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Dáil Éireann debate -
Wednesday, 16 Jun 1971

Vol. 254 No. 10

Finance Bill 1971: Second Stage (Resumed).

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

It seems to me that regulations dealing with tax collection in this country have become far more stringent and far more unfair than heretofore. I have always argued that some sort of relief in relation to estate duty would be extremely beneficial not only to those who have property to pass on to their successors but also to the State as a whole. It seems that every other country in the world has ameliorated conditions in relation to estate duty except this country. The recent proposals in the British Budget helped to a considerable extent the inflow of capital into that country. I have always argued that anything we might do in relation to taxation should be directed towards the purpose of encouraging people to invest their money here whereas the direct opposite exists here. Therefore, it is with regret that I have to indict the Government whose sole policy is collecting money with no view to the future of the economic planning of our country.

With relation to estate duty the British Budget proposals have consisted of an encouragement to invest money there whereby anybody from overseas who invests money in certain British Government securities is relieved entirely of estate duty. We seem to copy the British in practically everything they do. I will go so far as to say that this Fianna Fáil Government and those who proceeded them are British Government stooges and nothing else. Whenever the British introduce anything that is to the advantage of their economy, and which we could suitably copy, we never do so. I should like to ask the Minister why did he not introduce a system where by people from overseas would be encouraged to invest money here free of estate duty. That is one of the simplest methods which has been adopted by every other country in the world except this country for the purpose of encouraging the inflow of capital. We have had the direct opposite.

The charge on those who are in arrears with estate duty is being raised from 4 per cent to 9 per cent. In a great many cases, due to a lack of understanding of financial affairs, and very often, I regret to say, because of muddling among legal advisers, people find themselves—and particularly farmers in rural Ireland—responsible for estate duty over a great number of years. The raising of the charge from 4 per cent to 9 per cent will have serious repercussions on the agricultural community and on the business community in rural in Ireland. The unfortunate thing is that if a man who is liable for estate duty consults a solicitor—and I have had personal knowledge of this happening—it is presumed that the solicitor is acting on his behalf. Even in circumstances over which he has no control whatsoever, if the legal adviser spends months and months on the case—and I know of a case which went for over two years—he is liable for the extra charge. Therefore, this is not a sensible imposition in our tax code.

It appears to me that we have all become tax collectors. Whether we are employers of agricultural labourers or industrial workers, our job is to collect money for the Government. The situation is bad enough as it is at the moment, but it will become considerably worse when the value added tax comes into effect next January. While I am on that subject I should like the Minister to tell the House why he proposes to introduce the value added tax next January. What is the reason for that when it is not being introduced in any of the other countries applying to join the EEC? I say that as I am sure the Minister's reply will be that we must introduce a value added tax because we are going into the EEC. If the other countries have not got to do it, why have we got to do it?

I will give the simple answer. It is another way of collecting revenue. It is another way of widening the revenue scope throughout the country. At the moment certain things are free from the taxation that is imposed on the public. This will widen the scope of general taxation and take in not only the entire farming community but everything to do with agriculture which is vital to our economy. It took Fianna Fáil 30 years to see that but at last it has dawned on them. I know the Parliamentary Secretary will agree that they were a bit slow on the uptake to start with, but they now accept that view, and what do they do? They take the first opportunity to impose extra taxation on the agricultural community and everything relating to agriculture. When the value added tax comes into existence next January, the cost of agricultural production will go up and, therefore, the only advantage we might enjoy vis-á-vis other countries with regard to our export facilities will be wiped out overnight.

Let me come now to the proposals in relation to industry. I am sick and tired of hearing Fianna Fáil Ministers, Parliamentary Secretaries and Deputies talking about the difficulties we face, and how the Minister for Foreign Affairs is fighting the battle overseas for and on behalf of the industrial community. The first blow he should strike on behalf of the industrial community—and it is quite open to him to do so whenever he wants to do it— is to relieve taxation on industry and on industrial concerns. Firms in Ireland have to pay 10 per cent more in taxation than British firms. Is this reasonable? We are endeavouring to expand our industrial production. We are a sick economy due to the total failure of the Government to organise our position in every sphere. We are a sick economy and we are asked to pay 10 per cent more than British industrialists and asked to pay in taxation. With the Anglo-Irish Free Trade Area Agreement we are unable to maintain the parity of our exports. What sort of a Government have we got?

A ramshackle Government.

What sort of economic thinking have they done, or have they done any economic thinking at all? It boils down to the fact that the Government have no policy, no economic policy, no contemporary policy and no understanding of the situation that the country faces at the moment overseas or at home. They have no arrangements to meet the situation. They are loading our industry with extra taxation. They depend for advice on their officials. The job of the officials is to balance the budget and to see that there is sufficient money to carry on. It is not their job to direct economic or political policy. That is where the total failure of this Government lies. This Finance Bill is just another disaster. It is just another piling of heavy taxation on every section of the community. It imposes on every section of the community the obligation of being tax gatherers for the Government. We would not mind being tax gatherers for the Government if we could see some return in social benefits for the poorer sections of the community but, so far as I can see, the policy of this Government is to ensure that the rich get richer and the poor get poorer. That appears to be the net result of their policy.

I want to come now to estate duties. Why cannot successive Ministers for Finance accept the simple policy of deducting the allowances from the overall estate? The British have accepted this principle. Of course, we take from the British everything that does not benefit our economy but never take from them what would be beneficial to us. I put this case here almost every year while speaking on the Finance Bill. I am no expert on financial matters, always having had the greatest difficulty in keeping my own finances right during my career. Let us take the case of a very independent person having no responsibility other than a responsibility to himself. Under present legislation I understand that in such a case there would be entitlement to relief of estate duty up to £5,000. There may have been some slight concession in that respect but, fundamentally, that is the principle. If a person has an estate worth £20,000, the full amount is payable. Let us take a case of a man in professional or business life whose total estate is worth, say, £25,000 or £30,000. That would include business and stock in the case of a businessman. On the death of such a person his widow and children would be entitled to relief which can extend to £20,000 but since the estate is worth £25,000, the widow must pay the full amount. There is no reason whatever why the deductions to which people are entitled should not be made from the overall estate. I have been pressing that point here for a number of years but I am sorry to say that I cannot get very much support for it from any Party.

There seems to be an idea that anything to do with estate duty concerns only the richer members of society but that is not so. A small farm today of 40 or 50 acres which carried sizeable stock would be worth considerably more than the amount for which there is estate duty relief. I cannot understand why the Minister cannot take a political decision on this matter. It is political decisions that we want here. Parliamentarians are elected to assess the situation. They are supposed to be in touch with the people, both rich and poor, and they are supposed to be able to decide what is most beneficial to the community as a whole.

We have the same sad story every year. The officials have a job to do. It is for them to see that the money is collected and that the financing of the State goes on. It is they who inform the Minister of the surest and the easiest way of getting money and he follows their suggestions hook, line and sinker.

Turnover tax was one of the greatest disasters ever imposed on this country. It has been gradually eliminating and eroding from Irish public life the family grocer and the small businessman in every line and substituting for them supermarkets and big combines. In spite of all that, the ex-Minister for Finance, Deputy Haughey, last year doubled the turnover tax. That was the beginning of the death of small businesses. Deputies must be aware of the powerless situation in which most small businesses in this country are now placed. I have made representations on this matter to successive Ministers for Industry and Commerce and to successive Ministers for Finance but all to no avail.

In the town that I live nearest to, a business closed the other day solely because of turnover tax. All the employment there was terminated. Without divulging any of the secrets of my constituents, I can say that practically every small businessman in the country is in trouble with the Revenue Commissioners because of turnover tax. The reason for this is that people who had no training whatever in the keeping of books or accounts, were required to keep up-to-date accounts and to give an account, as the tax gatherers for this repacious Government, of every penny they earned. They were not able to do that with the result that they fell into arrears. Those who managed to survive the original 2½ per cent find now that the 5 per cent is putting them out of business or, else, they fall into arrears and eventually the sheriff arrives so that they must sell their stock and close their business. That is when the supermarkets move in in a mopping up operation and take over the small businesses that have been the backbone of, shall we say, middleclass Ireland and the rural population. These are the changing circumstances that exist here.

Very soon we shall have supermarkets here dealing with every sphere of business. The ordinary way of commercial life is disappearing. That is not due to the Revenue Commissioners who are only carrying out something against which they advised specifically. They advised against it when the late Dr. Ryan was Minister for Finance but they were overruled by the Department of Finance who were then advising the Minister for Finance that this was an easy tax and that once imposed all that had to be done was to increase it a little each year. Turnover tax has ruined this country. With the changeover to value added tax, there will be no relief for taxpayers because this new tax will be a combination of the wholesale and turnover taxes to which will be added a further 0.26 per cent to make sure that the full revenue is taken in. There is no excuse whatever for this because at present the turnover and wholesale taxes cover a wider sphere of taxation.

This Finance Bill is all cod. Sufficient money is not being raised in it to meet the revenue and the Government, in the final analysis, will be saved by the value added tax. This tax will save them from having a supplementary Budget in the autumn and the possibility of facing a general election as a result. It will have this effect by increasing the scope of taxation and by increasing the number of tax gatherers in the country. In this way Fianna Fáil hope to escape all the disaster they have caused, politically, economically and otherwise. This Government are disastrous and we have a disastrous Minister for Finance. I say this because he is unable to do his own political thinking. The only Minister for Finance who can be of any use to a country is a Minister who is able to do his own thinking and not leave it to his officials rapaciously to go out and collect the last farthing from the Irish taxpayers. That can go on for a certain length of time but the stage will be reached when the country will be faced with national bankruptcy. That time is not far away now. Everything is wrong here. The balance of payments has gone wrong and, as I have said, small businesses are closing.

Our farms are being sold to foreigners. These are the fruits of a disastrous Fianna Fáil policy culminating in the latest budgetary proposals and this Finance Bill. I only hope the country can survive until it gets into the EEC. That is our only hope of survival and the Government know that. They are banking and hoping they will survive until such time as Ireland can become a member of the EEC. That is the gamble they are taking that it will save us from economic and financial disaster.

I want to deal with the sections of the Bill that have special reference to estate duty. I have a proposal to make. It is not novel and it is not new but it is a proposal which has been turned down every time it has been made. That proposal is that estate duty or death duties as we know them, should be abolished. It may be argued that that would be to pander to the better off people. It is my view that the smallest possible minority might be a little better off if estate duty were abolished but I am certain that the economy would gain; it would mean a welcome influx of capital into the country. There are thousands of people in Europe and America who would be only too happy to invest their money in this country if estate duty were abolished. The number of countries in Europe that have not some form of estate duty is very small. One of those that comes to mind has a very sound economy and has attracted money from all over the world. If estate duty were abolished here that money would be channelled towards this country.

Estate duty is one of the harshest taxes imaginable. Take an ordinary farm. The owner dies and all his assets including farm, stock, machinery, implements, furniture, bank account, post office account and so on are assessed and the Government then collect the amount due in estate duty. It is at this point that hardship arises. In a case where a farmer dies and there is no money in the bank or no loose assets such as stocks and shares or money, the legatee has to go to the local bank for credit to pay the estate duty. Having regard to the present value of land the Revenue Commissioners are increasing the value they place on land, which means that the person inheriting the estate is faced with a crippling debt because of the estate duty demanded, a debt which he may never succeed in clearing. I have seen such cases in my capacity as a Deputy and as a person who in the way of business has to complete forms for the Revenue Commissioners. Yet estate duty is continued.

At the present time a change has been made in regard to voluntary transfer. A father may make a pre-marriage settlement on his son or daughter. The stamp duty involved is 50 new pence. When the marriage is solemnised the son or daughter is then registered as full owner of the property. This is something that has obtained down through the years and is a good thing. It is an incentive to the young man or woman living on a farm to get married. It means that that person is able to settle down in life without incurring large liability for stamp duty such as would be involved in the case of voluntary transfer without a marriage. The amount of stamp duty on a voluntary transfer is sizeable and imposes a considerable strain on the economy of farmers. We now have a change whereby in the case of a farmer who dies within a five year period the estate will be liable for estate duty. This is a mistake because it will mean that for that five years there is a danger that the son or daughter to whom the farm was assigned on marriage will have to pay the equivalent of stamp duty on a voluntary transfer. This provision is inadvisable. I would recommend to the Minister that this should not be allowed to happen. The extra revenue involved will not be sufficient to outweigh the disadvantages. There are advantages arising out of the present system and it should not be altered.

Extra taxes will be imposed on people who, in many cases, already carry heavy overdrafts. It is a strain on them when they must pay this extra revenue. The amount of money being secured by way of estate duty is not sufficient to warrant continuation of this measure. The strain imposed on farmers and businessmen by the imposition of this tax causes much hardship and worry. It also causes considerable worry and distress to people who are not in good health because they are aware of the financial strain that will be imposed on their families after their death.

The imposition of estate duty is not desirable. If we abolished this tax it would lead to an influx of wealth into this country. If the Government introduced a Bill containing clauses confirming that estate duties would not be reimposed for a specified period many people in Europe and America would be happy to invest their money in this country. Although there was a reduction in the rate of death duty in 1961, if the Government specified a definite period in which estate duty would not be charged it would encourage investment.

There is a considerable amount of discussion at present regarding the introduction of VAT. I should like to refer to the effects this tax will have on the sale of cattle. I come from a rural constituency, Laois/Offaly, which has a record second to none in regard to the livestock produced in the area. The vast majority of the farmers are efficient and hardworking but many of them find that the prices they are obtaining for their products are the same as obtained ten or 15 years ago. They have had plenty of reason to be dissatisfied regarding the prices they have obtained but they have managed to struggle on. Now it appears that VAT will be introduced in this country.

When the Marts Bill was steamrolled through the House by the former Minister for Agriculture and Fisheries many people considered that the reason behind it was that once the marts became registered the Government would take control of them and taxes would be imposed on the sale of cattle. During the last general election campaign I spoke at church gates throughout the country and I warned that if Fianna Fáil were returned to power they would endeavour to push through a Bill whereby taxes would be imposed on the sale of cattle. My warning came true because it appears that the Government are intent on imposing this tax. At the moment this tax is supposed to be on the sale of cattle but I am certain that it will be extended to include the sale of pigs and sheep.

If this tax is imposed every farmer will see his income whittled away. All farmers should rebel against this tax. We should not forget that livestock exports have kept the economy on a sound basis for the past ten years, that without these exports our economy would have collapsed.

The Deputy is now conducting an economic debate.

I believe, Sir, I am in order in what I have said. The effects of VAT are open to discussion on this Bill because we are dealing with the financial situation. It is possible to point out that this Finance Bill might have been different if the Government had not some alternative device in mind in order to introduce further taxation in the future. For that reason the tax I am speaking about is relevant. The imposition of this value added tax will be one of the greatest mistakes the Government could make. Cattle exports have been the principal item in keeping our economy buoyant. There is at the moment greater industrial exports, but the amount of money coming in from cattle exports is a most important factor in our economy. A value added tax will hit cattle exports to such an extent that our competitiveness in Europe——

The Deputy is moving away again from the Finance Bill.

I would point out that this value added tax which will be imposed——

The Chair has no knowledge of that because it is not in the Bill.

With respect, it is important that this matter be dealt with.

There may be a great many matters that should be dealt with but the Chair is confined to what is in the Bill.

If the Government had not had in mind the imposition of this tax I believe the provisions of this Bill would have been different. This tax will be imposed, or so we are led to believe. If the intention had been not to impose it there would have been different provisions in this measure and, for that reason, I believe I am in order.

The Chair cannot speculate on what tax may be imposed in the future. The Chair can deal only with what is in front of it at the moment.

I regard such a tax as unsuitable and inadvisable. I believe the effects of such a tax would be disastrous. The Government would be well advised to think again about the imposition of this tax. The benefits would not outweigh the disadvantages.

We always hear complaints when we have to find money and this debate has proved no exception. It is an easy exercise to spend money. It is a very different matter when it comes to finding money. This Bill rests mainly on the Minister's Budget Statement. The Minister outlined the various amounts allocated to the different Departments. He outlined the reliefs afforded to different sections under the social welfare code. He was then faced with the problem of finding the money. In order to find the money he had to levy taxation.

The Minister levied the taxes where he thought those taxes would cause least hardship. We all accept that Government expenditure not merely here but in other countries also is increasing very quickly and the task of finding the money necessary to support this expenditure inevitably falls on the Minister for Finance. This year is no exception but the Minister also outlined ways and means of lightening the load of taxation by better and more long-term planning and more selective tax methods. The Minister was faced with the prospect of finding a net £9.25 million in order to balance the account. I believe he had no option but to find this money through taxation.

Taxation is as old as the hills; it is a biblical word and in every country whenever the word "taxation" is mentioned it arouses resentment among the population. The Minister was faced with the problem of rising Government expenditure and was keenly aware of the ability of the taxpayer to pay and I think he used discretion in levying those taxes, unpleasant as his task was and is. I shall quote briefly from Volume 253, column 692 of the Official Report, under the heading "Control of Expenditure". I heard a number of speakers from whose remarks one would suppose that the Minister was taking a fiendish, sadistic satisfaction in taxing people out of existence: I believe this is not so and that the Budget Statement clearly indicates this. On the question of control of expenditure he says:

It is essential, therefore, to slow down the rate of growth of Government current expenditure to something more closely approaching the automatic growth in revenues at existing rates of taxation. The economy could not continue to devote to public expenditure the rising proportion of gross national product which became commonplace in the past decade. Concerted steps are, therefore, being taken to improve the arrangements for planning, approving and controlling the budget. New procedures are being instituted to ensure that expenditure is more closely aligned to the resources likely to be available. At an early stage in the preceding year the level of aggregate expenditure for the coming year will be determined by the Government in the light of such factors as the yield of tax revenues at unchanged rates, the desirable level of domestic and foreign borrowing, and the current and prospective economic trends. This aggregate will be divided into block allocations for each service and the Ministers will then be free, within broad limits, to decide the detailed subdivision of their allocations. This should strengthen the resolve of the Departments to discover ways and means of increasing the efficacy of each £1 spent and to optimise the benefits to be derived from their limited allocations. The fact that block allocations will be determined well in advance should assist Departments in making the policy and administrative changes required to keep expenditure within the limits assigned to them.

The Minister then went on to explain ways and means of abating this rising trend and he mentioned programme budgeting and, pending its introduction, as an interim measure, multi-annual budgeting. My point is that side by side with rising taxation the Minister is actively searching for a better taxation system so as to make sure that in terms of production a every £1 spent or every £1 of tax levied.

I believe this is realistic thinking and it is no use for any Deputy to take a paragraph from the Budget Statement or the Finance Bill and quote it out of context in order, shall we say, to peddle discontent. Nobody likes taxation but the fact is that it is the only system we know at present whereby any Government can carry on the services of the State. I think the Minister's approach to this matter is correct, to seek ways and means of cutting down Government expenditure and at the same time try to promote better methods of working the governmental system.

They are not cutting down expenditure; it is going up all the time.

It is going up all the time, that is freely admitted, but has Deputy O'Donovan any remedy for this? I have not met the man who has.

A little economy.

When one speaks about economy one has to be careful not to worsen the patient's condition by administering the wrong medicine. I am dealing here with taxation, how it threatens the economy, how it threatens to kill incentive and, if allowed to continue unchecked, how it may threaten our export drive and I am endeavouring to suggest ways to deal with this evil system of rising governmental costs. We want job security here and we must bear this in mind when talking about economies. We do not want to see drastic economies imposed which would result in increasing unemployment or the cutting back of reliefs to social welfare recipients.

If the wishes of all Deputies were adhered to the Minister would not be looking for £9.25 million. He would be looking for £100 million. We should try to arrive at a better balance and, as the countryman would say, "Cut your cloth according to your measure". There is no point in calling for increased expenditure on the one hand unless one can offer a source of revenue to finance it on the other. I do not know of any Deputy who can do this, not even Deputy O'Donovan who deals with it almost every day of the week in class, out of class, in this House and outside it.

Indeed, I have said it in this House frequently.

It is not an easy matter to combat inflation and rising taxation because, unfortunately, one begets the other. Our job should be to look around for ways and means of cutting back governmental expenditure without being too drastic about it. This problem has puzzled various governments not merely in this country but abroad as well. The Labour Government in Britain tried various devices to combat inflation; some worked and others did not work. I would commend to the House the Minister's aim of long term budgeting.

When a Deputy calls for a new service or the extension of an old one the first thing that should be examined is where to find the money to finance it and the second is which section of the community is best fitted to bear the burdens of the taxation necessary to finance a scheme. I do not believe anyone objects to paying taxation within reason but when taxation becomes either a bar to individual effort or a disincentive to industry it has reached the point where the Minister's recommendations should be seriously reconsidered.

The Minister is keenly aware of the burdens income tax, surtax, death duties and so on place on the community and here, again, I must refer briefly to the Minister's Budget speech where he dealt with the vexed question of taxation. He referred to the reliefs that had been afforded in the Budget to certain people in the social welfare group; he referred to increased allocations to various Departments in order that they could provide better services and increased prices to producers in some cases. The Minister had to find a sum of money in order that this could be done.

In relation to the question of taxes I should like to quote very briefly from the Minister's Budget Statement in Volume 253, column 710 of the Official Report. The heading of the paragraph is "Tax increases". I quote:

I must now turn from the pleasant task of making budgetary concessions to the more difficult one of finding the money to pay for them. The reliefs I have announced will cost £9.37 million, and when account is taken of the small opening surplus, they leave me with the problem of raising a total of £9.25 million. While, for the reasons I mentioned earlier, I am reluctant to increase the rates of indirect taxation, circumstances outside my immediate control leave me no alternative to increasing the rates of duty on beer and spirits.

If we take this short paragraph in conjunction with the desire, for example, to help the unmarried mother, or to relieve the pressure on the old age pensioner, or to deal with the case of the deserted wife, it is not too much to call on the pint drinker to pay a penny extra on the pint of beer or on the spirit drinker to pay twopence extra on a glass of whiskey. If we think of the amount of money we spend yearly on these commodities we can see that the Minister was not doing anything drastic when he levied those taxes. Placed in the same position I would do the same thing and I would not apologise to anybody for doing it. I think we spent nearly £32 million on drink in the last year. The Minister was trying here to temper the wind to the shorn lamb. He wanted to compensate some of those people who were under pressure in the social welfare range and, at the same time, he did not want to place too heavy a burden on the taxpayers. The area he selected in which to place his tax was well selected.

At the same time that the Minister was thinking in terms of relief for some people in the community and putting a charge on others the brewers were seeking an increase of under a penny a pint and the distillers were looking for something like a new penny or a 1½ new pence on a glass of whiskey. The Minister acted wisely. He compromised. He found out that the brewers had got sanction from the Minister for Industry and Commerce for an increase of one half penny on the pint of beer and he compromised by making it a penny and taking a share of it in taxation, which I think also includes turnover tax. We all know that brewing is of considerable benefit to us. Unfortunately down the years beer and spirits may possibly have had to yield an undue proportion of revenue but the main point is, and I think this was said by the former Minister for Finance, that the market is still buoyant and looks like being so. Therefore, the Minister acted fairly wisely in this regard.

The Minister introduced the Second Stage of the Finance Bill, 1971 on the 15th June and made a number of comments in relation to various taxes covered by this measure. I have listened to successive Ministers for Finance—and we have had a variety of them down through the years —making similar statements. Perhaps the phrases used or the different taxes proposed are not identical but it has been the sad experience of our people down through the years to have had substantial increases in taxation every year. For that one often hears criticisms of the Minister's advisers. One hears it said that all this is the result of Civil Service thinking, of certain alleged financial wizards or geniuses backstage who are planning to extract money from the taxpayers. The blame is laid at their doorstep. I am broadminded enough to think that these people who cannot answer for themselves in this House are not to blame. We have a set of officials who are second to none in their particular spheres. It is only fair to say that. From my dealings with them—and I have dealt with them not only in the Department of Finance but in other Departments also—I have found that if you are fair and honest in your approach to them, they are equally fair in return. I can say that having dealt with tax people at local level and here in Dublin as well.

Deputy Carter said, and perhaps other Deputies said also, that it is not very pleasant to have to pay tax. I am sure that down through the years their advisers have suggested various courses to successive Ministers for Finance that the Minister for the time being could follow and that, in many instances, the advice tendered, like the advice tendered by the Central Bank from time to time, was completely ignored or, if it was not completely ignored, very little attention was paid to it, despite the fact that those people are experts in their own fields. I did not stand up to defend civil servants be they in the Department of Finance or anywhere else, but it is only right, in passing, to give them their due credit.

Over a long period of years there have been many changes in this country. I was a Member of this House for a great part of that period during which those changes took place. In the early days after the foundation of the State, we had Ministers who, perhaps, had not got the advantage of having the experience that men who followed them later on had, but I am sure that, taking them by and large, they did their best according to their lights. Many of those Ministers had precious little experience of financial matters prior to taking office as Minister for Finance. It is true to say that some of them—and this goes for the present Minister—had no special qualifications, so to speak, for that line of work and consequently they had to depend in large measure on the advice of their own advisers, and they also had to study the economies of other countries.

I do not wish to be very critical of the present Minister. I know him personally and I am sure he is a man of integrity. That is my opinion of him, but it is true to say that he was not the first choice of the Taoiseach. When this Government was formed we had a different Minister for Finance but, due to circumstances with which I do not propose to deal this evening, we now have a Minister for Finance who was the second choice of the Taoiseach. He has shown very little imagination in the Budget he produced and in the statement he made to the House on 15th June introducing this Finance Bill. At the outset he referred to income tax. This tax is one of the most unpopular taxes judging from the amount of criticism you hear of it from time to time. It is more criticised than any other tax.

I have met scores of people, particularly young people, who are engaged in various activities in the city and in the rural areas who feel that they are being very unfairly and harshly treated. They are young girls in certain employment which shall be nameless who are working for as little as £4 or £5 a week. In some cases living accommodation and food are supplied. Others may be working for £8, £9 or £10 with no accommodation or meals supplied. It is quite impossible for these people to meet the income tax demands made on them and have a reasonable standard of living. Consequently many of them are revolting and taking to the streets, going out on strike with the consequent ill-effects and bitterness. Young girls in this city who came up from the country have told me that they have had to cut down on their meals to try to leave a few shillings aside to go to a dance at weekends. I say in all seriousness that in his Budget the Minister showed very little consideration for such people and was in no way generous towards them. He has shown very little consideration for their problems.

From reading the Budget Statement one would get the impression that the Minister does not realise the difficulties under which they work and live. There may be many people, too, in certain types of employment where they might have a mean type of boss who is reluctant to grant increases in wages except when compelled to do so under threat of strike action. We are living in a situation in which inflation and its ill-effects are making it more difficult for these people to live. There have been increases in transport charges. Coupled with those increases there has been the inconvenience in recent times of the interruption of public transport.

This probably results in some cases in a few persons getting together and engaging a taxi to take them to and from their place of employment. Of course, this would be yet a further imposition on them.

Cigarettes and beer have also increased in price and while these commodities may be described as luxuries many people would be of the opinion that they are entitled to them, at least in moderation. Certainly, I would not be the one to advocate a system whereby they would be denied these little pleasures.

It is a waste of time pleading with the Minister or with any Minister of a Fianna Fáil Government to remedy the difficulties under which many people must live. A Minister for Finance should have enough imagination and foresight to realise that the managing of a country's finances is not merely the adding on each year of additional taxes in order to make available to social welfare recipients the benefits to which they are entitled. Instead of imposing extra taxation these people should be looked after by way of increasing the national output and of increasing the earning capacity of the nation as a whole. That is a principle that Fianna Fáil have failed to take cognisance of down through the years. We have the iniquitous turnover tax which increased the price of every commodity that one might purchase including, of course, the necessities of life. No tax ever imposed could have caused so much confusion or so much ill-will in the country as did this turnover tax. It has been responsible, too, for many industrial strikes because, as a result of it, there were demands for increases in wages and where these were not met employees of concerns like CIE, for instance, and the banks went on strike. They took this action because they found that they were not able to meet the extra demands made on them. This caused a merry-go-round that resulted in continuing inflation on all sides. The Minister for Finance cannot say the Government were not warned from this side of the House that that would be the result of their methods.

Deputy Carter, speaking a few minutes ago, pointed out that it was unpleasant to have to pay increased taxation. Of course that is true. The Deputy said that nobody had suggested ways or means by which we could raise the necessary revenue without increasing taxation. Of course, there are ways and means of doing this other than by increased taxation. It could be done by increasing the productive capacity of the nation. Deputy O'Higgins dealt at length with that very subject while speaking here yesterday evening. This was a sound and logical approach to the problems of this country. Deputy O'Higgins stressed that the time has now been reached when we must do something to rectify the situation. We must give to our people the necessary weapons with which to increase production.

The Taoiseach has assured us that by 1973 we will be in a European market where we shall benefit considerably from the type of goods that we can produce here, particularly products such as beef, butter, pig meat and the many other products that we can produce and can produce more cheaply than can any other country. I do not blame Fianna Fáil, the Taoiseach or the Minister for Finance for all of the many difficulties that this country has faced down through the years. There were many problems that were not of their making but there were many others, too, for which they were responsible.

We all know that down through the years we as big exporters of agricultural produce to the British market were faced with the situation that, having produced cattle, pigs, pigmeal, becon and the many other commodities that we can produce efficiently, we had to sell them on a market that one could not always be sure of because Britain for as long as I can remember and before my time pursued a cheap food policy. Britain imports meat, lamb, mutton and butter from any part of the world where she can buy it cheaply. Businessmen from Australia, New Zealand, Denmark and other countries dumped stuff from time to time at cut prices on the British market. Because of that dumping our products, which were in the main far superior to anything that Britain could buy in any market in the world, because of their freshness and general high quality, had to be sold at give-away prices.

I engaged in the export of certain products to that market. Communications in those days were not what they are today. There were no telephones in rural areas. One had to depend on telegrams. Very often my late father and thousands like him, having bought products, had to sell them at far less than they had paid the producer. Admittedly, it also often happened that due to a sudden scarcity on the British market traders benefited from rapid increases in price. It cut both ways. The uncertainty of the marketing situation in England created many problems for this country, particularly for the farming and business community, created economic difficulties and even caused unemployment in factories and in other directions.

Taking the Taoiseach and the Minister for Foreign Affairs at their word and accepting their assurances that we will go into Europe in 1973, may I say that should I be alive at that time I will be one of the happiest men in the country? But, as Deputy O'Higgins asked last night, what are we doing through our budgetary policy to prepare for our entry to the great market which has great potential particularly from our point of view as an agricultural country? What are we doing and what have we being doing for the past few years? Have we not had situations in which farmers, the backbone of the country, have had to take to the roads and to the streets? Have we not had them parading in Merrion Street only to be slighted and insulted by the then Minister for Agriculture and Fisheries? I regard the farmers as a reasonable body of men. I live among them. I engaged in the same activities and still do to a lesser extent. Their problems should have been discussed and an effort made to find solutions to them. It was not easy to find solutions to many of the problems with which farmers were confronted. The Department of Education today are experiencing difficulties in solving their problems. Many problems could be solved by consultation and by common sense. If there had been consultation and if the problems had been solved our earnings today from exports of agricultural produce would be substantially greater than they are. In reply to the point Deputy Carter was making as to how we can get more revenue to increase social benefits unless we tax the people, I would say if our economy were sufficiently sound and if our principal industry were on a sound footing it is there that the extra money can be obtained without creating further financial problems for the Exchequer and for the Minister for Finance. We have not been driving along that road. We have been neglecting the main industry and the people who really count.

In the part of the country that I come from—Mayo—the Parliamentary Secretary will be conversant with the situation—there is a serious fall in population. I read in last week's issue of the Western People a report on the activities of Mayo County Committee of Agriculture and their schemes and the reports of the agricultural officers in County Mayo. I feel that similar comment could be made about other places such as Leitrim, part of Galway, the Connemara Gaeltacht area particularly, parts of Sligo, Kerry and Donegal and other regions. This was not a politician speaking. It was the agricultural advisory service of County Mayo. They described the situation in these areas as a doomsday situation. Anybody who cares to read that report will find last week's issue of the Western People in the Oireachtas Library. It makes sad reading, more especially to a person like me who lives outside Foxford in the heart of an area which has been very badly hit by the kind of conditions described in that article. The Budget which the Minister has introduced and the statement he made to Dáil Eireann on 15th June hardly made mention of these problems and difficulties and made very little provision to try to correct that situation. It is regrettable that I should have to say these things in the House. It is regrettable that that should be the position. There are fewer people in the country and many homes have been closed. In my native village there were 26 homesteads at one time but this number has been reduced to 11 or 12. There are only four families living in the townland, the remainder of the population are bachelors. The people who have left have gone to England and America where many of them have done very well.

What has happened in Ireland is that there are fewer people left to pay taxes. If the Government had been prepared to provide a way of life to help the families in the remote areas, if they had provided seasonal employment or had given them unemployment benefit, I am sure many of the people would have stayed. I say that with a knowledge of the situation, having done business with the people, having lived among them and known their way of life. Many of them would find it difficult to come back and set up homes in Ireland and there is nothing in the Minister's statement that would encourage them to return.

It would be helpful to the nation if these people were living in this country. They have done well in their countries of adoption. Before I came to Dublin this week I met some people who had returned from the United States where they have succeeded in obtaining lucrative employment. They inquired how things were going in this country but it was not difficult for them to see what was happening in the west of Ireland. One of the people to whom I was speaking had witnessed the sad spectacle of the closing of his home.

We are getting away from the Finance Bill. The Bill before the House concerns taxes and these are the only matters we can discuss.

Before you came into the House, Sir, I referred to the speech made on 15th June by the Minister for Finance. In the course of that speech the Minister did not think it worthwhile to refer to the problems facing the people in the west. Far from making financial provision for these people, a confused statement was issued a short time ago telling the people that the dole was being withdrawn——

This is not a matter to be debated on the Finance Bill.

It is strange that the Minister, when moving the Second Stage of the Finance Bill, did not think it worthwhile to make reference to the matter. However, in deference to the wishes of the Chair, I will not labour the point. My speeches in regard to this matter are on the records of the House. As Deputy O'Higgins pointed out yesterday, the Government should take steps even at this late hour to prepare our people for entry into the EEC. The Minister for Finance is a popular man in this House and I am sure he will get along quite well with the Ministers and officials of the European countries with whom he will be dealing. Whether he is experienced enough to deal with them is another matter; my opinion is that he is doing his best, and doing it rather successfully. The opportunities are there but we must grasp them. We have good advisers and officials and I am sure the Minister for Foreign Affairs is a competent and trustworthy man. However, we have a lot of work to do and we are not making the necessary preparations——

We cannot discuss these matters on the Finance Bill. This is not a general debate, it is a debate on taxation.

Deputy O'Higgins referred briefly to these matters yesterday and I am doing the same. The Government should ensure that as much money as possible is provided, even if it means a supplementary Budget or if it entails borrowing, to gear our people to cope with the competition we will face in the Common Market. When we enter the EEC we should have a sound economy.

I apologise if I have departed somewhat from a discussion of the Finance Bill but I am sure the Chair appreciates that there is a temptation when dealing with financial matters to refer to some matters that may not be entirely relevant.

I should like to test this Bill against the needs of the present situation, the kind of structure of taxation we have, and whether this Bill provides us with the structure appropriate to our domestic economy and to the situation in which we find ourselves in regard to EEC membership. This is relevant when we come to measure this Bill and to consider its adequacy.

First, I shall refer to our domestic economy to the extent our taxation system is related to the needs of our economy. There have been references in this debate to the condition of inflation in which we find ourselves. The references are well merited. Although the subject of inflation tends to be spoken of in season and out of season, there could not be a more appropriate time to dwell on it than at present. Recently we saw our country identified as topping the list so far as inflation in European countries is concerned. We have talked about it so often and at such length, that although the situation has reached a position of real gravity it has become such a matter of routine that it does not attract the serious attention it merits. It has attracted comment and speeches on all sides. Members of the Government have adverted to the inflationary problems we now face but I do not detect in the approach of the Government, either in this House or outside, or in the Budget, any real appreciation of the seriousness of the situation.

Of course, a measure of inflation in the sense of some increase in prices, some tendency of incomes to out-run productivity, is a feature of all modern States. There are economists who claim that some small degree of inflation is helpful rather than otherwise, although any inflation can introduce inequities between different groups. However, I do not think anyone would attempt to defend the rate of inflation we have experienced in the last few years. It runs not only beyond anything in our past experience but beyond anything experienced by other European countries. There is nothing in our basic economic situation that permits us the luxury of this kind of inflation without having to face the penalties that follow from permitting our economy to be inflated in this way. There may be countries whose affairs were so well run for a period of years that a temporary outburst of inflation, especially inflation of a clearly temporary character, can be tolerated and accepted without arousing undue concern. But ours is not a strong economy. Ours cannot tolerate that. It has not been run during the last five or six years in a manner that would leave it leeway to face the kind of problems this type of inflation brings in its train.

Our whole relationship with other countries in terms of trade is not such as to permit us the luxury of allowing our costs to get out of line with those of other countries. There is no evidence that in the past the levels of costs of production here, particularly of industrial goods, have been so favourable vis-à-vis other countries that we can afford to allow them to rise more rapidly than other countries and tolerate a situation in which these costs catch up and eventually pass out those of other countries. In fact, our situation so far as cost levels are concerned has never been a very favourable one. Because of the lower level of productivity here, for a variety of complex reasons, and because of the fact that our incomes are expressed in terms of a monetary unit which is the same as that of a great and powerful industrial neighbour, we always face this problem with a certain tension here.

Had we a currency expressed in different terms altogether, a currency which did not appear to the public to be the same as or identical to the currency of this neighbouring country, our problem might be less acute. If we had an Irish púnt whose relationship in sterling was 4.82 púnt to the £, or something like that, the average worker, the average farmer and even, perhaps, the average industrialist would be less clear on comparisons between ourselves and the neighbouring country and the unremitting pressure for incomes here to approximate to and, in some cases, even exceed those of Britain and Northern Ireland would be much less strong had we a different currency. The fact is we have inherited, for historical reasons, a currency which we have maintained, for good reasons, I think, at parity with the £. I am not suggesting any departure from that parity would be desirable, but it might have been better if, at the very beginning, we had fixed a currency unit of our own different in character and related to the £, with a starting point the same as unity but expressed in some other relationship, so that it would not be immediately apparent to everybody, when making comparisons in the case of incomes and prices, for example, with prices and incomes in the neighbouring country, as to whether there was or was not a direct comparability.

There is a problem here, the problem that so many of our people look outside our shores. Indeed, they do not have to look outside our shores; they merely have to look across the Border to Newry and Derry to see the income and price levels there. Because of our failure to solve our economic problems in the first half century of economic independence, and there has been such a failure, so many of our people have emigrated, so many have come back to visit us, so many of their relations have gone to visit them that there are no two countries between which there is such close contact and such familiarity with the social and economic conditions of each other's country. At least, so far as Irish people are concerned, there is a great familiarity with conditions in Britain and the combination of an identical currency unit at parity in the two countries, plus the enormous volume of social intercourse between the two countries, has created the position in which Irish ambitions and Irish aims in terms of incomes and Irish expectations in terms of prices are measured in terms of the position in Britain. That has created a very serious problem for us, a problem to which we have not, perhaps, given enough thought because the expectations created have aroused pressures to raise Irish incomes to British levels.

These pressures, up to about 1960, were kept fairly in check. A disparity between incomes existed. It varied a good deal. There were cases where incomes were on the same level. In other cases there were small differences. In others there were large differences. But, since 1960, the growing expectation of prosperity here and the growing unrest and dissatisfaction with the failures of past economic policies, together with easier communication through the medium of Press, radio and television between the two countries, all these have made our people restless, restless so far as incomes are concerned and restless so far as differences in prices are concerned between ourselves and Britain. The pressure has grown during this period, on the one hand, to raise such Irish incomes as were lower than those in Britain, and that was the normal pattern, towards the British level and, on the other hand, to resent the disparity in prices.

It is not easy to explain to an ordinary Irish worker who has not had the benefit of a course in economics why he should have to pay so much more for a lb. of Irish butter than his counterpart does in Britain for the same butter. This is the kind of question which bothers people. I had experience a few months ago of being invited to speak on productivity, a rather formidable subject with a dull-sounding name, in a factory in Dublin. The workers consisted almost exclusively of girls in the age group of 17 to 20, the majority of whom had no education beyond primary school. A few had intermediate certificate. A film on productivity was shown and then they were invited to ask questions of the guest lecturer, who happened to be me. What impressed me was the extraordinary range of interest in economic matters expressed by the girls concerned, the acuteness and relevance of their questions, and the extreme difficulty of giving them answers that would satisfy them. When they asked questions as to why, for instance, we had to pay more for our butter it was not easy to give a rational explanation in terms acceptable to an Irish working girl living in the city of Dublin. One might, perhaps, explain it more easily in rural Ireland in terms of the need to give assistance to our farmers, an argument which did not go down well with my audience. Indeed, during a break in the session I was accused by a number of them of being some kind of secret agent for the Irish farmers and they regarded me with great suspicion for having suggested there was any reason to assist the farmers. There are divergent views between the city and the country.

The point is that their expectations in relation to prices were related to conditions in Britain. None had any doubts as to what the price of Irish butter was in Britain. This was a familiar fact to them. If you asked them the price of butter in France or Germany they would not have known, not alone because of the greater distance and lesser communication but also because of differences in currency parities. I myself, if asked quickly, how does the price of petrol or butter in France compare with the price here, even if I knew the price, would take a little time to convert francs per kilo into pence per lb. It is only when one does that calculation that one can see with any assurance the nature of the price difference. The same measurements, the same currencies, great social intercourse and easy communication through the medium of Press, radio and television have meant that our people think in these terms.

The pressures created in the past ten years here by the growing and increasingly strong expectation of our people that they should have the same incomes as in Britain and pay the same prices when, in fact, the average productivity per head here is much lower lie behind the problems we face today. I do not suggest that in identifying the problem I am resolving it. There is no easy solution to it but the first step in coping with it is to recognise it. We have failed to recognise it in these terms; we have failed to recognise now powerful are the forces at work. We have failed to recognise how often when Irish workers at any level, clerical, manual, administrative or higher, seek increases in salaries, they are motivated by and have regard to levels elsewhere. The only cases where this is not so is where they discover to their embarrassment that their salaries or wages are higher than elsewhere. They then try to devise some other method of justifying an increase. Over the whole range of occupations where there is a difference in salary or wage levels the expectation or desire to equate with levels in Britain is a powerful force at work.

In our economy the average level of productivity per head is not as high as in Britain. I should not like to put a precise figure on it but it must be somewhere in the region of two-thirds to three-quarters. It is lower for several reasons. One is because of the different mix of our economy, the fact that in our economy agriculture looms so large and that for reasons not entirely in our own control the average level of incomes in agriculture is so low. If you have a sector employing 27 per cent of the population whose incomes are little more than half what they are in that sector in Britain and if in Britain that sector comprises three per cent of the population and incomes in that sector are twice as high as they are here, then even if everybody else in the country earned, produced and was paid exactly the same as his opposite number in Britain, because of those disparities in the mix of the two economies and the income levels in agriculture, these factors alone would account for a very large part—probably something approaching half—of the difference between the average level of productivity and the average level of real income and purchasing power in the two countries.

There are other factors. We do not have the heavy industries here which are predominantly male employers and industries in which male wages are relatively high. Fifteen years ago, and again in the past week or two, I have made comparisons between the levels of wages and incomes in this part of the country and in Northern Ireland and I have been struck by the fact that so little has changed in the relative patterns of these two areas in that 15 years, between 1956 and 1971. I found that in quite a number of industries earnings here are identical with or very close to—either slightly above or slightly below—those in Northern Ireland but that in the heavy industries with which Northern Ireland is better equipped there is a significant disparity. The adult male wage in the engineering industries in Northern Ireland is higher than it is in those industries here. In agriculture, of course, there is a big difference also and there are differences in the services sector and in public administration. But the actual industrial earnings outside the heavy industries sector are very much the same in the two parts of Ireland. Yet, because of differences in income levels in the others sectors and more particularly because of the mix of the two economies, the different mix of agricultural industry, of heavy and light industry and services, you get quite a significant disparity in average productivity and average income between them.

We are in this position and it will not easily be changed. It will certainly be significantly improved and a significant part of the gap bridged by EEC membership when our agricultural sector ceases to suffer from the disability of having its incomes kept down to not much more than half the level of those of farmers in an equivalent position in Britain and the EEC countries. This will obviously make a difference but it will not resolve the problem. Even when that happens the incomes of Irish farmers will, as to a large proportion of them, remain lower than those of people engaged in industry. The fact that in our economy agriculture will remain an important sector will, through the operation of this mix, have the effect of keeping our income levels below those of Britain and other European countries.

But a large part of the gap will be bridged by EEC membership and its effect on prices and on incomes indirectly through the impact price increases will have on output. Even when that happens there will still be a difference. One cannot foresee within ten years, 15 or even 20 years a complete bridging of the gap between ourselves and Britain or between ourselves and other EEC countries. I would hesitate to suggest that in this century we would catch up completely in levels of income and purchasing power and living standards with some of the wealthier EEC countries. I believe we could catch up with Britain within a period of, perhaps, not much more than two decades although a good deal would depend on whether EEC membership stimulates the British economy to some kind of economic growth and gets it out of the doldrums it has been in for decades past. Even if the British economy is spurred on and even if there is a faster rate of economic growth in Britain within the EEC there is good reason to believe that we shall catch up gradually over the years and that in, perhaps, 20 years time or longer our living standards will be very close to those in Britain. Until that happens, for the reasons I have mentioned, the different mix of the two economies, the lower level of productivity in heavy industries particularly and the consequent lower level of earnings and the lower level of productivity, perhaps, in the services sector also, the overall level of productivity here is and will remain—though, perhaps, to a diminishing degree—lower than that in Britain and the other EEC countries. So long as that is true, we cannot pay ourselves the same incomes and expect the same prices as in Britain. It is arithmetically improbable. Yet, unfortunately, it is the aim towards which our people aspire and, perhaps are being led to aspire by the fact that very rarely politicians have attempted to explain to them that there is difficulty about achieving such an aspiration.

This is the basic problem that faces us today. It is here the roots of inflation are to be found and unless we can resolve this in some way and get across to people that if they insist at every level on every group in society having the same money incomes expressed in terms of pounds sterling or Irish pounds at parity with each other as in Britain, this will mean a level of prices here far higher than in Britain and will make it impossible to sustain the existing parity between our two currencies. The only reason we have maintained parity is that the difference between productivity in the two countries—say 30 per cent lower here than there—has been matched throughout the history of this State by almost exactly equivalent differences between incomes in the two countries and because both productivity and incomes have been lower here by the same percentage it has been possible to retain parity between the two currencies. If you disturb that relationship and raise the relative income level here closer to the British level more rapidly than you raise the productivity level so that at some point incomes here are only 15 or 20 per cent lower than in Britain while productivity is still 30 per cent lower, that cannot be sustained because then the cost per unit produced in terms of the Irish pound will be so high that nobody in Britain will be fool enough to buy our products when they could buy them so much more cheaply from their own producers and from countries overseas. Indeed few people in Ireland would be fool enough to buy Irish goods when British goods could be bought so much more cheaply.

So, the battle that must be fought and that this Government have so notably failed to fight—one wonders if they are aware that there is a battle—is the battle to persuade our people not to allow their legitimate ambition to catch up with our neighbour to mislead them into raising incomes at such a rate, so far beyond the rate of increase in output per worker, that the parity of our currency is threatened and that our ability to earn a livelihood to pay for our imports and buy the things we need, give ourselves the living standard we deserve, is diminished or undermined completely.

The Government have advisers who know what I have said and know it better than I do and could, perhaps, put more precise figures on it. I have to presume that these advisers tell the Government these things. I know they do. I have to presume, therefore, although not having much confidence in the average level of ability of the present Government, that they are capable of taking in enough to grasp the basic relationship which I am putting forward. Indeed, the present posture of the Government representative opposite suggests that he must know already all I have said since his degree of interest in what I am saying is not very obvious at the moment.

In that situation what must bother us is why the Government, which must know all that I have said which must be aware of this and which must even on the most pessimistic assessment have the limited intelligence necessary to take in the key elements in relation to what I have mentioned, have not bothered to communicate this to the people knowing, as they must know, that their failure to do so is threatening the economy of our country and the livelihood of our people.

No one looking at the way our affairs have been run since 1964 and more precisely since 1968 could conceivably suggest that this Government have shown signs of grasping the problem and communicating it. The word "leadership" is not the word which springs to mind when we think of this Government in relation to the problems of our economy in the past three years. Once or twice they have woken from their slumber; perhaps that is unkind but once or twice they have been distracted from their other interests for a moment or two to rush on to television and tell us there is a crisis. Observing that talk of a crisis might disturb the confidence of people in the Government any crisis announced on television is switched off very quickly when some immediate, temporary effect has been achieved, but that is not the way to govern and it is not the way to meet the problems which face us today.

Our people are not going to be convinced that they cannot pursue the path which they are instinctively pursuing without disastrous results unless they get from the Government of the day leadership and example neither of which they have had. I do not think the most enthusiastic supporter of the Government can be heard in the pubs around the country saying to his pals: "Is it not wonderful to have a Government which is giving us such a lead and showing us how to get over the difficulties?" Whatever the supporters of Fianna Fáil may be saying I do not think it is cast in those words. Their attitude is, perhaps, more defensive than aggressive and more depressive than optimistic but I do not think anyone, including any member of the present Government, believes that they are exercising or have exercised in the past three years any kind of leadership in this matter.

In fact, what is noticeable about the present situation is the way in which the Government by its own torpor has managed to communicate this torpor to the community as a whole. I do not think if one listens to conversations in pubs or at street corners that what one hears suggests any realisation on the part of the community as a whole of just how critical our position is. I do not think the fault for that lies on the shoulders of the Opposition. That is not to say I claim anything approaching perfection for the Opposition or for my own party in Opposition. Of course, we have our defects and our failures. We have not always been as energetic as we should have been in putting across the dangers facing the country but, by and large, over the past three years we have done our job pretty well. I do not think anyone reading the speeches of the Opposition in two or three years time could accuse us of having failed to be alert to the dangers and problems facing us. They might say the Opposition cried "wolf" so often that it was not to be believed but I would have thought the position has been put with sufficient clarity, sufficiently loudly and in sufficiently compelling terms to alert people to the problems the country is facing, if the Opposition's leadership in this matter were matched by leadership from the Government. It is not because the Opposition are not doing their job that people are unaware of the problems. It is because the Government prefer to sweep them under the carpet and continue on their way careless of the consequences.

Indeed, in the past year the Government have increasingly had the air of a Government conscious of the fact that they will not be there much longer and, therefore, careless of the consequences of their action. If Fianna Fáil believed with any conviction that they would be in Government next year and the year after they would be taking a great deal more care of the economy than they are now. They would be making sure the people knew of the problems sufficiently in order to bring the people with them in resolving them. It is only because of the unhappy situation in which we find ourselves, with a Government not alone in whom the people have no confidence but who have no confidence in themselves to continue in office that I fear for the country at the present time.

Even a Fianna Fáil Government of the kind we had up to a year or so ago led by men for whom one could have little admiration in respect of their moral attitudes had at least the merit of sufficient confidence, portraying themselves all too frequently with such arrogance that they would be in office next year and the year after as not to be concerned about the future. What is depressing is that the crew in front of us now—I am not referring to the particular member of the crew there; I am speaking more of the sight which meets our eyes at Question Time, not that there are not some men on the front bench with ability and integrity but they form a remarkably small minority of the front bench—

I feel, Deputy, we are getting away from the Finance Bill, which, as the Deputy is very well aware, deals with taxation.

I regret if in trying to get across how difficult the problems facing us are I have been led into a more prolonged criticism of the Government's failure to alert the people than is appropriate to this Bill and I shall come back more closely to the Bill at this point. Nonetheless, it is useful to draw attention to the relationship that there is and must be between the state of our economy and its future prospects on the one hand and the quality of the Government and its handling of the situation on the other.

The danger we face has been referred to so often that people have, perhaps, ceased to believe it, which is the danger of pricing ourselves out of other markets or out of our own market. I have always felt we have overdone the business about pricing ourselves out of other people's markets where very often the particular quality of design or material of the goods we produce may give them a certain monopoly value and make them saleable even at an exorbitant price but we have under-estimated the dangers of our own market. The striking thing in the past few years has been the way in which the share of imports in home consumption has risen dramatically. It has risen three times faster in the past three years than it did in the previous seven years.

The reason that happened is something about which we can speculate but it would be very hard to construct any economic model explaining this extraordinary upsurge in the proportion of our home consumption which consists of imports which did not include as a major element in the explanation the increase in our costs compared with the costs of other countries. These are dramatically illustrated in the Review of 1970 and Outlook for 1971, Table 7, which shows the wage cost per unit of output figures and if we compare those with other countries and see how they have moved in recent years—and let us remember that wage costs constitute rather more than 60 per cent of the total cost of output—they are by far the biggest single component. If they are recognised it would take an extraordinary degree of efficiency in the running of a business, in the keeping down of overheads, in the keeping down of profit margins to offset the consequences of an excessive growth in wage costs. I am not now saying excessive growth in wages but excessive growth in wage costs which is the result of a relationship between wage increases and productivity increases. Nothing could be more satisfactory than that our wages should be rising rapidly if they were met by anything like a comparable increase in productivity, giving our workers a higher living standard to which they rightly feel entitled. When one gets a situation where not alone are wages rising rapidly but where productivity is not rising anything like as rapidly and where the gap between the two is growing then one must be concerned, and how large that gap has grown in the last couple of years. Let us remember that as recently as 1968 the index number for wage costs in this country was 116 as against 112 in Britain. That means that over a five-year period our wage costs had risen, it is true more rapidly than in Britain, but by only four points, by less than 1 per cent. It would have been better if that had not happened, if we had been able to improve our relationship, but at least it had not deteriorated at a very great speed, less than one point per annum over five years.

What happened between 1968 and 1970? In Britain certainly there is an acceleration of inflation which they regard as terrifying, as endangering the stability of their economy, and they have had in that period a 17 point increase in the index of wage costs, from 112 to 129. One might have thought, when that outburst occurred in Britain, that with even the most minimal degree of economic management here, the most minimal amount of leadership from the Government in the field of incomes policy, we could scarcely have done as badly as the British and should have been able in that period to restore the relationship which had drifted against us in the preceding five years.

It would not have taken much in the way of leadership so to organise the growth of incomes here that in 1969 our index number for wage costs would have been no higher than the British index number of 129, having eliminated the gap which had arisen between 1963 and 1968. That would have been a reasonable target to aim for, to recover the damage, not great but a certain damage, done to our competitive position in those five years, but just keeping our growth of wage costs a little below the British level. It would have meant, of course, an increase in wage costs in two years almost as great as in the previous five. That is not too much to aim for, to aim to keep the rate of growth of wage costs down to no more than double that of the previous five years. If that had been the target, if with leadership they had achieved that, we would have retained our competitive position vis-à-vis Britain. What did happen? What happened was that our wage costs index rose by 28 points to Britain's 17 and far from narrowing or eliminating that gap that had arisen between 1963 and 1968 a new and really alarming gap developed so that over that period the index number rose in this country to 144 and in Britain to 129.

That means that in 1970, by comparison with 1963, to compare these two years seven years apart, our labour costs had risen one-third more rapidly than Britain's and to a level which in relation to 1963 was about one-eighth higher than in Britain. That is to say that if we were able to compete in 1963, if the balance of wages here and in Britain was right in relation to productivity, and even that would be an optimistic assessment, it had gone wrong to the tune of something like one-eighth by the year 1970, and nearly all of that happened between 1968 and 1970.

It simply is not possible for that situation to continue without disastrous consequences and this the Government have totally failed to communicate to the public. Once or twice they attempted to do so but in a desultory fashion, switching on the crisis and switching it off again. I do not think anybody reading speeches of this Government, such speeches as have been made in the past year, could detect in them any real sense of the urgency of the situation. I do not recall any Minister drawing attention to the figures I have mentioned, published as they were six weeks ago, reflecting in dramatic form the cruel danger facing us. I do not recall any Minister doing his duty and drawing these to the attention of the public. Indeed, there has been a silence on this subject—not that there has been much on any other subject.

It is not good enough that the leadership of the country in a field like this should be left entirely to the Opposition. Let us be clear about this, the Opposition cannot do this single-handed. It is no good expecting an Opposition, no matter how dedicated, to provide the leadership that the Government should provide when the Government are dragging their feet. If we, as I am trying to do, try to alert people to the gravity of the situation the average man in the street, who does not want to be given tales of woe, will say: "That is just the Opposition going on. They are just trying to get at the Government. It is the usual propaganda." Who can blame them for that reaction when no comparable concern is expressed from the Government side? Any member of the public, and there are still some people who regard this Government as having some sense of responsibility, can hardly take terribly seriously the strictures of the Opposition on matters of this kind when the Government are not doing anything about it. I can quite understand the man-in-the-street saying: "Until the Government show some sign of worry, why should I worry about it?" It just is not possible psychologically for an Opposition to do this job single-handed. It is time the Government woke up to this fact. We have been trying for several years past, in effect, to govern this country from the Opposition benches and it is something we cannot succeed in doing and until we change to the Government benches we will not do it satisfactorily. In other circumstances, perhaps, the vigour of our attack might spur the Government into some kind of action, might shame them into some kind of action, but the inert group of men whom we see over there at Question Time day after day are not men, after the events of the past year, to be shamed by the Opposition into any kind of action, even to the dignified action of resignation from a job they are incapable of performing.

I am afraid we are getting further away from the Finance Bill which, as I pointed out, deals with taxation.

It is difficult to speak on this subject without relating one's remarks to the question of the Government and their role. Let me come now to what this Government in their taxation policy have been doing to help to prepare us for membership of the EEC. We are not ready for EEC membership. That does not mean, as some people on some benches feel, that we should therefore stay out, because we are even less ready for the rigours of staying out. One thing for which this country is not ready is the total disruption of our trade which would follow remaining outside the EEC when Britain joins. Our economy may not be totally disrupted yet but it certainly has not got the incredible strength to withstand the strain that would then be imposed on it. However, the fact is we are not prepared either for staying out or going in. It is precisely because of this that we have to take the softer option of going in. I have the strongest views that going into the EEC will be for our benefit, but that is another matter. I am simply saying that we are not prepared for entry and we are even less prepared for staying outside. We are not prepared because to be prepared would involve having a competitive economy with a tax system geared to making that economy more competitive and keeping it competitive. That is what we have not got. Not alone have we not got it, after 14 years of Fianna Fáil Government, but by a singular act of folly the Government managed last November greatly to worsen our degree of preparedness for membership by attacking that most vital source of strength—the availability of profits to be ploughed back into our companies for further investment.

The decision to raise the rate of company profits tax in that Budget was totally indefensible, as I think every Deputy on the opposite benches now knows, and as a lot of them knew at the time, although with a bad conscience they voted for the proposal. There are, of course, as I will show later on, very good reasons for modifying our tax system so as to make it more equitable and so as to distribute money to those who need it to a greater extent than is done now. I am not arguing against a more redistributive system of taxation. I am not arguing that the money left in the hands of persons after taxes have been levied is distributed in a way that we can justify. I see a need to modify the personal tax system so that it bears less heavily on some, particularly on people with families, and bears more heavily proportionately on some wealthy people who are getting away with so much under the present regime.

You do not answer the problem of redistribution of income by attacking company profits. If you want to deal with redistribution you attack personal incomes derived from company profits, quite a different thing. Only a half-baked concept of either socialism or social justice would suggest that one should attack the profits of companies rather than the incomes derived from them. In this mixed economy in which the private enterprise sector is by far the biggest factor and, indeed, the sector from which most of the dynamism is called for, and from which most of the dynamism comes, it is vital that there should be sufficient money to plough back for investment and expansion. Any future income of the community to be available for redistribution can only be increased if there is that money available for investment. The private sector must get most of its funds from the profits it makes. It may get some assistance from the Government in grants here and there, but basically the bulk of the money it requires for investment has to come from the profits it makes.

To attack these profits as if that were some half-baked gesture towards social justice is to show such an abysmal lack of knowledge either of economics or of social justice as to disqualify the man who did it from holding the office of Minister for Finance. I did not expect him, when appointed, to make such a blunder, although I can understand something of the attitude of mind which led him to make this blunder. Of all the things he could have done in that Budget I do not suppose there is any one other single thing he could have done that could do us more harm with regard to preparation for the EEC. It is fair to say that if I had been asked before the Budget how could the Minister do most damage to our preparations for the EEC by fiddling with the tax system, I would have answered: by increasing company taxation; and that is what he did. That is not preparing for EEC membership.

When we look at what was done by the former Minister for Agriculture and Fisheries—was he the last or the second last, one loses track—in regard to the milk price system, we see a man totally ignoring the immediate prospect of EEC membership and turning the milk price system on its head in a manner which was quite incompatible with membership. In fact, the man who did that, if he gave any thought to it at all, could only have been a man who did not believe that we would ever join the EEC. If he thought we would join the EEC in the next year or two it is inconceivable that he would have introduced a price system totally at variance with the EEC price system. Instead of increasing the output of milk as we prepared to enter the EEC, within which our farmers can make enormous gains from milk production, he so arranged the price structure as to reduce the output of milk. Assuming that he was not setting out to ruin our economy for the sake of ruining it, the only sane explanation of his behaviour is that he did not think we would join the EEC at all.

It is one thing to have a Government about which you can say that they have neglected to prepare for membership—that is bad enough and God knows it can be said about virtually every aspect of this Government's activities—but of a Government that set out to do everything the opposite way around, so to change the milk price system as to reduce the output of milk which will be our mainstay within the EEC, and to tackle industry by taxing company profits so as to reduce investment in industry, and to reduce the possibility of industry preparing for membership of the EEC, it can only be said that this is a Government of economic lunatics.

Hear, hear.

Let me be careful not to offend against the dignity of the House and say that they are a Government perpetrating economic lunacy. It is really inconceivable that any Government would adopt such tactics if they believed we were entering the Community. I sometimes think we have two Governments. We have the Minister for Foreign Affairs happily pursuing his own way and negotiating to join the EEC for which he shows, I think, a genuine enthusiasm. Not only is he busy negotiating in Brussels but he is making all the speeches at home too. He is one Government. There is another Government, numerically stronger and consisting of a whole lot of Ministers who, in most cases, show no signs of having heard of the EEC. One does not hear from most of them any speeches on their responsibilities in relation to EEC membership. In so far as they pursue policies at all they are pursuing policies like those of the Minister for Finance and the former Minister for Agriculture and Fisheries, designed to make it as difficult as possible for us to succeed in the EEC.

The increase in costs pricing ourselves out of the home and export markets, and the policies pursued by this Government designed to make it as difficult as possible for us to succeed in the EEC, are creating a situation in which EEC membership will pose an unnecessarily grave problem for us. There is no doubt in my mind about the benefits that will come. In fact, because of the price relationship for milk and beef between our prices and those of the Community, even this Government's malevolent attempts to disrupt our economy and to make it as difficult as possible for us to succeed in EEC conditions cannot completely destroy the benefits of EEC membership, though they seem to be trying very hard.

We need to consider very seriously now where we are going. It is clear that barring accidents—and there could be an accident in the British Parliament—we will possibly be a member of the Community in 18 months time. If we are to avoid a serious disruption of parts of our economy, offset undoubtedly by prosperity in other sectors but a serious disruption of parts of our economy bringing great hardship in those sectors which will not be compensated for so far as individuals are concerned by the benefits elsewhere, we will have to mend our ways in respect of the matters about which I have been speaking.

It is all very well for an economist or a politician to talk from his relatively ivory tower about the net benefits to the economy of EEC membership. I do so frequently myself but I am conscious all the time—and I have never spoken on this subject to any audience without emphasising this point —that it is not acceptable in human terms that the net benefit of membership should take the form of substantial gross benefits accruing to some people and substantial losses accruing to others. What we should be trying to ensure, through the way in which we organise our affairs, through the leadership the Government give in economic affairs, through the kind of tax system we are setting up, is that when we join the Community the sectors and the individuals who may suffer will be cushioned and helped to survive and to prosper by transferring to them part of the gains that will accrue to other sectors.

There is no sign of this Government doing that. There is no sign of their having any plans to do that. On the contrary, if anything they seem to be seeking to aggravate problems in the sector where problems will arise, the industrial sector, through their increase in company taxation, through placing the burden of taxation there. There is no sign that they are adopting any policy that would ensure that the jobs of the workers who will be affected, where redundancy will occur, will be kept in existence or that alternative employment will be provided in the same region with sufficient retraining facilities to ensure that the workers concerned can change over to new jobs or, in the case of older workers who may find it difficult to make that adjustment, to ensure that they will be given a most generous pension to give them full compensation for what they have lost through the effects of the freeing of trade upon their employment.

There is no doubt that there will be redundancy and that that redundancy will hit particular centres and towns in this country where particular industries are not capable of surviving. There is no doubt that the benefits of membership will be immense in other regions and in other areas and there is no doubt that the Government with a little intelligence and skill could ensure that these two are balanced. They could ensure that where there are losses there are compensations and that nobody is put into a position of hardship when additional resources are being created for the economy as a whole far beyond what is needed to compensate them. That can be done. I should like to be able to say that I see some signs of it being done but I have watched for the past ten years this Government's inactivity on this front. I have not watched silently.

Before entering politics and since then I have stressed repeatedly the need for policies designed to achieve this result but this has been to no avail. Despite constant pressing, I have not yet the slightest evidence from the other side of the House that they have examined, even geographically, the pattern of free trade in this country. Ten years ago I urged this on the Committee of Industrial Organisation with the representatives of management and trade unions who co-operated so closely on that committee and who, at times, found the problem of persuading the Government representatives of the need for action to be very frustrating. At that time we urged that the report being made of virtually every firm of consequence in the country, through the medium of industrial organisations, should be outlined in such a way as to indicate the geographical pattern of the problems that would be created. We did not ask to see this because to be told that the town of Clara, for instance, would suffer under free trade would be telling what the effects would be for a particular firm. Everybody knew that at the time but nothing was done about it. In many cases to have been told how a particular town would be affected would be to disclose information about the prospects of a particular firm. That was not what we wanted. What we asked was that the Government officials concerned would prepare a master plan, a map of the country, on which they would mark in each firm which the confidential reports they were receiving showed to be unlikely to survive or would be hit by the freeing of trade and mark in the number of jobs likely to be affected with all due recognition of the fact that they could be wrong and that in some cases undue pessimism would lead to a firm being marked as unlikely to survive and in other cases undue optimism would fail to identify a candidate for redundancy.

Making all due allowances for the errors that will be bound to occur, such a plan would have provided a sounder basis for planning the industrial development of Ireland in the 1960s than did the lack of any basis as existed. That is the kind of preparation that could have been made for EEC membership. Such preparation would have involved redistribution of resources. It would have involved additional taxation in order to provide extra resources and it would have involved a different strategy.

Therefore, to sum up what I have said so far, we are faced with the situation in which we are entering the EEC in conditions in which, on the one hand, our possibility of benefiting from membership of the Community has been reduced but not by any means eliminated—even this Government could not have done that—by the policies adopted.

The lack of leadership on the part of the Government in the field of income has led to a growth in labour costs that has threatened our ability to operate competitively in many industries.

The Deputy will appreciate that we are not having an economic debate.

I am only summing up the first part of what I said before moving on. Another 30 seconds would have completed this summing up. What I have been saying is that we have this problem of increased labour costs because of lack of leadership on the part of the Government. We have had the Government's action on company taxation which must be relevant to what we are talking about. We have had their policy in regard to milk prices. All of these have made things more difficult. There has been the failure to have any long-term strategy to prepare for free trade as a result of which we are faced with a situation in which we will not get the full benefits of EEC membership. We will have thrown some of them away. The hardships that will result from redundancy in certain areas will be greater than they need have been. What we need in going into this Community—what we need anyway—is a radical review of our whole taxation system. The kind of tinkering we have in this Bill could not be described even as the first hint of such a review.

Hear, hear.

It shows no signs of any understanding of the kind of problems that we must tackle. We need a tax structure which does two things. In the first place it must provide the incentives for increased productivity and increased initiative throughout the private sector of the economy. This is not simply a question of giving grants for everything that one can think of. That is not the way to stimulate initiative. Grants may be helpful but more than those are needed. We need in particular a tax system that has a built-in incentive for improved productivity and greater efficiency and for expansion at home as well as abroad which our system lacks greatly. We need also a tax system that is designed to ensure equity between members of the community—in this context I mean the people of Ireland —at any given point in time outside the EEC but to ensure also that in the dynamic situation created by EEC membership there will not be inequities.

A tax system should be designed to prevent inequities being created and to alleviate them where they arise. This Bill does not even begin to attempt to do this. The first thing I would seek would be information about the present impact on taxation and subsidies and transfer payments in this economy. What do we know about how much money we take from people at different income levels and how much is given to people at different income levels? If we do not know that we do not know how we are redistributing money and, consequently, we cannot begin to know whether that redistribution is equitable or whether it needs to be modified in any direction.

If I ask what is the redistributive effect on different income groups within the community of our present taxation, present subsidies and transfer payments, the answer I will be given is "None" because, after 14 years, this Government have not even bothered to find out. No Government can claim to be serious about introducing equity into the system of transfer of income through the tax system if they have not tried to find out what the present effects of the system are. Perhaps not the Government themselves but their advisers are well aware that in a neighbouring country, Britain, there can be found at regular intervals in the publication of economic trends, a table showing, for people of different income levels and with different family responsibilities, how much is taken from them and how much is given back to them through the tax and transfer subsidies systems. That table needs a lot of refinement to give us all the tools that we would need to play with in order to achieve equity but it does give a first good approximation of the impact of the tax system. It is the result of a social survey in Britain but the idea of carrying out social surveys is one that is alien to most of our Government Departments and to most of our Ministers but not to all. It must be said that the Department of Labour have shown a great interest in social research. They have sponsored many items of social research. I would fault the Department for the slowness with which they have carried out their tasks but I would not fault them for lack of imagination because they have shown an openness of imagination in this matter of research that is to their credit. However, this is not so in so far as other Government Departments are concerned.

I am not aware of any attempt by the Department of Social Welfare, for example, to do the job they should be doing—trying to find out what are the effects of these transfers. Neither do the Departments of Finance which, for many years, have been one of the most dynamic and imaginative of Government Departments. Even they have not undertaken this kind of survey. There is no reason why the Departments of Finance, Social Welfare, Health and the other Departments that are concerned in one way or another with income redistribution should not get together, devise terms of reference, sponsor a survey to be carried out by the Economic Social Research Institute or some other body, a survey which would show this information.

Perhaps such work is in train at the moment. All I can say is that after 14 years of Fianna Fáil rule I have not yet seen the results of any such work. Perhaps they have woken up to it in recent times. I have a vague recollection of having heard something about such a survey being undertaken. Certainly the results have not appeared yet. Until we have that we cannot begin to know whether the present tax system bears fairly on people or not. There are so many ways in which income is redistributed and many of our people are quite unconscious of the extent to which they may be beneficiaries of these ways and means of redistributing income through the tax system. We all know what taxes we pay, we are much more conscious of the direct tax than the indirect tax. What we do not always think about are the benefits we secure from tax.

The Chair does not wish to interrupt the Deputy but general Government expenditure is not in order for debate on a taxation measure. A taxation measure is concerned with purely taxation proposals and their effect generally.

I am in difficulty here, a Leas-Cheann Comhairle. I am concerned to discuss the impact of taxation on the community and whether it is equitable. Of course, the degree of equity in income taxation is affected by how much money individuals get back of the taxes they pay. I do not want to dwell on any particular kind of expenditure at all but merely to say that we need information on the net effect of the system of transfers because taxation and transfer payments are two sides of the same coin. If I pay £200 in taxation and if I send a child to the university and get £140 reduction in fees because of the grant to the university, then I am £60 down, not £200 down. One cannot, therefore, discuss taxation without some regard to the money the same person gets back. That is the point I am trying to make. I think that is in the context of the debate. I will not, of course, dwell on any particular form of expenditure, only on the relationship as far as the individual is concerned between the taxes he pays and the benefits he directly receives back. I submit, a Leas-Cheann Comhairle, that that is within the framework of the debate.

A discussion like this, of course, could get very wide and when dealing with a taxation measure, if we were to deal with general governmental expenditure which might be in many fields, we could find ourselves away from the taxation measure.

I am conscious of that, a Leas-Cheann Comhairle. I shall not dwell on this. I merely want to say that the net taxation of the individual is something we do not know anything about and I feel we should. I feel we ought to know, first of all, the gross tax position. We ought to have a table that will tell us in regard to a man earning £1,200 with two children with a typical pattern of expenditure on drink, tobacco and so on what is the total amount he pays in taxation. You cannot begin to have an equitable tax system if you do not know what is, in fact, the amount people are paying at different income levels. We do not know that. I would go on to hold, though not dwelling on it in this debate, that unless you know how much he gets back through various mechanisms of educational subsidies, housing subsidies, agricultural subsidies, tax exemptions of various kinds, unless you know that, you cannot know whether the tax system is equitable. I will not dwell on that but I submit that that is essential to any assessment of the adequacy of a taxation system.

Frankly, a Leas-Cheann Comhairle, I would submit now or at some other time that the convention under which we operate our debates may have to be modified because as we proceed to reform our whole taxation system, introducing as I think we will have to do, the concept of negative income tax under which people in the income tax code will in certain cases in the lower income bracket actually get money back, it would be quite impossible to compartmentalise debates between taxation and expenditure and I feel that, in fact, this House will have to consider this. At the moment we are in the curious position that the concept of negative income tax cannot be discussed in this House because you cannot discuss it in this debate without referring to the money you get back and you cannot refer to it in an expenditure debate without talking about the taxation which people pay. There is a great procedural difficulty here.

The Chair appreciates the point the Deputy is making. Of course, the proper time, the Chair would suggest, to make these proposals is in a Budget speech not where you have a specific measure dealing with specific taxes. We are dealing here with specific taxation on this occasion. Within these limitations the Chair is as much bound as anybody else.

It is essentially a Committee Stage Bill.

We are on Second Stage and one is permitted not only to say what is in the Bill but to do what I am doing, to say what is not in the Bill.

The Chair does not inhibit the Deputy from suggesting other taxation. That is not inhibited in any way.

I will, in fact, be coming to that. I think that the present tax structure has a number of features which are obviously unsatisfactory. The one which I think there is most concern about, and I am inclined to think both as a politician and as an economist rightly, is the whole system of taxation by means of rates. Even allowing for the present rebates out of general taxation, this system is one which seems to give grounds for dissatisfaction at every level and it seems to me that we must contemplate—and I await with impatience the relevant report of the interdepartmental committee—some alternative method of taxation. We must contemplate either an increase in existing taxes or some new system of taxation which will replace this particular form of taxation. There are those two taxes which in their present form, one is estate duty and the other is rates, are not only inequitable but are seen and felt by people to be inequitable.

Clearly, rates would not be in order for discussion on this Bill.

I cannot make the point that we should impose some alternative tax in lieu of rates without referring to rates. It would certainly not come well from the Opposition to talk of imposing alternative taxes——

You can talk about what is in the Bill, not about what is not in it.

I can talk also about what is not in the Bill. My concern is the Bill does not make any provision in its income taxation proposals for alternative taxes to replace rates which are inequitable in their present form and I submit that I am entitled to propose that there should be some alternative taxation or increase in existing taxation for that purpose. I can scarcely, I think, a Leas-Cheann Comhairle, be precluded from stating the reason why I think some additional taxation is necessary under some other heading. That is all I say. I think you can draw too tight a line here. I must, if I am to make the case for an alternative system or for increases in other existing taxes, give my reason for that and my reason is because of certain features of the system of rates which are regarded as inequitable.

Similarly, I shall be coming to deal with this question of a wealth tax. In dealing with that I shall be referring to it not because I think increased taxation is ever desirable or right but because it is necessary as an alternative to estate duty. I think I must be entitled to do that, not dwelling on it but going on to refer to what is wrong with existing taxes if I am to advocate that there should be changes or increases in other existing taxes or new taxes. I hope I am in order in that, a Leas-Cheann Comhairle.

The Chair does not wish to inhibit the Deputy in regard to a general proposal but, of course, the Deputy does appreciate that on the Local Government Estimate rates is a matter which falls for discussion.

If I were then to propose alternative taxation instead of rates, would I be in order?

The Deputy could advocate forms of taxation other than what is contained in this Bill.

That is what I am doing.

But relating it to the Bill.

What I am saying is that this Bill does not contain any provision that is going to alleviate the burden of rates.

Many other Bills do not contain anything like that. If you are going to talk about what is not in the Bill you can go over the whole field.

I tell the Parliamentary Secretary that the only Bill that could contain such a provision is a Finance Bill.

Rates can arise on other matters.

The only Bill that could contain alternative taxation to replace rates is a Finance Bill and what is wrong with this Finance Bill is that it does not contain any such proposals and I think I am entitled to make that point.

It is a matter for the Chair. It is not the form usually followed.

It is the Chair I was dealing with before the Parliamentary Secretary interrupted.

The Deputy is entitled to make the argument provided he does not go into detail on this matter of rates or rating. He is entitled to make a general argument.

I shall simply list the features of rates whose undesirability makes necessary some alternative system of taxation. I shall not dwell on them or expand. I shall simply list what these features are. There is, on the one hand, the burden of rates on agricultural land which, because of the form which the tax takes, is one clearly felt to be inequitable by the agricultural community and of very dubious economic benefit. You have then the fact that the level of rates is now so high on the dwelling-house that as a burden of taxation it is completely distorted in relation to the kind of incomes people may have living in such a house.

A system of local taxation is desirable to deal with genuine local expenditure. Any expenditure, the decision in respect of which is at local level, should be financed by local taxation. We all know that the great bulk of revenue from the rates is spent on items not decided at local level. We need a tax system under which central government taxation is responsible for financing those matters decided at central government level. The allocation of finance for housebuilding and the matter of the health services are central government decisions. Local authorities are not in a position to decide that they will go ahead with housebuilding and raise the money themselves. They are not allowed to do this because the question of where the money can be raised for this purpose is a central government decision. Local authorities cannot provide a health service unless central government so decide. These areas of expenditure should be financed from central government taxation. It is only where decisions are taken at local level, where for instance, County Kilkenny can decide to adopt some course and County Waterford decide not to do so, it is only where the level of decision-making given to counties permits them to make a decision that local taxation should be levied.

Where we have gone wrong is in allowing this form of local taxation to carry the burden of central government decisions which should be financed by central government taxation. We all know the saying about "power without responsibility". Central government have the power to impose a burden of expenditure on local authorities but they do not have to carry full financial responsibility. Therefore, we should ensure that this form of local taxation, never designed to carry the burden of rates, should be transferred to central government and any additional taxes should be levied at central government level. This is the thesis I wish to put forward and one with which I imagine most people would be in agreement. It is only inertia that has prevented anything being done about the matter by a Government that has been 14 years in office. Fourteen years should have been long enough for the Government to have noticed the problems and have tried to solve them.

In regard to what people pay and the return they get, we must contemplate some form of negative income tax. At the moment there are groups in the community who are not covered by the existing provisions for transfer of incomes. There is a system of transfer of incomes for the farming community. I see many defects in it in that much of the money goes to the well-off farmers and not enough to the smaller farmers. The system could be geared and modified to do a better job. There are systems for transferring income to the unemployed, the disabled, the widows and deserted wives. The systems are grossly inadequate but at least they exist.

However, there are groups in the community who are not covered. A man who has a job is not covered by unemployment assistance. If he is able to work he cannot qualify for disability benefit and he may not get assistance from any source. If the man is married and has one child and if he is living in Dublin he will not have a corporation dwelling because it is impossible for a family of this size to obtain such accommodation. If his child is not of school-going age he is not obtaining subsidies through the school system. If he were living in the country he might be able to have a telephone installed below cost but this benefit is not obtainable in the city. Neither is he obtaining any subsidy through the rural electrification scheme. In effect, this man is not getting subsidy of any kind but he is paying out quite a lot of money. If he and his wife take an occasional drink, buy cigarettes, even travel on buses, they are paying money into the Exchequer. Although he may not be contributing in income taxation he is not getting any benefit from the State. When they have paid their rent, this family may have so little left that they are living in misery and poverty.

There is no scheme to remedy this because there is no method of redistributing income through the tax system to a man who is working, however badly he may be paid or however badly he may be exploited by landlords. A tax system that does not provide for such a person is an inadequate system. What is needed is a system of negative income tax under which income tax will not be a one-way process. It should be a system of redistributing income between different sections of the community. It should be integrated with the social welfare code into a single system of re-distributing income so that those whose human needs run beyond what they can secure by the sweat of their brow, whose needs for housing, food and other essentials out-run their resources, will be given assistance. It should be a system whereby those whose resources exceed what they need for a reasonable livelihood pay proportionately towards other members of the community.

We are not speaking about dividing people into different income groups. In the case of a man in a high income group who has children qualified to go to university but who have not got the necessary four honours to obtain a scholarship, if he is living in the country it will cost him a considerable sum in fees and accommodation costs to send his children to university. In fact, in a recent survey the cost of maintaining a pupil at university was estimated at £7 per week. A man living in the country who has children wishing to attend university could find that it will cost him hundreds of pounds.

There are various ways of dealing with this problem. The grant scheme could be changed whereby the grant is given to the student who then pays the fees himself. In any event, it is evident that our system of income transfer needs to be flexible. It is obvious that a man earning £2,000 or £3,000 per year at some stage in his career may need help when it comes to the education of his children. A single man earning £15 a week, having inherited accommodation from his parents——

That is nonsense. This is a tax Bill and that is what the Deputy is supposed to be talking about.

I am making the case for a negative income tax.

The Deputy is going widely away from the Bill. The Chair is as bound as anybody else. This is purely a taxation measure and the matter for discussion is the Government's taxation proposals and the effects of such taxation on the country. A general economic debate of the same latitude as a Budget debate is not allowed.

I am trying to avoid an economic debate. I am trying to make the case in as simple and concise a form as I can for a negative income tax. I am pointing out that there are people who, under the present system, are losing out and getting no assistance and that we must have a tax system flexible enough to cope with this. This Bill does nothing to achieve that. It is a Bill in the traditional mode. It tinkers here and it tinkers there but, at the end of it, nobody could say that the tax system that emerges is substantially any better than the one we have or any more designed to meet the needs of income transfer, which a progressive taxation system should. This is my point. I shall not dwell on it any further. I think I have made it. I submit again that there is a growing difficulty in discussing matters in this House because the rules of procedure are increasingly antiquated in relation to the relatively sophisticated concepts of modern taxation and finance which we ought to be discussing here. This is something we must think about for further consideration in some other place.

That is nonsense. This is a tax Bill and that is what the Deputy is supposed to be talking about.

Deputy FitzGerald.

The Parliamentary Secretary probably does not know what negative income tax means. As an addendum to that I would add that I am not convinced our present system of subsidising rents is necessarily the best way of doing things. I think ultimately we ought to aim at a position in which we raise through taxation sufficient money to assist people to pay economic rents, whatever they may be, in public or private accommodation reasonably rated to their needs. This, again, would bring me into an area from which, I suppose, I am banned, but it is part of the same concept involving a radical reform of the whole taxation system.

On the question of estate duty, I agree with many of the strictures made in this debate and in other similar debates. We all agree, I think, when we think about it for a moment even, that there must be some form of taxation on capital. If you do not tax capital at all capital will accumulate in fewer and fewer hands. Indeed, such evidence as there is would suggest that burdensome and unsatisfactory though the present system of estate duty is, it is not, in fact, achieving at this stage in an adequate degree the redistribution of wealth, not income, which is desired. There is not any evidence that wealth is being spread amongst more and more hands. On the contrary, the evidence there is suggests that the present system of estate duty here and in other countries is not preventing the accumulation of wealth in fewer and fewer hands which was its aim and object. That is basically the reason for reconsidering the whole concept.

The taxation system here is inherently unsatisfactory because any tax which, on average, taxes people every 29 years, levying from them at that point a very large sum of money indeed, is obviously open to avoidance as well as evasion because, when a man knows that it is only, on average, every 29 years he, or his successors, will have to pay tax on the whole estate, then, by passing money on to another generation, to another member of the family, he can hope to evade this. By investing in some company he can try to evade it. There is no area of taxation where avoidance is more prevalent than here, no area where inequity is so great. Any well qualified company lawyer will tell you there is no need in practice for anybody with £100,000, or more, to pay estate duty. For people with somewhat smaller estates under that level, who have to keep the money fairly readily available, some of it locked up in insurance policies, some in a house, the possibilities of avoidance are not great. Most company lawyers will not, I think, recommend people with less than £100,000 to go to the trouble of avoiding estate duty. This is, perhaps, a rough and ready figure. It could be lower. It could be £75,000 or £60,000 in some cases. Once you go over the £100,000 the general prevalent view is that at that stage there is no point in paying estate duty and then you take the necessary steps to avoid it. The steps are far too technical for me to understand, never mind communicate to this House, but they exist and any qualified company lawyer will tell you about them. In that situation a system of taxation under which automatically the really wealthy estate benefits because it is worth their while to take the necessary steps and where only those with relatively small estates suffer is obviously an inequitable system.

I saw an estimate in The Economist eight years ago—I do not know on what basis the estimate was made, but it is a reputable journal and it hardly invented the figure—that in Britain two-thirds of estate duty was then avoided. Having examined the estate duty figures here, listened to, read, considered and heard discussions on a number of papers on the subject of capital in this country as assessed from estate duty returns, it is fairly evident that avoidance here is also on a large scale. I would not put a figure on it. I have nothing to go on. I cannot say if it is two-thirds. My own suspicion is that the avoidance rate here is probably less than that, but the fact that the proportion of capital held in very large amounts by individuals is less here than in Britain would mean that there is less incentive to avoid and probably avoidance is on a somewhat smaller scale. It is possible that avoidance here is only half or, perhaps, less than half, but it is quite possible that half of the tax that should be paid is being avoided, or one-third at least is being avoided, by these special measures that wealthy people can take. Any system of taxation which lends itself to that is unsatisfactory, indeed intolerable, and we have to find a better system.

That is not all that is wrong with estate duty. It is not paid just every 29 years. That is the average. In some instances it may have to be paid twice or three times within a year or so because of a succession of deaths in a family. In other cases 80 years may pass before estate duty has to be paid. The system is so haphazard as to be thoroughly unsatisfactory and inequitable. It also has special features which are quite indefensible. These could be remedied within the present system and, therefore, they do not of themselves make an argument for wiping it out completely in a new system of taxation, but nonetheless they are worth referring to. There is that extraordinary feature of estate duty at the moment that tax is paid totally at variance with the whole purpose of the tax, that tax is paid on moneys moving between husband and wife. I think everybody knows the thinking behind estate duty. The social purpose of it is to prevent the accumulation of wealth from one generation to the next, which would happen if there was not some such system of taxation. It did happen, of course, throughout the centuries up to the present century when similar systems were introduced in different countries. But wealth moving between husband and wife is not money from one generation to the next. Husband and wife are one person and should so be treated for the purpose of taxation. It is good theology and it is a good tax principle. I am not sure how much of theology comes into taxation, but there is a reference in the Scriptures. There is no reason whatever for estate duty to be levied as between husband and wife. The estate, passing horizontally between them, should be free of all taxation. I am quite clear on that and I have never heard anyone suggest anything to the contrary. It absolutely amazes me that we should go on taxing in this way. I know various reliefs have been given in recent years, but why do we go on taxing in this case? It is another matter if we do not have, as we do not have at present, any current wealth tax. It is another matter in the case of wealth passing from one generation to the next. I am convinced that the system of estate duty is so open to avoidance, because of the rarity with which the tax is levied, and based on the very large sums involved, and because the opportunity to avoid is so patiently availed of and because the tax is so haphazard in its incidence, falling, perhaps, three times in a couple of years on one family and not for 80 years in another, I am convinced that for these reasons, the tax is so objectionable it should not, in fact, continue. We must find an alternative and the alternative must be an alternative which obviously avoids these difficulties and dangers. I would suggest that an alternative must have these features: it must be a tax on wealth, on capital. That is the whole purpose of the exercise. It must be levied regularly, not at long intervals, and indeed annually, so that there is no opportunity for avoiding it by passing money from one hand to another. It must be levied regularly also to avoid the haphazard character of the tax and its incidence at the present time through the variability in payment depending upon the incidence of death in the family. These are the characteristics such a tax should have. It should also, of course, be such as to avoid the payment of tax on moneys exchanged between husband and wife. Indeed, it should be so designed that people should be free to make gifts to each other without having to pay taxation on them.

There is something rather curious about the concept, if you think about it, getting away from the whole revenue position and thinking about the idea of taxing gifts. Of all things, surely taxing gifts is the most curious. Of course with the system of estate duty, if you are to stop avoidance you will have to tax gifts but there is something wrong with a tax system that necessitates taxing gifts. Therefore, any system of taxation that replaces estate duty should not necessitate taxation of gifts but should leave it free to any member of a family to give money to any other member of the family without having to worry whether he will die in five years or about having to pay tax if he gives money to another member of the family. It is ludicrous to have a tax system that makes that necessary. I believe this can be done by substituting for estate duty a wealth tax. I speak for myself; I am not propounding party policy but giving my own views on a particular issue. It seems to me there is a very strong case for such a tax. Wealth should be taxed annually and not at variable intervals ranging from twice a year in one case to every 80 years in another case.

This involves certain problems but these are not insoluble. We are told this would mean having to value property every year; it would not. It means you would need to have available at any given time a reasonably recent valuation, not more than a few years old. It does not need to be this year's valuation. Valuations could be carried out at five-year intervals, for example. In the first year you would be paying on the full value and the assessment would diminish over the five years and then you would be paying in five year's time, on revaluation, on the full value again. One could allow that kind of variation because taking one five years with another or one year with another, people would pay the appropriate amount.

The number of estates involved is very small. If such a system involved taxation of estates of £30,000 and over and total exemption for all others, the number of such estates, judging by existing estate duty statistics, is only about 7,000. It depends where you draw the line and obviously, to avoid the payment of small sums, one would draw a line at a certain figure and tax estates, say, of over £40,000 or exceeding a certain figure not necessarily £40,000. By having a different threshold for being included in the tax net you can avoid the payment of small sums of £50 or £100—small in this context. In that way, on present estate duty statistics you would have to deal only with something like 7,000 estates, according to the latest figure which I estimated a few moments ago. I calculated it a few years ago and it came out at about 5,000; it has risen since then. If you take a threshold in the region of £25,000 or £30,000 using the method I have suggested, if you are willing to accept valuations made not less than five years before, then in any given year the number of valuations would be only about 1,400.

It might be a little more because I suspect there is avoidance and the figures I am using are of those who pay estate duty. As avoidance would disappear under the annual system the number of estates coming into the net would be greater. So it should be; people now avoiding tax would be paying it. But we are talking of something in the order of 1,400 up to, perhaps, even 2,000 valuations per year and this could be reduced drastically. You could start off by saying that in the first year you would only tax estates of £100,000 and over of which there would be, say, 1,400. The next year you would take the £80,000 to £100,000 bracket, say, another 1,400 or 1,500. In that way, you should start in the valuation system with 1,400 or 1,500 estates each year. After five years the first lot would be revalued so that in any one year over the whole period you would have a steady flow of valuations of between 1,400 and 2,000. That is not an impossible number. The tax would fall by definition on the 7,000, and perhaps eventually 10,000, richest people in the country in terms of capital.

They would have the advantage of not having to worry about what would happen when they died—would the firm be broken up, the farm have to be divided, the private company have to be sold or the house sold? All the worries entailed by the present system would disappear. Through the operation of this tax they would also have an incentive to get a proper return from existing assets. It is a feature of this country—indeed, of all countries, but perhaps of this one more than most— that many people do not try to get the kind of yield they should get from their assets. A modest tax of 1 per cent or 2 per cent—1 per cent at the lower end and not more than 2 per cent—would be an incentive to people to get a higher return. The man with a good deal of property or money tied up in jewellery or silver, stamps or diamonds, on which he gets no return might have to invest in something a little more profitable for him and for the country than, say, diamonds. That would be no harm. Anything that encourages people to invest their money profitably for themselves will yield a return for the country also.

In that way you would encourage a better use of wealth and discourage inefficient use of wealth. You would eliminate the avoidance problem, getting in millions of pounds from people now avoiding taxation without imposing any greater burden on anybody paying tax at present. In fact the system could be designed to reduce the burden on people now paying and only those who are avoiding taxation at present would have to pay anything extra. You would eliminate the worry associated with the fear of a break-up of property, a farm or a private firm, or the sale of a house and things like that.

No doubt there are technical problems to be overcome, problems of double taxation in the UK, for example, but those are problems for technicians rather than parliamentarians. Listening to the repeated complaints about estate duty and seeing how unsatisfactory it has been, and yet seeing the obvious need to have some form of taxation, I am forced to the conclusion that we must change over to some sort of annual tax of this kind. On the calculations I have made such a tax, never running to more than 2 per cent and 1 per cent at the lower level. applying only to estates of say £30,000 and over, could yield much more than the present estate duty while not requiring anybody to pay more through cumulative annual sums than they would pay at present except tax avoiders, and I have no great concern for them. If we get a few million pounds out of them that we are not getting at present it is a form of increased taxation that I would be happy to advocate.

The system is quite straightforward; I have outlined its main features and I hope the Minister will give some consideration to it because there is nothing in the Bill to show the exercise of great imagination in reforming our tax structure as it needs to be reformed.

A further comment on what I was saying earlier in regard to negative income tax; our whole approach should be to ensure that ultimately everybody in the community has a minimum family income appropriate to the size of the family, preferably, where possible, earned from employment. If employment does not yield enough then the employment income should be supplemented through transfers. Out of that they should pay out whatever they have to pay for housing and everything else. That is what the aim should be. Beyond that minimum family income there should be progressive taxation. This is the kind of structure we should aim at. We have not got it.

We have an extraordinary, higgledy-piggledy system drawn up quite unconsciously and unintentionally. The various steps that led to the present tax system are explicable in historical terms but nobody descending from another planet and looking at our tax system could understand its rationale if he did not read the history of taxation of the United Kingdom and Ireland back for decades certainly, and in certain respects for centuries. A tax system which bears so much the marks of historical origin, which can only be understood in terms of a book of history and not in terms of an economic textbook or books concerned with social justice, is a tax system that needs radical reform to which would need to be applied the kind of imagination so notably absent from this legislation and which has been, with rare and on the whole minor exceptions, absent from the legislation of this Government during their period in office.

I want to say something about social welfare but I wonder if here too I am going to be inhibited. From the point of view of the economist there is nothing to distinguish as taxation money levied in social welfare contributions from money levied in income tax and indirect taxation. If we look at the national accounts as published by the Central Statistics Office we find all these treated together as taxation, but is it the convention of this House for some curious historical reason that social welfare contributions are not taxation and cannot therefore be referred to?

The Chair has already pointed out what is in order for discussion on this particular measure—taxation proposals in this Bill and other effective taxation.

I am not entitled to say what is not in the Bill and what is not in the Bill is provision to tax people by one method or another in such a way as to provide an income-related social welfare system?

The Chair has already pointed out that on that basis a person might enlarge the scope of the debate and discuss anything.

All I am trying to discuss is taxation as I understand it as an economist and as is included in our national accounts. I raise the point for no other purpose than to show the urgent need for a reform of the conventions of this House. It is, for an economist, ludicrous to discuss the taxation system and not to discuss one of the main sources of taxation and not to be able to say that this Bill ought to contain provision for an income-related social welfare code involving contributions raised by what I call taxation in relation to people's income through social welfare contributions, which are taxation. Is it the case that I cannot advocate the inclusion in this Bill of such taxation?

The Chair would welcome just as much as any Deputy would welcome it if the conventions of the House permitted Deputies to range over so wide a discussion.

I only wish to talk about taxation which should be in the Bill. What I am anxious to know is whether the definition of taxation for the purposes of this House excludes social welfare contributions?

What is proper to Estimates is not proper to a discussion on the Finance Bill.

But the taxation of people through social welfare contributions—is that proper to estimates of expenditure? Surely that is not the case. Surely the taking of money from people is taxation and must be discussed under some tax measure.

The Deputy appreciates that the Minister for Social Welfare brings in an Estimate on which these matters can be dealt with.

That is how they spend the money; the raising of the money is what concerns me.

The Deputy is well aware that the Budget debate gives Deputies an opportunity to argues these points.

And social welfare legislation too.

The convention of the House is that the raising of money for social welfare is dealt with in a social welfare Bill, which is really a Finance Bill but is not treated as such for the purposes of this House.

It is not treated like the Finance Bill which we are discussing.

How can one discuss taxation when one area of taxation is shut off and is called something else for some silly—by "silly" I do not mean any disrespect to the House —historical reason? It makes discussion from the point of view of an economist very difficult. I defer to the Chair's decision but I suggest we shall have to reconsider the whole system because no economist can possibly compartment one form of taxation from another and expenditure from taxation. He finds himself unable to talk on any Bill relating to income tax and unable to discuss social welfare contributions to taxation when they are that. It just does not make sense. I shall have to accept my frustration and leave it at that.

We are dealing here with the Second Stage of the Finance Bill, 1971. The purpose of the Finance Bill is to implement the provisions contained in the Budget. I hope the Minister will not consider I am too rude when I say that the Budget this year was a fraud and it must consequently follow that the Finance Bill is also a fraud.

Hear, hear. The Deputy is right. They will not allow me ask a question about the fraud.

A long debate followed the detailed Budget Statement made by the Minister, followed by the Financial Resolutions and the time of the House is now being taken up on what can be described as this farcical pretence of a Bill. The Budget which is either the father or step-father of this Bill did not make any effort to remedy our present economic difficulties. It was provisionless and lacked initiative or imagination. How can we expect to debate the Finance Bill with any degree of commonsense or sincerity? When we consider the financial set-up of this country we must remember we are a very small economy which, in my view, is on the doorstep of bankruptcy. We are seeking to get into the EEC because we feel it is our only hope and our only salvation. We are not prepared for entry to the EEC but we are less prepared to stay outside the EEC. Our national debt has gone far beyond all our expectations. Taxpayers are obliged to pay something in the region of £95 million interest on the national debt. We have borrowed so much money from abroad because the capacity of our own taxpayers to pay has reached its limit, that those from whom we are borrowing are putting certain restrictive conditions on the way we spend the money we borrow from them. This is probably one of the origins of the community school idea. The people we are borrowing from probably told us that we were spending too much borrowed money on the provision of schools and we would therefore have to give new thought and consideration to the money we are spending on education.

This Bill imposes certain taxes. Have either the Minister for Finance or the Government considered the capacity of the people to pay these increased taxes? At the moment there are close on 85,000 persons unemployed that we know of and there are as many more that we do not know of. Our agricultural industry is in the doldrums because of lack of financial investment. Industry is having its own difficulties and those engaged in industry find that the pinch of certain tariff cuts and restrictions is rendering it impossible for them to continue to produce at an economic rate. There is, whatever the Minister may say, a large amount of unemployment in industry. There is unemployment in industry, stagnation in agriculture and emigration at an unprecedented rate.

Ah, not that. Whatever else, not that.

We have been told that there has been a falling-off in emigration. I want to assure the Minister for Finance that whatever statistics are available to substantiate the case that the West of Ireland has been denuded of its population we now have a similar cancer of emigration eating into the entire midlands from Kilkenny up to the Longford/Leitrim area.

The gap between the rich and the poor in this country is becoming wider. We are a country with very wealthy people, a country with very high spending, a country with an outward appearance of prosperity. We like to show that prosperity when we have a distinguished visitor like President Nixon or any other distinguished visitor. We make sure he is driven from Áras an Uachtaráin down O'Connell Street to the City Hall. He is never taken to the slums, to where there are bad housing conditions, to where there are very poor people. He is never taken to see the long queues outside the labour exchanges where there are hundreds of people who can find no work and are there for a few shillings unemployment benefit or unemployment assistance.

We expect provisions in a Finance Bill to put the Government in a position to apply certain funds to the improvement of the general economic structure of the country, to the provision of schemes of development, to the provision of employment and the general stimulation of money in the economy. We can describe this as purely artificial prosperity. When the Minister for Finance was preparing his Budget and preparing this Bill had he no serious thoughts at the back of his mind that he would have to prepare a Finance Bill that would yield sufficient funds to enable him, as Minister for Finance, and his colleagues in Government to eliminate from our society the vast amount of concealed poverty that is in our midst? Whatever taxation is extracted from the pockets of taxpayers by this Bill will be insufficient to even scratch the surface of eliminating from our society the vast amount of distress and poverty that prevails among the sick, the very old, the mentally retarded and various other groups with low incomes.

There is nothing imaginative in this Bill nor, indeed, in the Budget which will contribute in any way towards giving us the social welfare benefits and services, the health service or even the housing facilities, sanitary and public services we need. There is nothing in the Budget nor in this Bill which leads us to believe that the passing of this Bill will contribute towards relieving the heavily burdened rural and urban ratepayers.

The Chair will permit me to refresh the Minister's memory by quoting the first six sentences of a leading article in the Sunday Independent of the 18th January last year. As Minister for Finance, he cannot disclaim responsibility. I expected that a leading article of this kind would have made some impression on the Government and particularly on the Minister for Finance so that when he would be framing his Budget and implementing it through the provisions of the Finance Bill he would bear in mind the first ten lines of this leading article.

(Cavan): May I ask the Deputy if it is the 18th January, 1971 or 1970?

I seem to remember another leading article in that newspaper which concerned the Deputy. I wonder if it convinced him.

I cannot recall that one. I have been referred to in so many leading articles that it is just not possible to identify it straight away. If the Minister would give me a further hint, perhaps later on——

I think we might be out of order if we pursued that.

——I am sure it would be possible to recall it. Anyway, this leading article refers to the fact that three old people died from neglect in Dublin. I quote:

Three old people died from neglect over the Christmas and New Year periods in Dublin. The inquests held into their deaths gave heart failure from cold; starvation; and pneumonia as the causes. But first and foremost these old people died from neglect.

I shall not go further lest it might be considered by the very learned Acting Chairman as irrelevant. When one sees a newspaper publishing a leading article on a subject of such importance and urgency one expects it to be a headline for the Minister for Finance in the following year to take some practical steps to see that this will never occur again. The Budget or Finance Bill introduced this year will be entirely ineffective in so far as bringing relief to any section of our people is concerned because our people have reached the limit in the payment of all forms of taxation. We must be one of the most heavily taxed people in the world. Let us take motoring for example. Between motor insurance, taxation on petrol which yields a very handsome sum to the Minister and taxation on all vehicles, we must have the dearest motoring in the whole world.

That brings me to the question of the income tax free allowance which is permitted to workers. Everyone in rural Ireland knows that it is absolutely necessary for a worker employed in a rural district and living in a town or an urban area to have a car or some form of transport to get to his work and to return home. This has been brought about by Government policy. A few years ago the Government issued a directive to local authorities not to build houses in rural districts and that houses for workers, be they agricultural workers or forestry workers, were to be built in groups where water was readily available adjacent to towns and in urban areas. Now, more than ever before, workers must leave the town in the morning and return home at night after their day's work in a rural area. Forestry workers may be obliged to work in mountainous districts or in extensive valleys. Usually forestry plantations are several miles from an urban area or a town.

In this Finance Bill the Minister should have made provision for the granting of a generous allowance to such a worker who, through no fault of his own but because of Government policy, has to travel to work. He is expected to purchase petrol, to tax his car and to insure it to the satisfaction of the insurance companies. In referring to insurance companies may I say that there are two institutions in this country which are getting fatter and richer at the expense of their customers growing thinner and poorer: the insurance companies and the banks The Minister is sitting idly by watching insurance companies prosper and grow, and watching the banks restricting credit instead of seeing to it that a reasonable amount of credit is given to the public.

Acting Chairman

The Chair reminds the Deputy that a detailed discussion on the insurance companies or the banks would not be in order.

I quite appreciate that. I want to deal with the income tax free allowances. Every time a request is made to the Minister on this matter, lame excuses are made that it is not possible to raise the ceiling. The figure today for a single man or a married man is the same as it has been for years. The time has come when some reasonable approach will have to be made to this problem. The tax free allowance which was decided on many years ago is not what one would expect it to be in this day and age.

I am also convinced, and I am sure many other Deputies are convinced, that no real encouragement is given to people to work harder and to work longer hours. On the one hand we are told that it would be in the best interests of the community if we worked harder and longer but, on the other hand, why should any man work overtime if the greater percentage of his overtime earnings is taken from him and spent for him? I am sure the Minister has numerous contacts with workers in his own constituency. If he consults with any ordinary group of workers he will find that keen dissatisfaction will be expressed at the fact that if they work overtime their pay packets are immediately raided by the income tax authorities.

It has been my experience that tax inspectors are as reasonable as reasonable men could be, but they must obey the law, and the regulations are laid down rigidly for them. They should be permitted to use their own discretion in granting certain allowances to needy and deserving cases. It cannot be any great pleasure for tax inspectors or their officials throughout the country to have to stick to the hard and fast, cold and rigid laws. Very great hardship has been experienced by people through the payment of income tax which they could ill afford. Business people who spend a reasonable amount of money on the improvement of their premises should have some provision made for them in the income tax regulations. They should get certain concessions for ploughing back some of their money into their business.

The Minister for Finance should consider seriously the case of members of fire brigades and civil defence employed by local authorities. These people who may, from time to time, be in receipt of a small remuneration for their services, find that this small remuneration is added to whatever other income they may have for income tax purposes. The Minister is well aware that these civic-minded people are prepared to serve at all hours of the day or night when called upon. Instead of the amount they receive being subject to income tax, they should be given some concession for their services.

The Government have succeeded in extracting all they possibly could, by way of taxation, from the taxpayers of this country. The office of the Inspector of Taxes has been a very profitable branch of the Civil Service to the Minister for Finance. I have yet to hear any tribute being paid to the unpaid tax collectors of the nation—the shopkeepers and the other business people who, in some cases, have had to pay additional staff and who have had to give of their time in the preparation of books and records for turnover tax purposes. One would have expected that instead of the imposition of additional taxation, some provision would have been included in this year's Finance Bill that would have been a gesture of appreciation to the thousands of people who have had to assume the role of unpaid tax collectors for Fianna Fáil. Many of these people have been put out of business in their efforts to collect this tax for Fianna Fáil or for the Government. It is difficult to know whether it is for the party or for the Government that they must collect it or for which Fianna Fáil Government or which Fianna Fáil Party it was collected. No matter who it was for, they have had to pay up and are continuing to pay up. The Minister had not even the courtesy to thank those people. One way of expressing thanks to them would have been to permit them to retain a percentage of the turnover tax to help compensate them for the time given by themselves and their staffs to this task. The turnover tax has been a disaster from the day of its introduction and it will be a disaster while it is in existence.

The Minister referred to industrial grants. There is great need for new industrial employment. It would appear that an area which has been designated as an undeveloped area attracts from the Government for the establishment of industries a greater degree of financial support than would an area not so designated. Is it correct to say that the new policy of the IDA is that where they consider it to be warranted the same rate of grant will be made available readily in undevelop areas not so regarded? If this is so, I welcome the change. It is unfortunate that one poverty stricken part of the country should be in competition with another poverty stricken part.

The stage has been reached where it is very difficult to know what area should be designated as an undeveloped area because as a result of the Government's activities during the past few years, I can safely declare as undeveloped the entire 26 Counties. It appears that that is what the Minister for Finance is now getting around to. I do not know of any part of the country that is not in need of greater industrial development and employment than are the midlands.

This does not arise on the Finance Bill. We are dealing with taxation.

It is much of a muchness. I wish to refer briefly to the question of death duties. Death duties should have been abolished entirely long ago. Death duties have been responsible for the breaking up of numerous families and the disposal of many homesteads. Having regard to the small amount of money involved it would be a wise and courageous step to abolish death duties.

I was glad that steps have been taken to facilitate persons arriving in this country by boat or plane and who have no dutiable goods to declare. Representations have been made on numerous occasions to the Minister for Finance and to his predecessor that in the height of the tourist season persons were queueing up at Dublin Airport and other entry points and those who had nothing to declare had to wait until the customs authorities had dealt with persons who had dutiable goods to declare. Those responsible for the administration of customs offices at the airport and seaports will, naturally enough, read the debates and the comments that have been made. Every officer likes to read the comments made on matters concerning his sphere of activity. Would it be too much trouble for the Minister for Finance to address a circular to those responsible for the inspection of the personal luggage of passengers arriving at Dún Laoghaire and Dublin Airport? While to my knowledge the customs officers have been most courteous and extremely kind they seem to lack the virtue of patience. There is nothing more humiliating than to see a leg of a man's pyjamas dragged across the table in the customs shed while the officer is searching the case. On occasions, even where passengers were accompanied by small children, the cases were emptied and their owners had to repack them and to fasten them. I realise that the customs officers are most kind and courteous. All they need is patience. I suggest that they should be good enough to help the passengers to re-arrange the contents of the cases when they have inspected them and satisfied themselves that there is no illegal importation. This would avoid disturbance and inconvenience to passengers.

I am sure that numerous letters have been written to the Minister for Finance and to the airport authorities and to the B & I Company directing attention to this matter. Customs officers feel that they are doing their duty, as undoubtedly they are, when they investigate the contents of luggage but they must realise that considerable inconvenience is caused to visitors who expect a high degree of friendship, courtesy, hospitality and welcome. It is very poor welcome and hospitality to leave a person at Dublin Airport or Dún Laoghaire to re-arrange and repack his luggage. This has happened particularly in the summertime, when there was really no need for it, during the month of August and the last weeks of July, when whole families are coming over from England to spend a holiday in this country. If the mother of a family arrives with small children, and there is clear evidence that the luggage contains personal garments belonging to the family, the customs officers should be prepared to accept the word of the head of the family that is nothing to be declared.

I am glad that this year steps are being taken to facilitate those who have nothing to declare and who are coming by boat or by plane. There will be a suitable gangway provided for them so that they can leave the customs shed as quickly as possible after satisfying the customs officer that there is nothing to declare.

When Deputy Haughey was Minister for Finance he introduced certain tax concessions for writers, journalists, artists, dramatists and other highly-talented persons, concessions which were welcomed by such persons. Would the Minister for Finance bear in mind that there are certain Irish craftsmen and tradesmen living abroad who would equally appreciate such recognition as was given to novelists, journalists, playwrights and other friends of the Department of Finance? There is a grave shortage of blacksmiths in this country. That leads one to the question of the shortage of horses. There are a number of Irish blacksmiths in Britain who should be given financial concessions to induce them to return and to use their skills for the benefit of this country. In an effort to induce them to return they should be informed that they will not be liable for income tax or other forms of taxation if they pursue in this country the crafts in which they specialise. It may have been a good thing to make special provision for writers and novelists but there are numerous other persons who specialise in certain activities who are living abroad. Where it can be established that there is need for these specialised tradesmen a similar concession should be given to them.

The people have been slow to transfer property to members of their families. This prompts me to refer briefly to estate duty. When a Canadian or a citizen of the United States or Britain realises that he is getting on in years and is not able to shoulder responsibility, he transfers his farm or his property to a member of his family, but the same situation does not obtain here. On numerous occasions landowners have sought my advice as to whether it would be wise to sign over their property to a member of their family or, in some cases, to a friend. The first thing they ask me to do is to check on the scale of stamp duty in addition to the solicitor's and valuer's costs and other expenses. They hesitate to effect the transfer because they consider the costs an unnecessary outlay.

We should encourage landowners to transfer their property to their sons. In Ireland the tendency has been for parents to retain the property until they reach the age of 70 years, by which time the members of their families are in their late forties. If the duty payable on transfer of property were abolished much of the opposition of property owners to signing over their property would be eliminated. Every encouragement should be given to parents to transfer property to their children.

The brewing and distilling industry has passed through a difficult time. This industry is one of the oldest and most profitable of Irish industries. The various Finance Bills did not contain sufficient concessions to encourage expansion of this industry. We all read with a certain amount of amazement that as a result of economies and reorganisation to be exercised by Messrs. Guinness and Company a considerable number of workers may be redundant. Every budget has made it more difficult for those engaged in the brewing, distilling and malting industry, and the present Budget is no exception. I represent a constituency which was well-known in bygone days for its number of outstanding maltings. A considerable amount of distilling is undertaken in the area. Irish Mist, which has been a good dollar earner for the country, is manufactured in my constituency. The Minister for Finance should consider seriously how he can help to encourage people engaged in brewing, distilling and in the operation of malthouses. The malthouses are in-take sources for malting barley, which is a profitable crop.

All budgets in recent years have endeavoured in a determined way, and with malice, to ensure that people with a long association with this industry operate under the most difficult conditions. I should like to have seen some provisions giving substantial relief to those engaged in this industry.

There is one other matter I should like to raise. It is the severe burden of taxation on industrial concerns as a result of successive Finance Bills. I suggest to the Minister that where an industry encourages worker participation in the highest degree, with profit sharing as part of that participation, certain tax concessions should be granted. If workers could feel that they had a deeper and more personal interest in a particular industry the results could be epoch-making. There would be greater loyalty, harder work and a better output. Tax concessions on profit sharing with the workers could play an important part in helping industry to gear itself for entry into Europe. It would also make for better industrial relations. There would be fewer strikes and fewer grievances.

I do not know if I am in order in referring to the value-added tax but I have just one observation to make. Many people are very worried because they are completely in the dark. I want to bring to the attention of the Minister a letter addressed to him on 7th May last by the Irish Auctioneers and Valuers Institute expressing deep concern at involvement in the value-added tax. I would appeal to the Minister to clarify the position. The intention is to introduce the tax by 1st January, 1972. That is considered by the institute to be much too hasty a timetable for such an important change in our tax system. The institute protest that the time allowed is inadequate to test public reaction and they urge that the date for the changeover should be deferred to 1st January, 1973, at the earliest. The change is a very big one and more time is needed by the public to study what is involved. White Papers are issued on all sorts of subjects. The time has come when we should have some kind of information on this proposed change in our tax system. The Minister should put his cards on the table, but not the same pack that the Minister for Foreign Affairs is using in Brussels; he has said that he never plays all his cards in one game. This is an occasion on which the hand should be put down. The clear implications of this value added tax should be made known to the public. The Institute of Valuers are in my opinion correct when they say the Minister should defer this change-over until 1973 at the earliest. I commend their suggestion. I trust he will readily grant the reasonable request contained in their letter.

This Finance Bill is a disappointment. It is like the Budget, a complete fraud. Deputies on all sides should have no qualms in telling the Minister that there is nothing in the Budget to improve the financial or economic position of the country. The purpose of the Finance Bill is to implement the tax provisions of the budget. This Bill is a complete farce and will have no result. We must all express our keenest disappointment at the lack of drive, initiative and courage in this measure. There is no attempt to tackle the numerous problems which are seriously affecting the country. There is nothing in this Bill to speed the day when the vast amount of hidden poverty in our society will be eliminated.

We can only wait and hope. We can only tolerate the patchwork help and propping up of those who are so unfortunate as to be on the poverty line. There is a vast amount of poverty in our society and the Budget has done nothing to eliminate it. Until we have a Finance Bill showing courage, drive and initiative, tackling the problem of poverty courageously, with a clear attempt to raise the standard of living, there will be no real progress. The fact that we have so many people in our society who can be described and are described as second or third class citizens is no credit to us. After 14 years of Fianna Fáil Government there is no evidence of any drive to remove poverty from our society but on the contrary there appears to be a growing need for more voluntary organisations to help those who should be helped by the State but because the State closes its eyes and ears to its responsibilities it is left to somebody else to do in the name of charity what the State should do to remove poverty from our society.

If there was ever a time when serious decisions should have emanated from the Budget and the Finance Bill, this it it. At the time of the Budget it had become clear that we would be in the Common Market sooner than we had previously thought. That meant serious change and even though there would be a transitional period that change would come quite quickly, twice as quickly as in the case of the Anglo-Irish Free Trade Area Agreement. The fact that our people would be anticipating the coming changes and aligning their businesses accordingly would mean a change in employment and, as Deputy FitzGerald quite rightly said, a loss of employment in certain cases and a gain in others. This was a time requiring positive action, positive statements and positive change. Instead, we had a situation of utter stagnation. We have now been studying Common Market proposals and the coming changes in Europe and the changes involved in the Anglo-Irish Free Trade Area Agreement for, I suppose, ten years. It is certainly seven or eight years ago since I was on a study tour with Members of this House and I recall having a few very pleasant days during that tour with a member of the party opposite, the late Don Davern, God rest him. Those who have ministerial or shadow-ministerial responsibility have been involved in this study for so long that it was possible for us to forecast changes in the business situation and the employment situation and forecast the changes we should make even in advance of the first reduction in tariffs.

I know that my Labour Party colleagues take the view that perhaps we should not go into the EEC. I do not want to offend against the rules of order by going too deeply into a discussion on the Common Market but it is so relevant on the Finance Bill that I must deal with it to some extent.

It does not arise on the Finance Bill which deals solely with the taxation imposed in the Budget.

I am dealing with the system of taxation that should have been changed and the system of incentives that should have been changed because of the knowledge we had. However, I shall pass from it in deference to the Chair. I am rather in the position of somebody with Hobson's choice. We should have addressed ourselves to serious bargaining and to changes in our tax structure, our incentive structure and our national structure which would have better fitted us for the challenge that is to come.

This Budget and this Finance Bill reinforce the fact that there has not been a Government for the past two years. There are only 24 hours in every day and the maximum amount of mental work a person can do is eight hours per day. When the Government was involved with internal differences the attention of their members which should have been focussed on the problems facing the country was not so focussed. Instead they took the advice of the civil servants on the tax yields that would accrue in existing situations and, as a result, there was introduced what I described in the Budget debate as a "sweet Fanny Adams" Budget. It did nothing for anybody.

If one looks at sections 6 and 8 of this Bill one sees that the unearned income relief is increased from £225 to £250 for married people and from £125 to £150 for single and widowed people. In section 8 one finds that the limit of income to which small incomes relief applies was increased from £500 to £600 and when it is less than £600 a flat £150 of the income or the lesser. These are tiny changes which, when related to the increase in the cost of living, are actually unfair. They leave the people worse off than they were before the Budget was introduced.

A young executive from Aer Lingus visited my home last night about a certain local government problem. He told me he had got a £70 increment and the Government had already taken back £69 of it. He wondered how they would get the other £. I told him he would not have to worry about that; they would probably get another £10, £15, or £20. Indeed when one takes into account the amount of wholesale tax and turnover tax one pays they will get much, much more.

The Budget is a stay as you were Budget at a time when there was need for a change and this Finance Bill is spectacular for what is not in it. There is nothing in this Bill to help this country out of the doldrums. When the results of the census are known I wonder if we shall find the increase in population which we had hoped for has not happened and whether, in fact, since the last census there has been an increase in emigration.

I want to refer now to Government spending. The raising of taxation through this Finance Bill and the excessive load it has placed upon the backs of the people is in my view the result of incorrect spending by the Government. Saving has been described as wise spending but this Government never seem to have been able to curtail the huge increase in expenditure which follows in the Book of Estimates year by year. This has made it necessary to raise a vastly increased sum which is doing nothing for anybody. Nobody, whether in receipt of unemployment benefit, social welfare benefit or doing well in business, can say that he got anything out of this Budget. The average increase given to social welfare recipients varies above and below 10 per cent. In the case of people on unemployment assistance and people who are not getting some of their own money and some of their employer's money back it is generally something less than 10 per cent. In the case of people who are getting some of their money back and some of their employer's money back it is generally above 10 per cent. The reply given to a question put down by me at the time of the Budget indicated that the increase in the consumer price index was 10 per cent. I examined the long list which came in that reply and isolated such items as brandy, whiskey, cigars and other luxury items and, having done so, I made my own computation. It showed an increase of 12½ per cent in the cost of living as far as the ordinary necessaries of modern life are concerned. I put this figure to the Minister who emphatically denied it. He said it was in the region of 8 per cent.

At the time I was making my computation I did not know OECD were going to produce a figure as well. They did not isolate the luxuries I have referred to and I do not know what the components of their survey were. However they produced a figure of over 10 per cent. The Minister for Finance who had, perhaps, the easier situation of denying that my figure of 12½ per cent was correct found he had to deny the OECD figure and OECD with their offices in Paris have no bone to pick with our Minister for Finance. They exist to help the nations in this part of the world progress. They are there to do a job and anybody who has been there, met the officials and seen how they work realises that their report is an impartial document. The position is that social welfare recipients in this Budget got marginally more or marginally less than 10 per cent.

I feel the Deputy is going back to the Budget.

This is what the Finance Bill is for.

No, the Finance Bill deals with taxation not Government expenditure. Government expenditure does not arise on this Bill.

I should like now to discuss the question of death duties. The Minister defended the infamous death duty system in his Budget speech. At the present moment an estate of £5,000, £10,000, £15,000 or £20,000 is a very small one as far as the income coming therefrom in each normal case is concerned. A person might have a modest house valued at £5,000, he could have a business that might be valued at £10,000 and he could have stock and an excess of debtors over creditors of another £5,000. That person might have the right to live in that house and might not be earning more than about £1,000 a year. That person has to pay very heavy death duties. The Minister in this Bill has slightly changed the situation in relation to a widow but death duties are extremely unfair and it is quite incorrect for the Minister to have left, in the way he has, death duties there at a time when the value of property in sterling has increased and the profits accruing from that property have, in fact, decreased as far as anybody in business in this country can see. The impact of large supermarkets, the impact of modern trading on smaller businesses, should have caused the Minister to make a much more spectacular concession to small estates as far as death duties are concerned. I think we would all agree that 15 or 20 years ago a man with £20,000 was a rich man and that today, unless he realises it and lives on it, and it will not be long going away from him, that man as far as income therefrom is concerned is perhaps not a rich man at all.

The inclusion of gifts in consideration of marriage for stamp duty is something that strikes right across the normal and ordinary way of life. The way of life in rural Ireland was that the farmer contrived as best he could to have something to give his daughters when they married. That something might be small or it might be large. A figure of £5,000 today is not a very large figure. The more substantial farmers who might have more than £5,000 to give to their daughters on marriage will now have to pay stamp duty on this and in my view this is most unfair. This is something that is unfair at its very roots because the farmers pay very high rates. People talk about farmers not paying income tax but there are two things I should like to say in relation to this new tax which is being imposed in this Bill or will be imposed if the Government get their way. The value of farms is in the relationship of about three to two above the earning capacity of those farms. I know that the Agricultural Credit Corporation, in assessing the ability of a farmer to repay a loan, take the sale value of a farm at three and take the earning capacity of that farm at two. In other words, the farm that is assessed as being worth £30,000 on the open market is assessed as having an earning capacity as far as ordinary business is concerned of £20,000. That means that a gift from a farmer of land valued at £5,000, £6,000, £7,000 has a lesser earning capacity than anything else that could be given, say, a small business, shares or any of these other things. This means that this new taxation will bear very heavily indeed.

Let us look at the impact on small earned incomes of the direct taxation imposed in this Bill. I referred to the very small increases in the allowances that are being made. When we first introduced PAYE the normal wage at that time was possibly about £10 a week for the ordinary worker who was not a foreman. This man was paying tax at that stage on about one-third of his earnings if he had no dependants. If he had a wife he was paying no tax and if he had a wife and children he could earn far more than the average of £10 which is a fair estimate of what wages were at that time. Wages have increased and the value of money has dropped. The worker is now paying PAYE at the same rate, in fact at a slightly increased rate because of the change made by the Minister in this Bill, on a far higher proportion of his income. A man earning £20 is by no means a rich man. A man earning £20 with a wife and a child is paying some small amount of tax. A man with £25 a week is paying a fair amount of tax. A man with £30 a week, who might be, for instance, a driver of a heavy lorry and who might have to do very hard manual work, very long hours and difficult times away from home with irregular meals, could be paying a very high proportion of his income in direct taxation. This was never intended. This is something that was not considered to be the proper thing when PAYE was first introduced.

Let us face the fact that the Government have cashed in on the PAYE situation. They have, in fact, increased the cost of production to a stage at which no matter what increase the unfortunate worker gets, between the impact of direct taxation, the increase in the cost of production which his increased wage costs and after that the indirect taxation contained in turnover tax, which was doubled only a year ago, and selective wholesale tax which was increased again by 2 1/2 per cent to a total of 20 per cent, the amount that the ordinary man who does not go too wild either in drinking or spending on luxuries pays to the Government in tax is a very high percentage indeed. This was never intended.

There could have been some freedom created in this regard if there had been savings made by the Government in some of their excessive expenditure and if there had been an increase in the allowances given particularly to the worker with dependants. One of the great complaints of the worker is that while the director of the company, and in many cases the executive of the company, may be in a position to charge travelling expenses the worker is not allowed travelling expenses. If he lives, as many do, 10 or 15 miles from his work then this unfortunate man must drive there five or six days a week by the expensive method of having a motor car. It may be said that the public transport service is available. In my constituency there are 1,200 workers going through the gate of the GEC in Dunleer. There is a bus service which comes up and down the main road from Drogheda to Dundalk but I do not think there is another bus service available to them. I go home from this House by the Ashbourne road on which there are four buses a day from Finglas out. They carry the workers from Unidare and hundreds of workers from the various industries which Deputies know are out in Finglas and the various service industries such as the supermarkets and shops. There are not enough passengers to have a decent bus service put on these routes.

The man with £15 or £20 a week, or even £25 a week, with dependants, must have some form of locomotion. With the type of winters we have here it would hardly be practical for him to have a motor scooter unless he lived in the city. This man has to pay on everything above a very low figure at the rate of 5s 3d in the £1. The concession he had whereby there was a reduced rate of tax on the first £100 has been removed from him in this Budget. He has to provide his own transport. I have seen figures produced on the back of an envelope, which I could vouch for because the only variable was the cost of transport, which showed that these men had as little as £10 a week left to spend on the necessaries of life. After that there is the dreadful impact of indirect taxation.

I want to refer now to something that should have been done in this Bill. References have been made to the value-added tax, and obviously a value-added tax must come. I suppose value-added tax could be described as a surgeon's knife in comparison to selective wholesale tax and turnover tax which are blunt weapons which impose the same rate of taxation on a great variety of commodities. Surely if the Minister for Finance were really in command of his job and had a grip on his job, and if he were looking forward, he could have gone half way and, for instance, excluded some essential articles from selective wholesale tax. He could have reduced the impact of selective wholesale tax on those articles and increased the rate on luxury items. Surely there could have been some move towards a value-added tax so that its impact would not be the great cold plunge into the icy sea. We all know about the cold plunge into the sea of the turnover tax and the cold plunge into the sea of the selective wholesale tax.

The book-keeping necessary for value-added tax will be a very heavy burden upon the people. Could we not have gone half way? In so doing could we not have achieved some measure of justice in moving heavy taxation a little bit away from essential items which come in great numbers under the selective wholesale tax provision of 20 per cent, and moving towards higher taxation, if we have to have higher taxation, on luxury items? Is this not something that we should have thought about?

I have referred to the fact that social welfare recipients are now worse off and that the Minister's denial of this across the House was disproved by the OECD. They produced a figure of a 10 per cent increase in the cost of living over the 12 months. It is going from the sublime to the ridiculous to find the principal Minister of the Government, with the exception of the Taoiseach, contradicting an ordinary Deputy who has done his own sums and then find him contradicting an institution involving about 5,000 civil servants in Paris who have no axe to grind.

Today at Question Time the whole despicable, disgraceful, weak, knock-kneed sort of operation which the removal of the dole was, was unfolded. I put down a carefully worded question to extract from the Minister for Social Welfare the exact impact on the poor people on the western seaboard of the removal of the dole. I do not want to go into the three moves on the chessboard but, in the first instance, every single person was to lose the dole. Then we had the second and third moves. The answer given disclosed that well over 8,000 people lost the dole. In this Bill there is provision to change the original intention of the Government to remove the dole from 16,000 people. The horror that the first proposal evoked, the responsible, active and energetic actions of the Opposition, the comments of the free press, and the way in which the ordinary Fianna Fáil Deputy found himself received by his constituents produced the change.

I do not want to go into great detail on this but, at the same time, it is so despicable a provision that it must be referred to in some detail. Let me say again how dreadful it is that 8,000 poor people who live on the western seaboard, in places like north-Leitrim where there is no opportunity for work, and where all the willingness in the world does not help a person to get work, now get nothing but home assistance because of Government action.

The Chair does not understand how the Deputy can deal with this matter on this Bill.

With respect, this Bill deals with taxation to raise money for social welfare benefits and assistance. If there has been a deliberate reduction by the Government surely that is relevant to the Finance Bill.

The Deputy will appreciate that this Bill raises the necessary finance for every Estimate which comes before the House.

Very well, I will move on from that. I do not think it is necessary for me to say anything further. I am quite certain that tomorrow the free press will give the people the figures for the number of unfortunate people who lost their mere pittance. I should like to refer now to the section which imposes a rate of interest of 9 per cent on tax which has not been paid. The previous situation was that when estate or death duties had not been paid interest was charged at the rate of 4 per cent. Very often there are very good reasons why such tax is not paid. I know there may be people who would try to evade paying it and who would drag payment out for as long as possible. On the other hand, I am sure that my colleague here, Deputy Fitzpatrick, could instance many cases where, because property had not been sold or because of family or legal difficulties, it was not possible to pay the tax or duty due to the Revenue Commissioners. However, there is the other point that in this Bill there is no provision whereby interest at 9 per cent would be paid to a person who paid tax or duties to the Revenue Commissioners in advance. It has been drawn to my attention that what is sauce for the goose is sauce for the gander and that if the Revenue Commissioners wished to charge 9 per cent on money owed to them, they should likewise pay the same rate for taxes or duties paid in advance. It is unfair to increase this rate from 4 to 9 per cent.

I had hoped that in this Bill there would have been the removal of the infamous increase in corporation profits tax. I have been told by businessmen whose parent companies are in Britain that it is a very simple and, legally proper matter to increase the service charges made by the parent company for administration and other purposes, to increase the cost of commodities manufactured here from imported raw material and to make more profit in Britain and less profit here. The non-removal of the corporation profits tax increase has created the situation whereby in about 70 per cent of cases there is less taxation to be paid in Britain. I am aware that the Minister has indicated and, properly so, that there is a difference in Britain in relation to the payment of dividends and tax on dividends and their payment here. While that is true, it is true also that in many cases, particularly if a dividend is not to be paid or if a small dividend is to be paid, it would suit people better to pay the tax in Britain. I prophesy that the yield in extra revenue which the Department have indicated will accrue as a result of this extra taxation, will not accrue because there are very big companies in this country whose parent companies are overseas and if the rate of tax overseas is less than what it is here, they will pay it overseas. Nobody could prove very easily what was the cost of such a company's raw materials, what were their administration expenses or what was the cost for any other service they provided.

Without mentioning the name of any company, the type of company that would be likely to be involved would be an oil company or other big companies whose parent company is overseas. Many of these companies would be likely to have common shareholders or shareholders who held shares also in other companies.

It is my contention that the corporation profits tax imposed during the year was a political animal. It was produced in the Finance (No. 2) Bill of 1970 and the reason it was produced was because at the same time a sister Bill had been produced for the purpose of holding down wages. This latter Bill, because of its unpopularity in trade union circles and with the people generally, was withdrawn but the Government, having gone out on a limb and said that this unfortunate Bill was necessary and that it would yield £3½ milion in that year and £6 million in a full year, let that imposition stand. It was political in the sense that if the Government intended hitting the worker, they would also have to hit the industrialist but having been forced to withdraw the Bill that was intended to hit the workers, they had no option but to leave the other imposition.

There was the opportunity in this Bill to remove that imposition and to impose more equitable taxation. Also, there was the opportunity to spend less and to help the people but that was not done because there was not time to do it. The position was that the Minister and his Government had no time to apply themselves to these matters because of their own internal difficulties.

The Finance Bill does not deal with the position of sterling. We have moved some distance from the old system whereby our £ was tied entirely to the British £ but anybody who has been reading the events that are fore-shadowed for Europe will know that one of the conditions for Britain's accession to Europe is that sterling will disappear as a reserve currency. He will be aware that Britain have undertaken to get rid of their reserves and place them in a different way during the first years within the Community. Therefore, sterling will be phased out as a reserve currency. However, our Government will do nothing about that until this time 12 months. I wonder what Britain are doing. I wonder if the Civil Service as it exists in the Department of Finance, or if the expertise that exists in the Revenue Commissioners, had an ear into which they could talk or whether this is simply a stay-as-you-are Budget.

The other point that arises is that we have pledged ourselves in this Bill to a 9 per cent interest in respect of overdue amounts. In the Common Market there is a conflict on interest rates. One group wish to reflate their economies by way of having low interest rates while other groups believe in having high interest rates. There is no word in the Minister's speech about that situation nor is there any word in it about the position in so far as interest rates are concerned. There is no indication in his speech as to what interest he is to pay on money placed with him on short term such as, for instance, on Exchequer Bills. All that has been disregarded. There has been no thinking about it. The Minister for Finance has produced no thought on it in his Budget, no thought on it here. Where are we going in that case? Are we going to be another 12 months nearer Europe, nearer the end of the Anglo-Irish free trade situation, with out having done anything to fit ourselves for the great change that is to come? This Finance Bill is as dull as a dark wet day. Yet the Minister for Foreign Affairs tells us that we are entering the European Economic Community.

Is the Deputy in order, a Leas-Cheann Comhairle?

Will the Deputy tell the House what he would do if he were Minister for Foreign Affairs? I should like to hear that.

I thought we were discussing the Finance Bill.

The Chair will decide when it hears what the Deputy is dealing with.

What I am discussing, in fact, is largely what is not in the Finance Bill.

That is the point.

I have listened to this debate. I have heard people discuss malthouses, almost everything under the sun. I bow to the ruling of the Chair. For 15 or 16 years, except for a short stay in the Seanad, when I found the Cathaoirleach there the very same, I have found the Chair in this House very fair, very accommodating, very obliging, in all their persons.

I agree, but I am sure the Deputy will agree with me that if we were to discuss everything that is not in every Bill we would do no business for the country at all.

It is not for me to say but I would regard myself as entirely out of order, for instance, if I were to discuss the light weight gain of cattle but I am not discussing the light weight gain of cattle. I am discussing the fact that there is nothing in this Bill directed towards the fact that within three years we will be economically within a unit which is defined as financially, monetarily and economically nine-fourteenths the size of the United States of America.

If the Deputy would assist the Chair in this matter, the position is that on this Bill you can deal with the finance measures that appear in the Bill or what the Deputy may think should be in the Bill in regard to taxation.

Yes. Then, I must, therefore, come back to section 2 and deal with the fact that there was this small alleviation whereby a person who was on the edge of the income tax-paying bracket got a reduced charge on the first £100 of his taxable income. That is removed. In the words of the explanatory memorandum, it is terminated. This may seem a very small thing but I am sure Deputy Burke will agree with me, seeing that he was so interested in my remarks, that the person on the very edge of the income tax-paying bracket is either a person who has a very small income and no dependants or a person who has a modest income and dependants and that the termination of this small alleviation was a mean provision. It may represent £20 or £30 but £20 or £30 to a man on the edge of the income tax-paying bracket means a new suit, or several pairs of children's shoes or a couple of children's suits. The bottom of the barrel must have been scraped fairly clean when the Government had to resort to removing this small alleviation which was of such great benefit to persons on the very edge of the income tax-paying bracket.

I have no objection to section 4 because that section appears to prevent the avoidance of tax. The legal avoidance of tax is, of course, by description, legal but if it is something that can get past the net of the Revenue Commissioners which was not intended to get past and which it is unjust to allow to pass, it is right and proper that the loopholes should be closed. Section 4 closes a loophole and, therefore, I do not see any objection to it and I say that it is a proper way to approach the matter.

Section 5 is a very small section dealing with the question of a trade mark and allowing a person to charge it as a business expense. I have not the slightest doubt that 99 per cent of auditors were charging it as a business expense and that nobody was going to find out about it.

I wonder how much that will cost the Exchequer in any full year?

It is one of the things thought up by somebody in a back room. In Section 10 we increase from £222 to £243 the income limit of a dependent relative in respect of whom the maximum deduction of £60 may be given. What does this really mean? The Minister for Finance was told by the OECD that he was wrong and that, in fact, the cost of living here increased by 10 per cent. We have the pattern that I have described of social welfare that those on contributory social welfare benefits, and such like, got a bit more than 10 per cent and those on non-contributory allowances got a bit less than 10 per cent. We now have a situation in which the increase is of the order of £20 on £220, in other words, it is no increase at all; it is just keeping pace with the increase in the cost of living during the year. This proves that the Bill had as much thought and as much effort put into its general drafting as the smallest and least important piece of legislation that ever passed through this House could have had. There is the provision for the blind person and that is to be welcomed. Section 12, of course, is nothing more than the bringing into line of this Bill with the Social Welfare Act of 1970. Again, these things are necessary.

The Minister got to section 12 in the first page of his speech. I gather we are in for a long evening.

If the Parliamentary Secretary wants a long evening, he will get it.

I gather that. The speech just happens to be there in front of me. The Minister got to section 12 on the first page of his contribution.

That is all right. That does not worry me at all.

I do not know why the Fine Gael Deputies are so anxious to delay this Bill. Surely the meat is on Committee Stage rather than on Second Stage?

There is nobody in any mood to delay this Bill. The position is that we will make our contributions here, I hope without the help of the Parliamentary Secretary and with, as I said, the very efficient and fair approach of the Chair which has always been shown in this House to the Opposition. In regard to the allowances referred to in section 13, all this means is that we will continue these allowances until 31st March, 1973. My guess is that in 1973 another Finance Bill will make provision for continuation of the allowances. This arrangement was necessary because the old provision was becoming out-of-date.

I suppose we must regard taxes on liquor as automatic. However, we must accept that the cost of beer is much more expensive in this country than in Britain. Reference was made by Deputy Oliver Flanagan to the position regarding the largest brewery in these islands—I think it was the largest brewery in the world at one time. Dublin Deputies in particular must be well aware of what is happening in this instance. An economic situation seems to exist whereby the brewery in question may consider it a more sensible procedure to expand production outside this country. One of the factors that may influence the decision taken in this case is the price of beer. The man in the street has a certain amount of money set aside each week for his enjoyment. Some choose to save this money, some to spend it in recreational pastimes and others choose to spend it on drink. The fact that beer costs more in this country will play an important part in deciding whether the brewery referred to by Deputy Oliver Flanagan decides to continue with development and expansion in Ireland. Not alone do the taxes on beer have an adverse effect on our tourist trade but in this instance they may even mean the loss of one of our largest industries.

We must face the fact that we are to blame for much of this. Every Budget changes the financial and economic structure of the economy one way or another. In the past things remained very much as they were and all that was needed were various adjustments in taxes and allowances. However, in the modern economy the Budget is an instrument for the raising of taxation and for the correction of inflation or deflation where this is needed. In the modern State adjustments are necessary not only once a year but many times during the year. If one follows what has happened in Britain and their struggle to get their balance of payments right, one realises they have succeeded because they paid constant attention to the economy.

Evidence of such attention is not present in this Finance Bill. This is an old-fashioned Bill that changes slightly the rates of taxes. It increases the taxes on beer and cigarettes in the old-fashioned way in order to reach a figure that will gain the revenue the Government need.

Now was the time for change. This was the moment when we should have made changes in our economic structure. Change need not be striking in its effect; it should not be felt to any great extent. However, it should produce the desired effect in a modern economy. It should produce the effect that would provide more employment, a better living for our people and a chance to increase our exports, on which we are dependent.

This Finance Bill does not do any of these things. Its approach to social welfare problems leaves much to be desired. The increases in the allowances given to those people who are maintaining relatives, indeed the allowances given to all social welfare recipients, have been of the order of 10 per cent and have only compensated for the increase in the cost of living. My computation of the consumer price index, when the more exotic items were removed, produced a figure of 12½ per cent which was contradicted by the Minister. Perhaps the Minister can argue with me regarding the difference between 10 per cent and 12½ per cent. The Minister also had to contradict the figure of a 10 per cent increase in the cost of living produced by the OECD.

This Finance Bill has done nothing for the country and is proof of the non-government of Fianna Fáil. It imposes stamp duty tax for the first time on presents and on wedding gifts. In many cases the latter item represents savings for 20 years or more, sometimes in the form of insurance policies taken out by parents for their children. Savings made in that way strike at the very heart of the community. It reminds me of the infamous Finance Act of 1965. Under one provision of that Act the Married Women's Property Act was not allowed to apply in the case of insurance policies taken out by husbands as a means of providing for their wives, so that wives would not be left penniless should their husbands predecease them. That was one of the most dastardly enactments ever passed by this House. Some of us, indeed, sold our insurance policies because of that penal provision. That is a measure of the sort of thing Fianna Fáil will do when they are short of money—bring within the scope of the taxation net life insurance policies for estate duty purposes.

This Finance Bill does nothing for anybody. The sooner this Government get out the better. There will be a long period of convalescence after the present economic sickness before the essential remedial measures will bear fruit. Deputy O.J. Flanagan spoke eloquently about our forgotten poor. Everybody knows that the present social welfare benefits are utterly inadequate. There is no alternative except the emigrant ship.

Again, may I remind the Deputy that he is getting away from the Bill?

I want to see this Government out, and out soon, so that next year's Finance Bill will make the changes necessary.

I was interested in Deputy Donegan's mournful speech on the financial state of the country and his charge that we are not doing anything for the weaker sections in our community. Deputy Donegan is a very honourable man——

So are they all—all honourable men.

(Cavan): That is more than can be said for some of the boys over there.

——but Deputy Donegan has not been altogether honest in describing the economic state of the country.

A person cannot be honourable and dishonest at the same time.

(Cavan): Deputy Burke was officiating today, do not put him off his train of thought now.

I came in specially to listen to Deputy Donegan. Believe it or not, I am always anxious to learn. According to Deputy Donegan everything is wrong. Deputy O.J. Flanagan spoke about the old age pensions, children's allowances and various other benefits but both Deputy Flanagan and Deputy Donegan voted against increases for those in receipt of social welfare.

Deputies

Hear, hear.

That is the fact. They apparently think the Minister for Finance is a multi-millionaire.

Not this Minister for Finance.

The last Minister for Finance.

They apparently think he can give increases out of his own pocket, thereby avoiding increasing taxation in any way. This is codology. None of us likes increases in taxation but, as practical people, we realise that benefits for the weaker sections of our community cannot be improved without increased taxation. If Deputy Donegan could show us the way to increase benefits without increasing taxation I would build a monument to him in County Louth.

There already is one—the 600 to 700 houses in the pipeline since we took over the county council. Fianna Fáil built 130 in seven years. There is my monument now.

There is a monument to me in the city and county of Dublin where we built thousands of houses.

And Skerries harbour.

We have all been associated with the building of houses in the last 30 years. I am talking about a monument to the man who was going to improve our economy. Deputy Luke Belton is an honourable man. If there was any way in which the Minister could increase social welfare benefits without increasing taxation then he would follow that course. I hoped Deputy Donegan might have some solution, but I was disappointed. Deputy Flanagan made a statement on Friday about the old age pensioners. Did the Minister see that?

I did not.

It was a long statement to the effect that the old age pensioners——

Deputy Burke will appreciate we are on the Finance Bill.

I am dealing with the Finance Bill. May I claim your indulgence, Sir, because you are an honourable man.

The House is full of honourable men tonight.

May I claim the indulgence of the Chair? I shall not embarrass him.

Give the Deputy a chance to keep going until 10.30.

He said we were only giving so much money to the old age pensioners, the widows and orphans, the unemployed, the disabled and so on but he did not tell the people that he voted against the increases for these people. I am now telling the Dáil that he did.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Strange things have happened in our time. Imagine calling for a count at this hour of the night. Yet the Deputy is a good public representative and is doing his job very well. He is a misguided Deputy. He voted against the increase for the poor widows, the poor old age pensioners and against the deserted wives' allowances. I would never believe a charitable man like him would do something like that. He is a very gentle and decent man. Deputy Oliver Flanagan says we have provided only £5 for old age pensioners but when the Minister for Finance was giving an increase for old age pensioners, widows and orphans, Deputy Oliver Flanagan voted against it. Did the Minister for Finance know that?

I did not.

No doubt queer things have happened in our time.

(Cavan): The Deputy can say that again.

Did the Chair know that all Members of the Labour Party voted against these increases? I can scarcely believe it myself.

Ochón agus ochón.

It was said that we were a Party that was against the poor and against the worker——

We know now you were only against yourselves.

When these people voted against the increases I mentioned the fact and I asked myself: "Am I seeing things? Is it true that the socialist Party voted against an increase for the poor widows and orphans, the deserted widows, old age pensioners, sick benefits, unemployment benefit and a number of other things I shall not delay the House with?"

What exactly is a deserted widow?

Does the Minister remember these people voting against these things?

We are becoming accustomed to this.

The present Government have to become accustomed to anything.

They brought in a motion to increase old age pensions——

The Deputy voted against it.

I am delighted at the Deputy's interruption. They brought in this codology motion and expected that the Minister would be a multi-millionaire ten times over and that he could pay what they proposed out of his own pocket. When I was speaking previously I quoted from an old play in which I took part long before I came into the Dáil and had to give up acting——

(Cavan): The Deputy only started then.

Mac Liammoir is only trotting after you.

(Interruptions.)

The extreme socialists and the Fine Gael Party proposed this motion and they wanted the Minister to give all the increases out of his own pocket but dare he look for any increased taxation. It was The Merchant of Venice again. This is what we are up against.

(Interruptions.)

As the Deputy said himself, you are up against queer things.

I never thought I would have witnessed all these things in my time.

Nobody else did either.

If I have time to write my reminiscences I shall devote a special chapter to the extreme socialist party and how they voted against an increase for old age pensioners.

I thought they did not turn up that night.

I shall tell the Deputy what they voted against. They voted against an increase in the widows' and orphans' pensions, the deserted wives' allowance——

Deserted widows.

(Interruptions.)

Would the Deputy move the adjournment?

Debate adjourned.
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