man on £5,000 a year pays. He pays £1,500 a year in tax, i.e., three-tenths of his income. He pays £40 a year in surtax but that was not worth taking into consideration because of the activities of the present Government party over the past three or four years in relation to surtax. The case made for altering the surtax rates in recent times would not hold water for a moment i.e., that we were anxious to get back experts from various parts of Britain to work here. From what I know of business, I do not think salaries here are so non-competitive with British salaries that we could not have maintained a fairly stiff surtax.

In paying £1,500 out of his £5,000 he pays three-tenths of his income, i.e., 30 per cent of his income, against the unfortunate man, by comparison, on £1,000 a year who pays 15 per cent of his income on tax. In other words, the man on £5,000 a year does not pay any surtax at all. He is still essentially on the same rate of tax as the man on £1,000 a year. The rate of £150 on £1,000 is 6s in the £ and the standard rate of tax at present is 7s in the £ so that we are back where we started. It is the same thing. As I can see it, the man with £5,000 a year really pays no greater taxation worth talking about than the man with £1,000 a year.

I want to turn to another angle of this as regards, again, the man on a medium income, i.e., the man subject to tax. If I might mention the Revenue Commissioners again. I shall mention them many times during this speech because the care of these taxes is assigned to them in section 38 of the Bill which reads:

All the taxes and duties imposed by this Act are hereby placed under the care and management of the Income Tax Commissioners.

This is an unusual section to have in these Acts though doubtless it has a well-documented history but it is quite unnecessary. However, there it is and it did give the Revenue Commissioners a certain kind of status that certain other people in the community did not have.

I want to deal with the turnover tax which was doubled. The first thing I want to say about it is that the Minister, in his Budget Statement, said that he would get £20 million from doubling the turnover tax although the White Paper estimates of receipts and expenditure had shown £23 million for the 2½ per cent turnover tax. Therefore, he will not get an extra £20 million, as he was pretending in his Budget Statement: he will get an extra £23 million and, of course, this extra £23 million could have made a worthwhile contribution to a matter we shall be debating later on—I do not want to develop it—namely, a proper increase in children's allowances.

Let us take the turnover tax. Again I looked at the Revenue Commissioners' report and I noticed that they have various headings in the column dealing with turnover tax. Strangely enough they have not got butchers' shops in a separate heading. They showed grocers as just under £2 million and they showed grocers and public houses together, that is, the kind of public house that is also a grocery shop, as under £1 million. I assume if we take grocers' shops and butchers together, and take them as being a sum of £3 million a year, the Minister, as an alternative to spending the money on children's allowances, could have taken the turnover tax off food. He would not do that. The trouble about the Fianna Fáil Party is that when they do a dirty trick if one talks about it and attacks it he is a dirty fellow. It is not the Fianna Fáil Party who do the dirty trick. They are not dirty at all or smeared or anything else.

That is a very good point.

I have seen it time and again over 20 years. One is rolling oneself in the dirt if one dares to mention something the Fianna Fáil Party do.

This £3 million, on the basis of the figures of the last report of the Revenue Commissioners, would have enabled the Government to take the turnover tax off food. If they had done that, my speech today would be very different. I would have to be honest and speak out the truth. I look at this turnover tax as it applies to food and I cast my mind back, though I may be regarded as going into antediluvian periods, to Adam Smith and his four canons of taxation. I notice the modern books leave them out but this does not mean I think any the less of them. Thought is different from engineering or from any from of modern activity, say computers. Pure thought can be as good with the Greeks as it is with the most modern German philosophers. The canons of taxation, according to Adam Smith 200 years ago, were equality, certainly, convenience and economy. These words, of course, like all words can have different meanings just as there are certain words in this Finance Bill which are defined as meaning something which they do not mean, an Alice in Wonderland kind of stunt. Let me look at those four words. The turnover tax has no equality in it, no matter how one interprets equality. It has no certainty in it because one cannot tell what the price of food will be and one cannot tell, if one is a young person, what the size of one's family will be. There is, from the point of view of the Exchequer, economy in it and there is an element of convenience in it from the point of view of the purchaser of any article, that he pays at the time he makes the purchase.

When turnover tax was first imposed there is not the slightest doubt that it had a most disastrous effect on the cost of living. It is doubtful if it did not have a more disastrous effect this time. Only last night I was with a group of grocers, an independent group of retail people in this city. They told me that many of the ordinary retailers with one shop had not bothered with the tax when it was 2½ per cent. They paid it up and left it at that. However, when it became 5 per cent they just could not bear it and they had to collect it. This is not a concoction of mine. They told the Minister this when they saw him before the Finance Bill.

There has been an increase of 4½ points in the cost of living in the three months from the middle of February to the middle of May, I suppose the greatest increase ever in a period of three months. The Central Statistics Office had abandoned the new index they had set up in 1968, I suppose under pressure, I do not know, it showed such a huge increase between November, 1968, and February, 1969, of 3.3 points, 1.1 per cent a month, but they are back on it again because the 1953 index would show such a colossal increase that it had to be abandoned and the 4.5 per cent increase in the cost of living which was shown in the figures which were sent out to us by the Central Statistics Office, I would say was primarily due to the operation of this turnover tax.

There are several things wrong with it. First of all, it applies quite unfairly because a shop providing labour pays the tax on the cost of the labour so we have an additional reason for the success of the supermarkets. They do not provide labour services for the community and, therefore, quite apart from the kind of conditions many of the bigger ones get, the way they squeeze the manufacturers and the kind of terms they get and the way they collect their money in cash, they are a kind of bank with no depositors and the ordinary small retailer is being grilled. I am of the opinion that, as has been happening recently in the United States, the wheel will turn and people will feel they want to go in to their grocer and say: "Good morning, Tom," and he will help them himself and talk about the matters of the day.

There are many real difficulties about this direct and indirect taxation on this massive scale. Perhaps the Minister will remember, because I remember very clearly the Minister talking about a 7 per cent increase in incomes at the Fianna Fáil Ard Fheis on a Sunday and two days later, on the Tuesday of that week, the Labour Court awarded a group of workers a 23 per cent increase. I would say the Minister noted that. I certainly did.

Still, of course, only 7 per cent in respect of this was allowed in price increases. That is all I was saying.

The Minister made sure they would go up higher.

That is all I was saying.

That is why Cement Limited insisted on the Government making a decision.

The Government did not make a decision.

Oh, they did.

Let me examine this 23 per cent on the basis of what I have been saying about income tax. Income tax will take over a quarter of that 23 per cent, 5s 3d in the £, because every person who got that increase is now paying income tax. If one knocks 5¼ per cent, almost 6, off 23, one is left with 17. Then knock 5 per cent off the 17 because it does not matter whether they appeared to put on the extra 2½ or the 5, it was, in fact, somewhere between 5 and 6 per cent that went on prices for the reasons I have given. It did not matter who was operating it. Everybody did put it on because one cannot pay 5 per cent to the State without collecting it. One knocks another 5 per cent off the 17.

There is no point in stating what the Central Statistics Office told us about the year 1958. What the workers got in real terms was about 13 per cent. Would anybody argue that this would compensate for the futher inflation the Minister is so proud of, judging by some of his remarks in answer to questions: it is everywhere around us; therefore we are in this inflationary game. The 13 per cent they got in real terms would not even compensate them for the increase in their cost of living since the last round of wage increases, let alone allow them to make provision for the further increases in costs every week.

Since the famous Budget introduced by the former Deputy MacEntee on 1st April, 1952, there has been no period of one month in which there has been a greater increase in the cost of living than there was in the month of May of this year. In 1963, the effect of the introduction of the turnover tax was not noticed immediately because the traders did not quite know how to handle it, but by now they know it pretty well. Deputy Maurice Dockrell raised a point on which I support him very strongly, that is, that our method of getting in revenue for the State is inequitable. The burden of taxation falls on too few people. It is about ten or 12 years since one of the then Revenue Commissioners said to me: "There is legal and illegal evasion of tax". As Deputy Dockrell pointed out, the farmers are now completely free of income tax. This party stated what we had to say in our policy document. We would require farmers with a valuation of more than £100 to submit accounts, the same as other people. This certainly was a liberal point of view. No effort would be made to bring a man with a valuation of under £100 into the income tax net.

Deputy Dockrell also pointed out the disincentive effect of this high rate of taxation if you have to employ somebody on overtime. This is an old problem. It was most forcibly pushed home by the coalminers in England immediately after the last war. Having worked four days in the week, they refused to work any more because it was not worth it. Deputy Dockrell went on to say that we are still following a method laid down by the British. He is correct from the philosophical point of view, but I do not think he is correct in practice. In fact, the farmers in Britain are liable to income tax, whereas our farmers are now legally free of it.

Deputy Dockrell and Deputy Donegan mentioned death duties. There used to be a theory in this country which was expressed by many people—the city engineer of the city of Dublin was one man who held this view very strongly and when the former Deputy John A. Costello was Taoiseach he also held it strongly—that if we abolished death duties, big numbers of wealthy people would come in here and this would be of great advantage to the country. For a long period of years the yield from death duties was £3 million a year. I was looking at the figures recently and the yield is now £8 million to £9 million a year. That is because real property is valued in quite a different way from the way it used to be valued, and has also increased in value. It is also true that our estate duties are lower than those in Britain but they are not as low as they were when Sir Chester Beatty came here. He was attracted to this city by the low rate of our death duties.

I remember that when a member of the Guinness family who lived in Knockmaroon died leaving an estate of £3 million, the estate duties paid here were £1.3 million. If he had died in Britain the estate duties would have been £2.4 million. In other words, those who were bequeathed these moneys would have been left with £600,000 in Britain whereas in this country they were left with £1.7 million. I am not so envious of people that I would wish to see an estate of £3 million reduced to £600,000. It is becoming a question as to whether these huge increases in death duties are not pressing too severely on people. A great deal of money is taken out of businesses of moderate size — for example a business worth £100,000— and this creates cash difficulties for the people running the business. It creates problems.

Deputy Gallagher spoke about section 17 dealing with tax deductions from payments to sub-contractors. The drafting of that section is most peculiar, to put it mildly. The section runs into two pages and there is no provision in it for the cost of materials. It states that the principal shall deduct from the payment and pay to the collector tax at the rate of 7s in the £ on the amount of such payment. That is on the gross amount of the payment. The sub-contractor can avoid being penalised in this fashion by getting a certificate from the Revenue Commissioners. This is not exactly my idea of equitable behaviour on the part of the Revenue Commissioners or anybody else. I certainly have great sympathy with the point of view put forward by Deputy Gallagher that it penalises savings. That is not its purpose, of course.

Its purpose was stated by the Minister. It is so innocent.

Section 17 is an anti-avoidance measure designed to deal with another recent development, namely, the system of sub-contracting in the construction industry, or "lumping" as it is commonly known. These sub-contractors have, for the most part, been escaping tax because of the difficulty of identifying them. The measure now being introduced will require tax to be deducted at the standard rate from payments made to these sub-contractors unless the Revenue Commissioners authorise otherwise. The Revenue Commissioners may make regulations for the operation of this provision.

Of course, the regulations will have to be laid before the House of the Oireachtas.

That is not the kind of legislation that commends itself to any ordinary person. We all know the intention behind it but there ought to be some other method of collecting the money. This method creates difficulties for persons engaged in genuine operations. Certainly it will create a lot of work for the principals, as they are called, because of the way it is drafted. It will sometimes be difficult to determine when a contractor is a sub-contractor and when a sub-contractor is not a contractor.

I should like to ask the Minister why section 53 was not drafted in a straightforward way? This section deals with the 3½ per cent Exchequer bonds and the 3 per cent Exchequer bonds which the Department of Finance has said are due for repayment in the middle of 1970. Payment is being prevented because of the bank strike. In fact, many people have not received the dividend payments due to them on 1st May. The State has defaulted in the payment of the National Debt and many people will be hard hit financially as a result. It is all very well to say it is not possible to pay these debts because the Bank of Ireland is closed but that is not good enough. No matter what it may look like on the surface we all know that there is plently ofsub rosa banking being carried on at the moment in the city. The only thing is that it has to be done quietly. Instead of giving us all the gobbledy-gook as stated in subsection (3) of section 53, and I quote:

Where an order is made under subsection (2) of this section, interest at such rate as may be specified in the order, shall be paid on the outstanding stock aforesaid in respect of the period from the 15th day of July, 1970, to the date of redemption, fixed under this section, of such stock.

Why did the Minister not specify the rate of interest? What is all this rubbish about making orders and not making orders? I realise the inference may be drawn that the 3 per cent Exchequer bond holders will be paid a higher rate of interest and that the 3½ per cent Exchequer bond holders will also be paid a higher rate of interest but there would have been no harm if that had been inserted. Subsection (4) of section 53 states, and I quote:

The Minister may by order revoke or amend an order under this section including an order under this subsection.

One noticeable omission in the Bill is a capital gains tax. No doubt those people who have been watching the behaviour of the stock exchanges in the United States, Britain and here will ask: "Where is there a capital gain to be made today?" This does not alter the fact that a capital gains tax is long overdue. I personally think this is a matter for the Revenue Commissioners. As I have mentioned the Revenue Commissioners, I should like to point out that I thought it was most improper of the Revenue Commissioners, during the course of last year's general election campaign, to make a public statement that a particular transaction was not subject to tax. I am not saying they were wrong. In fact, it is extremely likely they were right having regard to the man who was chairman of the Revenue Commissioners until recently, but I do think it was most improper of them to make such a statement publicly. There is a serious snag here from the point of view of the community. The Revenue Commissioners have always been treated with great respect by everybody. Nobody ever reflects on them in this House except when they get involved in some way. But if they ever again issue such a statement, then in the words of the former Taoiseach, Mr. Seán Lemass: "I cannot stop them getting black eyes and bloody noses." Such an action takes from their status. It should never have hap-happened: I do not know why it did happen.

We have to consider the Budget and the taxation imposed in the Budget, its relevance, its adequacy, its appropriateness and the consequences that flow from the tax policy in the Budget. This country's economic position has deteriorated fairly steadily in the past two years, although the position over the last few months is more obscure and difficult to interpret. If we look back over this period we see some disturbing indicators. If we look at the Government's policy statement and the Government's action, particularly the taxation imposed in this Budget relating to the increase in expenditure proposed in the Budget we find a disproportion between the gravity of the situation, the seriousness of the position disclosed by the economic indicators and the action taken by the Government.

I shall take just a couple of these indicators. First of all, the trend of non-agricultural wages and salaries. In 1967 these increased by £38 million, in 1968 by £55 million and in 1969 by £79 million. This year they are projected to increase, by the Economic and Social Research Institute, by £101 million. Thus, the rate of increase of wages and salaries has trebled in three years. One does not need to be an economist to appreciate the gravity of such an acceleration of wage inflation. Indeed, it would not be easy to find any other country in Europe—there are parts of the world where inflation is endemic—with anything approaching that kind of trend or pattern. This has had its effects. If we look at the trend of prices we see an extremely disturbing position also. Between 1967 and 1970 the average annual increase in the consumer price index was 7 per cent. There is no other three-year period that I can find since the war in which the average price increase attained even 5 per cent. The average over the 20 years from 1947 to 1967 has been 3¼ per cent but in the last three years prices have been rising at a rate more than double the average of the post-war period, a period on the whole of considerable inflation both here and elsewhere.

The figures published in the consumer price index for May show an increase in the first quarter of well over 4 per cent giving an increase over the two years between May, 1968, and May, 1970, of no less than 16 per cent so that the average rate at which prices are rising has accelerated and has reached 8 per cent per annum as against the average of 3¼ per cent per annum during the post-war period. Here we have a trebling of the rate at which wage and salary incomes are growing combined with an increase of 2½ times the rate of price inflation all occurring within two to three years.

We need to consider why this price increase position has occurred. I do not want to put the whole blame directly on increases in wages and salaries although I believe much of the blame must go directly and indirectly to this particular cause. If we examine the factors that have contributed to the rapid price increase which has occurred during 1967 to 1969 we find that the labour cost per unit produced in manufacturing industry has risen by 13 per cent. When we look at the import price picture we also find a startling increase of 15 per cent in import prices in two years.

This phenomenon has attracted extraordinarily little attention. I and others have spoken frequently in the last few months, even in the last two years, on the subject of the direct effect of wage and salary increases on the cost of living, but very little has been said, if anything, about the increase in import prices. It is time we stood back and looked at the situation to see why this increase occurred. There is a lesson to be learned here. One might think import prices were something beyond our control, that it is a case of somebody else putting up the prices and not our fault, but I think it can be shown this is not the case. In fact, the increase in import prices that has occurred is an extraordinary increase: in two years it has been one-third greater than in the previous 16 years; in other words, the rate of growth of import prices is running something like 11 times the rate to which we have been accustomed. That is an enormous increase. This occurred because this country was forced, with another nearby country, because of the increase in its labour costs that occurred between 1963 and 1967 to devalue its currency.

I do not believe we have seriously considered the implications of that devaluation. We have tended to assume that what happened was that Britain devalued and we had to go along with them. We have become so accustomed to following Britain in everything that nobody has even queried whether our devaluation was necessary. It was just assumed that if Britain devalued we also had to devalue. We devalued with Britain because with Britain we have pursued the same kind of inflationary policy, with the same effects on labour costs, through wage and salary increases, as Britain had and these two countries together in four years increased their labour costs in both cases by 13 per cent while other countries in Europe had held their labour costs fairly steady over the same period.

In West Germany there was an increase of 5 per cent—that is the highest—but that was a purely temporary phenomenon in 1967. In the following year there was a drop and the labour costs increase in Germany for the five-year period 1963 to 1968 was only 1 per cent. In France there was a 2 per cent increase and in Italy there was a drop of 4 per cent in labour costs in this period. In the US and in Japan the increase was 2 per cent in each case. Virtually, there was no change in all these countries while Ireland and Britain increased their labour costs by 13 per cent. The value of their currencies diminished and that had to be recognised in devaluation for devaluation merely recognises what is already a fact in a case like this. Through wage inflation, which we pursued here simultaneously with wage inflation in Britain, we had undermined our currency and accordingly had to devalue. This was not exposed for the tragic situation it was because it happened that it coincided with a similar phenomenon in Britain and our devaluation could be comfortably hidden in that of Britain. As a result, the fact that it was necessitated by deficiencies in our own policy and by the lunacy of our own behaviour was obscured.

We had to devalue our currency because our labour costs went up in that way while the labour costs of other countries did not. Our costs structure changed and we could no longer compete and we were forced to devalue. As a result of that devaluation over a period of several years—because devaluation took much longer than, perhaps, people thought to produce its effects on prices—import prices have risen because the effect of devaluation is to have a marked impact on import prices. In our case this was longer delayed than usual, I think, because as Britain devalued also and as we derive half our imports from Britain part of the effect of devaluation was cushioned, but only temporarily, by the British situation. Devaluation worked its way through the British prices and costs structure rather slowly, as is usual, and then in turn we were influenced in the first instance directly by the increase in the price of imports from the rest of the world and more slowly by the delayed effects on British costs and prices of their devaluation. As a result, something like 10 per cent, I believe, of the 15 per cent increase in import prices is a direct consequence of the devaluation of our currency which we forced on ourselves by the incompetence of our own policy and by the careless way we proceeded to increase our costs. It is that which constitutes the larger element in the increase in import prices, accounting for something like two-thirds of it. It is that big increase in import prices as a result of devaluation combined with the continued and accelerated increase in our labour costs that has put up prices in this country at the phenomenal rate that it has happened.

The Government's failure to control this or do anything about it has forced on the Government forms of taxation that have further increased the prices spiral which has now attained a pace never before attained in this country since the end of the war. That is the background to our present position. The fact that prices here are rising at the moment at the present rate is due to a combination of two things; current wage and salary increases and a second stage inflation arising out of that devaluation.

I want to warn that we should learn from this; that we are already at a stage where our prices are being put up not only because of current wage inflation but because of the last wage inflation and this is a spiral that can continue and very easily we could get into the position where every couple of years we would have to make a similar adjustment to our currency parities and face a similar further increase in wages and causing a similar further increase in costs and so on. We are now well into this cycle and yet there is no sign of this being recognised by the Government, no sign of any recognition of the seriousness of the situation.

There have been times in the past when our labour costs have risen a little more than in Britain, but only briefly, because we have tended to have a two yearly cycle of wage increases whereas in Britain they tend to rise more gradually by the same amount each year. As a result, our wages and salaries have pushed ahead temporarily and then they tend to level off and the British catch up again. There is no period in the past where the disparity between the way our labour costs and those of Britain increased was more than 5 per cent in the 12 month period and no case where this was not substantially retrieved in the following 12 months.

There was no such case until now, not even in the 1963-67 period when we and Britain followed this path of wage inflation. But now it is happening; we are at the second stage of this inflation. We passed through the first stage hand in hand with Britain. We wrecked our currencies. We were forced to devalue them but now, whereas the late British Government made valiant efforts to bring this situation under control and succeeded to a significant degree and have been able to produce a £500 million balance of payments surplus as a result of policies pursued, we in this country at present have failed to take any adequate action to deal with wage and salary inflation and we have a balance of payments deficit which in British terms, if related to the British national product, would be counted in thousands of millions of pounds.

We are told it is a £60 million deficit and the British national income is about 30 times ours. We are talking, therefore, of an external deficit here which in terms of British national income would be about £2,000 million whereas in Britain they have a surplus of £500 million.

Although the British have succeeded in controlling this salary and wage inflation to some extent and succeeded in getting their economy into such shape that they have a balance of payments surplus, they consider themselves, and are widely considered in the world, as being still in a dangerous position. There have been gloomy references in Britain to possible further devaluation of the £ and to a serious economic situation. Much of this was election propaganda but the fact is that international opinion regards the British economy as still far from being out of the wood even though they have a substantial external surplus and have control of their situation to that extent. We have an external deficit which in British terms is four times as big as their surplus and we are now in a position where, far from bringing our wage inflation under control, for the first time in the history of this country it has outpaced the British rate of wage inflation and for the first time there is a significant and by no means temporary disparity emerging between the trend of our labour costs and those in Britain.

On what does the parity of our currency with sterling depend? It does not depend on any ability on our part to be as productive as the British economy, partly because of the different mix of our economy, partly because we have a large agricultural sector in which incomes are low for reasons part of which at least are outside our own control and which we hope to remedy by EEC membership, and for that reason—sorry, I have lost my point.

I should not be surprised after what the Deputy said.

Today we have a wage inflation leading to an increase in labour costs which is running ahead of the position in Britain, and ahead to a substantial degree. Let me quote some figures in relation to this: in 1969 labour costs in Ireland increased by 10 per cent; in Britain by 5 per cent, in Italy by less than 5 per cent— because of strikes it is difficult to get the precise figure but it is something below 5 per cent, perhaps a good deal below it—in Germany by 4 per cent, and in France by 1 per cent. Therefore our labour cost increase in 1969 was double that in Britain and two and a half times or even more times the increase in labour costs in the other major European countries. In the last quarter of 1969 our labour costs were running 12 per cent above those for the same quarter of the previous year. In the other European countries apart from France, that is, Britain, Germany and Italy, the increases were between 7 and 9 per cent.

For the first time our labour costs are now clearly running ahead of labour costs in Britain. The increase is bigger. This has not happened before and the reason it has not happened before—and this brings me back to the point I missed a minute ago— is that our two economies, although very different in character, have kept pace with each other over the last half century. It is true that our productivity is lower than in Britain. It has been so partly because of the mix of the economy, because of the larger agricultural sector, and partly because productivity in our industrial sector is lower than in Britain. Up to now we have always been willing, taking the country as a whole, to pay ourselves proportionately less than Britain. Our currency could attain parity with sterling not because we were as productive as Britain but because the amount we paid ourselves for what we did was lower than the amount the British paid themselves by the same proportion as our productivity was below British productivity. The parity of our £ with sterling depends upon the maintenance of that relationship. If at any stage we allow our payments to ourselves of wages, salaries and profits to rise faster than in Britain in proportion to the productivity of the two countries, then that parity of currency cannot be maintained.

This is a crucial relationship, and it is a remarkable fact that for 50 years we have maintained it. Despite all the temptation to increase our wages and salaries faster in relation to productivity than in Britain, in has never happened, except by a percentage point or two occasionally and then there was a pull back a year or so later. Over this entire period of 50 years this relationship has not been significantly or permanently disturbed until now. Now for the first time under this Government this situation has arisen and we can see the damage that has been done already in 1969. Already there is a 5 per cent margin between our labour cost level and the British labour cost level in this short period of time.

Does anybody think in this year of 1970, with the trend of wages and salaries now, this position will be retrieved? We are no longer in the two-year wage round pattern where in the year after the wage round we mark time while the British catch up. Far from it. It is likely this year our labour costs will rise again by 10 per cent. The best forecast that can be made at present is that labour costs in Britain may rise by something like 6 per cent. That is the forecast of the National Institute of the Economic and Social Research. That 10 per cent is not a figure I put forward with any certainty. It is rather a crude guess at this point of time. We do not know enough about the trend of wages and salaries this year, but I think it is very unlikely we shall be able to maintain the increase in our labour costs at 6 per cent or less. It is now certain —and the Government's policy has made this inevitable—that the increase in labour costs here will be greater than in Britain this year, thus further increasing, instead of, as in the past, wiping out the differential that has arisen, and thus further eroding the value of our currencyvis-á-vis sterling.

This is the central problem that must be talked about and tackled. There is no evidence that the Government—perhaps because of their other preoccupations—are facing this. Ministers are not talking about it. They are not getting across the seriousness of the situation. They have perhaps cried "wolf" so often when there was little or no reason to do so that their voices do not carry much weight at this stage. They have devalued their own authority by repeated warnings in the past when the situation did not merit the kind of warnings given. Now even if the Government tried to convince the people, they are so discredited in the economic sphere as in the political sphere these warnings would not be heeded.

It is necessary therefore here, as in so many other aspects of our national policy, for the Opposition to take on the job of Government and to put to the country how serious the position is and the need to tackle this position. It is the Opposition therefore who are pressing the case today for a prices and incomes policy which in any other country faced with this problem would be done by the Government.

That is the economic situation in which we find ourselves. It is having its effect upon our international trade. The effect of this erosion of our economic position, of the erosion of our currency, is to increase the cost of our exports sold abroad and—this is of more importance than is usually given to it—to increase the cost of our home production sold in competition with imports from other countries. There is evidence in the figures available to us of a very rapid erosion of our competitive position as a result of the policies pursued by the Government. If I may just give the figures for exports and imports——

The Deputy will appreciate this is not an economic debate. What is before the House are the Government's taxation proposals and the effect of this taxation on the country.

I am trying to set the scene for an examination of the Budget in its context. This Budget involves a certain increase in taxation and a certain increase in expenditure. I believe there is disproportion between them and that the wrong measures were taken in relation to the economic situation. I am trying to set the scene. I have nearly completed that part of my speech, but it is necessary to see the Budget in its economic context. One of the troubles in this debate is that, while it is a debate on the Budget and the tax measures in it, the taxation measures have to be seen nowadays in their economic context. We have been used to seeing them in the financial context and this makes it difficult in this debate.

The Chair wishes to point out that there is not the same latitude as in a Budget debate.

I appreciate that. If I could make my point about the trade figures, I could then bring this into relevance in relation to the Budget and come to the Budget itself and what I consider is wrong with it.

The Budget or the Bill?

To the only tax measure in the Budget which is in this Bill and the inadequacy or appropriateness of that. Is the Minister satisfied?

Does the Deputy wish to have the Budget debated again? It is very interesting, but it may not be in order.

I shall proceed to relate my remarks to the Budget and in particular to the taxation imposed, and I think the relevance of it to this Bill, which deals in particular with the increase in turnover tax, will be seen very quickly. The increase in the volume of exports, which was 11 per cent in 1967 and 1968, dropped to 6 per cent last year, with a very narrow base, one-third of all products accounting for five-sixths of the increase. On the imports side, there has been a five to six times increase in the rate of growth of the import share of the home market, and as far as I can estimate from a careful study of the figures only one-third of this up to last year arose from the Free Trade Area Agreement and two-thirds of it from other factors, the principal of which, I suggest, is the erosion of our competitive position.

Therefore last year the import bill was £40 million above what it would have been if the rate of growth of the import share had been maintained at its pre 1967 level. That left us with 7,500 fewer jobs than we could have had in industry and 15,000 fewer jobs altogether. That is the basic thesis I want to make there.

Coming to the taxation measures in the Budget, this Budget increased expenditure by £22 million and increased taxation by £12½ million. These are the net changes in the Budget. As a result, and if you take from August onwards, because of certain fluctuations because of the temporary transitional effects of the measures involved, this Budget pumps into the economy an additional net £1 million a month. To what extent is that an appropriate budget? To what extent are these taxation measures appropriate to the needs of the economy at this time? I would regard them as totally inappropriate.

The figures we now have available tell us that retail sales in the first quarter increased by 15 per cent in value terms. Allowing for the phenomenal price inflation, it is still a 7½ per cent increase in the volume of retail sales in the first quarter. That is the background to the Budget and it is against that background of this exceptional increase—I do not recall offhand any first quarter of any year in which the volume of consumption rose at this rate—that we must view this Budget. Faced with the background of a massive increase in prices, in wages and in the volume of consumption, the Budget imposed taxation related to expenditure which was to my mind completely inadequate in relation to that increase in expenditure.

What is the form of this taxation? The taxation has taken the form of an increase in the turnover tax. It is my belief that turnover tax has a very limited value as a tax measure because if you raise the rate of turnover tax above a fairly insignificant level the large number of units you have to supervise and the temptation to evasion being in those circumstances so great, render this tax unsatisfactory. I am not opposed to expenditure taxes. I do not share the views of those who see the simple dogmatic difference between direct and indirect taxes. It is not necessarily the case that direct taxes are more progressive than indirect taxes. We know in this country from studies carried out some years ago that, in fact, apart from the taxation on tobacco, the other principal indirect taxes are all progressive in character. This emerges from studies carried out by Mr. Reason and published in the seventh report of the income tax commission so that we are in the position that indirect taxation may or may not be more progressive than direct taxation but we should not be dogmatic about it. Moreover, to the extent that direct taxation is less progressive, in the economic sense of the word "progressive," that is more than in proportion to income, to the extent that it fails to meet that criterion it is possible to adjust incomes in other ways. It is possible to so use the taxation raised as to compensate less well off people for the extra burden of taxation so that the net effect of the budgetary measure involving a non-progressive tax may be progressive if the money is spent the right way.

I do not object in principle to indirect taxation but an indirect tax which is reaching the point at which a definite danger of evasion arises is one that has in it a serious defect. An indirect tax which has to be paid through something like 40,000 outlets—perhaps not that many are engaged in the actual transaction because of the exemption measure but there is a very large number of outlets running into several tens of thousands—is a tax which is unnecessarily costly to administer and which imposes a very unfair burden on many people who need not be involved in this tax net. When this tax was introduced the argument in favour of it, and at the time it seemed to have a certain merit, was that if you imposed taxation at the wholesale level there would be a tendency, because the retail mark up is of a percentage character, for the retail mark up to be increased as a percentage of the percentage tax imposed. Although the amounts involved were so small as from a national economic viewpoint not to be significant, this case seems to have some merit but what merit it had was undermined and totally eliminated by the subsequent decision of the Government not long afterwards to introduce a wholesale tax, a wholesale tax which meant that now we have taxes paid at two levels by two sets of people. If the wholesale tax which we now have is to be justified despite this danger that it might involve a certain accumulation at the retail level, then if that objection to the wholesale tax has been overcome to the extent that this tax has been introduced and was yielding, before this Budget, just as much as the turnover tax, then I see no reason whatever for continuing the turnover tax.

The only objection raised against a wholesale tax as distinct from a turnover tax was this point. The Government have undermined that point by introducing a wholesale tax and why have we still got a turnover tax? Why have we still got tens of thousands of people unnecessarily involved in the process of tax collection, spending their time in the evening doing the Government's work when the tax could be collected by firms at the wholesale level who are already doing this kind of work? It would give very little more trouble to these firms who are in any event larger firms and better equipped to do the job, when filling up the existing wholesale tax forms to fill up figures in relation to taxation on a wider range of goods at a lower level. This is what the turnover tax is meant to be. In fact, what we have already is a wholesale tax at several different levels. We have already departed from the principle of a single level of wholesale tax and if we can have two levels of wholesale tax, why can we not have three levels? Why cannot the turnover tax be imposed at that level, thus relieving some tens of thousands of people of the burden of having to cope with this tax?

Moreover, the case in favour of a value added tax is strong because if you do bring this back to the wholesale level I would recognise the danger that the burden of taxation at that level is so great it may be then creating a temptation to evasion. Therefore, when you have expenditure taxes imposed at a single level, as I believe this tax should be imposed within our existing framework, that is at the wholesale level only and not wholesale and retail, when the taxation imposed at any given level becomes so high as to create the temptation to evasion, you then try to spread it but you should not spread it forward to the retailers who are least able to cope with it, who are most numerous, who create many more administrative problems, but you should spread it backwards to the relatively small number of manufacturers—2,000 to 3,000—and to the importers—perhaps 1,000—who would be involved in a value added tax system.

We need now to consider a restructuring of taxation because the Government went into this the wrong way round. They convinced themselves that a turnover tax was the right tax to have to the exclusion of the wholesale tax. Then they introduced a wholesale tax and we now have a wholesale tax at several levels. At this stage we should eliminate turnover tax and have a value added tax from the wholesale stage backwards, which would involve only a few thousand people in this process of tax collection instead of some tens of thousands of people as at present. There seems to me to be, from the technical aspect of the way taxation should be levied, a very strong argument in favour of that.

To come back now to the adequacy of the tax measures, it seems to me that the tax levied in this Budget is inadequate in relation to the economic situation and in relation to the expenditure proposed in the Budget itself. I would hope to be in order in referring to the outturn of the Budget in relation to this tax. The question before us is whether this was the right tax to impose and whether the amount imposed is right. I submit that there is evidence that this Budget has been so designed because of the disproportion between taxation and expenditure that it is likely to yield a budget deficit. I should like to give my reasons for that which I submit are well within the limits of the debate.

This question of the likely outturn of the Budget is a little complex. It involves an assessment of the future pattern of expenditure, largely predictable in accordance with the Government's Estimates but subject to a certain marginal variation, and of revenue which is, perhaps, less within the Government's control. The Government have to make estimates as to what increase in revenue will accrue at existing tax levels and, having done that, they have to decide whether in relation to the likely level of expenditure as set out in the Book of Estimates, plus the increase above that which we know normally takes place, that must be allowed for too, whether the natural buoyancy of revenue from existing taxes will balance the books or whether increases in taxation of the kind proposed in this Bill are necessary in order to achieve a balanced budget is the right answer.

In this instance it is quite clear— and was made clear by the various economic commentators such as the Economic and Social Research Institute and the Central Bank—that we need a budget surplus. I belive this Budget will produce a deficit for the reasons which I now state. The natural buoyancy of revenue last year was estimated by the then Minister at £28.5 million in accordance with what has, until this year, been standard practice and that practice was to underestimate. In the past the practice has been to underestimate the buoyancy of revenue and to write it down to much less than the figure is likely to be, so that there will be a margin to pay for unexpected and unbudgeted increases in expenditure, which can be substantial. Last year the increases amounted to £17 million. The Minister for Finance very properly estimated the buoyancy of revenue at £28.5 million. The Minister actually secured £46 million and he must have known that he would get at least £40 million. The £46 million could not have been much of a surprise.

This year, however, in making the Budget forecast, the Minister allowed for a natural buoyancy of revenue, at existing tax rates, of £50 million. In arriving at £28.5 million and £50 million I am, in each case, making allowance for the overflow effect from the previous Budget where taxation is imposed some distance into the financial year and some of the effects overflow into the following year. The actual buoyancy figures shown on the face of the Estimates were £42 million and £51.2 million, respectively, for the two years. The previous year's £42 million was not natural buoyancy but arose from tax measures late in the preceding year which had an overflow effect in 1969-70. In this year's Budget the Minister allowed for £51.2 million and £1.2 million arises from a similar overflow effect. The true natural buoyancy of revenue arising from the basic tax level already there was £28.5 million allowed for in the previous year and £50 million allowed for this year. What justification is there for this increase in the figure? The £50 million allowed for is greater by £4 million even than the amount actually achieved last year. To what extent is that likely to happen? I think that it is unlikely to happen and that the buoyancy of revenue will be less than this figure. This depends on what further steps have to be taken to restrain the growth of the economy in the months ahead. It can be said, on the basis of the commentaries of the Economic and Social Research Institute and the expectation of the income/expenditure increases that if there were no restrictive measures taken this year at all the increases in revenue would be of the order of £55 million, and certainly not more than £55 million. With the restriction in credit and other measures which the Government may be forced to take it is unlikely that this figure will be attained. I believe the buoyancy of revenue will be less than £50 million. It could hardly be more than £50 million even with the measures already taken with regard to restrictions in credit.

Consequently this year, unlike all previous years, the Minister has taken full credit for the entire natural buoyancy of revenue. There is nothing left to pay for unbudgeted increases in expenditure. These increases in expenditure can be big. Last year they amounted to £17 million. That £17 million included a substantial figure in relation to public service pay. The Minister has made a provision in this Budget for an increase in public service pay of £10 million. I would like to ask the Minister to tell us whether the increase in public service pay which will arise from the negotiations just completed will be more or less than £10 million.

The negotiations are not completed.

The Minister would tell us of the offer made and what is likely to arise from the negotiations. The negotiations have reached a stage where the Minister should be able to make some rough estimate and tell us whether the £10 million is about right or is totally inadequate. We need to know that in order to have an intelligent debate on this measure. The Minister could have told us about it, perhaps, at the beginning.

I would remind the Deputy that we are not discussing the Budget as such.

I am discussing the adequacy of the turnover tax measures in the Budget and whether they are the appropriate measures to introduce.

I do not think the Deputy is entitled to claim that I should have furnished to the House, when introducing the Second Stage of the Bill, an estimate of the cost of the increases in public service pay.

In that case I do not see how the Minister could justify this measure unless he produces some figures of his kind. It seems to me that the Minister is thinking in such Gladstonian terms as to be totally irrelevant to the economic situation of any economy since the Great War. My point is that even allowing for such contingencies as public service pay and assuming the £10 million is adequate —although I doubt it in view of the recent settlement—there still occurred last year and the year before increases in other expenditure not allowed for in the Budget of £9 million to £9.5 million. The turnover tax measures in this Budget yield in relation to the expenditure proposed an amount which is likely to fall short of total expenditure. These taxation measures, taken in conjunction with the buoyancy of revenue, are unlikely to yield a sufficient amount to cover the increases in expenditure. The natural buoyancy of revenue has been fully discounted and there is no provision of any kind for the additional expenditure which always occurs and is usually of the order of £9 million or £10 million, other than for public service pay which occurs over and above the amount set out in the Book of Estimates.

I believe this Budget will produce a deficit. I believe it is inappropriate particularly when the Minister has been advised that there should be a budget surplus. The measures taken in this Budget are, therefore, inappropriate.

I am precluded from discussing any question of reducing expenditure. I can only say that given the levels of expenditure which the Government propose the level of taxation is totally inappropriate to our economic situation. The effects of this Budget, in the words of a headline put on one of my articles by theIrish Times, are serious. The headline reads: “Budget adds fuel to the flames of inflation”. I lack the imagination to think up such headlines but my journalistic colleagues occasionally put a phrase of that kind on an article of mine and the phrase puts across very well what I intended to say but had not the wit to say so succinctly myself. Perhaps what the Budget has done is “add fuel to the flames of inflation”.

There are several points I would like to make arising directly from the Finance Bill. In relation to estate duty, this Bill makes no adequate provision to cope with the many difficulties in connection with this tax. I am personally convinced that a tax of this kind and having this kind of effect is necessary. It would be most regressive and put us into a position of being one of the most reactionary countries in the world if we had no taxation on capital or if we allowed people to accumulate wealth indefinitely. I am unconvinced that the rate at which taxation is collected—I will not say imposed—on capital in this country is sufficient. I am not convinced that it is adequate to prevent the continued accumulation of capital. A study of estate duty figures themselves for what they are worth—and they have a limited value —would tend to indicate that wealth is accumulating in fewer hands to a greater and greater extent and that estate duty is inadequate. Having said that it is inadequate to achieve this necessary social objective, I do not accept that the present level of estate duty and the method of levy are appropriate. The purpose of this tax is to prevent wealth accumulating from one generation to the next. There is no social case, or no case in equity, for the taxation through estate duty of funds passing from husband to wife. This is something which I have never understood. I cannot see on what possible grounds such a tax should be imposed. I understand why wealth should be taxed passing from one generation to the next. Too much wealth goes from one generation to the next, largely because the form of taxation is so inappropriate and inefficient and a large part of it is avoided. It has been estimated in Britain that two-thirds of the estate duty is avoided—not evaded, but avoided. A prominent solicitor said to me recently that for any estate of any large size, which runs up to £100,000 or upwards, where it is worthwhile going to some legal trouble to avoid estate duty and where the person concerned is well off enough to be able to set money aside in a way where he will not have access to it himself, there is no difficulty whatever in avoiding estate duty completely.

For somebody who has a small estate, who owns a house or has an insurance policy, it is not possible to avoid the estate duty. That person cannot avoid it because he needs the house and the insurance policy for his wife and the difficulties of avoiding duty at this level are great. Indeed, at the lower level the estate duty is rarely avoided: it may not be worthwhile making the necessary legal provisions, paying for expensive legal advice and going through the technical business of setting up companies and so on. Also, it may not be possible because the person may not be able to afford to alienate his property in the way necessary to get around this estate duty.

That is the position for the ordinary man who has a house or holds an insurance policy but the wealthy man can avoid completely payment of this duty. Any solicitor can tell you that a man with £75,000 or £100,000 would be a lunatic to pay estate duty and if he is paying this duty he certainly needs a more competent solicitor to advise him. A system of taxation so inequitable that the rich can avoid it completely but the less well-off cannot avoid it at all is socially unjust and is the most regressive type of taxation any country could have. That is the form of capital taxation we have in Ireland.

Many problems are created in regard to the agricultural sector. Whereas in Britain provision is made to deal with estate duty in regard to farming, similar arrangements do not apply here. The incidence of estate duty on farmers in Britain is very light but here the level is of the order of 50 per cent higher than in Britain and this applies to the range of £30,000 to £100,000. Although we are an agricultural country we do not make any provision for the difficulties involved in the agricultural sector where frequently there is undue pressure to break up farms into smaller units because it is necessary to sell off part of the land.

Frequently it has to be sold on a limited market because one is not allowed to sell to just anybody.

Quite, that is also another technical difficulty. Agriculture is one area where we could be a little lenient on the transfer of property from one generation to the next but in this connection we are much tougher than the British. Here we have a tax that is inequitable to the farming community—although this is a most important sector—and it is inequitable to the less well-off. It has now been tightened up so that it covers insurance policies and it has this peculiar arrangement whereby if one takes out an insurance policy for one's wife—as I have done—one is liable for estate duty at a very high level on a modest policy. It has all of these defects and very few virtues; it does not prevent capital from accumulating from one generation to the next and it can be avoided completely by the wealthy. It has all the marks of a bad tax judged by the canons of taxation of Adam Smith and I endorse the remarks of Deputy O'Donovan in this regard. Although it is unusual to hear Adam Smith quoted from the Labour benches, in this case he need not worry because these canons of taxation could be accepted by any Labour or Socialist Party as they involve commonsense on the one hand and equity and fairness on the other hand.

We have a most unsatisfactory position in regard to estate duty and I recommend to the Minister that he would take a long, hard look at this matter. The basic defect of estate duty is that it is levied at such long intervals that the incentive to evasion is great. The average interval at which estate duty is paid is 29 years and any tax at such a long interval is paid in such large sums that it is worthwhile going to some trouble to evade payment. If the duty were paid every year evasion would not be possible in the same way because, whereas one can avoid payment of estate duty by transferring property to one's children seven years before death, if the tax were paid annually this could not occur. All that would happen would be that the children would have to pay the capital tax each year and it would not alter the position except that the splitting up of the property might bring it into a lower level of annual capital duty. When the duty is paid after an interval of 29 years there is created an incentive to avoid payment which, in fact, is occurring on a very large scale. In Britain it is estimated that avoidance amounts to two-thirds of the total amount that should be paid. I am expressing a personal view, rather than party policy, when I say that this tax should be on an annual basis rather than payable on death and it should not extend to transfer of property to one's wife. The burden should also be eased in regard to farmers and the whole problem needs to be looked at afresh.

In this connection the Minister has a great opportunity because there are very few cases where one can change a tax so as to reduce the level of taxation and yet collect three times as much money, but this the Minister could do. He could change the system of taxation to an annual tax that could not be avoided, he could slightly reduce the rate of tax, but by plugging the loopholes in the matter of avoidance of payment, he could collect more money. If the Minister instituted a reform of this kind it would be remembered to him subsequently, although he would want to do this fairly quickly if he wishes to carry out this reform in this term of office of the Fianna Fáil Government.

I do not think the reliefs given in section 9 are adequate. I think it leaves married women in this country in a worse position than women in Britain although the need to encourage married women to return to work is quite considerable. In many parts of the country it would be worthwhile to attract married women back into jobs in industry; I consider we should make more generous provision although I welcome what has been done.

Sections 15 and 16 deal with some technical points in relation to the 20 per cent dividend relief for Irish companies. I am not satisfied that this relief is of value. From my own limited experience in this field I do not think anybody has ever floated a company to get the benefit of this relief and it is not given a very high priority by those concerned with financial matters. I should like to ask the Minister if it is not true that this relief will have to be discontinued in EEC conditions as it would be discriminatory as between Irish and other companies. I am not too sure of the position and perhaps the Minister would clarify this point.

There is another point I should like to put to the House. It relates to the question of the value of stock exchange securities for the purpose of estate duty. Let us take an example of a person worth £200,000 who died in the last two years. Let us suppose his investments are entirely British and attract the higher British rate of 60 per cent which would reduce the estate to £80,000. Let us say the shares drop by 40 per cent—and this is not impossible because the drop in shares during this time has been at this percentage—then the position could be that there would not be any money for the heirs because of this system of valuing shares. This seems extremely inequitable and something should be done to give an option to the personal representatives to choose as an alternative to the value on that date the average value of the securities spread over a period of three years. Some such provision is necessary to get over what could be a grave injustice. I am concerned that there should not be too much accumulation of property from one generation to the next but that somebody could lose all because of a flaw in estate duty legislation appears grossly unfair. That is a matter that, with advantage, could be considered.

These, then, are some points on the Bill itself, the main burden of which relates to the adequacy of the whole measure in relation to the economy. I think that I have succeeded in keeping my remarks relevant to the Bill for a good deal of the time and I hope that I have not been too far out for the rest of the time.

Coming in, as I am now, between learned discourses from two economists, is not exactly the position that I would normally choose.

It could be quite pleasant to have the last word after the economists.

I hope it will be pleasant for me but it may not be for some of the economists. A number of the points raised by both Deputy Dr. O'Donovan and Deputy Dr. FitzGerald would seem to be slightly outside the scope of the Bill but at the same time, they were all worth making. I shall try to confine my remarks to the Bill itself.

A number of speakers commented on the effect of the turnover tax on prices. It has been suggested that in most cases retailers did not put on the first 2½ per cent turnover tax in 1963 so that, therefore, the increase this year was an increase of 5 per cent. Of course, this had a disastrous effect on prices particularly in the smaller shops. When the Budget was introduced I was one of the people who was sorry for the smaller shopkeepers but since I have studied the effects of the turnover tax, I am now quite satisfied that most of them are well able to look after themselves. I am satisfied, also, that most of them did put on 2½ per cent in 1963 but that some of these were under the impression that it could be reasonably assumed that that was forgotten about and that people would not know, whether, in fact, the 2½ per cent had been put on then. Consequently, they felt that they could take a chance on putting on an extra 2½ per cent in addition to the increase which the Taoiseach, Deputy Haughey or the present Minister for Finance put on this year. I am not sure which one of them was responsible for that increase.

At any rate, the result was disastours. I mentioned to the Minister for Finance while he was Minister for Industry and Commerce that he should endeavour to find out what exactly was happening with regard to this tax. The bigger shops and, in particular, the supermarkets seemed to be able to get over this easily enough by reason of the fact that they buy in bulk and so on. Some of them say that they are not charging turnover tax but I assume they are paying it. However, most people who are buying goods in small quantities complain that they are paying very much more than 5 per cent. In many cases if a person buys a small article for a couple of shillings, he is charged a penny or twopence tax on it. We had the case of a person who was charged an extra penny on a box of matches. I presume that the sale of matches fell drastically in that particular shop so that the matter would have regulated itself within a very short time.

The Minister in his opening speech referred to an added value tax. When he is replying to the debate, I should like him to tell us if he is talking of a tax, as Deputy Dr. FitzGerald said earlier, to replace other taxes or is he talking about another tax that would be added to the taxes already being paid. I assume the latter is what he is talking about but if that is the idea, it will not be welcomed.

The Continental system of added value tax is not operated in the way in which Deputy Dr. FitzGerald suggests it should be done here. It is spread over the entire range in most cases. If an effort is made to introduce a tax in addition to those already being paid, every effort will be made to prevent its imposition.

It is suggested in the Bill that improvements are being made in relation to those paying income tax and, in particular to those paying tax under the PAYE system. I have said in this House and outside that the PAYE system of collecting income tax is entirely wrong and that many people are paying tax on money which they never see. Of course, this has resulted in very substantial amounts of money coming to the Government above what is budgeted for. We had a typical example of this last year when the Budget, according to the then Minister for Finance, was meant to be balanced in such a way that it would cover only outgoings but during the three or four weeks towards the end of the financial year, we had Supplementary Estimates in this House amounting to £35,600,000 while there was a surplus of half a million pounds on the Budget at the end of the year. Deputy Dr. FitzGerald is off the mark when he says that there will be a deficit this year because of substantial wage increases because I would estimate that since the average increase appears to be in the region of £4 and since the agreements are usually made to cover a period of about 21 months, the Government will get at least £1 and, in some cases, 30/- out of the weekly wage of each taxpayer. This would be in addition to what they are already getting. I am sure that this will result in a substantial credit balance at the end of the year but, of course, the Government, if they are still in office at the end of the year, will find ways of removing it so that it will not be used next year to the advantage of people who are already being over taxed.

Deputy Dr. FitzGerald referred also to the question of wages in so far as wages are going ahead of those being paid in Britain and on the Continent at the present time. He said that the percentage increase here is greater than it has been on the Continent. Perhaps, he will agree with me when I say that the basis on which they work on the Continent is very much greater in most cases than it is here. Wage levels here are so scandalously low that substantial increases are required to bring them anywhere near to what could be regarded as a living wage. I should hate to think that if Deputy Dr. FitzGerald were Minister for Finance he would suggest preventing substantial wage increases. Maybe I am misjudging him.

As I think any Labour Minister for Finance would do, I would try to discourage wage increases of such a character that they would reduce employment as is happening at the moment.

The suggestion that the only way in which to increase employment is by keeping down wages is, I am afraid, something which is not very acceptable, as Deputy FitzGerald and everybody else knows.

I did not say that. I said raising them excessively can reduce employment.

As far as I am concerned, I can find nobody in this country, earning a week's wages, who is being paid excessively. Most people have to work very hard. Deputy FitzGerald may know some who do not. There may be exceptions, but I am still trying to find them. I certainly do not believe that the solution to the problem is to keep wages down. It an effort were made to keep prices down, I might be able to go along with what Deputy FitzGerald says. If we are ever going to do anything about trying to standardise or regularise the cost of living we must make an effort to tie down prices. That has not been done.

Which you can only do by preventing wages rising excessively.

Which came first? The chicken or the egg? Prices go up and then we attempt to follow those with wages, but so far we have not been very successful.

I think that is a delusion.

It is as well to know the way people like Deputy FitzGerald think about these things. As far as PAYE is concerned, I mentioned on a number of occasions the fact that I think one bad mistake is the collection of income tax on gross wages. Very many workers have to pay substantial sums to get to their work. They may club together to buy a car. It must be taxed and insured. They must pay for the petrol to run it. None of these expenses is allowed when they pay their income tax. There is something wrong in the system. Why no Minister has had the courage to look at it in the correct way I just do not know. I hope I live to see the day when this will be dealt with in the proper way.

There is a section then which is supposed to deal with what most of us call "lump" jobs. Deputy Gallagher —I do not always agree with him— spoke the other day and there was a great deal of justice in what he said. The amount of money involved as far as income tax is concerned is relativly small. "Lump" jobs are jobs where ten or twelve men get together to do a job at a price. The price of the job may represent the correct cost of doing the job, but they work very hard to get a few extra pounds by doing the job in a shorter time. It is as simple as that In most cases they do not pay income tax and the suggestion now is that they should be made to pay. The section provides that the person who employs them will be docked income tax at 7s in the £. This matter could be dealt with in a more humane way if the Department of Social Welfare insisted that cards should be stamped. We would not then have the situation in which, if one of them falls ill or is knocked off, he is not entitled to benefit of any kind. That is the approach we should have instead of using a very large sledge hammer to crack a very small nut. Some smart person in the Department obviously decided this was the way to deal with the matter. This is entirely wrong.

Reference was made to the fact that the married women's allowance has been increased by £29 a year; that is £29 at 5s 3d in the £, which is something like £6 or £7. That is all it will amount to. Will this make any difference as far as married women are concerned? Does anyone suggest this will bring any more married women out to work? Those who are anxious to work will not work because they are taxed on everything they earn over £1 odd a week. Does anyone think this inadequate concession will encourage them to go out to work? Of course, it will not. The matter is again being dealt with in a rather stupid way by people who obviously never were in the position in which their own wives had to go out to work because, if their wives had to go out to work and the combined wage packet at the end of the week was barely enough to keep the household going, as is the case with costs as they are at the moment, they would have a different approach from their present approach.

Death duties are very complicated. It is true that, if one takes up a newspaper, one sees members of the farming community, for instance, leaving a substantial amount of money. The fact is that farms and houses are now very highly valued. The cute fellows make sure that, when they are dead, their money will not go to the State. As Deputy FitzGerald said, the fellow who has plenty of money makes sure it will not be possible to catch him out and tax him after he is dead with death duties, but the ordinary individual usually does not bother about these things and the result is that those who are left behind are stuck with debts they find it very difficult to pay.

There was a lady a few years ago who died and left a 30-acre farm to her niece. The niece was married. Her husband left his job and went to work the farm. He knew nothing about death duties. He was only a short time in the farm when he got a bill for £3,000 death duties. The only way they could get the money to pay the death duties was by selling half the farm. Then they met another snag: the Land Commission would not let them sell the farm to anybody but an uneconomic holder. The number of buyers available was small. Those who were prepared to give a very substantial sum for the farm just could not buy it and, in the last analysis, these people were worse off than they were before they got the legacy from the aunt. This sort of thing should be guarded against. The same kind of thing happens with house property. Some one dies and leaves a house. The value may be £8,000, £9,000 or £10,000. The house may be a very ordinary house. Where is the person who gets that house to find the money to meet death duties? In most cases they have to sell the house or raise a loan on it to pay the death duties. This is wrong and something should be done with it.

The suggestion has been made again and again from these benches that a capital gains tax should be introduced. For some extraordinary reason no Minister for Finance in a Fianna Fáil Government wants to hear a word about that. The present Minister is new to the job. He should take a good hard look at this because this is one way in which money can be taken off those who get money "fairly soft" and who can afford to pay. Up to now in most cases taxation appears to be imposed on those who can least afford to pay it. It is about time something was done to make those who can and should pay bear some of the extra taxation. A capital gains tax is one of the surest ways of doing this. Maybe it is too much to ask that the present Minister should try to rectify this obvious, very obvious, fault in our taxation system.

The taxation system has come under review again and again. I agree with Deputy O'Donovan that the former Minister for Finance, no matter what anybody may say about him on other fronts, was a very competent Minister.

He could always defend his proposals and the result was that he was able, in some cases, to put across things, the wisdom of which many of us doubted, but he always had a very good argument in support of his proposals. We are in the extraordinary position that it was he who prepared the Budget. It was introduced here by the Taoiseach and the Finance Bill is now being piloted through the House by a Minister who had nothing whatever to do with the original proposals.

It is extremely difficult to read the mind of the person who thought out the proposals contained in this Bill. I should like to ask a number of questions on this but I do not think there is any point in asking the present Minister for Finance what Deputy Haughey meant when he introduced certain things. For instance, he has in the Bill that the first £100 will be taxed at 4s 7d in the £ rather than 5s 3d or 7s. Would somebody tell me what it is expected will be produced by this or who will be pleased because he gets 100 times the difference between 4s 7d and 5s 3d? What will 100 eightpences do? I would like to know what was the thinking behind this because, obviously, there must be a reason for it. That is the sort of thing that is written into the Bill. This actually gives the impression that something is there when, in fact, there is nothing.

Again, with regard to the married women's allowances, it is rather ridiculous that those very small concessions should be put into this Bill. A Minister producing a Budget and afterwards producing a Finance Bill should at the very least be able to say when he is introducing it: "This is something which will go down on record and somebody at least will appreciate it". I cannot see how this £100 at eight-pence in the £ will make any difference. I am afraid I cannot see that the difference between £47 and £74 for a married woman will mean anything to those people.

There are several little things like this in the Bill and it is hard to see the reason why they were included. In the Official Report of 17th June last, volume 247, No. 9, column 1336 the Minister said:

The income limit for the purpose of the dependent relative allowance is raised by section 11 to £222 which is the annual equivalent of the non-contributory old age pension as increased in the Budget.

The non-contributory old age pension increase granted in the Budget is only given from 1st August next but the tax year starts on 6th April. This may be only a minor point but I am sure the Minister must know the complications this will involve. I wonder has he done anything to ensure that this small allowance will, in fact, be given. We know at the present time that dozens of people have not got their amended tax certificates. I am quite sure that there is a good reason for it, the good reason being that the Department of Finance cannot get staff to do their jobs. The juniors are not being paid enough. The whole thing is a vicious circle. One thing causes another and because the Department will not pay enough they cannot get staff and people are not able to get their amended tax allowances. Some of them have not yet got their tax allowance for this year.

Let us take the lower paid State employee. For some extraordinary reason he is taxed on a different basis from people employed outside. This applies to forestry workers, Bord of Works employees, soldiers, gardaí and so on. Is there any reason why this should be so? Do the Department and the Minister not know that this is causing a certain amount of annoyance? It causes much annoyance to the person who moves from one place to another, if he is in State employment for a few months and moves outside orvice versa. This causes all sorts of complications. Why will the Minister not do something about it?

Is the Minister not also aware that if somebody does not get his tax-free allowance until the month of June and he has been working since April a certain amount has accrued? Would it be too much to ask that when the tax certificates are sent out the aggregate amount would be brought to the notice of the employer so that the employer will not continue to collect tax at whatever the rate is on the tax certificate, completely ignoring the fact that over a period the employer has either being deducting tax or the employee has not been with that employer at all? An amount has accrued and the person does not get credit for it. Those may be small points but they really affect the small man or women who is depending on a week's wages. The unfortunate thing about it is that when a person who is getting a small week's wages has a substantial deduction made from his wages for one week because of some mistake made at tax level, and gets, not £14, but £9, in some cases this can result in hunger or at least embarrassment for the man and his family. I can see no reason why a greater effort should not be made to have this matter rectified.

I am one of the people who believe that the people who collect the tax are not enemies of the public, as some would have us believe. They are simply people who are doing their job. Incidentally, let me make this comment about the people who collect income tax: It is disgraceful that in the year 1970 they are asked to work under the conditions in which they work in this city. They work in little rooms with absolutely no privacy, very little light and no filing accommodation. In fact, if an ordinary member of the public goes in to inquire about income tax he might as well make public confession because he has to stand in a queue and everything that is said can be heard by the people behind.

They do not get absolution.

They might sometimes. I would not be too hard on them. Those are things which should be dealt with. I asked the Minister for Finance three years ago if he would do something about this. He said he had great plans to try to reorganise the income tax collection system in this city but unfortunately it has not been reorganised. I have visited one or two offices down the country and they are worse than the Dublin offices. I would not be one bit surprised, having regard to the cramped conditions under which they have to work, if they were in pretty bad form and were not inclined to listen to people who go in to make a case about an assessment or about a deduction of income tax.

I said at the start I would not detain the House too long because I believe there are a number of Deputies who want to take part in the debate. I want, however, to refer again to the question of the turnover tax. The simple position about turnover tax is that when it was introduced first in 1963 it was bad. It was then 2½ per cent and nothing else. The wholesale tax was later introduced and subsequently increased. The turnover tax has now been increased to 5 per cent and we now have the ridiculous situation that in many cases the 5 per cent is added to the 2½ per cent which was already being deducted. That is added to the wholesale tax. Not alone are the goods which are being bought taxed but the tax itself is taxed and a return must be made by the retailers of the amount collected on the goods they sell in turnover tax and the amount they collected on that turnover tax. The position has become so ridiculous that it is completely out of hand. Unless an effort is made to rectify this and to put matters in order before any other type of tax system is introduced, we will have serious trouble with the people who go into shops to buy the ordinary things of life. One sees a price on an article in a shop and if one buys the article one is then told that the price is not right because so much tax has to be added under two or three different headings. The situation is too ridiculous for words.

I suggest that if the Minister for Finance does not rectify the matter then somebody must do it because if it is allowed to continue it will only make matters worse as the months go by.

Ní shílim go bhfuil an oiread sin bua agam, maidir le cúrsaí airgid, ach, mar sin féin, ba mhaith liom, ar an ócáid seo, cúpla focal a rá ar na neithe a bhaineann leis na cúrsaí sin. Amhail gach duine sa Teach seo, is maith liom airgead a bheith agam mar cuireann sé ar mo chumas tairbhe a bhaint as na neithe a chuireann daoine eile ar fáil. Bíonn iarracht d'éad orm, maidir leis na daoine sin, nuair a chítear dom go bhfuil níos mó airgid acu ná mar atá ag teastáil uatha. Tá mé sásta, pé airgead sa mbreis atá agam a chaitheamh ar mhaithe lem chomharsa muna bhfuil dótháin aige chun maireachtáil ar a laghad.

Cé h-iad na daoine eile sin?

Cé h-iad na daoine atá ar aigne ag an Teachta?

Na daoine atá i gceist agat. Cé h-iad?

Dubhairt mé go bhfuil dhá shórt daoine ann—iad san a bhfuil an iomarca acu agus iad san nach bhfuil a ndóthain acu. Cuirim an Teachta O'Leary i measc na ndaoine úd a bhfuil an iomarca acu agus tá mé féin agus mo léitheid i measc an dreama eile.

Tá an Teachta Tunney i measc an dreama a bhfuil an iomarca acu.

I am not all that well versed in financial matters, as such. On the other hand, I would claim an ordinary layman's knowledge of the subject. Money is something we all reach out for. In so far as it gives me the opportunity of purchasing or availing of the skills and the sacrifices of other people, naturally I am anxious that I should have some of it. I am slightly envious, perhaps, of those who have more than I have. I am in sympathy with those who have less than I have. I would hope that, in our treatment of financial matters generally, we should all approach the subject in this frame of mind.

There are, however, matters which are more important than £sd. Here I would take slight issue with the Deputy who, perhaps, to his embarrassment at times, finds his name confused with mine. I have in mind now allowances to married ladies. In circumstances where a married lady finds that she can cater adequately for the needs of her family, in a situation where, if she cannot be present with her children, she can afford to employ somebody who can look after the children in her absence, I would readily concede that she should have all the freedom she desires to engage in outside employment and that there is an obligation on us to see that in respect of that employment she obtains adequate financial compensation. But, I do not agree that because of economic circumstances in the home, the mother should be encouraged to go out working. I should much prefer that in those circumstances, the State would make a special allowance to the mother so that she could remain at home and look after, protect and instruct her children. I have already said here and I shall continue to say it until I am convinced of the contrary, that we are doing a disservice to many young people by pretending that it is necessary for the mother to leave them in order to take up employment. There are, I would admit, cases where it would appear necessary and in those cases I would advocate that the State should make special generous allowances to those ladies——

But there are many married ladies who prefer to go out to work. They say they are fed up with the monotony of housework.

I should examine the situation and find the origin of such monotony. If the point is made that there are some ladies—I accept there may be some—I submit we are doing a disservice to a large percentage of the ladies in Ireland if we say that they want to be refugees from domestic responsibility. I concede that there are some but to those who would make the case that there is a monotony attached to housework I would say that we should be examining the situation to discover if perhaps we could so organise matters that the monotony would be less than it is alleged to be. If there were in certain areas—certainly in certain built-up areas—a centre to which such a lady could adjourn in the morning and have a cup of coffee and a chat with her neighbour——

Her fellow prisoners.

I would hope that the giggling flippant on my left, Deputy Michael O'Leary, would take this matter as seriously as I do. I think it is a very serious matter.

I think we will have to take it up on some other Bill.

With respect to the Chair, I suggest that, in so far as it refers to the increased allowances which we are making to married ladies who are in employment, it is relevant. To me, it has a relationship to the Bill we are discussing.

Deputy Tully mentioned that people who can pay taxes should pay them. I agree. However, I find it rather difficult to reconcile that sentiment with an earlier sentiment expressed by the same Deputy that certain skilled men who indulge in "lumping" and who earn a substantial amount should not have to pay tax at all. He makes the point that people who can afford to pay tax should pay it. Why then should he endeavour to make the point that those who are earning good wages should not pay tax? That, to me, is quite illogical. On the other hand, if he claims that taxes are too high, I cannot relate that to his anxiety to have everybody better paid to provide all State servants with more palatial offices than they have. I would agree that some State servants should have better offices than those in which they operate but, having said that, I am prepared to support the taxation required for the provision of these offices.

It does not come from taxation.

And, pray, from where does it come?

Capital moneys.

And do capital moneys fall from the sky?

That is news to me. Capital moneys have to be obtained one way or another. Certainly, capital money does not grow on trees. It must be provided for. It must come from somewhere. Deputy O'Donovan, from whom I might have learned a little in the matter of economics, will not, I hope, castigate me later on but, as I see it, money has to be generated; money has to be provided. There is not any machine that will turn out this money. Money must be there in relation to the effort that has been made towards its generation.

The printing press is the machine.

I look forward to the day when, dawdling around my house in my slippers at the age, I hope, of 95——

The Deputy must be looking forward to premature retirement.

—— under a Labour Government I shall share in the benefits of their financial printing machine.

Get a new pair of slippers.

I do not think the Deputy is serious when he suggests that machines should be manufactured to manufacture money.

Oh, they do. That is the difficulty at the moment.

It is a difficulty. I thought the Deputy said it was an attribute to the system he envisages.

Notes are made by a machine.

Yes, but they are made in relation to some form of effort, I presume.

They are printed.

A Daniel come to judgment. I had an idea they did not rise up from the ground. They are printed but in relation to certain efforts made in the community and certain sacrifices made by the community.

Apparently we are all living, financially speaking, in a fool's paradise and we have all been so foolish as to deny ourselves this ready access which the Labour Party would seem to have to increasing the standard of living in Ireland and having nobody work or pay taxes.

Capital means tax.

Tax the people who can afford it.

I would hate if we were all depending on what we got from them.

The Minister's party has depended on them for a long time.

I do not think you are doing too badly yourself.

(Interruptions.)

Order. Deputy Tunney.

I am sorry I missed the contribution made by Deputy O'Leary. I am at the moment inclined to excuse his pretended flippancy. I am quite serious when I say that it is pretended because I have read him and listened to him on certain matters and I will concede that when he is serious perhaps he is worth listening to, but I feel that on a finance Bill it behoves every Member here to speak with a sense of responsibility. We all enjoy an occasional lapse but lapses into flippancy do not solve the problems that are abroad——

And there are problems abroad. Deputy Tully spoke about the hardships and the low wages which certain people are obliged to endure. I am not happy that any worker should have less than that which would give him a worthwhile standard of living and on this I say, irrespective of whether or not it is politically wise that I feel that we in Ireland, generally speaking, must have a new approach to the word "work." We must stop avoiding using the word and we must not try to preach a gospel to the people of Ireland that they can continue to enjoy a high standard of living, relatively speaking, unless we all work. I am not happy that at the moment we are working to our full capacity. I am dissatisfied when I see people—and these people are not confined to any particular section—who think that whatever happiness there is in this life is to be obtained by doing as little as one can and getting as much as one can for it at the end of the week or of the month.

There are 50,000 unemployed who want to work very badly.

As soon as we all realise that the harder the rest of us work and the more we put into the effort the more capital will be generated to place in employment these people about whom Deputy O'Leary is concerned. This employment cannot be provided unless this capital is generated. I submit that the system of effort compensated by adequate financial reward is the only system to generate this capital and that the other system, which would seem to guarantee reward without effort, is one, the continuance of which would destroy whatever we have built up in this country to date.

We are here again this evening under Fianna Fáil discussing a record taxation which has been imposed on the people of this country by the Fianna Fáil Government. Despite the promises that were made in the past—I remember away back Fianna Fáil promised to reduce taxation—today we are taxed to the tune of almost 4½ times what the people of this country were taxed in 1956. Indeed many people claim, and I think justly, that at the present time they are ground down with increased taxation at national and indeed at local level.

Deputy Tunney stated that the people were not working to full capacity. Many people are inclined to argue, and perhaps justly, that if they work harder they pay more in taxation to the Government. They will tell you that the incentive is not there to work harder. If they do, it is only working to pay more and more taxes to the Government.

The rate of work in respect of thousands of workers is determined by a machine.

I agree, but if they do work overtime they pay more in taxation. Perhaps there could be some incentive given by having less taxation for greater output. If there was such a system it would help the economy very much.

We are facing an increase in turnover tax from 2½ per cent to 5 per cent. Many of us remember when this tax was introduced. We remember Deputy Lenihan, who is now Minister for Transport and Power, telling us that it would only be on luxury goods and fur coats.

(Interruptions.)

Do not forget the slaughter of the calves.

The Minister should not forget low standards in high places. The Minister knew at that time what he was talking about. He knew what his own friends were engaged in. He knew what his fellow Ministers were doing.

Let us get back to the debate on the Finance Bill.

It is a pity he did not whisper into the Taoiseach's ear and get the Taoiseach to take action——

The Deputy must speak on the Finance Bill.

——against those people who were engaged in low standards in high places.

A Deputy

The Deputy should go into the sludge disposal business.

It might have been more apposite if the Minister had called for a winter of debate and not a summer of action.

(Interruptions.)

The Minister said they should look into their hearts and purify the party.

The Deputy must come back to the Finance Bill.

If we had not got those low standards in high places at that time, and if the Government had a winter of debate, and looked into and purified their hearts, the people of the country might not now be paying the taxation they are paying today, and the former Minister for Finance might not have had to put this crippling burden on the people.

The Deputy did not tell us about the calves yet.

They have swallowed so many promises they made in the past——

Seventy thousand calves in 1947.

What about the 100,000 new jobs? What about the ships that were sent to the bottom of the sea? How many fewer people are at work today? What about, burn everything British except their coal?

(Interruptions.)

Is it not Union Jack we have today? Is not Jack tied to the tail of Britain in a free trade agreement?

Interruptions from any side of the House are disorderly. We must proceed with the debate on the Finance Bill.

We remember we were told that we were a little island but that we could do without Britain and Europe and the rest of the world, and we were told that if every ship was sent to the bottom of the sea——

Every damn ship.

——every damn ship was sent to the bottom of the sea we would live without England, we would live without the rest of the world. Now is not Jack tied to the tail of John Bull?

Will the Deputy come to the Finance Bill?

Is it not Union Jack we have today? Instead of "Let Jack lead on" it is "Sack Jack and stab him in the back".

The Deputy must refer to the Taoiseach.

They are trying to stab the Taoiseach in the back.

"Fine Gael will win".

Those promises were made in regard to the turnover tax. It was stated that it would be imposed only on fur coats and luxury goods but it is imposed on all the necessities of life, despite the fact that the present occupant of the Park made promises——

The Deputy must withdraw that remark. He must not refer to the President.

I understood he was in the Park. The President of Ireland and the ex-Taoiseach said that a Fianna Fáil Government would never impose taxation on food.

The Deputy must not involve the Presidency in debate in the House.

He was a politician all his life and I think we are entitled to quote from things he said in the past. He said in 1959 in Dungarvan that they would never tax the necessities of life. At that time the loaf was about 7d or 8d. Now I do not think anybody knows what it is but it is certainly 2s 3d or 2s 4d or perhaps 2s 7d or 2s 8d.

You would not get a slice of bread for 2s 3d.

The then Taoiseach in the same year stated in Ballinrobe, I think, that they would never dream of taxing the necessities of life. He talked about the blood-curdling lies of Fine Gael in saying that Fianna Fáil had any intention of ever taxing the necessities of life. A turnover tax of 2½ per cent was imposed in 1963 and it has now been doubled to 5 per cent and food, clothes, coal, all the necessities of life, are being taxed. Despite the promises made by those two gentlemen at that time, a few years later they removed the food subsidies to the tune of £16 million. That is the audacity of the party that would stand up on platforms throughout the country and tell us they always kept their word to the Irish people and that they always had regard for the poor. Certainly that cannot be said for them now, because they are taxing them as cruelly and as harshly as they possibly can.

It was pointed out at that time and since then that the turnover tax would increase the cost of production and would increase the cost of living. The cost of living is now increasing at an enormous rate due to Government taxation. The £ is jet-propelled and it is impossible for any worker or any worker's wife to live because, as somebody said recently, if you are going shopping with a basket you would almost want to bring a basket of £ notes to get the necessities of life to keep your family for even one week.

Due to Government taxation CIE charges were recently increased. Television charges and radio charges and charges for anything you like to name are increasing due to the burden of taxation imposed on the people by the Government. Fianna Fáil are just being true to form. The moment they get back into power, public taxation and local taxation start careering upwards. We remember the promises made in the past—and Deputy Colley wants to bring us back to the slaughter of the calves——

The Minister for Finance.

I remember they told us a long time ago when it was costing only £22 million to run the country that they could reduce taxation by £2 million. We know now how they have kept their promise. Instead of reducing it from £22 million to £20 million they have increased it from £22 million to roughly £450 million.

Does the Deputy remember the suggestion to reduce the price of milk?

They kept their promise to reduce taxation by £2 million by increasing it by roughly £228 million.

They have reduced us to beggary.

It might be no harm to remind them that when they left office—and they had a lot to say about taxation in 1956—the total taxation imposed on the people was £105 million. We all know what it is now. The usual repetitive arguments which are produced each year in regard to the upward swing in Government taxation, fail to reflect the real gravity of the crisis facing this country. I am talking about the financial crisis and not the other crisis. I am talking about the crisis facing the Fianna Fáil Party and, of course, when it faces the Fianna Fáil Party, since they are the governing party, it affects each and every one of us.

The Deputy is finding it difficult to keep off that crisis.

It is very difficult to keep off it.

Deputy Tierney settled the Labour Party this morning when he said they were going on the wrong road.

It will be very hard to know which road Fianna Fáil are going on at present.

The middle of the road.

(Interruptions.)

Deputy L'Estrange on the Finance Bill.

Deputy Davern does not know which road the Fianna Fáil Party are going on. He is sitting on the fence. He does not know which side to come down on. He does not know whether to come down on the side of the Haugheyites or the Blaneyites or on the side of the Taoiseach. He does not know whether to back Jack or stab Jack.

Deputy L'Estrange's intelligence system must have broken down in the past few weeks.

The Chair is warning Deputies that it is not prepared to listen to any more interruptions. Deputy L'Estrange on the Finance Bill.

It can truthfully be said that never in the history of this country was it more desirable and necessary to have a period of stability than it is now, so that producers, whether they be farmers or industrialists, can prepare and equip themselves for the more competitive period which undoubtedly lies ahead when we enter, as seems likely, the EEC.

The only way in which tax revenue can be increased without causing inflation—and according to Deputy Childers, the Minister for Health, who has spoken on two occasions recently about inflation, inflation is gripping our economy—without causing an increase in the cost of living and without causing bad industrial relations is by a growth in the national production which will provide a larger taxable income. Our aim should be to bake a larger national cake so that every section of the community can get its fair share of it. It is an inescapable fact that if taxation maintains its upward course as of recent years it will outstrip the real growth of the economy. Financial experts claim that this is what is happening at the present time. The danger signs are there and it is up to the Minister for Finance and the Government to take heed of those danger signs because when taxation outstrips the real growth of the economy we are, as a nation, in trouble. The Government have their own problems. They seem to care little about the nation's problems or about the economy. The Minister, when questioned by Deputy O'Leary, did admit, and more or less prophesied, that measures may have to be taken shortly to right the economy.

I said nothing new.

It is very hard to know when a Fianna Fáil Minister is saying anything new. In March, 1969, the then Minister for Finance went on radio and television and warned the people that we were in dire circumstances.

The Deputy was a great man to run away from that.

Talking about running away, I have not fallen off anything yet.

The Deputy might yet.

If I held on to a drain pipe I hope I would not fall off. Deputy Haughey went on radio and television last March and told the people the economy was in a dire state. He told us to tighten our belts immediately and he told workers not to force wage claims. The Taoiseach then called a Cabinet meeting and Ministers agreed to impose on themselves a 14 per cent reduction in their salaries because the economy was supposed to be in such a bad state. In less than two months the Minister for Finance introduced an inflationary Budget imposing increased taxation and handing out gifts all round to various sections in order to win the general election. The Government won the election but the people are paying for the fraud committed in 1969.

The Government are allowing the economy to drift from bad to worse. Ministers seem to be more interested in tearing down the institutions of this State than in building them up or building up our financial viability. The future of this country rests in the hands of the Government and to a large extent in the hands of the Minister for Finance, and the action he takes to right the economy. The Government are meddling and muddling and as far as financial affairs are concerned they have deceived the nation and that is wrong. They have been proved to be incompetent and their forecasts about reducing taxation have been wrong in the past. The Government's carry on has lost them the confidence of the world and, as far as the people are concerned, that is humiliating. Many people claim that we shall lose £30 million alone from tourism this year. If that is the case an extra financial burden will have to be placed on the people in the years ahead because of the incompetence of the Government and the harm that has been done in the last five or six months by the Government and especially by some Ministers.

In the last 12 or 14 years we have had three doses of a stop-go policy under Fianna Fáil. In 1967, when Deputy Haughey became Minister for Finance, we had a balance of payments surplus of £15 million. We had been in a period of recession from 1963 to 1966. At the end of 1968 we turned that balance of payments surplus into a deficit of £22 million. With those signs of inflation one would have expected mild corrective measures to be taken but instead, as I said a few moments ago, in March, 1969, we had dithering and hesitant legislation but we had no proper leadership. The second Budget of 1968 was definitely a deflationary Budget. It imposed £19 million new taxation. This was the Government's effort at trying to tackle the problem of inflation.

The Chair would remind the Deputy that we are dealing here with the Finance Bill and the Government's taxation proposals and their effect on the country. This debate on the Finance Bill is not as wide as a Budget debate; it deals only with the tax proposals which are before the House.

The difficulty is that our taxation is largely due to the mess created in the past.

(Interruptions.)

Even though taxation, direct or indirect, has continued to rise it never seems to be sufficient to enable the present Government to pay its way, Loans and still more loans have left us deeper in debt. We are now paying over £105 million each year, I think, to service the national debt owed by local authorities and semi-State bodies. Sooner or later—unless it is too late—the Government will learn that it is impossible to borrow itself out of debt. We seem to be getting deeper and deeper into it. In reply to a question I asked about a month ago I was informed that the total national debt was over £1,000 million and that the amount owed by State and semi-State bodies and local authorities came to almost another £400 million.

I am old enough to remember in 1950-51 when the Government of that time borrowed money and taxed people to build houses and hospitals, Fianna Fáil supporters outside the polling booths were saying: "Put them out; they will put the country in pawn". At that time the national debt was but a fraction of what it is now when we have to put taxation of over £106 million per annum upon our people. That is more than it took to run the country in 1956 and it has to be imposed now to pay the interest on what is owed by the State, semi-State bodies and local authorities. We are entitled to ask how long can that continue. If as a result of increased taxation we were putting more people to work we could give the Government some credit.

It was stated at one time that the yardstick by which the Government should be judged was the number of people put to work. If the Minister for Finance could say that, due to higher taxation they had created more jobs than existed 14 years ago, we could give them credit for it. I asked a question here on the 9th April last about employment statistics. I asked what was the number of people at work in 1956 and at the latest available date and the reasons for any decline. We must remember that when listening to radio or Government speeches you only get half the story: they tell you so many more are employed in industry but they leave out agriculture and other sectors. If the Minister could claim that there were more jobs due to the higher taxation it could be said they were doing good work but the facts are that in 1956 when taxation was £105 million we had 1,125,000 people at work; in 1969 with taxation of over £400 million we had 1,069,000 at work, a drop of 56,000. Those figures cannot be denied because they were given by the Parliamentary Secretary to the Taoiseach. It is the Government's duty to say what has happened in the meantime. If that is the yardstick by which the Government are to be judged, according to the words of Mr. Lemass, when he was Taoiseach, the present Government are a failure.

As a constructive Opposition with the national interest at heart and a united party which is not divided between gun-runners, gun-smugglers or doves and hawks, we have not only the right but the duty to ask ourselves what lasting value have we got from this huge taxation on the country. Where is the country heading? If, as a result of Government policy and growing taxation, we had more people at work and emigration had been stopped—it has not stopped——

The measure before the House does not open up a debate on Government policy.

I am pointing out that despite the increase in taxation if we could say we got value for money we could concede that the Government was right in increasing taxation but I can prove that instead of providing more jobs we have provided less. I can prove by statistics that despite the huge increase in taxation, 450,000 of our brothers and sisters have been driven from the country in the past 14 years and over 100,000 driven from the land. Am I not entitled to make that argument? If the Minister could say they were getting results from higher taxation in the form of more jobs and less emigration and that they built sufficient houses for the people, we could give the Government credit: but when the reverse is the case, am I not entitled to argue that the Government's policy has been a failure and that we have not benefited by the increased taxation?

We are not engaged in an economic debate or a general review of Government policy. We are dealing with the Finance Bill.

It may be worth pointing out that when Fianna Fáil were in opposition they always spoke of reducing taxation. Deputy Lemass, as he then was, as reported in the Official Report, volume 155, column 624, in a discussion on taxation, blamed the inter-Party Government for high taxation. He said:

Surely some explanation is due why the Government not only failed to keep that pledge but why the cost actually has gone up by £10,000,000. Some apology is at least due to those whom they misled by that statement by a responsible representative of the Coalition parties.

What was the statement?

It is at column 624, volume 155.

What was the statement Mr. Lemass made?

It was a promise of 100,000 jobs.

Let us hear the statement.

It was about increased taxation.

Who made it and what did he say?

I have just given the statement.

No, the Deputy has given us a selective quotation.

I have quoted from the Official Report the statement Deputy Lemass made. At column 49, volume 157, of the Official Report of 8th May, 1956, Deputy Lemass also stated——

It is a pity the Deputy would not quote the other statement.

Mr. Lemass, speaking about taxation, said:

We announced that we had made up our minds on that fact and that so far as we were concerned, there would be no increase in tax rates above the 1953 level. We made it clear that, if any Budget difficulty arose, that difficulty would be met by a reduction of expenditure and not by increasing the tax burdens on the taxpayer.

That is a lovely statement.

Give us the other statement.

Low standards in high places, Galway, 1967.

The Deputy is like a broken record. He will not tell us what we want to hear.

If a thing is worth saying once it is worth saying ten times until it sinks into the minds of the people. It is only now the people are beginning to realise the corrupt, arrogant and fraudulent Government we have on that side of the House. It has taken a long time for it to sink into the minds of the people but they are beginning to believe it today.

Are you trying to say the Irish people are not intelligent?

Not at all. The Irish people are very intelligent, but let the Taoiseach call an election inside the next month and he will find out how intelligent the Irish people are. I dare you to do it.

The Deputy is quite right.

You will fool the Irish people no longer. Their eyes have been opened.

What about Deputy Cooney?

I did my utmost to get Deputy Cooney into the House. I hope he will be here for the next 20 years. He is a man of ability and integrity and I am proud to see him sitting in the Fine Gael Benches and before long he will be a member of a Government of this House.

It is either you or him.

There are safe seats there now.

Would Deputies would address the Chair?

If they would leave me alone I would be finished long ago.

If Deputies would address their remarks to the Chair there would not be this cross-barrage in the House.

Deputy L'Estrange referred to something the former Deputy Lemass said. I wonder could he give us the text of what Deputy Lemass said at the time?

And the context of what Deputy Lemass was referring to.

I can tell the Minister. He said he would provide 100,000 new jobs.

To what was Deputy Lemass referring?

Deputy Lemass was referring to increases in taxation.

He was referring to a statement, according to what the Deputy said.

I can give the Minister Deputy Lemass' statement.

The Deputy is running away again.

I quote: "so far as we were concerned, there would be no increase in tax rates above the 1953 level." We know what it was costing in 1953 to run this country, about £87 million. I may be out a couple of millions but——

May we take it from Deputy L'Estrange's repeated refusal to give the statement which was referred to in what he quoted that he is not prepared to give us the statement. Let us not waste any more time on it. Will he say "yes" or "no?"

I am prepared to give you what I have here. I took out of the Official Report what I want to make my speech. Let the Minister for Finance get from the Official Report what he wants. He has five civil servants there to do his research. I have only myself and it is not too easy.

The Deputy gets an odd anonymous letter.

I have never quoted from an anonymous letter, and if the Deputy wishes, I will show him some I have on a file.

This is all irrelevant to this debate.

If Deputy L'Estrange will not give us the statement he is supposed to be quoting from, will he withdraw the remark?

An Leas-Ceann Comhairle

That is up to Deputy L'Estrange.

I have nothing to withdraw. I am quoting a statement which was made by a former Taoiseach, and I intend to ask the present Minister for Finance how Fianna Fáil kept the promise that was made at that time that they would not increase taxation above the 1953 level. Is it not true that instead of not increasing taxation above the 1953 level they have increased it from £87 million or so to £450 million now? Can he give us any valid reason why a Taoiseach would come into this House, make such an important statement to the Irish people, why he would fool them and that the Minister would have the audacity to stand up here and say Fianna Fáil, the true Republican Party, never misled the people: "We are here because we have always told the truth to the people." I have heard the Minister say that inside the last two or three months. He always refers to the true Republican Party. Now you have one of these Republicans quite recently saying some of them never joined a local security force and that they are in the Republican Party because they are hurlers or footballers.

Would the Deputy care to enlighten us? Could we suggest the reference made to Deputy Lemass was based on a statement made by a prominent member of the inter-Party Government to the effect that the inter-Party Government would reduce taxation and that they failed to do so? Would that be correct?

Yes, I am not denying that, but they increased taxation by only £1 million or £2 million. Fianna Fáil made a promise, when it was £87 million, to leave it at £87 million, and they have kept that promise by increasing it to £450 million. Mr. Lemass went on to say that if any Budget difficulty arose, that difficulty would be met by a reduction of expenditure and not by increasing the burden on the taxpayer. That important statement was made in this House in May, 1956. As I have already informed the House, that promise was kept by increasing taxation by £370 million.

One of the greatest difficulties facing us today and one of the greatest dangers facing us on the eve, almost, of negotiations for entry to the Common Market, is our high-price economy which has been forced on the people by the Government's high taxation policy —by reducing the food subsidies by £16 million, by the turnover tax of 2½ per cent which was imposed in 1963 on food and on all necessaries of life and which was doubled in the recent Budget, by the extravagant increase in the cost of administration at Government level and also the high cost of local taxation. I remember when rates were six shillings in the £ and we were promised complete derating by the Fianna Fáil Party.

Local taxation has nothing to do with the Finance Bill.

At that time only £5 million was collected in rates. Last year £50 million was collected. It would have to be admitted by all concerned, by industrialists and workers, that many of our exports are being priced not only out of the British market but out of some of our home markets. Many of our industrial products, due to high Government taxation, are much higher priced even at home than they are in Common Market countries. Due to the increased taxation which takes place every year and due to the Government's economic policy it is impossible for industrialists to plan ahead because they do not know where they stand. Government taxation policy affects all spheres of our economy and drives up costs of production for our industrialists, our farmers and indeed for all our people from one year to another.

The flabby cost structure has been inflated like a balloon and there is a serious danger that the balloon will burst. The Government's financial policy has been calculated, both in regard to its timing and its general direction, to raise prices and to raise costs while the opposite is what we need at present. We want stability so that everybody can plan ahead for the more competitive period which lies ahead. We require greater encouragement for our industrialists and our farmers, who are also important producers and exporters. Instead, they do not know where they stand from one year to another in regard to taxation.

We believe in an incomes policy. We believe everybody should get a fair share of the national cake. We believe something to which Fianna Fáil often pay lip service and that is that all our children should be cherished equally. If we had an incomes policy taxation would be more evenly distributed on all sections of the people. It would be a fairer system than that which we have at present. The majority of wage and salary earners and those taxed under the PAYE system have a sense of acute grievance because they are paying tax on 20s in the £ of their income under a set of restrictive rules. It is well-known that other sections of the community can and do evade their responsibilities. If all sections of the community were caught in the income tax web through an incomes policy then income tax and other taxes, and perhaps turnover tax, could be reduced. It is time, because of the situation that has arisen whereby we are dependent for direct tax revenue on wage and salary earners to an inequitable extent, that a fresh look should be taken at the whole concept of taxation. Those people are probably the most sorely affected section also as far as indirect and other taxes are concerned.

As far back as 1965 we advocated an incomes policy. It might be no harm to quote from volume 217, column 1557, of the Official Report for 15th July, 1965, when Deputy Lemass stated:

Deputy Cosgrave and some other Deputies were referring to what they called a national incomes policy. I wish Deputies who use this vague phrase would attempt to tell us what they understand by it and attempt to define it in more precise terms. I believe this is a phrase used by lazy people to conceal the absence of thought and understanding of this situation. At best, it represents a process of wishful thinking, the hope that some magic formula will emerge out of the air which will solve all these problems and introduce the golden era in which after their day's work employers and workers will be dancing around maypoles together. So far as I know, no satisfactory incomes policy of the kind Deputies appear to be thinking of has emerged in any free democracy.

I should like to know if it is now a phrase used by lazy people because the Taoiseach and the Government have now been converted to the idea of an incomes policy. It is a pity that they did not try to make some headway in regard to an incomes policy in 1965 when Deputy Cosgrave advocated it here. If we had an incomes policy taxation would rest more fairly and more justly on all sections, everybody would be more or less caught in the web and we would not have to increase turnover tax from 2½ per cent to 5 per cent and in all probability wage earners could get a reduction in income tax. One thing which is certain is that the wage earner is caught and he cannot evade even one penny of his liability. His total income is known and income tax is assessed on it and he has no way out. It is a pity that the Government did not introduce an incomes policy back in 1965.

The fact that the Government have to impose this huge burden of taxation on the people is due to the stop-go policy of the Government over the years. It is all due to the terrible inflationary policy of the Government which they have pursued since they came back to office in 1956. They have at their disposal a highly effective weapon which, if properly used, can create and expand wealth internally and attract wealth from foreign sources also. I refer to the use of taxation. Fianna Fáil have used taxation as an instrument for destroying and discouraging wealth instead of using it to attract wealth to this country.

We, on this side of the House, welcome the Government's conversion to a situation in which taxation is being used to encourage industrial enterprise. We proposed this type of taxation in 1956. Two Bills were introduced, one by the late Deputy Norton and the other by the late Deputy Sweetman, to give tax concessions to people to set up industries and exports. We had had for a number of years the Control of Manufactures Acts. Certain tax concessions were given in the West of Ireland which were not applicable to other parts of the country. The two Deputies concerned were satisfied that, instead of having Irish boys and girls forced to emigrate to earn their living in Birmingham or Coventry, we could, through the proper use of the tax system here and with the aid of tax incentives, encourage industrialists and the people with technical knowhow from abroad to come here to invest their wealth and to build factories here. We had the people to man the factories.

Those two Bills came before this House. Deputy Lemass, then leader of the Opposition, opposed them vigorously. I defy the present Minister for Finance to say that it is not true that Deputy Lemass, when he was leader of the Opposition, got up and said he believed that at some future date he would be in a position to wipe those Bills off the Statute Book. He also said that the moment he came back to office he would do so. I ask the Minister for Finance is it not true that the then leader of the Opposition said this?

No. The Deputy is mixing it up with another Bill.

I am not. I said there were two Bills, one introduced by the late Deputy Norton and the other by the late Deputy Sweetman. The aim of the two Bills was to give to industrialists outside the western areas tax incentives which would encourage them to set up factories which would employ our own people. The leader of the Opposition at that time, Deputy Lemass, made that statement. I am glad to say that the Fianna Fáil Party afterwards approved of the work done at that time and to their credit they increased the tax incentives which were given. That work was well done. The late Deputies Sweetman and Norton did excellent work in introducing those Bills.

Less than a year after those Bills had passed through this House the Whitegate oil refinery was established. It brought £12 million into this country. We were using our taxation in a proper manner to encourage industrialists to come in from abroad. The Government have continued and expanded that industry. It gives employment to Irish people at home. We are proud of anything which gives employment to our own people. We started the Shannon Scheme also which provided power for the industrial revolution which took place and we were told it was a white elephant.

We are not having an economic debate. The Chair has already said that.

What about the planes at Shannon?

(Interruptions.)

The Chair has already ruled that there must be no interruptions from any side of the House. The interruptions are disorderly. Deputy L'Estrange on the Finance Bill.

It might be no harm to inform those young Deputies who are interrupting that the Finance Bills of 1926 to 1932——

We are dealing with the Finance Bill, 1970.

I wanted to point out that there was money then to pay 200 soldiers and officers to protect the Shannon Scheme.

This is all irrelevant on this Bill.

(Interruptions.)

What has happened recently in the drift to anarchy and the importation of guns?

This must not be referred to.

Taxation, if properly used, can be a highly effective weapon. It can help to expand industries and give employment to our own people at home. I am glad to see the Government's conversion to the proposals which we inaugurated.

It is a pity the Deputy cannot claim Christianity as well.

The Deputy does.

Anyone who has tomahawks and long knives out and knows what took place at recent meetings in regard to "Honest Jack" must realise there is very little Christianity left, if the Deputies want to pursue that line.

(Interruptions.)

The Government should continue to pursue and to expand this course of action so as to build up the wealth of our own citizens and to attract outside capital investment in factories. The Minister might give us the number of factories which were started since this scheme came into operation. There were hundreds of them. The figure of 64,000 people was given some years ago as being the number of those employed. If that scheme had not been introduced and if those people were now unemployed we would have over 120,000 people unemployed.

Debate adjourned.
The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 1st July, 1970.