Financial Resolutions. - Financial Resolution No. 2: Income Tax.

I move:

(1) That in accordance with the provisions of any Act of the present session to amend the law relating to income tax, section 2 of the Finance Act, 1970, shall cease to have effect in relation to the year 1971-72 or any subsequent year of assessment.

(2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

Can the Minister say what is the precise estimated gain to the Exchequer as a result of this resolution which proposes to delete section 2 of last year's Finance Act and to disregard the entitlement of an income tax payer to two-thirds of the standard rate?

In the current year it will mean a gross yield of £6 million, but, as I have indicated, we are increasing the minimum earned income allowance.

Are there not concessions granted? The Minister announced that certain concessions are being granted in respect of certain categories of taxpayers. Am I right in thinking this is in two parts?

That is right.

Can the Minister say what will be the precise effect on the Exchequer of this resolution, taking into consideration the concessions which will offset the yield?

In this financial year the gain will be £6 million. The cost to the Exchequer of reliefs is £1 million with, therefore, a net gain of £5 million. In a full year the net gain would be £5½ million.

Is this the resolution dealing with the first £100 of income?

The present Minister for Finance last year handled the Budget debate, though he did not introduce the Budget. If he remembers, the Taoiseach read the Financial Statement because of Deputy Haughey's regrettable accident. He made a great song and dance about the big number who would benefit and about the wonderful thing it was. Will the Minister now say why it was decided this should be taken away this year? There are an awful lot of people who are on very low incomes. Those people are being taxed and this was some little concession to them. At least so we were told last year. I am disappointed with the fact that the lower income groups are not dealt with fairly, income taxwise in this Budget. An effort should have been made to do something in respect of low incomes. The personal allowance has been increased very little since the mid-sixties. This was a concession granted last year which is being taken away this year. The Minister has admitted there will be a net gain of £5 million. Does not this mean in effect that he is reimposing the £6 million which was given away last year? Can the Minister say why this particular item was selected?

It is true to say that the gross yield from this item is £6 million. As I have explained in my statement, the reliefs, which are designed to assist the lowest bracket of taxpayers, will take 20,000 out of the tax net and will afford relief to some taxpayers to the extent I have indicated in my statement. As to why this was chosen, I think I have indicated the reason in the Financial Statement. Very briefly I shall repeat it. We would not have had to impose new taxes this year if we did not make any concessions. We would just have balanced. Certain concessions had to be made and they had to be paid for.

I have explained the difficulties, the lack of wisdom involved in any extensive indirect taxation. Therefore, if the concessions were to be paid for at all I was driven back to income tax. I was then in the position of looking at alternative ways of doing it within the tax code. Increasing the standard rate would be regrettable from several points of view, as I indicated in my statement. If one wants to get at the top bracket of taxpayers one gets very little money out of them. This particular relief was one which involved all taxpayers and the cost to them of withdrawing it would not be more than £1 per month.

That is five shillings a week for a fellow paying rent for his house.

He has probably received a fairly substantial increase in income since.

One-third of it goes to income tax.

One-third of it goes to the benefit of his colleagues.

The Minister gave no remission at all to those on the bottom of the scale.

This concession last year was given to everybody. The man on £700 a year got it, and so did the Minister for Finance on £7,000 a year. Is not that correct?

The Minister for Finance is not on £7,000 a year. That part is not correct.

He is near enough to it. We will not argue about a few pence. This is an outrageous performance. It is disgraceful that a concession given last year, the first concession on income tax since PAYE was introduced, despite massive inflation, is being taken away. What kind of Government is this? They decide to do a thing today and change their minds tomorrow. At least this time the Government waited for 12 months. It is a very objectionable way to behave. The Minister claims he will take 20,000 people out of the income tax net. What percentage of the taxpayers does that represent? Twenty years ago it would be 12 or 15 per cent. What percentage is it today? Is it 5 per cent? It is not. I think it is 3 per cent. The Minister made big play of this. It is all nonsense.

The Minister has stated that 20,000 taxpayers will be released from the net. Would the Minister state the number of taxpayers who will be affected by the abolition of the reduced rate on the first £100?

All taxpayers.

How many approximately, please?

The total number of taxpayers is somewhere between 550,000 and 600,000.

Thirty times as many are gathered in as are released. The Minister put in the smaller figure and not the bigger one. I hope that this is not an act of spleen, considering the source of the reduction last year.

I do not know what the Deputy means when he says that I put in the smaller figure and not the larger figure. I was referring to the reliefs and they related to the 20,000 taxpayers.

The Minister restored a charge on 30 times as many people.

Did the Deputy get the impression from what I said that I was getting £5 million income tax without touching any taxpayers? Does the Deputy think I have a magic wand in my pocket? Let us be reasonable.

The Minister was doing somethingpianissimo.

(Cavan): The net result of the proposal is to increase taxation on the lower income group. That, in effect, is what will happen. There is no worthwhile increase in the personal allowance beyond some paltry adjustment in the earned income relief. This is really an undue hardship on the lower income group. It is in keeping with the policy of the Government as expressed recently in the abolition of the unemployment assistance in respect of the most defenceless section of our community. Admittedly, the Government rocked a bit there. It could be truly said that Deputy J. Lenehan did not get himself expelled in vain. He reaped some benefit for the people for whom he sacrificed himself. This trend seems to be creeping into the income tax code so far as this Government are concerned.

A few years ago I objected to the action of the Government in giving a very substantial concession to sur-tax payers. That was done on the pretence that it would result in encouraging managerial people to come here and to take over employment. In effect, it gave an earned income relief of £1,250 to the sur-tax payers. If a concession could be given to sur-tax payers a few years ago increasing exemption from £2,500 to £3,750—and I think it is now £4,500—it is very difficult to see how this recent increase can be justified. This shows a continuation of Government thinking that the rich should get richer and the poor poorer.

We cannot pass the Financial Resolutions without getting some additional information which the Deputies and the general public require. In his speech the Minister stated that the tax concessions will remove 20,000 taxpayers from the income tax net. I should like to know how this number is made up. What kind of incomes have these people at the present time? What income have the 20,000 people who are to be removed from the income tax net? Everyone knows of the growing dissatisfaction in this country on the part of the workers, particularly single men and women who have incomes in excess of £7 per week and are taxable. This Budget does not change that position. In spite of the fact that the value of money has depreciated steadily this figure has been more or less standard for the past ten years. At the time it was fixed £7 was equivalent to £14 today. Money has depreciated in value. I am not sure of the date when this figure of £7 was fixed. Little or no variation has taken place since then. There has been little or no variation in the Financial Statement of the Minister today.

Deputy O'Higgins said that a single person earning more than £9 per week will not benefit from this Budget. That is a clear-cut statement. Who in Ireland is earning less than £9 per week? Are we to assume there are several thousand such people? Are we to assume that the "several thousand" are included in the figure of 20,000 taxpayers mentioned as escaping the income tax net? It is further stated that a married worker here earning more than £14 weekly will not benefit. The standard wages for local authority rural workers is about £17 per week. The rate is higher in urban areas. Unless the Minister has some further evidence to give us, my present assumption is that instead of any relief being given to such people they will be taxed to the extent of an additional £12. They will lose the remission on the first £100 of income. The reduction on this £100 of income is to be abolished and the standard rate applied.

I wish to protest in this House as I did in the past. I am aware that, in order to provide money for the public services, money has to come from the pockets of the people. At the present time this Government are engaged in a system which was used some years ago by a Mr. Singer who was carrying out certain operations in the borrowing of money. Not only are the Government trying to get money in Ireland from the Irish people but they are going abroad to see where they can find money. They are searching Western Europe and have also moved towards the American field.

When we are considering Financial Resolution No. 2, I wish to refer to the position of the man or woman who is single, who is trying to build up some income with a view to getting married, providing a house and providing the essentials that go with it and who finds himself or herself taxed for sums earned in excess of £7. That is, to my mind, unfair and unjust. While I appreciate what Deputy Haughey, when he was Minister for Finance, told me in reply to a question that those remissions would cost a great deal of money. Whilst I appreciate the difficulty of the Government in getting money—they go abroad to try to borrow money—at the same time it is entirely unfair that the tax free allowance is only the £7 it was ten years ago. It now requires £14 to buy the same amount of goods which £7 did ten years ago.

On behalf of the Labour Party I protest against the continuance of this position. I expected in this Budget Statement, particularly having regard to the long debate we had on this question down through the years, that there would be some reasonable concession so far as the tax-free allowance was concerned. Married men are allowed only £12 to £13 weekly free of tax. I suggested on previous occasions that it was surely within the competence of the Department of Finance to devise a system whereby lowly paid workers should get greater exemption from income tax. A married worker without children who works with any local authority in Ireland cannot be compared with the person who earns as much in one day as he earns in a week. Despite this those lowly paid workers have to pay the same money for their drink, their food and their clothing, although the man on a small income cannot frequent the establishments which the Minister for Finance frequents for his wearing apparel.

People with salaries of less than £20 a week have grounds for complaint. There are some people who are semi-invalid or semi-incapacitated and who are lucky enough to find jobs at rates well below ordinary standards, but the present Minister for Finance now comes along and has the earnings of those people, which are usually around £10 or £11 a week, taxed as much as £1. Despite the financial difficulty of the Government there is undoubtedly an unanswerable case for increasing the tax free allowance of workers in the lower income group. I am disappointed to see that instead of any help being given to such people the opposite is the case.

Does the Minister feel there is any necessity to make a reply?

There is no comment to make. My statement is factual.

Does this include the remission as well as the extra taxation?

This Resolution?

It only includes taking away the special concession which Deputy Haughey gave them when he was Minister for Finance?

The other items are relevant.

They are very relevant.

Could I ask the Minister to do something like that which Deputy Murphy is looking for? The question we will be asked when we leave this House by the person earning £9 is what saving this will mean to him over and above what he had to pay previously and what saving it will mean to the married person with no dependants earning £14? Could the Minister spell that out and convert it into new pence for us?

(Cavan): It will not mean any saving.

You will have to have regard to the £100 lost for the remission.

The Deputy is talking about particular categories.

Those are the categories mentioned in the Minister's statement.

The Deputy means the people up to a fixed level?

The Minister referred to single people at £9 and married people at £14.

Is the Deputy asking what saving they will get?

Yes, over and above what they paid previously. Say those people are exactly on £9 and exactly on £14 a week.

Will the Minister write down their names?

Deputy Tully will ensure that not too many will be at that level.

There may possibly be a small saving in these cases.

I was trying to get it for each week. I suppose we will have to work that out.

As against less than £12 a year increase for any taxpayer.

What is the present position of the group of people, the 20,000, who will be free of income tax? What group do those people come from? Who are the 20,000 people the Minister says will escape the tax net as a result of his Budget proposals? How is this figure calculated?

I could not tell the Deputy how it is calculated. This is a job that is done by the Revenue Commissioners. I do not know how they actually did the sum.

Does this include pensioners as well?

Yes, if they are taxpayers. It includes all taxpayers.

(Cavan): I want to say a word on behalf of the group Deputy Cosgrave has mentioned, the pensioners, because I believe they have a grievance. I know local government pensioners expected relief in this Budget from income tax but instead of that those people, who are retired for some time and are living on grossly inadequate pensions, lagging behind for years, are now called on to pay £12 a year more. Surely the Minister cannot stand over that. I know they are getting some paltry increase, but surely the Minister is giving a little bit with one hand and taking more away with the other hand. Surely he does not stand over taxing those people. Surely it would be possible to put a section into the Finance Bill that would relieve pensioners whose incomes or pensions did not exceed a certain sum.

A saving of £6 a year would not buy milk for the pensioner's cat or seed for his canary.

(Cavan): Yes, but the Minister is taking £12 from them here. I should like to have the Minister's view on that. I have been asked by a number of local government pensioners who have a grievance in this regard to direct the Minister's attention to their case. These people were looking forward to some substantial relief in this Budget in the payment of income tax on their inadequate pensions. I can see how they will react when they find that instead of getting a net relief they are being asked to pay a net increase. Even at this stage I would ask the Minister to think about this when he is framing the Finance Act and to make some provision for these people.

The liability here relates to a taxpayer's income, not to whether he is a pensioner or a worker. I cannot make a distinction.

These people must be in one of two categories—either apprentices or pensioners. I do not know of anyone else in the country at the present time who could hope to live on less than that amount, unless they were on the dole.

Question put.

We have delayed the Division because Deputies complained that the bells were not ringing and we have had an inquiry made.

The Committee divided: Tá: 67; Níl: 60.

Tá.

  • Aiken, Frank.
  • Allen, Lorcan.
  • Andrews, David.
  • Blaney, Neil.
  • Boylan, Terence.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Brennan, Paudge.
  • Brosnan, Seán.
  • Browne, Patrick.
  • Browne, Seán.
  • Burke, Patrick J.
  • Carter, Frank.
  • Carty, Michael.
  • Childers, Erskine.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard C.
  • Cowen, Bernard.
  • Cronin, Jerry.
  • Hillery, Patrick J.
  • Hilliard, Michael.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael F.
  • Lalor, Patrick J.
  • Lemass, Noel T.
  • Lenihan, Brian.
  • Loughnane, William A.
  • Lynch, Celia.
  • Lynch, John.
  • McEllistrim, Thomas.
  • Meaney, Thomas.
  • Molloy, Robert.
  • Crowley, Flor.
  • Cunningham, Liam.
  • Davern, Noel.
  • Delap, Patrick.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Fahey, Jackie.
  • Faulkner, Pádraig.
  • Fitzpatrick, Tom (Dublin Central).
  • Flanagan, Seán.
  • Foley, Desmond.
  • Forde, Paddy.
  • French, Seán.
  • Gallagher, James.
  • Geoghegan, John.
  • Gibbons, James.
  • Gogan, Richard P.
  • Haughey, Charles.
  • Healy, Augustine A.
  • Herbert, Michael.
  • Moore, Seán.
  • Noonan, Michael.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Malley, Des.
  • Power, Patrick.
  • Sheridan, Joseph.
  • Sherwin, Seán.
  • Smith, Michael.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Wyse, Pearse.

Níl.

  • Barry, Peter.
  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bruton, John.
  • Burke, Joan.
  • Burke, Liam.
  • Burton, Philip.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Cott, Gerard.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Crotty, Kieran.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Dockrell, Henry P.
  • Dockrell, Maurice E.
  • Donegan, Patrick S.
  • Donnellan, John.
  • Dunne, Thomas.
  • Enright, Thomas W.
  • Esmonde, Sir Anthony C.
  • Finn, Martin.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Fox, Billy.
  • Governey, Desmond.
  • Harte, Patrick D.
  • Hogan O'Higgins, Brigid.
  • Jones, Denis F.
  • Kavanagh, Liam.
  • Kenny, Henry.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McLaughlin, Joseph.
  • McMahon, Lawrence.
  • Malone, Patrick.
  • Murphy, Michael P.
  • O'Connell, John F.
  • O'Donnell, Tom.
  • O'Donovan, John.
  • O'Hara, Thomas.
  • O'Higgins, Thomas F.
  • O'Reilly, Paddy.
  • O'Sullivan, John L.
  • Pattison, Séamus.
  • Ryan, Richíe.
  • Spring, Dan.
  • Taylor, Francis.
  • Thornley, David.
  • Timmins, Godfrey.
  • Tully, James.
Tellers: — Tá: Deputies Andrews and Meaney; Níl: Deputies Cluskey and Dr. Byrne.
Question declared carried.