Committee on Finance. - Value-Added Tax Bill, 1971: Report Stage (Resumed).

Amendment No. 15 not moved.

To amendment No. 16 there are a number of alternatives and consequential amendments. It has been suggested that we should take amendments Nos. 16 to 24, inclusive, 28, 30, 31, 32, 47, 48, 50 and 51 together.

Might it not be better to take amendments Nos. 16 and 17 together? Amendment No. 16 contains the principle of the single rate of tax at retail level and is really the crucial one, although I think amendment No. 47 is consequential on it. The others are concerned with a different matter, the matter of rounding. It is true that in amendment No. 16 there is provision also for rounding but the main feature is the single rate of tax at retail level.

I suggest that we discuss them as the Ceann Comhairle proposes. We can have separate votes if necessary.

Yes, separate divisions. It has been suggested that amendments Nos. 17, 18, 20 and 22 form an alternative proposal and might be taken together.

They form an alternative in so far as they involve a somewhat different system of rounding but do not deal at all with the question of the single rate of tax at retail level because some of the rounding refers to the very tax which we are trying to eliminate in amendment No. 16. We could discuss amendments Nos. 16 and 47 and confine ourselves to the single rate and discuss the question of rounding on the others.

I suggest that there would of necessity be a duplication of much of the discussion and I think the other way would be better, allowing separate decisions, if we want them at that stage.

I do not mind very much but the single rate of tax and rounding are totally different issues. However, we can take them together.

I move amendment No. 16:

In pages 14 and 15, to delete subsections (1) and (2) and to insert:

"(1) Tax shall, subject to subsection (2) be charged at whichever of the following rates is appropriate in any particular case—

(a) 11 per cent of the appropriate amount of any consideration which relates to the promotion of dances and the delivery (if any) of goods and the rendering (if any) of services other than those specified in the First, Second and Third Schedules, in connection with dances, where payment of the consideration for such delivery or rendering is included in the consideration in respect of admission to the dance or is a condition of admission.

(b) 30 per cent of the appropriate amount of any consideration which relates to the delivery of goods specified in the Third Schedule.

(c) 5 per cent on the appropriate amount of any consideration which relates to the delivery of goods or the rendering of services other than those specified in the First, Second and Third Schedules.

(d) zero per cent of the appropriate amount of any consideration which relates to the delivery of any goods in the circumstances specified in paragraph (i) or (c) of the Second Schedule or the delivery of goods of a kind specified in paragraphs (vi) to (viii) of that Schedule or the rendering of services of a kind specified in that Schedule.

(2) Where goods which are of a kind specified in the Third Schedule and which—

(a) were imported, or sold in the State, before the specified day in such circumstances that wholesale tax was chargeable or would have been chargeable if that tax had been in force on the date of the importation or sale, or

(b) were imported or delivered on any previous occasion on or after that date in such circumstances that tax at the rate of 30 per cent was chargeable in relation to such importation or delivery.

are delivered within the State on or after the specified day by a person other than a manufacturer of goods of the kind so delivered, tax shall be charged at the rate of 5 per cent of the appropriate amount of the consideration for such delivery."

As these amendments are being discussed together, I shall have to deal with both the single rate of tax and the rounding of the amounts. I shall not dwell on the latter because Deputy Collins will want to speak on that in relation to his amendment and discuss the issue and principle of rounding more fully than I would wish to do. I am concerned with the single rate of tax.

The effect of this amendment would be to eliminate the present wholesale tax rate of 10 per cent which, in conjunction with turnover tax, means a 16.37 per cent tax rate, although, as I pointed out earlier that, in fact, involves a higher figure and more money than is involved in the present wholesale tax. A system that imposes two separate rates of tax is, we believe, something to be avoided. We also believe—I shall not dwell on this— that products like food should be excluded or derated. As this would cause some difficulties for retailers—though, by no means, the same difficulties as having two tax rates—we feel this is an added reason for having a simpler tax rate. To achieve this in accordance with the amendment set down would involve a loss of revenue to the Exchequer because it would involve charging goods that are now charged at 10 per cent wholesale tax at the turnover tax rate only. That is a strong reason against the amendment, but I would point out that the reason why the amendment takes this form, and why it does not make any provision to cope with the problem which would undoubtedly be posed for the Exchequer in losing this tax revenue, is that the Rules of the House and, indeed, I believe the Constitution do not permit us to make proposals involving an increase in taxation and we would, therefore, be ruled out of order if we put down an amendment in that form. I am, I think, permitted to say however that, as far as we are concerned, we recognise the need to maintain revenue and, were the principle in this amendment to be accepted with a view to securing a single rate of tax at retail level, we would be sympathetic to an appropriate proposal to secure additional revenue by other means. This would clearly involve some adjustment in tax rates so I would like the House not to take this amendment too literally but to recognise that the rules have necessitated our putting down an amendment which is really not in the form in which we would like it to be, and which involves an adverse impact on the Exchequer, whereas we fully recognise, as a responsible Opposition, that if you are going to have a single rate of tax and if you are going to have also, as we will propose in a later amendment, a zero rate on food and other products, adjustments would need to be made in tax rates to obviate any loss. What I would like to discuss, therefore, on this amendment is the principle of the single rate of tax and not the literal wording of the amendment.

It is clear that, if retailers and wholesalers have two rates of tax proposals, very severe problems will be posed for them indeed, especially because the borderline between the two is by no means clear. We have had representations from one organisation, the Irish Drug Association, setting out some of the products in question. I think these came up at the special committee where the point was made by us that, on the basis of that list, it becomes extremely difficult for anyone running any kind of business to make the necessary distinction. The whole business would need to be organised in a different way to achieve this.

The products that were mentioned were baby cream, which would have a tax of 5.26 per cent, baby powder which would have a tax of 16.37 per cent, baby food which would have a tax of 5.26 per cent and baby bottles and teats would have a tax of 16.37 per cent, nappy-liners, 5.26 per cent, but nappy-pins 16.37 per cent, magnesia 5.26 per cent and baby toilet utensils, not unconnected, 16.37 per cent. A system which requires a chemist to segregate all these articles on the basis of distinctions which are certainly not clear to me and not, I think, to the chemist, never mind the baby, is one which introduces unnecessary complexity into the system and the desirability of having a single rate of tax is immediately evident. One can take that position and, at the same time, believing that food should be zero-rated, a clearcut division in regard to food and things like newspapers and books should be easy enough to operate. Even if our other proposal in relation to certain other goods other than food sold by grocers is accepted the purpose of that is, in fact, to make it simpler for the average grocer's shop which deals in other articles like soap and detergents to operate, drawing a line roughly where the grocer's shop ends and another type of shop begins. We could argue the merits of that and I can see a case being made against extending the zero rate on food to other products. However, we can discuss that later.

Any lines drawn must be clear and simple. Where it is between zero-rating and two rates of tax it must be clear and simple for the retailer and wholesaler to be able to operate it simply. The rationale of distinguishing baby food from baby powder, nappy-liners from nappy-pins and baby powder from baby bottles and teats is something which is lost on me and I defy the Minister to produce a rationale which would come readily to the mind of the retail chemist so that, as he deals with these goods, he instinctively knows which one falls into which category. No such clearcut distinctions exist at the present time.

For these reasons it seems to me vital that there should be a single rate of tax and the demand for this from both the retail and the wholesale trade is overwhelming. There are, of course, problems involved. Of course, our system at present, involved in both a wholesale and a retail tax, does not easily lend itself to this without loss of revenue but we have put forward proposals, which I shall dwell on at greater length later, designed to meet this particular point. It is our view that this could best be met by having a single rate of retail tax which would need to be marginally higher than the present rate to bring in additional revenue and to compensate for the loss of zero-rating food and the single rate of wholesale tax which would merge the present two rates of wholesale tax into something like an average of the two. Such an arrangement could then be operated on the basis of trapping that wholesale tax at the manufacturing level and this would then reduce the number of taxes at retail level to a single rate of tax, plus, if our proposal in relation to food and other products is accepted, the zero-rating of these articles. From the retailers' point of view and the wholesalers' point of view this would be very much simpler and it seems to us that, although this involves signiticant changes in the incidence of tax, as these charges can be secured in such a manner as to benefit the poorer consumer and place the burden on the better off, the only valid objection to the changes in the incidence of tax connected with the question of a single rate of tax disappears. For these reasons we would press the Minister to accept the principles of the amendment by recognising that the amendment itself would need to be varied somewhat to ensure that acceptance of this principle would not lead to a loss of revenue to the Exchequer.

I agree in principle with what Deputy FitzGerald has said. I am, however, more interested in my own amendments, Nos. 17 to 24, 28, 30, 31, 32, 48, 50 and 51. These are concerned with the rounding of the rates of taxation under the value-added tax system. Under the latter system our tax system will become more complicated. I do not think this is fully appreciated in commercial and industrial circles. I have been considering the structure which will emerge. We will have a zero rate of tax for some goods, a 5.26 per cent rate of tax for other goods and services, an 11.11 per cent rate of tax for certain activities, a 16.37 per cent rate of tax on goods not classified as luxuries and a rate of 30.26 per cent on certain luxury goods? This will cause traders a great deal of trouble.

There is a very good case for rounding off all these figures. I refer the House to the proposals for a value-added tax system in a paper laid before this House in March, 1971. On the section dealing with the manner in which value-added tax works it was stated that each taxpayer arrives at his liability by taking first the full amount invoiced by him for a chargeable period for taxable goods sold or taxable services rendered and by applying the rate or rates of tax appropriate thereto. From the resulting sum he deducts the value-added tax invoiced to him on his purchases of goods or services or borne on goods imported by him in the same period. This will necessitate a tremendous amount of accounting and accountability right along the line from the point of manufacture through the wholesale and retail levels.

I am satisfied that each business unit will have to have an invoice for each distinct purchase, setting out the prices of the goods to which will be added the appropriate rate of taxes for the various commodities. In the case of some firms working on a two-monthly period, there would be thousands of transactions involved. On the sales side the trader would have to keep separate accounts of the selling prices and would have to show also the appropriate rate or rates of tax charged on the selling prices of the goods. These would all have to be compiled every two months and the tax paid would have to be substracted from the tax received.

Surely the figure should be rounded off if only for practical purposes. By rounding them off as I have suggested, that is, from 5.26 to 5 per cent, from 11.11 to 10 per cent, from 30.26 to 30 per cent and from 16.37 to 10 per cent, a certain amount of simplicity would be introduced into the system in relation to invoicing. This would help in no small way to alleviate the administrative difficulties which this system will involve for traders. It will be difficult for a clerk in an office to make out invoices which will have columns for the various tax rates. Looking at the suggested invoices published by the Department it will be seen that this will lead to an expensive set of documentation. I know that part of the exercise of this system is to make it unprofitable for people to evade taxation. Under the value-added tax system each trader will be forced to keep proper accounts if he is to get the full value for tax he has to pay. He can do this only by offsetting the tax he has paid against the tax he has collected. This will force a certain amount of proper accountability. We in this party would not favour the evasion of taxes by anyone as was suggested by the Minister this morning. Such evasion would be very unfair to those traders who account for tax under the present systems.

I do not wish to delay the House on this point but I wish to emphasise again the logic of rounding up the figures. Admittedly the adoption of the figures I have mentioned would result in a loss of revenue to the Revenue Commissioners. I am aware that a reduction in the rate from 16.37 to 10 per cent, for instance, would involve a substantial loss of revenue but I merely wish to make it clear to the House that the principle I am advocating is one of rounding off figures for the purpose of facilitating traders in compiling their daily invoices. I do not think anyone can argue against the validity of that principle. It is not a matter of a trader having to pay 5 per cent to the Revenue Commissioners and, therefore, having to charge 5.26 per cent on his turnover in order to bring in this amount. This is the system operating at present under the turnover tax system which is a sales tax, whereas value-added tax is not a sales tax. Under the value-added tax system there will be a deduction from a gross receipt of tax. I do not know why these fractional figures were suggested in the first place. At the special committee it was suggested that the reason for them was to maintain the present structure of taxation. I do not think that the present structure can be brought to the second decimal place. That is going beyond what is reasonable or necessary.

Perhaps I am speaking for every trader when I say that they would wish to have figures which could be ascertained easily at the point of making out invoices. Instead of a 30.26 per cent rate I would not be against having a 33? per cent rate but, of course, I could not suggest that by way of amendment because it would be ruled out of order. A figure of 33? per cent would be easy to calculate. Again, in relation to the 16.37 per cent rate I have suggested a rate of 10 per cent. Perhaps a more realistic figure in this instance would be 15 per cent which would not be difficult to calculate either. The point is that it should be possible to incorporate a system of simple figures which would reduce the task of calculation for the traders at all levels and in particular at retail level. I ask the Minister to reconsider this question. During the sittings of the special committee, he gave no indication of being sympathetic in relation to the practical administration of this new system at the commercial and industrial levels. I am asking him now to appreciate the obvious difficulties and unnecessary complications which these figures will involve for traders and to accept rounded off figures.

This group of amendments, I think, provides a suitable opportunity to say a few words I want to say about the conduct of one of the members of the special committee. The Minister, at the end of the last ordinary meeting suggested that we should have a private meeting. Next day there appeared in the newspapers, obviously from a particular Deputy whom the Minister identified for us at a subsequent meeting, a notice that this private meeting had been arranged, and not alone that, but a statement as to what was to be discussed at it. I consider that conduct contemptible. Democracy cannot work if people behave like that. Democracy is at present being subverted and here we have a Deputy who pretends to be a great upholder of democracy and he behaves like this. But there were much more serious results than that——

The meeting to which the Deputy is referring is one of which the full minutes are to be published in due course and there was nothing private about it at all.

On the contrary, the Deputy is entirely wrong: no minutes were taken of it. There was no reporter at it.

The meeting at which the decision was taken as a result of which the accusation is being levelled at me was a meeting the minutes of which were taken and they are to be published.

They have not been published yet.

(Interruptions.)

Let me deal with this matter once and for all. If we are to have special committees——

They are to be published.

The Deputy can make that case. The Deputy is a dishonourable person.

The Chair is anxious to get on with the amendments.

It is necessary to deal with this matter once and for all. If we are to have special committees——

Am I not entitled to a reply on that point?

The Deputy already spoke on it this morning. He defended himself by telling a lot of fibs and untruths in the House.

Deputy O'Donovan on the amendment.

The Deputy pretended he had taken up the argument with the Minister but that is not the issue. The issue is the disclosure——

Is the word "untruths" parliamentary?

It is quite parliamentary.

I asked the Leas-Cheann Comhairle, not Deputy O'Donovan.

If the Deputy is imputing that an untruth was told by Deputy FitzGerald it would not be in order to do so.

I think he said untruths were told by the Deputy.

Untruths and fibs.

I presume what Deputy O'Donovan meant was that Deputy FitzGerald's statements were inaccurate.

Sir, the fact is that Deputy FitzGerald pretended that only——

On a point of order. What about the untruths alleged against me?

Would the Deputy shut up for a minute? He has been talking all day.

I am raising a point of order. Perhaps the Deputy would not shut up but stay quiet while the Leas-Cheann Comhairle rules.

The Leas-Cheann Comhairle has ruled.

Yes, I have ruled. I said that if the Deputy said Deputy FitzGerald was telling an untruth it would not be in order.

I think the Leas-Cheann Comhairle is aware that the Deputy did, in fact, say that fibs and untruths were told by me here this morning. Therefore, I take it he will ask the Deputy to withdraw.

I am not going back on that. I stand over what I said. This morning here the Deputy deliberately drew down this on an amendment to which it did not relate——

Is this an apology or a withdrawal?

It is neither because the Deputy misbehaved himself in a most disgraceful fashion. You cannot have this kind of thing in a democratic institution——

Is the Deputy going to withdraw?

I am not going to withdraw it. The Deputy can do what he likes about it.

I was asking the Leas-Cheann Comhairle if Deputy O'Donovan will withdraw.

What the Chair has already said in regard to the matter is that if a Member imputes to another that he told an untruth then normally the Deputy concerned, when it is brought to his attention, withdraws. In this case the Chair understands that Deputy O'Donovan used this phrase "fibs and untruths".

That is true. I have not heard him withdraw it.

There will be no withdrawal because certainly the Deputy misled the House or attempted to mislead the House this morning.

That is a different issue.

He did attempt to mislead the House this morning. He pretended the issue was what happened last weekend. That was not the issue at all. The issue was, is, and will remain his conduct the day after the Minister——

I think I am entitled to the protection of the Chair.

I am sure Deputy O'Donovan would withdraw any imputation of untruth if he made such.

If the word is required to be withdrawn I withdraw the word but I want to keep on my point. This was a special committee set up for a very good reason which we all know. They worked quite well and when they were finishing their ordinary sittings where a report was being taken, the Minister said: "Let us have a special meeting about the taxation of food, a private meeting." That private meeting was held last Thursday and there were no reporters at it but before it was held, a member of the committee dashes off, gets in contact with the newspapers, saying the Minister made that suggestion and it all appeared the next day that the Fine Gael Party had proposed that taxation be taken off food.

And the Labour Party.

Deputy O'Donovan on the amendment.

Deputy FitzGerald keeps on interrupting but he will not get me off this. He is not getting off this hook so easily. It was dishonourable and discreditable conduct and the result was—and this is what I am concerned about; I do not give a fig about Deputy FitzGerald scoring petty points—that when we met the Minister last Thursday his whole attitude had changed, perfectly correctly because his confidence had been disclosed in public and violated. It was a most dishonourable and disgraceful business. I do not care who did it: the Minister knows well that if anybody in the Minister's party did it I would say the very same things about him. I am damned if I see why I should not say them about a Deputy on the other side of the House. It was quite wrong——

I shall be given equal time to reply on this amendment. I take it?

Will the Deputy observe order?

The Deputy moved the amendment and will have the right to conclude on it.

And I shall be able to discuss these allegations.

The Deputy may discuss them till he is blue in the face. It was a discreditable and dishonourable business.

Would the Deputy deal with the amendments now?

If the Chair would prefer I can talk at length on this matter on amendment No. 40 or amendment No. 41.

The Deputy is more interesting on the other topic.

You bet I am, much more interesting. This special committee and the whole democratic system of Parliament cannot work if Members are going to behave in that dishonourable fashion.

The Deputy is aware that he cannot deal with the procedures of Parliament on this Bill now.

I could put down a motion of repudiation of the activities of Deputy FitzGerald on the matter but to be quite honest I do not think he is worth it. I would certainly do it with the greatest pleasure but it is not worth it.

On a point of order, could I ask whether an allegation that a Deputy acts dishonourably by disclosing the proceedings of this committee, which are printed and published subsequently, and in respect of which there is no confidentiality, is in order?

Generally, in regard to matters like this political charges are made by Members of the House from time to time. Where there are personal imputations involved the Chair always protects the reputation where a Member is personally affected but political charges are very often made across the House.

And the Chair thinks this does not affect my personal reputation?

Deputy FitzGerald has considerable experience of making charges of that kind.

This is a real example of these "instant politics" about which I have frequently protested, dashing round to the newspapers——

The Deputy will realise that we are very far from the amendments before the House.

He is enjoying himself.

If the Chair would prefer I could keep my remarks until amendment No. 40 or No. 41 because they would certainly be relevant then. May I explain to the Chair? The whole atmosphere changed and rightly so; I think the Minister was quite right; if it had happened to me I should not have been as quiet about it as the Minister was. He did not lose his temper but he certainly dug in his heels and he was not even going to consider our amendment. I shall deal with that afterwards. I can give very cogent reasons as to why we put it down. I think the Minister appreciates those reasons. The behaviour of Deputy FitzGerald on that occasion was not in accordance with ordinary common decency in political life. Nobody does that kind of thing. When the Provisional IRA were to meet Mr. Whitelaw they did not announce it, and neither did he. It came out four or five days later.

I did not realise that our committee was in that category.

The Deputy does not realise many things.

I have allowed the Deputy to make his point and the Deputy should now deal with the amendments.

In deference to the Chair I will leave the matter for the present. It relates primarily to the food subsidies so on the amendment dealing with the food subsidies I will say more about it.

The Deputy is too skilled a parliamentarian not to know that repetition is out of order.

On a different amendment.

He has been out of order for the past five minutes.

We have also been known to have a change in the Chair.

It is very good to hear Deputy FitzGerald talk about my being out of order for five minutes considering the hours we listen to him repeating things which he has been told were wrong over and over again. I would put up with anything, but I will not put up with dishonourable conduct. It was a discreditable business that he should rush around to the newspapers that evening and say: "We of the Fine Gael Party have got the Minister to agree to talk about abolishing tax on foods."

And the Labour Party.

I am sure that Deputy O'Donovan will now deal with the amendment.

I am in favour of amendments to round these taxes to even figures. I am aware of the Minister's argument on the special committee that it would not make that much difference.

It is like the coalition gimmick.

What about the Provos? I thought the Deputy was at variance with somebody not so long ago.

I regard this taxation as a very serious matter. If the special committee were to work properly the Minister was giving it a real opportunity to do so when he suggested a private meeting. I believe the Minister. I take people as I find them. I wrote to the Minister about it and got a most cordial reply from him. In the meantime, Deputy FitzGerald had committed this crazy coot action. It was the action of a crazy coot individual to dash around to the newspapers and tell them we were going to have a private meeting, and what it was about. It would be bad enough to tell them that there was to be a private meeting of the committee but to tell them what it was about was most discreditable and dishonourable.

Part of the proceedings of the committee which will be on public record in due course when the printers get around to printing it.

In due course. Mr. Whitelaw's meeting with the IRA came out in due course also. It did not come out beforehand.

This is the meeting Deputy Tully felt the press should be at.

It would have been preferable to have the press at all the meetings. Then they would not have to get unofficial reporters to tell them their version of what happened and give the impression that not merely were there only two parties on the committee, Fianna Fáil and Fine Gael, but only two people, the Minister and Deputy FitzGerald.

Deputy Tully should accept that I said the Fine Gael Party and the Labour Party.

That is not what was said in the papers, on radio and on television.

If Deputies do not accept my assurance I cannot help it.

I am dealing with the discreditable behaviour of the Deputy.

We must get on with the business of the House.

It would be no harm if we did, and if Deputy FitzGerald would subside for a few minutes. He has to listen now. He has no option. Normally he does not listen. He leaves the House the minute he has finished speaking. There was an occasion not so long ago when he was pulling his hair out by the roots because Deputy O. J. Flanagan was called before him. I got in after him and Deputy FitzGerald had to listen. He was like a jerking Jehovah.

I always enjoy Deputy Flanagan, whatever about Deputy O'Donovan.

Deputy O'Donovan on the amendment.

In the proceedings of the committee which have already been published the Minister said that an evening-off of the tax would not achieve what we wanted. He also said that what appears to be the case on the surface very often is the case if sufficient people come to believe it. I discussed this matter with a professional accountant yesterday, a man of some standing in the city, and he told me there is no question but that the rounded figures are the ones. I am not a professional accountant but I know a good deal about figures.

The ordinary trader will be appalled by a figure like 16.37, for example. The Minister raised great objection to having more than two rates. He said it would make it very complicated for the traders. There are many people who go back like a snail into a shell at the sight of figures like these. If the figure is 5 or 10 or 20 per cent they feel they know what it is about but the bulk of the people are horrified at a figure like 16.37. Therefore I am strongly in favour of these amendments to get the system on an even keel. I appreciate that computers and machines can be set to tick this thing out but there are many traders who not only could not afford a computer but could not afford any machine. These unfortunate people, having started early in the morning and done their day's work, will have to spend at least one evening every week, probably until 2 o'clock in the morning, trying to make their returns to the Revenue Commissioners.

The Minister and his officials may be right. I want to make a comment. We did not see a Revenue Commissioner during all of these meetings. This is of some importance. It is on the same topic as what I said about Deputy FitzGerald. It does not do the standing of a special committee of this House any good if no Revenue Commissioner appears before it. When I was a member of the Civil Service, during the budget debate the chairman of the Revenue Commissioners was always here and so was the secretary of the Department of Finance. Nowadays I notice they are here on the day of the big show, the day the Minister reads his budget speech, and then they "vamoose" and some juniors are put in instead of them. I do not mean any disrespect to those men. I simply mean that the senior men disappear. I do not think they even wait for the motions to put the taxes into operation to be dealt with. They go immediately the Minister finishes speaking. What I am doing is trying to defend democracy.

Secret democracy.

Deputy FitzGerald was suspicious of the Prisons Bill and then he voted for it. I have no use for lip-service democracy. I believe in democracy and I have always believed in it. If the private proceedings of a special committee are to be reported in advance to the newspapers they cannot function. The special committee did not function that day. That may appear to be a reflection on the Minister but it is not intended that way. I do not blame the Minister for making up his mind that he had enough of that kind of thing and that he would not put up with it. You cannot have a discussion in private and in public at the same time.

These amendments are all being taken together, I am glad to say. There is a plethora of them. It seems to me that they are reasonable from the point of view of how they will appear to the public. You work this thing in fives: 5, 15, 30, something like that. I will leave what I was going to say in relation to the scheme which got so much publicity for Deputy FitzGerald and the Fine Gael Party to be dealt with on the amendment relating to tax on food. I have said what I want to say on these amendments and I am strongly in favour of them.

I should like to hear the Minister's comment, if he does not mind coming in before me. Deputy FitzGerald will be concluding.

The Deputy will appreciate that I am in some difficulty when I can speak only once.

In that case it is only fair to the Minister that I should make my comment, which will be brief. Like Deputy O'Donovan, I feel that there should be a rounded off figure. I have been looking through the report of the debate in an effort to find the relevant portion where the Minister referred to the countries which were already charging value-added tax. I am afraid there was a difference of opinion in the special committee about some of the rates of tax. Eventually we ironed out what exactly was happening in the countries referred to. I mentioned in the early part of the afternoon that while the Minister quoted The Netherlands as being the country on which we were basing our tax system——

Not copying.

"Basing" is the word I used — he seemed to think that in Sweden there was also something worth following. I found going through the report that somebody had done a pretty good job of selecting the tough systems and trying to incorporate them in ours. This was a wrong idea. As to the number of rates of taxes being used, the Minister said that in one country there were four rates being used. It turned out that only two were in operation, the other two did not count very much.

The Minister has been insisting that it is necessary to go to two places of decimals for the purpose of having an accurate tax here. Of the countries on which he has been basing his system none has done so. With one exception, all European countries have a rounded off system of tax. There is one country using one system only. That is, of course, a high rate. I do not think any of us would be satisfied if we chose that one, because the rate is too high.

I do not want to go over the ground so well covered by Deputy O'Donovan and I do not want to quarrel with Deputy FitzGerald in this House or any where else. Perhaps it does not do us any good. I also believed that a mistake was made. When the Minister asked for a private meeting to discuss a matter which was mentioned to members of the committee, it was a pity that meeting did not remain a private meeting until the matter was discussed. Afterwards the press and the general public would have had available to them what we had decided to do. In the early days I could see no reason why the press were not allowed to be present at our meetings. It was pointed out that we would have more freedom to express views. This was agreed. In those circumstances I do not think it is fair that a slanted version of what happened should have appeared. I have great respect for the gentlemen of the press. We have to when we are in public life. Perhaps if I had put in a version I would have slanted it towards myself although I do not think I would. A slanted version was given to the press. It appeared as if nobody took part in the discussions—there was one reference to the Labour Party—except Fine Gael and Fianna Fáil and Deputy FitzGerald.

One of the things that I had been referring to on a later amendment which Deputy Collins asked about was, perhaps, the most important matter raised at any of the meetings. I believe that he and a number of other Fine Gael and Fianna Fáil members, possibly because the press were not present, were prepared to express the view held by the Minister and the Revenue Commissioners at the committee meeting. This was done. I do fear for the future of special committees. If I take part in future committees either the press will be present or a statement will be issued. It is most unfair to those who work so hard to get things done to find that the general public were given the impression that nobody except the Minister and Deputy FitzGerald took part in the debate. We would not be raising the matter here but for the fact that it has been brought to our notice by the general public. In fact, I was given credit for a little point, that I was interested in taking the tax off school books, but he added "only". Having regard to the fact that Deputy O'Donovan's and my amendment dealt with the tax on food, that was a little bit thick, even for Deputy FitzGerald.

The Minister's argument, that it is necessary in order to have the amount of tax which is to be collected as even as possible to what is being collected at present under existing taxes, two decimal points must be used, is an argument that I am not prepared to accept. At a special committee meeting on 21st June the Minister said:

By taking 5 per cent. of 105.26, we collect precisely the same amount as is collected under turnover tax at the moment, which is 5 per cent on a tax inclusive basis. The VAT is on a tax exclusive basis. That means that if goods are sold at 105.26 and if you take 5 per cent as being the amount of the tax, that works out at 5.26, which is the amount of the tax.

What the Minister was saying is that 5 per cent is what is being collected under the turnover tax. Can the Minister find anything wrong with the system under which the turnover tax is being collected? If it is all right to collect it at the even 5 per cent now, why is it necessary to change to 5.26? The same applies to the other rates of tax. If the effect is the same, why not leave it as people understand it? There are persons in the Revenue Commissioners office and in this House who cannot visualise the position of a small shopkeeper trying to estimate what a 5.26 tax on 35p or 36p comes to. There are people, even in the House, who would have difficulty. I do not know how the customers will find out whether or not they are being treated fairly. In a craze to have things absolutely right and because the Revenue Commissioners want to prove that they are doing what they feel should be done, they have introduced these little refinements which have caused so much trouble.

I quite agree with Deputy FitzGerald that a single rate of tax would be ideal. The Minister said it could not be done. He also says that if we have zero tax rating this is, in fact, another tax. We disagreed on that before. We will disagree again. Would the Minister not agree that it will be extremely difficult for somebody going to the supermarket where there will be a little girl at the check-out point who must calculate the price of the commodities bought and decide whether the tax is at 5.26 per cent or 16.37 per cent, in addition to the price?

When I asked the Minister did he think this difficulty could be got over the Minister came back with the rather pat answer, which does not fit in, and his suggestion was that possibly something that had been suggested to the RGDATA earlier could be adopted, that the tax could be put on at shelf prices for the 5.26 and, therefore, there would be only one rate of tax to be watched by the girl at the check-out.

The Minister must know that if you attempt to put on tax at shelf prices— and I know it is done already by those who put up a sign in the window saying: "No turnover tax collected here," because they must get it in some way—the item which costs only a few pence will have added on to it the lowest amount of tax that can be put on, that is, the new half penny. If you put a new half penny on to something which costs two, three, four, five or six pennies, does the Minister not realise that that is far in excess of the amount of tax? Therefore, the obvious way to put on the tax is to do it at the check-out where the entire bill can be put together.

However, if that is done, how do you get over the two rates of tax? I am quite sure the Minister will, some time before the Bill finishes, come back with the story that he used when the decimal currency was being introduced: "It is all right. The traders can take the tax off one item and add it on to another and the average will work out all right." There are two things wrong with that: No. 1, it will not work on a small item being bought and on which a half new penny will be much higher than the proper rate of tax; and, secondly, what happened when decimal currency was being introduced and when there was talk of reducing the price of one item and increasing the price of the other? Our friends, the traders, in many cases reduced the price on the slow-selling item and increased the price on the fast-selling item, and we know who made the money then. This is a problem which I do not think it is easy to deal with, and I am not asking the Minister just to wave a wand and decide it.

The Deputy will accept, I presume, that it is not a new problem under VAT, that it will be precisely the same position as at present.

The Minister is wrong there, because, while I am prepared to agree it is a problem under VAT, the Minister is creating a bigger problem by making the tax 5.26 per cent instead of 5 per cent. I am sure he agrees this is a new problem of his creation.

No. The whole point is that it will be exactly the same as the turnover tax.

It is not. If it is, why have the other European countries that are operating VAT gone for the rounded tax rather than for tax running to two decimal places? Or are we the smartest race? If so, we should have been in Europe long ago and taken over. There must have been some reason for it, and I believe the reason for it is that the Revenue Commissioners believe they are smarter than anyone else in Europe and are going to show the rest of Europe how things should be done. They may be very clever people but I think they are making a mistake.

I suggest to the Minister that the introduction of 5.26 is a mistake, and, as regards the introduction of a second rate of tax, 16.37, to suggest that anybody can easily work that out is a mistake for the Minister. I know quite well the Minister will say: "It is the same thing except that it is the difference between tax exclusive and tax inclusive," but you cannot tell that to the country grocer, because he is the man who will have to operate it. I believe that eventually it will show a higher rate of tax all round, that when the goods are being finally bought they will be bought at an excessive price, that there will be a small extra cost added on. In addition to that, the customer is the person who will have to pay the tax anyway, because all the people who have handled the goods before him will collect it from him. For that reason, if for no other, the arrangements should be as simple as possible. It should be a single rate of tax or, if that is not possible, it should be rounded off so that those who are handling it would be able to understand what exactly they are doing.

I have three main items to deal with arising out of the discussion on these amendments. First, on the remarks which have been made about the meeting of the special committee, that is, the unofficial meeting, if I may call it that, I do not wish to comment at all. I think the Labour Party Deputies have expressed their point of view and I assume that Deputy FitzGerald is about to express his when he gets in to reply.

At great length, I have no doubt.

I have no doubt about that.

I shall have another opportunity on a later amendment.

I do not wish to comment on that except to say that I think Deputy O'Donovan and Deputy Tully are long enough in politics now not to be taken aback too much at what happened. Indeed, they are showing that if they were a little taken aback, they know very well how to deal with a situation like this. I do not want to comment any further except to say— and it is an obvious comment but one which it would be peculiar if I did not make—that the whole performance bodes very ill for the projected Coalition.

I expected the Minister to make that comment.

If I did not make it, I would be very remiss.

It is fair that the Minister should make it.

I am trying to restrain myself. The Deputy will appreciate that if I wished I could go to town on that point. I have no desire to do so. I do not think it needs to be underlined.

The Minister appreciates, just as Deputy Tully and myself do, that Deputy FitzGerald is a Johnny-Come-Lately in all this business.

Yes, I do. If I may get to the other main matters I have to deal with, the question of rounding, on the one hand, and, in effect, the concept of trapping tax at wholesale level which is inherent in the first amendment proposed by Deputy FitzGerald. On the question of rounding, there seems to me to be still a good deal of misconception. The first misconception is this: Deputy Tully still believes that in the other countries which apply value-added tax they do not have these odd rates, but he is not right in this. If I may burden the House for a moment with some examaples: France has rates of 7.5, 17.6, 23 and 33.3; Belgium has whole numbers; Germany has 5.5 and 12 per cent; The Netherlands has whole numbers, 4 and 14 per cent; Luxembourg has 5 and 10 per cent; Sweden has 17.65 per cent, which is to two decimal places.

One rate, but I am dealing only with the relatively minor point, at the moment, as to whether or not other countries have odd rates or rates to two decimal places.

The French rates are not nearly as awkward as the Minister is pretending. A rate of 33.3 is one-third.

I can see that. I am merely dealing with what I regard as a very minor point. What is a major point in all this is that Deputy Tully, despite all the discussion we have had on this—and they have been lengthy —does not seem yet to have grasped why we have these peculiar-looking rates here, because he asked whether the Revenue Commissioners think they are smarter than anybody else in Europe. The real point as to why we have these odd-looking rates is that they are as close as we can get to the existing rates. For instance, the 5 per cent turnover tax is exactly the same as the 5.26 value-added tax. Therefore, when Deputy Tully talks about the problem, and it is a problem, of applying tax to a small item and where the smallest amount you can add is half a new penny, he is talking about what is a genuine problem but he is not talking about a new problem or about a problem arising under VAT. This is a problem arising at the moment under turnover tax because it is precisely the same level of tax as will be charged under VAT.

I do not quite get the Minister's point on this. This whole thing is going to be submerged by inflation and the Minister knows that as well as I do.

That is another point. I am speaking from the point of view of the shopkeeper and the consumer.

Would the Minister not agree——

This debate cannot be allowed to develop into a Committee Stage debate.

——that what he said is not necessarily a good or valid case for a multi-fractional VAT system such as 5.26 per cent, which I think is one rate at the moment.

I had not completed my argument. The point I am making, and it is a very important point and relevant to this whole discussion, is that the rates which are proposed are arrived at on the basis of existing sales taxes. This means that, in the case of a customer going into a shop to purchase something which is subject to turnover tax at the moment, but not subject to wholesale tax, he should pay precisely the same price after VAT as before because the tax will be exactly the same. The amount of tax collected by the Revenue Commissioners on the particular item is exactly the same. Unless one grasps that basic fact, one can go completely wrong and can certainly say that having rates which go to two decimal points does not make sense. We would not have contemplated these very strange-looking rates but for the fact that I was determined that we were not, by introducing VAT, going to provide an excuse for increases in prices because, in so far as the consumer was concerned, the consumer who goes in, after VAT comes into force, to buy £1 worth of groceries should get, other things being equal, exactly the same as before because the tax will be exactly the same.

Why is this so important? That is what I cannot understand.

Let us say that we took 5 per cent instead of 5.26 per cent. What we would be doing then is, first of all, reducing the amount of tax collected on particular items and then finding ourselves faced with raising that amount somewhere else—that is problem No. 1, where do you raise it? —and secondly, from the point of view of the customer going into a shop, does Deputy O'Donovan or any other Deputy believe that by reducing the rate to 5 per cent the cost is going to go down? I do not believe it.

No, but it would be easier administration.

I will come to the shopkeeper in a moment. I am speaking now from the point of view of the customer, the man-in-the-street, going into a shop. If we reduce the rate from 5.26 to 5 per cent do you think he is going to pay a lower price? I do not. As it is, with 5.26 per cent he will pay exactly the same as under turnover tax now.

Why have a higher rate?

We cannot have a Committee Stage discussion on Report Stage.

I do not know how much clearer I can make this point but I think it is essential to grasp it, that we are proposing 5.26 per cent VAT because it is the precise equivalent of 5 per cent turnover tax. To the man-in-the-street, the important thing is that he is paying exactly the same, not more or less tax nor more or less for the goods, so that there is no disturbance in the price of the goods.

He will pay more every day that passes owing to the huge inflation which is going to submerge the whole thing.

That is another point, but on the question of rounding, which is what we are discussing on these amendments the fact is that if the man-in-the-street finds that as a result of changing to VAT the price of the commodities he buys in a grocery shop are the same, that the tax is not changed even though it looks different, he is not concerned in working out 5 per cent or 5.26 per cent. If the price does not change, that is what he is concerned about. This is unanswerable from the point of view of the customer.

I do not think the Minister ought to be so concerned with logic. It is not a matter of logic.

I am concerned with reality.

It is not a matter of reality either.

I think it is. I think that from the point of view of somebody paying in a shop, it is very real. If the price of his goods goes up or alternatively, there is a reduction in tax but the price does not go down, that is very real from the point of view of the man-in-the-street—the customer. I am quite convinced that from his point of view the case for having a 5.26 rate instead of 5 per cent as suggested is unanswerable but from the point of view of the shopkeeper the situation is different. The argument is made that this is going to present enormous problems from the shopkeeper's point of view because calculating on the basis of 5.26 per cent is very difficult, compared with 5 per cent.

And the wholesaler and manufacturer.

This is a plausible argument. I am taking this 5.26 per cent rate because it illustrates it best but the arguments I am making apply in fact to the other rates too, with qualifications.

We will agree that far.

The point I am making is that so far as the shopkeeper is concerned, it may look as though the thing is going to be far more difficult for him, but let us examine what is involved. First of all, if you take 5 per cent instead of 5.26 per cent, this involves a more simple calculation but, conversely, it produces a figure for him in calculating his actual tax liability to the Revenue Commissioners of something like 4.762 per cent on a tax-exclusive base, so that whatever you do—if you round the rates in the Bill—you produce uneven rates for the shopkeeper in calculating his liability to the Revenue Commissioners.

Could I point out, on a point of clarification—in the circumstances here, I have no right to reply but I should have—under the system a manufacturer, retailer or wholesaler will deduct from the tax he collects the tax he pays and give the balance to the Revenue Commissioner? This does not involve him in any fractional computation.

How does he know? Surely he has to take it on the basis of his sales and purchases. There is no other way to do it. He subtracts the tax on one from the tax on another and the difference is the tax.

He has one complicated sum to do.

The Deputy agrees that he has to make the calculation.

Wholesalers and manufacturers have endless multiplication sums to do to two decimal points.

I am coming to this, but the fact is that he does have to do this calculation with this odd figure but if you make the rates in the Bill even——

They will have these complicated sums.

I did not interrupt the Deputy and perhaps he would let me put my arguments. What I am trying to put across is not so complex but the Deputy seems to think it is and perhaps the Deputy might give me the opportunity to do it. He will have an opportunity to reply. It is very important that this should be understood by Deputies as to what this involves. So far as the shopkeeper is concerned —and as I said, this is the negative side of it—if he has an even figure of 5 per cent to charge, he has to do a calculation with a very odd number to calculate his tax, some figure running to three decimal points. That is the first point. The second point is that, when you analyse what is involved for the shopkeeper, you find, first of all, that he will be issued by the Revenue Commissioners with a ready reckoner which will show at a glance in regard to all the figures he will be dealing with what the tax is. He does not have to calculate. He just has to look up the ready reckoner.

Thirdly, any shopkeeper in the course of time becomes very used to the items he is selling. Even with a fairly wide range he knows what the goods cost him, what he sells them for and what his profit is. He knows this by force of habit. He is ordering the same goods month after month and, for the vast bulk of his range of goods, he is very familiar with all this. The result is that, in the course of time, for the vast bulk of his goods he will not even have to look at his ready reckoner. These arguments are equally true of the wholesaler and the manufacturer. I am just adding that in. I am describing it from the point of view of the retailer who seems to me to be the person most likely to have these problems of calculation.

For those who are in a bigger way of business and for whom the thing could be complex, most of them, if not all, will in fact use machines to do this calculation and there will virtually be no difference for them what ever rate you make or how many decimal points there are because the machine will be set to do the calculation. I do not think we need worry about these people. The people we need to think about are those who have no machines and who will have to make their own calculation. I suggest people will not have to calculate a rate of 5.26 per cent on something; they will just look at a ready reckoner. When you look at this, and when you analyse it, you realise that the suggestion of a shopkeeper sitting up until 2 o'clock in the morning doing all these calculations just does not stand up. The arguments for altering these odd figures—the 5.26, the 11.11, the 16.37 and so on—based on the difficulties involved for people in making calculations just do not stand up.

We come back then to the question: why have these rates? Why not have even numbers? I come back now to the first point I made. It is a point I should like everyone to understand. We have them because they are the closest mathematical equivalent we can get to the present taxes. I want to ensure that, when value-added tax comes in, there will not be a change in the rate of tax so that a person going into a shop will not be faced with the situation in which, if the price is increased, the shopkeeper can say the increase is due to value-added tax. I want customers to be in a position to know that, if anyone increases prices and says the increases are due to value-added tax, the customer can say that is not so and it can be investigated.

They will say it anyway. I have been told time and again in shops that this increase and that increase is due to the Government. I knew very well that it was not.

Would the Minister answer a question from me? The Minister has been asserting the extreme importance of keeping the tax rates the same.

As far as is humanly possible.

The Minister can hardly say that a rate of 16.37 per cent is as near as is mathematically possible equivalent——

The Deputy may not make a speech.

Would the Minister explain how he can justify his statement in the light of the 16.37 per cent tax rate?

I have already done so in the special committee and I shall not go into it again. It is on record and there is no point in wasting the time of the House.

Then there is a contradiction in what the Minister has just said.

There is no contradiction. If the Deputy looks up what I said the Deputy will find there is no contradiction whatever because I phrased my argument very carefully.

The Minister's explanation about the 16.37 per cent rate was quite clear.

It is not as near as mathematically possible; £3½ million is rather far——

The Minister is in possession. He may speak only once. The same applies to Deputies except that the Deputy who moved the amendment has the right of reply.

I will just say about the £3½ million mentioned by Deputy FitzGerald that he knows this is going back to the taxpayer and not to the Revenue Commissioners. It is for these reasons that I am opposed to the amendments which suggest the rounding of the figures. I believe that the alleged advantages are illusory and the practical effect would be to provide an excuse for changes in prices, whether up or down, but mainly up, and the customer would not know what was right and what was wrong. Under this system the customer will know that the value-added tax system is not providing an excuse for increasing prices and it can, therefore, be much more easily checked on.

On the other main issue raised in Deputy FitzGerald's amendment, what is involved here is, of course, tied in with a later amendment and the proposals which got publicity in the newspapers, to which the Labour Deputies referred; the principle involved in this is involved in that too. This is the principle of trapping part of the tax at the wholesale level. There are a number of objections to this approach. It emerged this morning in discussion on another amendment that Deputy FitzGerald was under the impression that the value-added tax on building materials, and so forth, would, in fact, be paid back to the traders. It will not. I think that misconception of his is built in to this proposal also but, leaving that aside and accepting that the loss of £3 million revenue on motor cars, radios, televisions, et cetera, would not be made up within the value-added tax system and would have to be made up somewhere else, even allowing for all that, we find that the rates suggested by Deputy FitzGerald are not sufficient. I am in some difficulty here in that I am in danger of spilling over into a discussion on the other proposals.

I thought we were to deal with trapping when we came to the zero rating on food and other proposals.

But this certainly involves trapping and I am in some difficulty.

No more than is trapped at present, but the basic idea of the single rate at retail level does involve trapping.

It is not possible to have a single rate at retail level without trapping. My difficulty is that, if I do not deal with it now, I will not, in fact, be dealing properly with Deputy FitzGerald's amendment. On the other hand, if I do deal with it, it will come up again later and I do not want to be repeating myself. Perhaps it would be better to say simply that there are a number of possible, cogent, detailed objections to this concept of trapping and that I will elaborate on them on a later amendment. Perhaps it would be better to say at this stage that that is so and, for that reason, I am opposed to this amendment which involves this concept.

We appreciate the thoroughness of the Minister's replies in many respects but he has not dealt with the basic question of the desirability of having a single rate of tax at retail level.

I think everybody will agree that one rate is desirable if that is attainable but the real argument is not whether it is desirable but whether it is feasible and that is the item that I did not go into again.

I accept that but I am afraid that we have reached the situation where, however we discuss this, we will divide the arguments in half so that the argument is bound to be incomplete. While the Minister has been inhibited, and rightly so, from dealing with that point I would have thought that he would have argued more on the issue of this desirability and how important it is to have a single rate. However cogent the Minister may believe the arguments to be regarding the difficulties of alternatives, this is of such importance that a solution to it must be found. Clearly the Minister must not attribute the same importance to it because he has not got the same determination to overcome the obstacles as we have on this side of the House. Therefore, there is a difference in attitude on this point of the importance of the single rate tax.

Although the Minister developed at great length his thoughts on rounding off figures the basic fact remains that so far as the retailer is concerned, it is only necessary to calculate once every two months and having arrived at his turnover he must calculate what tax he has to pay. That means that once every two months he must multiply his turnover by 5.26 per cent or, under the Minister's proposal of having two tax rates, he would have to segregate his sales and apply two percentages. On the Minister's proposal which involves rounding off from the point of view of the consumer, but not from the point of view of the wholesaler or manufacturer, every wholesaler and manufacturer would have to do this calculation on every invoice in order to establish how much tax is on the goods at that point so that tax can be recovered at the next stage. The enormous amount of work involved, which will require the installation of special machines which cost £1,600 each but which will not be available until next year, exceeds thousands of times over the work that retailers will have to do once every two months in their double calculations. This point does not seem to have got across to the Minister. It is obvious that the operation must be simplified for the wholesaler and the manufacturer.

The Deputy cannot have it both ways. If the wholesaler must do all this work, the retailer will not have to do it.

I am always willing to be put right. I am aware that I have been wrong on several points but my understanding is that under the Minister's proposal, every time anything is sold to a retailer by a manufacturer or wholesaler, the invoice must show what tax is levied up to that point. That involves taking the values of the goods at that point and multiplying them by 5.26 per cent, by 16.37 or 30.26 per cent but always multiplying them to two decimal places. That having been done, the retailer has a series of invoices with the tax shown on each. He sends these in with a single calculation once every two months or, under the Minister's proposal, two calculations. I would much prefer the retailer to have to go two decimal places once or twice every two months than for every wholesaler and manufacturer to have to go to two decimal places on each invoice. All the Minister's arguments about not wishing to disturb by even .26 per cent the level of tax lest somebody should increase prices is unconvincing. On special committee the Minister went so far as to argue that if he reduced the 5.26 per cent rate to 5 per cent, it would be taken by people as an excuse to increase prices. I found that argument astonishing. The Minister may convince some people that if he did that the benefit might not always be passed on but I do not think that anybody will accept that a reduction in taxation would lead to an increase in prices. The Minister's emphasis on this question of the importance of maintaining the tax rate is not convincing in any case. When I raised the point by way of question he dodged away hastily and went on to repeat something that he had said earlier.

In all fairness to myself I must say I did not dodge away from the question. I referred to the fact that I had gone into the details on special committee. I have some concept of the mood of the House which I think would be that we ought not to go on repeating what we said on special committee. One must make certain cases but it is not necessary to repeat ad nauseum everything that was said before.

We are debating a very important principle and the Minister is asserting it is his determination that the tax rates will be as near as possible mathematically to the existing rates. However, I have pointed out that in respect of a range of goods representing 15 per cent of consumption—these are goods which at the moment bear 10 per cent wholesale tax as well as 5 per cent turnover tax — the Minister proposes to up the taxation by a number of full percentage points to vield £3,500,000 extra because he needs that money in order to pay money back. He cannot argue simultaneously that he needs the money and, consequently, must increase tax, and then go on to say that at all costs tax must not be increased even by the slightest degree and that throughout this Bill he has endeavoured to remain as near as possible mathematically to the present tax level. He has departed widely from the present level in the case of 15 per cent of goods. He said it is very important that the customer should know there was no increase in tax yet he is increasing tax on those goods. Therefore, he cannot claim that there will be no change in prices because he is raising the £3,500,000 in order to repay money to different people in different amounts.

There is no question of one offsetting the other for the same person. There is no question of a trader who is selling furniture now being taxed more heavily but getting back an equal amount through the repayments system. Anybody who is selling furniture or any of the goods that bear the 10 per cent wholesale tax will have the tax increased and must, consequently, increase prices. The position will be that the Minister is expecting the customer to know that the price of baby cream should not be affected while the price of baby powder will be increased, or that nappy liner prices will remain the same while nappy pin prices will be increased.

Therefore, for a range of goods that are in no way distinguishable from other goods, there is to be an increase in taxation. In that respect the Minister is, perhaps unintentionally, liable to mislead the House and that is why I am trying, in so far as I can, to inform the House on this point. The Minister departs from the principle of maintaining the present tax rate and for a heterogeneous group of goods indistinguishable from other goods by any principle known to man he intends increasing the price so that the customer cannot know whether the price ought to be going up. He must remember that in respect of nappy pins, for instance, prices will increase, whereas for nappy liners there will be no increase. Once that confusion has been introduced there is no point in us trying to hang on to the principle to the tune of 0.26 per cent in other cases. There is no point in the Minister trying to say that he cannot reduce the tax rate of 5.26 per cent to 5 per cent because in some way this would confuse the customer. On the one hand he cannot justify an increase of about three full percentage points in taxation on 15 per cent of consumption and then say that because he is tied so tightly he cannot vary tax rates at all and cannot agree to reduce the tax rate by 0.26 per cent in another case.

That case has no logic whatever and the Minister knows it, and he should not attempt to put across to the House something which is not, in fact, the case. From that point of view his argument on rounding is cockeyed and carries no conviction. It would have carried no conviction if he had held to this principle on the wholesale tax and if he had not decided to raise £3.5 million extra by increasing tax rates on this range of goods with a view to providing money to pay for these repayments of tax to different people in different circumstances. So much for that argument. I do not wish to be repetious although I am accused of it at times. I am not conscious of being repetitious and I try to minimise it as much as possible whether the Minister and Deputy O'Donovan believe me or not.

I think we could all agree the Deputy is not conscious of doing it.

I am glad that in that respect at least my honesty of purpose is recognised. Let me come to the area where I am accused of being dishonourable. I should like to defend myself for a shorter time than that taken by Deputy O'Donovan to make these accusations. Deputy O'Donovan refers to the special committee which at its first meeting, in fact, set out the procedure to be followed.

Would the Deputy come to the point?

I have not started yet. When this committee first met and the question of the admission of the public and the Press was discussed, there was never any discussion or mention of the proceedings of the committee being kept secret or not being published or not being communicable to anybody either then or later. The question of the admission of public and Press was raised by the Chairman and Deputy Tully said:

I would have no objection to either the public or the Press being present. I do not think they would be very interested in what we are trying to do here. They would be interested in the end result; I do not think they would want to sit here for hours.

The discussion went on; the Minister intervened and discussed the matter further and said it was a workmanlike session and that, perhaps, we might be tempted to be a little less workmanlike when we are in the presence of the Press and public. For that reason he said he would favour not having the Press or the public at sessions of the committee. There was no question there or anywhere else of the proceedings of the committee being secret. They are, of course, published. Not alone that, but I myself raised in the committee at the end of the second session the question of the delay in publication which was a problem causing great concern to all of us.

What has that to do with it?

I have been accused of dishonourably disclosing the proceedings of this committee. Deputy O'Donovan took about 12 minutes to make the accusation and I propose to answer it in ten which I think is appropriate as my conduct has been called in question in this House——

I bet the Deputy will never do it again.

Deputy O'Donovan did accuse me of untruth this morning. He withdrew that by saying he withdrew the word, with great emphasis on the "word", thereby not withdrawing the intent. He did not state what was the untruth I was supposed to have told. He knows perfectly well that I never made the slightest secret, in the committee when the members met informally, of the fact that I had communicated the decision to hold this meeting to the Press. It was not secret; the proceedings of the meeting were in no way secret. The purpose of having the discussion in committee out of the House was to enable us to have a more detailed, technical discussion as a result of which——

Why were there no reporters there?

The Deputy should allow Deputy FitzGerald to reply.

I do not like the Deputy still shaving the truth as he is now doing because there were no reporters at the private meeting.

It was agreed that there would not be reporters at the meeting but there was nothing whatever secret about the proceedings. In fact, the purpose of the committee was to discuss highly technical matters outside this House. There would be no value in this if, after the discussion we were, by virtue of the proceedings not being published for a fortnight or more—and there is a delay of over a fortnight in publication now—we were not able to go and consult various interests concerned with the Bill, tell them what happened at the committee and discuss with them what should be done on Report Stage. I have never heard it suggested in this House that if a matter is discussed in special committee we are precluded from having any consultations on the proceedings and that we must enter Report Stage without having discussed with anybody outside what has happened or what amendments are appropriate.

That is not the allegation which is entirely different.

It has never been suggested that the proceedings should be secret and we are entirely free to state what has happened at a special committee to anybody one likes. I come now to the suggestion that I in some way gave a slanted report to the papers. The suggestion was made by Deputy O'Donovan and Deputy Tully that I, in some way, highlighted not only the Fine Gael role but my own and that I played down the role of the Labour Party. I have twice already asserted and I assert again, that in anything I have said in public or in private on this matter, I have in every instance linked the Labour Party and Deputy Tully with the amendment and I have never at any stage——

On a point of order, at no stage did I allege anything about what Deputy FitzGerald had said about the Labour Party. I made no reference to it.

I am dealing with Deputy Tully.

Why did the Deputy mention me then?

Deputy Tully said the report I had given to the press was slanted.

Why did the Deputy include me?

I understood you to charge me——

The Deputy heard what he wanted to hear.

If Deputy O'Donovan says the report was not slanted that is all right; if that is his view and he disagrees with Deputy Tully——

The Deputy is not going to twist my words. I made no reference to the matter.

Either it is his view that it was slanted or it is his view that it was not slanted and I do not give a damn which but it must be one or the other.

This is the way the Deputy tumbles words around the place. He knows well what the allegation was.

I shall deal only with Deputy Tully's allegation, not made by Deputy O'Donovan who does not feel that the report was slanted. But Deputy Tully, unfortunately, did feel that the report was slanted and accused me of having slanted it. I assert that in anything I said to any Press men or to anybody else that in the two statements I made, I linked the Labour Party with this matter in every respect.

Deputy Tully was quite right. You have drawn it out of me now.

Let me conclude my remarks on this by pointing out that as evidence that what I said to the Press was not slanted, in all four newspapers there are reports and none of them mention my name on any occasion without mentioning Deputy Tully in the same passage. I challenge Deputy O'Donovan to show me anywhere in these four papers where as a result of a Press briefing by me or otherwise, publicity was given to me or to Fine Gael without referring to Labour. The references in The Irish Press are as follows:

Deputy Dr. Garret FitzGerald (FG) and Mr. James Tully (Labour) had amendments down to this effect....

Later on:

Deputy Dr. FitzGerald and Mr. James Tully argued at the Special Committee on the VAT Bill that with the increased food prices in EEC the tax on food would bear more heavily on poorer and larger families....

I never told anybody that but in so far as it is there the two names are linked. Similarly, in the Irish Independent. I am going to nail this misrepresentation—I cannot use the word untruth although Deputy O'Donovan has no qualms about it—once and for all. In the Irish Independent the only references are as follows—Deputy O'Donovan does not like the truth but he is going to hear it:

The Fine Gael and Labour spokesmen on Finance, Dr. Garret FitzGerald and Mr. James Tully both tabled amendments in the Dáil seeking the removal of food from the proposed Bill....

The next reference is:

Dr. FitzGerald, Mr. Tully and other members of the Committee are expected to submit to a Committee session next week detailed proposals....

Let us take The Irish Times:

How was Deputy Collins left out of that?

The only references are to people who put down the amendments and whose names were on these amendments: Deputy O'Donovan's name was not and Deputy Collins's name was not. In The Irish Times there is a reference to a special body set up by the Dáil to discuss a motion from Deputy James James Tully (Labour) and Dr. Garret FitzGerald (Fine Gael)—Deputy Tully is first on this occasion—that food should be made exempt from VAT. There is no further reference to me or anybody else in Fine Gael in that report. In the Cork Examiner we have the same situation:

Considerable time was devoted by the Committee under the Chairmanship of Mr. Gus Healy (FF) to discussing amendments by the Fine Gael and Labour spokesmen on Finance, Mr. Garret FitzGerald, TD, and Mr. Jimmy Tully, TD,

There is no other reference to me there. There is no evidence whatever that I slanted the report. I have never done so at any stage and, in any reference I have made, I have linked the Labour Party to it both publicly and privately. If I had any confidence in the decency of Deputy O'Donovan on this matter I would expect him to withdraw the remark he made a few minutes ago about supporting Deputy Tully on the suggestion that I slanted the report.

The Deputy will wait a long time.

I will wait a long time for the Deputy to withdraw something he said which has been proved wrong, I agree. In fairness to the Minister, he never made any such suggestion. He is quietly enjoying this, of course. I do not blame him. Why should he not?

It is not worth as much to him as he believes.

The Deputy does not know how much I believe it is worth.

I can guess.

There was no question of the proceedings being secret. The Minister knows that and therefore he did not join in the allegations made by Deputy O'Donovan.

There was another reason.

I have dealt with all the points made and I have refuted the allegation of dishonourable conduct and I am content to leave it at that.

Is amendment No. 16 withdrawn?

I understand that decisions are not required on amendments Nos. 17, 18, 20 and 22.

I am prepared to have the amendments in my name. Nos. 17, 18, 19, 20, 22, 23, 24, 28, 30, 31, 32, 48, 50 and 51 taken in conjunction with amendment No. 16. I think amendment No. 47 was also taken in conjunction with it.

Question put: "That the words proposed to be deleted stand."
The Dáil divided: Tá, 64; Níl, 58.

  • Aiken, Frank.
  • Allen, Lorean.
  • Andrews, David.
  • Barrett, Sylvester.
  • Brosnan, Seán.
  • Browne, Seán.
  • Burke, Patrick J.
  • Carter, Frank.
  • Childers, Erskine.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard C.
  • Cowen, Bernard.
  • Cronin, Jerry.
  • Crowley, Flor.
  • Cunningham, Liam.
  • Davern, Noel.
  • Delap, Patrick.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Fahey, Jackie.
  • Faulkner, Pádraig.
  • Fitzpatrick, Tom (Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, James.
  • Geoghegan, John.
  • Gibbons, Hugh.
  • Gibbons, James.
  • Gogan, Richard P.
  • Healy, Augustine A.
  • Herbert, Michael.
  • Boylan, Terence.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Briscoe, Ben.
  • Hillery, Patrick J.
  • Hilliard, Michael.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael F.
  • Lalor, Patrick J.
  • Lemass, Noel T.
  • Lenehan, Joseph.
  • Lenihan, Brian.
  • Loughnane, William A.
  • Lynch, Celia.
  • Lynch, John.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Thomas.
  • Molloy, Robert.
  • Moore, Sen.
  • Moran, Michael.
  • Nolan, Thomas.
  • Noonan, Michael.
  • O'Kennedy, Michael.
  • O'Malley, Des.
  • Power, Patrick.
  • Smith, Michael.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Tunney, Jim.
  • Wyse, Pearse.

Níl

  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bruton, John.
  • Burke, Joan.
  • Burke, Richard.
  • Bruton, Philip.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Cott, Gerard.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Crotty, Kieran.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Dockrell, Henry P.
  • Donegan, Patrick S.
  • Donnellan, John.
  • Dunne, Thomas.
  • Esmonde, Sir Anthony C.
  • Finn, Martin.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Fox, Billy.
  • Governey, Desmond.
  • Harte, Patrick D.
  • Jones, Denis F.
  • Kavanagh, Liam.
  • Keating, Justin.
  • Kenny, Henry.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McLaughlin, Joseph.
  • McMahon, Lawrence.
  • Malone, Patrick.
  • Murphy, Michael P.
  • O'Donnell, Tom.
  • O'Donovan, John.
  • O'Hara, Thomas.
  • O'Higgins, Thomas F.
  • O'Reilly, Paddy.
  • O'Sullivan, John L.
  • Pattison, Séamus.
  • Ryan, Richie.
  • Spring, Dan.
  • Taylor, Francis.
  • Timmins, Godfrey.
  • Treacy, Seán.
  • Tully, James.
Tellers: Tá, Deputies Andrews and Meaney; Níl, Deputies Cluskey and Timmins.
Question declared carried.
Amendment declared lost.
Amendments Nos. 17 to 24, inclusive, not moved.

As amendments Nos. 25 and 26 are alternative amendments, perhaps they could be discussed together.

I move amendment No. 25:

In page 17, after line 19, to add a new paragraph as follows:

"(f) an amount equivalent to the amount by which the Revenue Commissioners are satisfied that the accountable person's costs have been increased as a result of the application of this Act."

Amendments Nos. 25 and 26 suggest alternative ways of trying to achieve the objective of giving traders some compensation for the work of tax collection imposed on them by the Revenue Commissioners under the provisions of this Bill. The amendment in my name is one which, perhaps with more confidence than one sometimes feels, leaves it to the Revenue Commissioners to decide what compensation will be appropriate. The other amendment, No. 26, proposes an amount equivalent to 0.5 per cent of the net amount payable to the Revenue Commissioners in respect of the taxable period, with a maximum of £1,000 in a taxable period.

The Minister met the point that a straight percentage of the net amount of tax payable should be given by saying that he believed it would give a bigger benefit to the larger firm than to the smaller firm and that therefore scaling would be required. To meet this point Deputy Collins approached it by putting a maximum on the figure. I considered the maximum but wondered whether an alternative might not be to leave it to the Revenue Commissioners to satisfy themselves as to the amount. The Minister could accept either amendment. Deputy Collins and I would not fall out as to which is accepted.

I moved an amendment similar to amendment No. 26 in the special committee. This is an attempt to allow all traders a certain amount of money as an expense for collecting the tax for the Government. Since the introduction of PAYE and of the turnover and wholesale taxes the trader at various levels has become an unpaid tax gatherer. This should not be so. The cost to any one trader of administering PAYE and the turnover and wholesale taxes has become substantial, and the introduction of the value-added tax system will further increase his costs in this respect.

My amendment allows a trader to subtract 0.5 per cent of the net amount payable to the Revenue Commissioners in respect of the taxable period, provided that this amount does not exceed £1,000 in the taxable period, which is the equivalent of £6,000 per annum. The reason I have put down this amendment is the reply given to me in the special committee by the Minister who said that an open-ended figure of 0.5 per cent would, first, be in favour of the larger trader and, second, in favour of the trader who collects the higher percentages such as 16.37 and 30.26 per cent. This was a valid argument and I accept it. With a view to satisfying the Minister's argument on this point I introduced the maximum amount by which a trader could benefit under this amendment, that is, £6,000 in any one year.

I do not quite follow that. I have been trying to work out from the amendment what the Deputy had in mind. Did he say that the maximum benefit a taxpayer would get would be £6,000 in any one year?

That is right. £1,000 in the taxable period. The taxable period is defined in the Bill as two months.

Does the £1,000 relate to the amount which would be refunded, the saving to the shopkeeper, or does it relate to the amount of tax to which he was liable?

It would depend on the amount he was returning to the Revenue Commissioners. At no point would he be entitled to deduct more than £1,000 in a taxable period of two months——

I see. That is what I wanted to know.

——which is equivalent to deducting a maximum of £6,000 per annum. This, of course, would not be allowed to all traders. Those at the maximum would only be the very large traders, wholesalers, most likely, and the large-scale retailers, who would be giving quite an amount to the Revenue Commissioners in the taxable period. There are costs which every trader would have to meet under this Bill, and the Revenue Commissioners ought to recognise that traders have to bear these costs of collection. Heretofore no recognition has been given to the trader in respect of collecting this tax for the Government. By accepting this amendment the Minister would be showing goodwill in respect of the introduction of a new and complicated system, and this would be welcomed by wholesalers, retailers and manufacturers in general.

I should like briefly to support the principle behind the amendments. It is quite true to say that traders have become accustomed to calling themselves unpaid tax collectors, and, perhaps, all of us are in a certain way unpaid tax collectors for the State. Would the Minister state, when he is replying, whether or not it is correct that under the present system there is a certain amount of compensation allowed in certain cases for the collection of taxes? Does he not agree that this new system should have built into it something which would compensate the person who has to employ additional help?

I had a discussion with a group of traders, and possibly the man who was giving me the particulars might not be the best example at all, but he told me he had under his control—not owned by him but under his control —100 retail outlets. He said that each of them would have to provide a new cash register. The average cash register of the type he required he estimated would cost around £300, buying them in bulk. That is 300 times 100. Add on to that the training of someone to handle it and the cost of working it right through because of the complicated system which the Minister insists on introducing, and you can see an additional argument in favour of some compensation.

The small traders, with whom we discussed this matter, seem to be scared to death of all the extra work they will have to do for nothing. Some of them said they would have to go out of business completely, particularly the older ones who felt they would have to depend on the State for subsistence, that it would not be possible to run their business with this extra impost on them. I do not know whether the figure suggested by Deputy Collins is correct or not. It might be a little high.

I would think so.

It is a maximum figure.

Anyway I do not think we will get anything out of this by arguing about it here, but I think the amendments are worth while and I would suggest the Minister should have a look at it to see if something could be done. I do not believe anybody in the Civil Service or in any other business would do this sort of thing for nothing. Why should it be expected of the traders of this country?

(Dublin Central): I have expressed a certain amount of sympathy for this type of amendment before but, as I have said in Committee, I do not think an amendment giving a percentage is suitable, even though Deputy Collins has amended it to some extent. As we know, already, there is this concession on the first £100 of 2.27 pence. This concession was given to traders to encourage them to submit their accounts. There is no doubt that, by and large, retailers have a considerable amount of work to do. First, they have to deduct PAYE from their employees. They are also responsible for national health insurance stamps and for the turnover tax which has to be submitted every two months to the Department of Industry and Commerce. Now they will have to deal with VAT. These things are the responsibility of the retail traders.

A costly responsibility.

(Dublin Central): Therefore, a case could be made that they are doing a considerable amount of work voluntarily, work that it would take many civil servants to account for. However, there is one snag here. Up to now this concesion was only allowed at retail level, but I am not altogether sure that wholesalers or manufacturers would not claim the same concession. Seeing that manufacturers and wholesalers will also be accountable persons and will keep accounts, they probably would be in the same position to claim it as retailers, so that how this would effect revenue might be a different question. That is a complication I see in it. I agree with the spirit of the amendment, but there is no doubt that retail outlets and owners of shops have a considerable amount of work to do, and I sympathise with them, and I know that a certain amount of additional work will be involved in this value-added tax system. There is this difficulty I see that probably the wholesaler and manufacturer could say that they are entitled to it now because they have to make out invoices at various percentages.

Taking amendment No. 25 first, this is designed to give some compensation to the taxpayer for the additional cost of operating value-added tax. It would impose on the Revenue Commissioners the obligation of ascertaining the additional cost, if any, to the taxpayer of operating value-added tax and allowing that cost as a deduction from the taxpayers' VAT liability. Of course, the taxpayer will already have got a deduction in computing his tax liability in respect of the tax on his purchases, but that is not what is in question here. What is in question, apparently, is to relieve the taxpayer of the balance of the cost of VAT to him. Deputy FitzGerald did say when moving the amendment, quite unusually for him, that he was proposing to leave the matter entirely in the hands of the Revenue Commisioners. He did hint, without actually saying it, that this was not because he had absolute faith in the Revenue Commissioners. The real reason is that it is a question of passing the buck. He knows that it is impossible to make this kind of calculation, that it would be quite unworkable, and for this reason I could not accept amendment No. 25 at all.

Deputy Collins's amendment No. 26 seems at least to be designed, if one accepts the concept of it, on a workable basis, because there are figures quoted and one can operate on that basis. However, there are a number of reasons why I do not think this is really an acceptable or feasible arrangement. I think the point raised by Deputy Tully has been answered by Deputy Fitzpatrick but, perhaps, I should say——

I would prefer to hear the Minister.

It is true that there is at the moment under the turnover tax system an allowance, as Deputy Fitzpatrick said, on the first £100.

The Minister will accept that I knew that, but what I asked was why this is being taken away.

I am coming to that. I can say that I did understand that the Deputy knew it. The first reason which I feel should be advanced against the amendment is that it would be inequitable as between different classes of traders. I know Deputy Collins endeavoured to cover the point but I do not think he has done so. It is true that in the setting up of the VAT system, there would, I suppose, be certain transitional expenditure arising out of the procedures being set up to deal with it, but once this has been done the continuing cost of the operation would probably not be appreciably higher for larger firms than for medium or even small firms. A continuing compensation which would be based on net liability is, therefore, likely to favour the bigger firms, and in addition, while the cost of operating the tax in relation to goods liable at the 16.37 per cent rate is not likely to be higher than the cost of operating the scheme in relation to goods at the 5.26 per cent rate, nevertheless, the net tax payable would be higher and, therefore, the suggested basis of compensation would be higher, and would, therefore, favour people dealing in goods at the higher rate. As a consequence of that, jewellers and furniture dealers would receive relatively more compensation than grocers or drapers, and, of course, those traders who are accountable at the 30.26 per cent rate would be the most favoured of all.

Another factor in this is that the method proposed would favour traders who imported their stock because, since no tax would be chargeable on imports, their net liability for each taxable period would be higher than the net liability of the corresponding traders who purchase their stock in this country from accountable persons. Another factor is that firms who are engaged solely in exporting would have no net liability and, therefore, would not get any relief at all under this provision. We did discuss the matter in the special committee and Deputy Collins, I think in an effort to meet some of the points I have been talking about, did include in this amendment a limitation—"not to exceed £1,000 in a taxable period." I have not got an exact calculation on this and I suppose it is not possible to have one, because it depends on the rates at which the goods being sold are liable, but it is certainly not unreasonable to assume that under the proposal, there would be relief available to firms having a turnover up to £500,000 a year. It could well be higher than that but it would seem that that is not an unreasonable figure.

Therefore, as far as the amendment on the face of it is concerned, it would seem to be designed to give relief to people in quite a big way of business. I would have thought that the main concern in this regard would be in respect of retail traders, and particularly smaller retail traders, and this is where Deputy Tully's point comes in, because at the moment they have this benefit under the turnover tax system. It is true that that benefit is disappearing under VAT, but, on the other hand, they are getting benefits which I believe will more than compensate them for any additional cost they will have in operating VAT. Those benefits are primarily the right to claim refunds of tax on their inputs which they cannot do at the moment. There is a form of double taxation at the moment under the present system. Everything they will purchase in the course of business, for their business, under VAT, including even building of premises, extensions, counters, cash registers, fitments of all kinds— all these contain an element of tax under the present system—under VAT they will be able to recover that amount of tax in full, which they cannot do at the moment. This is one benefit.

The other benefit they get is that, because of the taxable period now being made two months, retailers, many of them to a substantial extent, will benefit by improved liquidity. It is for this reason that I am satisfied that, for retailers, the benefits will more than compensate them for any additional costs they may have in operating the value-added tax system as compared with the present system. While I do not want to get involved in an argument as to what additional cost they will have—it is difficult to be precise since it depends to a great extent on the particular case—I do not believe the additional cost involved will be anything like what has been alleged by some people, both inside and outside the House. I think the difficulties encountered will be far less than has been thought. I might also mention that no other member or applicant member of the EEC gives compensation of the type referred to in this amendment and it is possible—I do not put it any stronger than that—that an amendment of this kind might not be acceptable to the EEC.

The case made on both these amendments is that the collection of this value-added tax will involve traders in the expenditure of money. The Minister has stated that there will be costs involved in equipment and in setting up a system of collection and he argues that there is no cause for complaint really because the traders can claim a tax rebate. That may be so, but they cannot claim back the actual cost of the equipment.

That was not quite my argument.

It was to be inferred. The Minister also accepts that there will be a continuing cost, and he makes the case that the continuing cost, when the system gets going, will be quite small. He does admit that there will be a continuing cost and he admits there will be an initial outlay. Accepting that, he should not criticise the people who put down these amendments for failing to meet the cost exactly in their proposals. It is the Minister's job to find the right way equitably to recoup people for losses sustained as a result of the collection of tax. All of us have some experience of PAYE and what is involved in that system. There is absolutely no compensation. There is the case where semi-State bodies involved in this type of collection are not allowed to employ extra staff, but they must collect the tax. The Minister should really consider this very seriously. There is no doubt in anyone's mind but that this will cost traders money. If the Minister accepts that—I think he must accept it—it is up to him to devise the means of compensating traders fairly and equitably, whether they be small traders or large traders, or whether they are involved in the sale of items in which there are many or merely a few transactions. It should be possible to find a way to compensate people.

I am disappointed that the Minister did not go even part of the way to meeting my amendment. It is a constructive amendment. I prefer my amendment to that of Deputy FitzGerald. His would involve the Revenue Commissioners in estimating expenses. Mine would not involve that. To get £1,000 deduction in a taxable period a trader will have to return £1,200,000 in tax to the Revenue Commissioners. That would mean £6,000 in a taxable year. I am satisfied that the work which would have to be put into returning £1,200,000 to the Revenue Commissioners would cost a trader more than £6,000 per annum. That is a valid point. I accept that exporters will not benefit under this scheme. This is unfortunate and I did not realise that would be the situation until the Minister explained it. Some positive effort, expressed in terms of money rather than in terms of allowances in relation to inputs and capital costs, should be made in favour of traders. I am open to reducing the £1,000 taxable period if this will mitigate the advantages in favour of a large trader. I am sorry the Minister is not in favour of this amendment.

Amendment, by leave, withdrawn.

I move amendment No. 26:

In page 17, after line 9, to insert the following new paragraph:

"(f) an amount equivalent to 0.5 per cent of the net amount payable to the Revenue Commissioners in respect of the taxable period, provided that this amount does not exceed £1,000 in a taxable period. "

Amendment put.
The Dáil divided: Tá, 53; Níl, 65.

Tellers: Tá, Deputies Cluskey and and Timmins; Níl, Deputies Andrews and Meaney.

  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bruton, John.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Cott, Gerard.
  • Creed, Donal.
  • Crotty, Kieran.
  • Cruise-O'Brien, Conor.
  • Dockrell, Henry P.
  • Donegan, Patrick S.
  • Donnellan, John.
  • Dunne, Thomas.
  • Esmonde, Sir Anthony C.
  • Finn, Martin.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom (Cavan).
  • Fox, Billy.
  • Governey, Desmond.
  • Harte, Patrick D.
  • Jones, Denis F.
  • Burke, Joan.
  • Burke, Richard.
  • Burton, Philip.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Kavanagh, Liam.
  • Keating, Justin.
  • Kenny, Henry.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McLaughlin, Joseph.
  • McMahon, Lawrence.
  • Malone, Patrick.
  • Murphy, Michael P.
  • O'Donnell, Tom.
  • O'Hara, Thomas.
  • O'Higgins, Thomas F.
  • O'Leary, Michael.
  • O'Reilly, Paddy.
  • O'Sullivan, John L.
  • Pattison, Séamus.
  • Ryan, Richie.
  • Spring, Dan.
  • Taylor, Francis.
  • Timmins, Godfrey.
  • Tully, James.

Níl

  • Aiken, Frank.
  • Allen, Lorcan.
  • Andrews, David.
  • Barrett, Sylvester.
  • Boylan, Terence.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Briscoe, Ben.
  • Brosnan, Seán.
  • Browne, Seán.
  • Burke, Patrick J.
  • Carter, Frank.
  • Childers, Erskine.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard C.
  • Cowen, Bernard.
  • Cronin, Jerry.
  • Crowley, Flor.
  • Cunningham, Liam.
  • Davern, Noel.
  • Delap, Patrick.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Fahey, Jackie.
  • Faulkner, Pádraig.
  • Fitzpatrick, Tom (Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, James.
  • Geoghegan, John.
  • Gibbons, Hugh.
  • Gibbons, James.
  • Gogan, Richard P.
  • Healy, Augustine A.
  • Herbert, Michael.
  • Hillery, Patrick J.
  • Hilliard, Michael.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael F.
  • Lalor, Patrick J.
  • Lemass, Noel T.
  • Lenehan, Joseph.
  • Lenihan, Brian.
  • Loughnane, William A.
  • Lynch, Celia.
  • Lynch, John.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Thomas.
  • Molloy, Robert.
  • Moore, Seán.
  • Moran, Michael.
  • Nolan, Thomas.
  • Noonan, Michael.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Malley, Des.
  • Power, Patrick.
  • Smith, Michael.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Tunney, Jim.
  • Wyse, Pearse.
Tellers: Tá, Deputies Cluskey and Timmins; Níl, Deputies Andrews and Meaney.
Amendment declared lost.

Barry, Richard.Begley, Michael.Belton, Paddy.Bruton, John.Burke, Joan.Burke, Richard.Burton, Philip.Byrne, Hugh.Clinton, Mark A.Cluskey, Frank.Collins, Edward.Conlan, John F.Coogan, Fintan.Cooney, Patrick M.Corish, Brendan.Cott, Gerard. Kavanagh, Liam.Keating, Justin.Kenny, Henry.L'Estrange, Gerald.Lynch, Gerard.McLaughlin, Joseph.McMahon, Lawrence.Malone, Patrick.Murphy, Michael P.O'Donnell, Tom.O'Donovan, John.

Coughlan, Stephen.Creed, Donal.Crotty, Kieran.Cruise-O'Brien, Conor.Desmond, Barry.Dockrell, Henry P.Donegan, Patrick S.Dunne, Thomas.Esmonde, Sir Anthony C.Finn, Martin.FitzGerald, Garret.Fitzpatrick, Tom (Cavan).Flanagan, Oliver J.Fox, Billy.Governey, Desmond.Jones, Denis F. O'Hara, Thomas.O'Higgins, Thomas F.O'Reilly, Paddy.O'Sullivan, John L.Pattison, Séamus.Ryan, Richie.Spring, Dan.Taylor, Francis.Timmins, Godfrey.Tully, James.

Amendments Nos. 27 to 33, inclusive, not moved.
Amendments Nos. 34 and 35 ruled out of order.

I move amendment No. 36:

In page 23, line 35, after "whatsoever" to insert "other than documents which relate exclusively to the affairs of clients or customers of the accountable person".

This amendment is designed to include patent and copyright agents with barristers from the point of view of exemption and in respect of this there has been representation on this point. I raised this matter in respect of patent agents in the special committee but since then it has been suggested to me that it should be widened to include patent and copyright agents. It had not struck me that copyright agents should be included but they are in a similar position. Both groups feel they could be in the position which the Minister feels certain professional people could be in, where it would be to their advantage to be exempted. It seems reasonable that they should be included in these circumstances.

The decision as to whether or not certain services should be exempted is governed by the budgetary considerations and partly by the requirements of the directive of the EEC. There would not be any significant loss of tax in an exemption for patent agents but the general requirement of the EEC directives is that those services ought not be exempted which enter directly into the cost of taxable goods or taxable services. Article 6 of the EEC second directive requires the transfer of patents, trade marks or other similar rights as well as the granting of licences in regard to these rights, to be brought within the scope of the tax. My recollection is that I read this out at the special committee. The point is that this is the provision in relation to the transfer of patents, trade marks and other similar rights as well as the granting of licences in regard to these rights. The services of copyright and patent agents are directly related to such activities which are required to be brought in. Consequently, it would seem contrary to the spirit of the directive to exempt them and, therefore, I do not find it possible to accept the amendment.

Mr. J. Lenehan

As the only man who holds the pen used by Cassius Clay this evening, I want just one minute. In regard to this value-added tax nobody has clarified one point, I should like to know before next voting—I am not too sure of what I voted for on the last few occasions— if the Minister can give some assurance that people who sell, say, under £1,100 per month or something like that will be treated under VAT as they are being treated at present.

We cannot deal with that on this amendment.

Mr. J. Lenehan

I cannot make a statement or debate on this unless I get the Minister's point of view.

The amendment before the House is specific. The Deputy may make an inquiry on Fifth Stage.

Mr. J. Lenehan

I am not trying to hold up the debate for a moment but before I can say yea or nay to this I want to get an answer to a simple question.

The Chair will permit the Deputy to put a query on Fifth Stage but we cannot have it on this amendment.

Mr. J. Lenehan

I cannot speak on the amendment unless I get an answer to the simple question I am asking——

Even the Minister would not be answering a question on this amendment.

Mr. J. Lenehan

He probably would not know the answer.

If the Deputy had been present not so long ago he would have heard this whole question discussed and I gave the answer.

Mr. J. Lenehan

Give the answer now; it will not take a minute.

We are on an amendment now——

Mr. J. Lenehan

I will vote against it this evening, so.

The Deputy must do as he wishes.

I can imagine more rational grounds for bringing down a Government.

Mr. J. Lenehan

I am not afraid to walk across the House and do not think I am.

The Deputy might walk back again some day. As I understand the Minister, he is referring me to article 6 of the second directive. I think he is referring to article 6.2. I want to tease this out and make sure I have understood it correctly. The directive says that the rules laid down with regard to the taxation of the provision of services shall be compulsorily applicable only to services listed in Annex B which refers in the first item to assignments of patents, trade marks and other similar rights, and the granting of licences in respect of such rights.

It is suggested that, as far as the EEC is concerned, those references bring compulsorily within the framework of the Bill copyright and patent agents as distinct from the activities of assigning patents and trade marks? I would have thought that they perform a function of an agency kind. I would not have thought that they assign patents or trade marks or other similar rights. Would I be permitted to ask the Minister whether it is his view that this provision in regard to assignments of patents, trade maks and other similar rights, necessarily brings copyright and patent agencies within the framework of the Bill?

What I said was that since these services and transfers in relation to such rights are specifically brought in, the services of patent and copyright agents are directly related to these activities which are clearly in, and consequently it would seem to be contrary to the spirit of the directive to exempt them.

Perhaps the Minister is referring to section 10 of Annex B: the services of forwarding agents, brokers, business agents and other independent intermediaries in so far as they relate to the supply or importation of goods or the provision of services included in the list. Is the Minister suggesting that a copyright or patent agent is a business agent whose work relates to the provision of the service of assignment of patents and trade marks and other similar rights? Is that the Minister's line of argument?

No. I am not saying other than what I have already said.

If the Minister is not accepting my line of argument I am in a bit of a difficulty. The mere fact that the assignment of patents is included in the directive does not of itself require that the activities of copyright and patent agents should be included. It is arguable that section 10 of Annex B brings them within it but, as against that, there is no mention whatever of copyright. In our law the assignment of patents, trade marks and other similar rights would not necessarily extend patents and trade marks to copyright. Could the Minister indicate where, if anywhere, the question of copyright agents is brought within the framework of the directive? I submit that it is not. For some reason the Minister does not wish to press his line of argument which could be quite convincing on the question of patent agents. He has not got a case on the question of copyright. For that reason there is a case for not feeling bound by the EEC directive because it does not seem that it directly involves copyright agents. I wonder if the Minister would be permitted to comment on that?

The only comment I can make is that I do not think the Deputy listened to what I said.

I listened very carefully. The Minister referred to the EEC directive in terms which do not very much resemble the wording of the directive. He talked of business activities.

I did not.

It is difficult for me to recollect his exact words. Will the Minister quote what he said?

I said that Article 6 of the second directive requires the transfer of patents, trade marks or other similar rights as well as the granting of licences with regard to these rights to be brought within the scope of the tax. I did not refer to business activities.

I thought the Minister referred to activities which in some way had a business orientation.

I cannot quote it accurately enough to identify it in the Minister's brief but there was some reference of that kind. The Minister has not answered the point about copyright agents at all. I am reinforced in my view that the copyright agency situation is not covered by the EEC directive. That is not a reason for not including them. As I have been specifically asked to raise this matter I feel the Minister should give some consideration to it.

Mr. J. Lenehan

I am sorry——

The Deputy may not intervene at this stage because Deputy FitzGerald has concluded on that amendment.

Mr. J. Lenehan

The Chair does not know what amendment I am going to talk on.

The Deputy may not speak at this stage. He has already spoken.

Mr. J. Lenehan

I am as much entitled to talk as any other Deputy. I asked the Minister as question and he did not think it worth while to give me an answer.

As the Minister has not dealt with the point I think I will press the amendment.

Mr. J. Lenehan

The House will not get up this week if the Deputy goes on that way.

Amendment put and declared lost.

Amendments Nos. 37 and 46 formed a composite proposal and may be discussed together.

I move amendment No. 37:

In page 41, line 2, to delete all words after "baggage".

The point here relates to the question of car hire. Contrary to the Minister's indication earlier that he did not wish to vary the present rates of taxation, the effect of the Bill is to extend the value-added tax to car hire which at present is not taxed under turnover tax. I am hoisting the Minister with his own petard. I would press that he should not choose this moment, especially with the tourist industry in its present condition, to start taxing car hire. I urge on him to accept the amendment.

Mr. J. Lenehan

I will not be very long on this. The Minister refused to answer my very simple question.

We are on amendment No. 37.

Mr. J. Lenehan

I cannot speak on this amendment until I get an answer to a simple question.

The Deputy is out of order unless he keeps to this amendment.

Mr. J. Lenehan

Under TOT we got £1,100 a month where the wholesaler collected the tax. Does this also apply to the new tax? The Minister does not want to answer. He can keep his answer.

The Minister would not be in order in dealing with a matter which is out of order.

Mr. J. Lenehan

So far as the good jobs of most of the people in this House are concerned I am a key figure.

God help the Government who depend on that key figure.

I have already dealt with the concept behind this amendment in some detail at the special committee and I do not think there is any point in my doing so again.

Since the reports of the special committee are not published for some time afterwards they do not receive any press publicity. While I recognise the undesirability of extended repetition here on matters dealt with by the committee, in the public interest it is desirable that the case should be stated for the various points which, after the special committee, are still considered to be at issue, and that the Minister should reply briefly and indicate his reasons for rejecting them.

I say that in the interests of Parliament and, indeed, of the Minister. I do not lose anything by the Minister not answering a point I have made. While not wishing to extend the debate and understanding the Minister's desire not to do so, I think it might have been better for him to say a few words as to the reason for deciding to tax car hire. Not to give the House a reason for his decision is a bit unsatisfactory, all the more so, because, may I point out, despite the Minister having referred a few minutes ago to the fact that he said something in the special committee, I am unable to verify that fact because we have now reached the stage where the reports of the special committee have not yet been published. I raised this at the second session of the special committee with the Minister and I asked him to make sure, because this House has no power to make sure, that the reports would be published quickly and promptly.

We cannot deal with that matter on this amendment.

May I suggest that whether Deputy FitzGerald's recollection is accurate or not is hardly relevant?

I am sorry. The Minister does not take my point.

I do not think the Deputy has made a point.

This matter was discussed in the special committee but nobody in this House who was not on the special committee——

We can only deal with the amendment.

——can know whether or how it was discussed or what points were made because the reports, although a fortnight old, have not yet been published.

We are not dealing in general with the Bill. We are dealing with a specific amendment.

May I inform you, because you have no other means of knowing it, that there was a discussion in the special committee on this point and the Minister made a reply there, the details of which I cannot recollect and which he is not inclined to give the House, on this point? I submit that it is unsatisfactory procedure in this House that if we have special committees, which I think are desirable, the reports should be so delayed that we should then discuss the Report Stage without them.

We cannot discuss the procedure.

May I put it to you that I understand—I hope I am correct in this—that there is a convention of the House that although the reports are not secret and although one may discuss freely what happened there, one may not mention in this House what happened at a special committee until the report is published? You can mention it outside.

We are dealing with an amendment on Report Stage. We are not dealing with procedure on a special committee.

May I put a point of order? Am I correctly informed, because I have been so informed privately, that, in fact, although there is no bar to the publication outside the House of what happens at a special committee, one is not entitled to refer to it in the House? The Minister has referred to what happened at a special committee the report of which has not been published.

If that ruling was given by the Ceann Comhairle, it is unfair to ask the Leas-Cheann Comhairle to give a decision which may be contrary.

We cannot discuss the propriety of things on a specific amendment on Report Stage.

Am I not entitled on a point of order, to ask if the Minister was entitled to refer to what was discussed at a special committee?

An Leas-Ceann Comhairle

No. The position is that amendment No. 37 is before the House and that is what we are dealing with.

On this amendment, the Minister said he had dealt with this matter in a special committee. This is the first time the Minister has not answered a case here. What I am wondering is, then, whether his unwillingness to answer the case relates in some way to the fact that there is a convention of the House that you may not refer in the House to what happened at a special committee?

How can the Deputy make that point when he and I and other Deputies have regularly in the course of this debate referred to what happened in the special committee?

It has been published.

The Deputy is simply wasting the time of the House.

I have pointed out to the Minister that we have now reached the stage where volumes 6 and 7 of the report of the special committee become relevant. The report has been published only up to volume 5 to date. That brings you to one of the sections of the Bill towards the end. We are now dealing with the First Schedule. The proceedings of the special committee in respect of the First Schedule have not yet been published. I understand that one is not entitled to refer to the proceedings that have not been published. Are we at a stage in the Bill, therefore, where neither I nor the Minister can refer to what happened at the special committee? I am entitled outside the House to refer to it but not inside the House. Is that the ruling of the Chair?

The Deputy is looking for a ruling which, as far as the Chair is concerned, there is no necessity to give because what is before the House is an amendment and the Chair is going to stick with that.

Am I entitled to refer to what happened at a special committee on this amendment?

The Deputy may refer to that in so far as this amendment is concerned. The Deputy is concluding.

I am glad of the ruling because I was otherwise informed a short while ago, that I was not entitled to refer in the House, but only in the House, to matters in the special committee the reports of which have not been published. It is that ruling which is bothering me at the moment but you have indicated that no such ruling exists and I am entitled to refer to it.

The Deputy was not told that from the Chair, of course.

By the Chair but not from the Chair. I simply wanted to be clear because there is confusion.

To refer to it. The Deputy, I take it, is only referring to it.

Am I entitled to refer to what happened at the special committee?

A Leas-Cheann Comhairle, may I make a point of order? Deputy FitzGerald knows, following the Minister's statement, that we have reached the stage where the Minister has decided to refuse to accept the amendment. There are a number of very important amendments which have to be debated here. We have only until midnight. I would suggest to Deputy FitzGerald that there is no point in attempting to get a ruling on whether or not the proceedings of the private session should be discussed in this House at this stage. I hate to say this, but I think we are wasting time on something that is not relevant. I am not trying to rush away, as was suggested in some of the newspapers. I stay here as long as anybody else. I do not mind how long it takes to finish this. We should be reasonable. Either we vote on it or not.

What is not evident to the Chair is that earlier on in the debate, on another section, it was suggested that in disclosing outside the House what happened at a special committee before the reports were published. I had acted dishonourably. I sought private guidance on this from the Chair and was informed that there was no ruling whatever on that particular point and I was entitled to do so but I was not entitled to refer to these points in the special committee in the House until the debates were published.

I am sorry that Deputy FitzGerald has raised that point again.

I want to clear the air, in view of the allegations made.

What was considered dishonourable was that the special committee meeting which was arranged was not alone reported in the Press but the matter to be discussed was reported in the Press.

These were matters referred to in the proceedings of the special committee when it met.

We must deal with the amendment. We cannot go back on procedure.

I understand that the Chair has now ruled that I am entitled to refer to the proceedings of the special committee even though they have not been published, in so far as they are relevant to the amendment under discussion. That is as far as I want to go. I do not want to press the matter any further.

Question: "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 38:

In page 41, after line 18, to add "( ) second-hand movable goods".

The point here is that goods that have been taxed should not be taxed a second time, I understood it was a basic principle of value-added tax. Yet, if this amendment is rejected, we are in the position that goods will be taxed each time they are sold. This seems against the basic principle of the Bill.

The effect of this amendment would be that all sales and importations of secondhand goods would be exempt from tax. There are a number of reasons why I could not accept this amendment. First, it would be contrary to the principle that value-added tax is designed as a general tax on consumer expenditure. Secondly, it would be contrary to the basic purpose of this Bill which is a changeover from the present system to value-added tax. Under the present system, secondhand goods are charged at the effective rate of 5.26 per cent.

The acceptance of this amendment would weaken the control of the tax by opening areas up at the retail stage where no tax would be chargeable. In addition, it would affect the situation in regard to traders who deal partly in new and partly in second-hand goods because an apportionment of the tax between taxable and exempt transactions would be necessary. Finally, it would disturb the neutrality in that second-hand goods could be imported tax free from abroad and sold in competition with home goods which had at some stage borne tax.

The last point the Minister made is reasonable, but I would not agree the other points he made are reasonable. I think there could be an arrangement made whereby imported second-hand goods could be taxed. We would all accept that.

If that is the only reason which the Minister has——

It is not the only reason.

It is the main reason, and the Minister should have another look at that.

The Minister did give other reasons but I doubt if he feels they were very compelling. It does seem wrong that second-hand goods should be taxed, but apart from that the Minister has not put forward very convincing reasons on this point.

We went into this in considerable detail in the special committee and I believe that the arguments I put forward, especially when amplified, are such that I cannot accept this amendment.

Amendment, by leave, withdrawn.

I move amendment No. 39:

In page 41, line 40, to delete all words after "aircraft".

This involves the deletion of the following words: "going to places outside the State; and the repairing and servicing of ships and aircraft engaged in international commercial transport of passengers and goods". The reason for my amendment is not that it is particularly important to secure that this applies to ships and aircraft engaged in internal transport. In fact, the volume of transport in Ireland which is internal and carried out by ships and aircraft is fairly small. There is a certain amount of coastal shipping and, of course, air services between Dublin and Shannon and Cork. It must be remembered that planes going to Shannon and Cork from Dublin are also, with few exceptions, going outside the country. There is no such thing as aircraft of the Aer Lingus fleet which is confined to domestic air transport. There is possibly only a helicopter or light aircraft so engaged and light aircraft would probably also be engaged outside the country as well as on domestic work. Therefore, it does not seem to me to be feasible to have a provision of this kind, which would mean, for example, that, if Aer Lingus stocked their aircraft with food and drink at Dublin en route to Shannon and New York, because the goods are going to a place inside the State, in the first instance, these goods carry 5 per cent tax, but if the aircraft were stocked up at Shannon the goods would be zero rated.

Do not forget the 5.26.

I must not forget that. I cannot recall—it is some years since I was in Aer Lingus—what the practice was then in that respect, but in those days, in any event, they were hired aircraft and the whole position was different. However, it could well be that Aer Lingus at the moment or in the future would wish to be in a position to be able to victual its aircraft in Dublin and not have to make a prolonged stop at Shannon en route to New York, to the disadvantage of the passengers, during which it would load up food and drink in order to avoid the value-added tax.

I put it to the Minister that this is quite unsatisfactory. I do not know if he has received representations from Aer Lingus on this point. I have not myself, despite my former association with them, but I would be surprised if the company would be satisfied to be so constrained that they must either pay value-added tax in this particular instance on trans-atlantic travel, on all goods embarked, or, alternatively, have a prolonged turn around at Shannon to embark food and drink there at the expense of losing passenger traffic by extending the length of the journey from Dublin to New York. I do not see that this will help the competitiveness of Aer Lingus in its operations against American carriers with whom, I gather, the Government intend that we should be competing in the very near future when they have finally got around to admitting what they have settled in this particular matter.

What basis is there for that statement by the Deputy? Is he trying to mislead the House again?

Is the Minister suggesting no decision even behind the scenes has been taken in this matter?

Yes, and has the Deputy any basis for saying otherwise, and if he has why does he not say it? If he has let him tell us what the basis is.

I understood, possibly wrongly, that, in fact, some time ago a decision in principle was taken.

What did the Deputy mean by saying he understood?

I have possibly been unreliably informed.

The Deputy might preface his remarks by that instead of trying to pretend he knows what the situation is and that he is speaking with some authority.

I am only stating the position as I understand it. If the Minister assures me to the contrary I accept his assurance, and, indeed, it is useful to have that matter clarified even in such an improbable place as a debate on the value-added tax.

In other words, the Deputy tries to mislead the House and then tries to justify it by saying: "Well, I got that information." It is a technique with which we are not unfamiliar, but I think attention should be drawn to it.

I think it is appropriate that information of any kind that comes to one's ears which may or may not be correct——

Would the Deputy come to the amendment?

One does not speak of a thing like that as being true if one does not know it to be true.

I understood it to be true. If my tone indicated more certitude than the quality of my information justified, then that is a defect of the way I speak. I know I speak more dogmatically than I should at times and I apologise to the Minister.

The national interest is concerned here, and it is unfortunate that the matter should be dealt with in this way.

I am glad the Minister has clarified the position. I would have thought he would be glad to clarify it. I am sorry if I departed from the amendment. The fact that we are concerned with here is that we do not know whether from this moment onwards there is going to be competition. Nobody has any idea as to whether the Government are going to reach agreement on this matter and permit competition into Dublin, and this is still something the Government have yet to decide. We cannot, therefore, give any view on this, but the Minister will allow me to say that the fact that the negotiations are going on suggests this possibility. In the light of this possibility it would seem, even if it is only a possibility, undesirable to worsen the competitive position of Aer Lingus either by imposing a tax on the goods which it lifts at Dublin, if that is the significance of the section as at present drafted, as I believe it to be, or, alternatively, having to spend extra time uploading drink and food at Shannon, thereby prolonging the whole journey and making it less competitive. I shall not dwell on that, but it is an important point.

Even where this is not the case, even where it is not a question of aircraft carrying passengers through Shannon or, indeed, through Cork to the Continent or to Britain, even if it was only a question of an Aer Lingus aircraft undertaking domestic flights on the same day or other days as well as undertaking international flights, the problem arises: how is a clear distinction going to be made in this matter? As regards the repairing and servicing of ships and aircraft, how is the Minister to determine whether an aircraft of Aer Lingus which is being repaired is an aircraft engaged in international commercial transport?

Is it necessary for the company to state or to establish that on its first trip after the repair and maintenance activity, it went to Shannon or to Cork or did not go there but went abroad? Is that what is required, or is it the intention to look at the whole fleet of aircraft and say: "They spend so much of their time outside the country that we will regard them as engaged in international commercial transport of passengers and goods, even though occasionally they undertake domestic trips? Is that the way it is to be undertaken?

It may be that that is the answer on that point and I will be satisfied if the Minister gives that answer, but I am not satisfied and will not be satisfied until the Minister clarifies the issue on the question of aircraft travelling from a point in the State to another point in the State in transit for an international destination. It seems to me that the wording here is explicit —"goods delivered on board ships or aircraft going to places outside the State". This aircraft is not going to places outside the State; it is going to Shannon. It will later be continuing on beyond Shannon. That is another question. Its initial destination is inside the State. Is it that the Minister's interpretation of this is wide enough to allow that if the aircraft is intended to go ultimately outside the State and although it is going to stop inside the State in the first instance, the tax is not payable? Is it the intention of the Minister that if it is a BAC 111 or a Boeing 737, undertaking a purely domestic trip to Shannon the goods will have to pay the 5.26 per cent rate but if the aircraft operating to Shannon is going on across the Atlantic, the food will be at the zero rate? Is this not going to create very great complications for Aer Lingus? I wonder if the Minister has thought this out and whether, on reflection, he may not agree that he is attempting the impossible in this matter and that in the nature of things aircraft are so interchangeable and the work they do, domestically and internationally, so closely inter-related that to attempt to distinguish between them is not practicable.

In the case of shipping, it may be somewhat easier. There are probably vessels engaged more or less exclusively in coastal activities—there used to be a tanker which went from Dublin to Cork exclusively—but even many coasting vessels operate fairly freely either along the coast or, perhaps, to Britain and is it going to be the case that if a coastal vessel is moving goods to Belfast, it is in one position and to Cork, in another position? I wonder whether the Minister has thought out the implications of the section. I do not want to waste time and having developed the point to that stage, I will leave it to the Minister to reply. It may well be that he can satisfy us that he has given adequate thought to this and that the problems I am fearful of may not arise.

I was under the impression that even though the Minister at the special committee did not appear to be very receptive to our ideas on this but the points having been made. I felt possibly he would decide to have another look at it. Like Deputy FitzGerald, I feel that a mistake has been made here and while Deputy FitzGerald has been accused of being dogmatic, I would say that the Minister is being dogmatic about a matter which he should easily recognise as being something on which he should give way. I do not propose to follow the line followed by Deputy FitzGerald because he has fairly well explained it several times, except to say that a few years ago we had in this House numerous complaints about a certain shipbuilding company here that was supposed to have been stocking up with vegetables, fruit and so on from Holland. We all raised our hands in horror and said: "Surely this does not happen," but, in fact, this sort of thing would encourage them to do it because if they stock up from Ireland with the necessary goods, they will have to pay value-added tax. In addition to that, in the case of boats going from Drogheda to Whitehaven, Cork to Whitehaven, Dublin to Whitehaven, this sort of thing happens quite often. They would be outside this; they must pay VAT on stores because they are not exclusively within the waters. The same thing applies with regard to repairs. With regard to aircraft, I think it is ludicrous to suggest that an aircraft which is flying through Ireland should not pick up any food particularly here because if they do, they will have to pay tax on it, whereas if they are going outside, the matter can be dealt with in a different way. This applies also in the case of repairs.

The Minister is, perhaps, being very dogmatic about this and I think he should have another look at it. There is no point in trying to force it here because the Minister says "No" and his cohorts will come in and vote us down—that is a certainty—but I appeal to him to show a little commonsense. This is not a matter over which we should have a lot of disputes.

Of course not.

I think the Minister should, in fairness——

Probably the Deputy is being a little dogmatic now.

I would be dogmatic if I had the forces behind me which the Minister has and that is his only reason for being dogmatic, because he knows he can vote us down. He must realise that he is wrong in this and I suggest he should have another look at it.

I do not know where Deputy Tully dredged up this idea that I am being dogmatic about this. The situation is that we discussed this in the special committee and I agreed to have another look at it. What was involved was the choice of the best wording to achieve what we all agreed should be achieved. I find it difficult to understand how, in those circumstances, my attitude can be described as dogmatic. I have not even replied yet.

But you have not put in an amendment which would give anything like what we are suggesting.

The Deputy has not even heard what is the result of my having looked at it and yet he says my attitude is dogmatic. As it stands, this amendment would apply the zero rate to all goods delivered on board a ship or aircraft, irrespective of whether the ship was engaged in transport within the State or outside the State. It would also exclude from the zero rate the repairing and servicing of ships and aircraft engaged in international commercial transport. I do not know if that was what Deputy FitzGerald intended, but it is not a proposition I would accept.

It is a defect of the amendment and the Minister is quite right in drawing attention to it.

It may be that he put down the amendment in relation to the wrong part of the section. If that is the effect of it then for that reason it could not be accepted.

With regard to the fact that I said I would have a look at this position, I intended when replying to tell the House what the result of that looking at it was. The position is that the main purpose of this provision is to ensure that foreign ships and aircraft can be bunkered and serviced at Irish ports without any tax complications. If we do not do that——

Did the Minister say "foreign ships"?

The Minister, perhaps, meant foreign-going ships?

Would the Deputy let me develop this, please? If we failed to make this kind of provision, there would be a danger that shipping or air companies would take their business elsewhere. As I understood it, Deputy FitzGerald's objection was that the persons carrying out the servicing would not know whether or not the ship or aircraft was engaged in international commercial transport and, consequently, would not know whether or not tax should be charged. On full consideration of this position, the best advice I can get is that there is very little force in the objection. The kind of ship or aircraft which is designed for international transport is well known to the traders who engage in the bunkering or servicing of such vessels. Furthermore, the identity of the owners will also normally identify the kind of activity in which the ship or aircraft is engaged. A foreign ship or an air company is exempt from tax on any service rendered within the State under section 5 (4). Secondly, it may safely be assumed that paragraph V of the Second Schedule will be interpreted as authorising a zero rate on the servicing of all ships or aircraft on behalf of such companies. If that is so, then the only area of doubt which could arise would be in relation to Irish transport companies, such as Irish Shipping or Aer Lingus.

Could the Minister explain why the exemption of something under one section should ensure zero-rating under the Schedule? I do not follow the argument.

I could go back and explain it, but is it really relevant or is it just an interesting point that the Deputy has picked on?

I just want to understand the Minister. I am sorry.

The words "going to a place outside the State", are these cogged from some foreign Act passed in France, or Germany, or Holland, or somewhere like that?

Would the Deputy let me finish and then put his question and I shall try to answer it? On the basis of what I have said, the only real area of doubt would be in relation to an Irish transport company, like Irish Shipping or Aer Lingus. In fact, it makes relatively little difference whether or not they are charged the tax because, since most of their business is outside the State, they would in any event be entitled to be repaid practically the whole of the tax they have suffered.

We have looked at this matter to see if we could devise a better wording to meet the situation we are trying to meet. We have not been able to produce anything better. The present wording seems to be reasonably suitable. It is clear, of course, that the whole problem of the treatment of transport under the value-added tax system presents considerable difficulties. This is so particularly where a single consideration covers transport which is partly within the State and partly outside it. This is one of the problems which is being considered by a special study group of the EEC and it is likely that a uniform system for dealing with this problem will be suggested in the near future to the member States. In the meantime, the wording in the Bill is the best we have been able to produce, having given considerable thought to it, and that wording will be interpreted administratively as meaning that, in relation to a contract for passenger transport, excluding any idea of a tour, from a place within the State to a place outside the State and vice versa, the whole of the consideration will qualify for a zero rating. In the case of, say, Aer Lingus, on a flight from Dublin to New York, the hop to Shannon will be ignored.

It does not say that in the Bill.

No, but I have explained the situation.

The Minister is aware that the interpretation of Acts beforehand has resulted in people saying that they do not care what the particular Minister said: they will take what is in the Act. I know the Minister has the intention of doing it properly.

May I remind the Deputy again that we have tried to devise a better wording and we have failed. No better wording has come from the Opposition either and so we are stuck with what we have. But I have placed on the record of the House the intention as to how this will be administered.

I suggest that the intention of the Minister as to how something is to be administered has not been accepted on other occasions.

Subject to certain qualifications, I do not think that is true. I would ask the Deputy to consider in what circumstances would it arise that someone would apply to the courts to upset this administrative interpretation.

Someone prosecuted for not paying value-added tax on goods might take it to court and quote what the Minister said and the court would say: "Sorry, but we take what is in the Act."

Who would take it to court?

The Revenue Commissioners.

If the Revenue Commissioners took someone to court on the basis of what I have placed on the record of the House as the intention of the Administration, then the Revenue Commissioners should be sacked and, if I were Minister for Finance, they would be sacked.

Sacked if they obeyed the law? That is an interesting proposition.

I have explained to the House that no one has yet come up with a solution but Deputy FitzGerald, of course, knows the answer clearly.

I am just talking about the legal effect of this. I am not talking about what the study group in the EEC may be trying to do about the problem.

It is exactly the same problem. I wish we would not waste the time of this House with the kind of nonsense that Deputy FitzGerald goes on with.

In this case I think I can understand why Deputy FitzGerald is raising the matter.

Has anyone a better suggestion? We have discussed all this before and no one has come up with a better suggestion. It has been gone into as thoroughly as possible and we have not been able to do anything better.

Would the Minister not do what is done in the British Act?

No, I would not.

First of all, the Minister is perfectly right in saying my amendment is defective. In drafting 33 amendments my eyes slipped and I deleted more than I intended to delete. I should have left in the last three lines of the original section and, if the Minister were prepared to consider the amendment, I would, of course, amend it to correct the defect in the drafting. The Minister asks how can this be done. In the British Act, as regards repairing and servicing ships and aircraft, ships and aircraft are defined according to their size by a rough and ready rule which more or less differentiates between foreign-going ships and aircraft. If a ship is over 1500 tons it is capable of going abroad and, if it is under 1500, it is not. In the case of aircraft differentiation is based on a weight of 18,000 lbs. If the aircraft is over 18,000 lbs it is treated as an aircraft likely to go abroad and, if it is not over that figure, it is treated as less likely to go abroad. A ship or aircraft designed or adapted for recreation or pleasure, such as a steam or motor yacht, is not covered. It is done on the basis of size. What has the Minister against that? He challenges us to produce a solution. I ask him what is wrong with the British Act and he will not answer me. I put it to the Minister there is an answer there. I am not saying it is the best answer, but it is an answer.

If the Deputy really wanted a dialogue he would not carry on as he has been carrying on here all day. Indeed, he will find a much greater dialogue going on between me and the Labour Benches. It is not any personal animosity now, but it must have sunk into him by now that Deputies on all sides are getting tired of Deputy FitzGerald's purely debating points.

On all sides?

On all sides.

I have had some comments from the Minister and from one or two Deputies on the Labour Benches who seem to have some feelings in my regard.

And not only today, but in the special committee. Surely it has sunk in.

I take it that my job is to oppose constructively, to explore the difficulties in legislation and to put constructive suggestions as to how these difficulties may be overcome. I will not be put off by any Minister trying to tell me that I am taking too long to do that job.

If the Deputy wishes to do it this way, he may but I will do it my way.

If the Minister is not capable of restraining himself and wishes to become cross, I cannot prevent him from doing so.

I can restrain myself very well by saying the minimum possible.

The Minister issued a challenge. He asked: "How can this be done" and I suggested helpfully——

I recall an important occasion in this House when I had been on my feet for only a minute or two to oppose a Bill that was found subsequently to be unconstitutional, and Deputy FitzGerald accused me of wasting time.

It is absolutely possible that that happened. I am not objecting to either the Minister or any Deputy saying that I am wasting time. They are entitled to say so if they wish but I am impervious to the suggestion that because I pursue a legitimate point beyond the point that the Minister finds acceptable, I should then sit down. This is not my idea of opposition and never will be. I try to be courteous and I try also not to press an issue beyond the point of no return and where discussion will not lead any further I try not to be repetitious. Perhaps I fail on all these counts but I continue trying and I am sorry if the Minister finds me so trying.

On the particular point I will ask the Minister to consider the simple solution to the problem of the latter part which has been found in the British Act on the basis of the size of the vehicle. This is an obvious solution and one that has been used for other purposes in other Acts. On the first question of goods delivered on board a ship or aircraft, I think I can take it that what the Minister is saying is that if the ship or aircraft is going to a place outside the State even if it is to stop en route, he will interpret it in that way. It seems a fair interpretation and I am prepared to accept it. It could be turned over in court but I do not think it likely that that would happen. However, in the latter part, in respect of aircraft or ships engaged in international commercial transport of passengers and goods, the definition is vague and impracticable. The Minister's hesitant reply indicates that is his opinion also. He has admitted that he has sought a solution but failed to find one. Therefore, I ask him simply to do what was done in the British Act which in this case seems sensible.

Is the amendment withdrawn?

I would like to press it. Part of it is good and part of it is defective.

Amendment put and declared lost.

Acting Chairman

Amendments Nos. 40 and 41 are related and may be taken simultaneously.

I would like to point out to the Chair that we had a discussion with the Ceann Comhairle this morning in respect of these amendments and it is our wish that they be taken separately.

For the most serious reasons.

Acting Chairman

I am being guided on this by instructions which I took from the Leas-Cheann Comhairle.

All the Leas-Cheann Comhairle could have told the Chair was that if agreed by the proposers, the amendments could be taken together. We do not agree to that. Therefore, they must be taken separately.

Would it meet the requirements of the Labour Deputies if the amendments were discussed together and the proposers had a right of reply?

The Minister has got the point but the question is whether it is in order to deal with them in that way. If they are taken together the first one is moved by the proposer who has the right of reply but if it is defeated, the other falls. For that reason we wish our amendment to be taken separately. I am prepared to accept the Minister's suggestion if that procedure is in order.

Acting Chairman

If they are taken together there will be an opportunity given to the Labour Deputies and to Deputy FitzGerald to reply separately.

I accept that.

Acting Chairman

I understand this is not a precedent that can be guaranteed to be granted at any future time.

It was not given to me today.

The Deputy did not ask for it.

The reason for tabling our amendment was brought out clearly at the special committee. It is an amendment which will be met by the increase of £3.7 million that the Minister mentioned. We took these foods out deliberately to meet that view because we knew that the Minister could not afford to lose £15 million in revenue.

Acting Chairman

I propose that we get on with the amendments.

I take it that each of us will be given an opportunity of moving the amendments.

Acting Chairman

Yes.

The Chair said that two Labour Deputies and Deputy FitzGerald would have the right of reply. I take it that he meant a Labour Deputy or, alternatively, that Deputy FitzGerald and others would have the right of reply. I am sure that no distinction of that kind was intended.

It is strange that the Deputy should raise this sort of issue. There are two names here.

That is why I raised it.

If the Deputy wishes to make an issue of this, we can go on talking on it for the next half hour.

I am only trying to clarify the position.

The trouble with Deputy FitzGerald is that he is always trying to clarify matters unnecessarily.

I move amendment No. 40:

In page 42, after line 24, to add a new paragraph as follows: "() food of a kind used for human consumption and non-alcoholic drink."

If the Chairman decides to permit two speakers from Labour and one from Fine Gael, we can be tolerant about such matters. The question of food here is a major issue. It is our belief that social justice requires that food should not be taxed. This is a point which can be argued best by reference to the facts of the situation. When one examines such evidence as we have, which is fairly extensive and, with some limitations is valid information on household budgets, one finds that food as a proportion of household budgets varies greatly according to the incomes of the families concerned. It would be difficult, perhaps impossible to find any other range of articles which looms so much larger proportionately in the budgets of poor and large families than food. Therefore, in specifying food for zero-rating we are picking on something that would have the maximum social impact. It might be thought that at this stage in the history of the country with its relative affluence, this would not be true to such an extent but it is true and the large variation in respect of foods generally in the household budget inquiry of 1965-66 was that from about 43 per cent of the family budgets of the poorer families were constituted by food down to 21 per cent in the case of the better-off families. In other words the proportion was twice as large in respect of the poorer families.

If one takes a narrower range of food—the range discussed at the special committee which I shall not go into because there seems to be some doubts as to whether we are entitled to refer to it because of the failure to have the report published, that is, that range of foods which constitutes 75 per cent of total food consumption—the difference in ratio was more marked. These foods are described commonly as necessary foods. The range of foods left for consideration by the special committee, representing three-quarters of all foods, are even more skewed in this way than the total food consumption. So much so that for these foods which one can describe loosely as necessities, the proportion of the budget was 31 per cent in respect of poor families and 10 per cent in respect of better-off families. As the foods mentioned in the Labour Party amendment are drawn from this list I suspect that these foods are ones on which the expenditure is very much larger in the poorer families than in the richer families. To that extent the Labour amendment is well judged in terms of seeking to achieve the maximum benefit possible for the poorer families within certain limits of cost to the Exchequer of about £4 million. I was not of the opinion that one should limit oneself to such a figure but in imposing such limits one would choose foods that would be on the lines of those mentioned in the Labour amendment. To that extent I support the amendment but I would like to press my own amendment first before adverting to the Labour amendment.

All food should be exempt because if we take the range of goods which were not covered by the suggestions made in the special committee there is one-quarter of foods which are regarded as less necessary. Even in that range of foods which represented 14 per cent of the budgets of poorer families and 10 per cent of the budgets of richer families, although the disparity there is much less than in the case of necessities it is still marked. In other words, by including the whole range of foods rather than the conventional necessities one increases the social impact by benefiting poorer families more at the expense of richer families. Given that and given the technical complications for retailers of distinguishing different foods it seems to me better that the whole of foods should be zero rated and that the necessary arrangements should be made to find the tax revenue from other sources and it is on that basis that this proposal is put forward.

If the amendment were accepted there would be a loss of revenue estimated at about £15 million. I think that estimate is common ground. In preparing any estimates which I shall be submitting I had the opportunity, through the courtesy of the Minister, of consultation with the Revenue Commissioners who were immensely helpful in checking out my calculations and in bringing me through many complications in the calculations which I would not have got through successfully myself, although this particular figure is one which I calculated myself and which I validated by reference to them. The money would have to be found from another source. In fact, in formal discusions proposals were put forward by this party which we have since published indicating how that money might be found. The total sum we would be seeking would be somewhat larger because we were also including some other articles which, as they are not referred to in this amendment, I shall not mention. That led to a need to find, not £15 million but over £17 million and any figures I give about finding money are related to that slightly larger figure going beyond the amount required to compensate for the zero rating of food.

The proposals which we put forward after considerable thought for finding the money were, first, that the present turnover tax—we can talk for the moment in these terms although that tax is, of course, being absorbed in the value-added system— should be increased by 1 per cent from 5 per cent to 6 per cent. In other words, you would have a value-added tax of about 6.4 per cent which we rounded up for the Minister's benefit to 6.5 per cent in lieu of the 5.26 per cent which is proposed in the Bill. Such a change would mean an additional £8.5 million, only half of the sum required. Therefore, it was also proposed that the present 10 per cent wholesale tax rate applying to about one-seventh of consumer expenditure should be increased to 15 per cent. This would be achieved by having for the goods in question a VAT rating of about 24 per cent in lieu of the proposed 16.37 per cent. The effect of such a change in VAT would be the equivalent within the present system of having a 5 per cent turnover tax and a 15 per cent wholesale tax instead of the present 10 per cent. This would yield a further £8.05 million.

Another feature of our proposal, which I shall not dwell on because we have dealt with it, was that this higher rate of wholesale tax turned into VAT at a rate of 24 per cent, would be trapped at the wholesale level and would not pass on to the retail level. As a result, through this scheme we achieve a single rate of tax at the retail level. I mention that merely to link these together.

The effect of these proposals, therefore, would be to yield an extra £16.5 million replacing the £17 million lost through zero rating of food and certain other commodities we shall discuss later. In other words, we replaced virtually all that money. It was also proposed, although this is not an integral part of the proposal here, that the proposed 30.26 per cent rate on cars, radio sets, records and record-players should be brought down to the 24 per cent rate and so have a single rate of wholesale tax. This would mean a certain cost to the Exchequer which would be more than met, we felt, by the extra revenue which the Minister proposes to get by his proposal to have the 16.37 per cent rate bringing in an extra £3.5 million.

If these tax changes were to be effective and satisfactory it would be necessary that the benefits of the tax reductions on food and the proposed other items should be passed on to the consumer. It would be necessary to ensure that where taxes are reduced as proposed in our amendment, and over a narrow range of goods proposed in the Labour amendment, that the retailers would pass this on to the consumer. One might think forces of competition would achieve this and very generally I think this would be the case but some doubt has been cast on the local effectiveness of the forces of competition by some recent figures and there are local problems in this respect. We recognise that it would be necessary for the National Prices Commission to keep an eye on this situation but we cannot accept the Minister's suggestion, repeatedly made in the special committee and I think earlier today here in another context, that we may no longer reduce taxes because in his view any tax reduction will not be passed on to the consumer. He went so far in the special committee as to suggest that a marginal reduction in tax from 5.26 per cent to 5 per cent would, by virtue of being a change in tax, so confuse people that retailers would put up prices. The proposition that we cannot reduce taxes without people putting up prices in response to it is one which I found curious and very unconvincing.

Neither am I convinced that we are in a position, where the mismanagement of the country's affairs and the failure to control cartel monopolies has been so total that the Government are now impotent to reduce taxes on expenditure lest these not be passed on to the public. To suggest that is to condemn the policy of the Government, and particularly of the Minister for Industry and Commerce, in regard to prices so utterly that such a suggestion would come better, though not very convincingly, from the Opposition than from the Minister for Finance. That he should have so little confidence in his Government's prices policy as to believe that he dare not reduce taxes because the benefits would not be passed on because the cartel-monopoly situation and the failure of price surveillance is such that he could not guarantee the benefits would be passed on, is an utter condemnation of the Government's prices policy which I was surprised to hear from the Minister. Even a member of the Opposition might be slow to make such an accusation.

I am not convinced; I do not think he really believes his Government are as inept and as incompetent as that. I believe he is making an excuse not to do what in our view should be done. The price surveillance machinery is, or can be made sufficiently effective to secure this result.

There is another aspect of this which is another complication that must be dealt with. If our proposal for the trapping of the new rate of VAT of 24 per cent at the wholesale stage were to be accepted to achieve a single tax at the retail stage one consequence would be that the base for the calculation of the tax would be increased and as a result retail margins, if calculated on a percentage basis on a wholesale tax base, would rise in absolute terms. The Minister made this point in the special committee; he suggested this was a difficulty to be faced and that there was a danger that because retailers' margins are calculated in percentage terms in many instances and because he felt they would not agree to modify these, the effect of a proposal involving the trapping of more tax than is now trapped—at present only the tax at the higher rate of wholesale tax is trapped—the trapping of all wholesale tax, if that were done, would create a problem by increasing the absolute amount of retailers' margin by their applying the same percentages as at present to a larger wholesale tax base.

Recognising this as a point I took the opportunity of consulting with various retail groups. I sought public assurances from them which they would have to stand over and on which they could be policed—if that is the right word—by the National Prices Commission, should the occasion arise, that they would reduce their percentage margins by the appropriate amounts which would be a reduction of about one-eighteenth in the present percentage margin.

I received such assurances willingly from the RGDATA Group representing the VG, Spar and Mace groups as well as supermarket chains like Williams, Liptons and Five Star, and also from the Association of Voluntary Groups representing the MNC and the Londis organisations. Since these groups did not cover two major supermarket groups, Dunnes' Stores and Quinnsworth. I approached them and sought and got similar assurances from them. These were assurances given in public and they would, therefore, be open to supervision by an adequate prices surveillance mechanism if we had one, and I hope we have or can have one. Therefore, the only objection put forward by the Minister was overcome. On that basis we put forward our proposal at an informal meeting of members of the special committee.

A private meeting.

Indeed, a private meeting, at the end of which there was some discussion as to what might be said about it. Agreement was reached that each Party present could state what they had said or done at the meeting but should not speak for others.

It is what was said before that was important.

The statement issued by Fine Gael dealt only with our own position. We left it to the Minister to clarify his position which he did about 24 hours later. There was a certain informal briefing that night of the Press through the Government Information Bureau.

Acting as a responsible Opposition we devised a proposal which would meet the problem of maintaining the revenue. We went laboriously into the calculations. We checked them out with the Revenue Commissioners to make sure that we had not gone wrong, and that we would not be misleading the special committee or the House. We satisfied ourselves that our proposal was realistic in terms of replacement of revenue that might be lost if this amendment were accepted.

We also sought to ensure that the difficulty put forward by the Minister would be fully met by the necessary assurances from these organisations. We did everything we could to ensure that the zero-rating of food could be undertaken and that no valid excuse could be put forward to prevent this being done in the interests of the lower income group whose consumption of food represents such a high proportion of their budget, and whose living standards would be improved if this proposal went through.

The effect of this proposal would be roughly as follows on the price of the various goods: On food and other goods which we propose to zero-rate, a reduction of 5 per cent; on other goods, which we also proposed should be zero-rated, a reduction of about 7 per cent—certain goods which are sold by grocers which are not actually foodstuffs. The effect of our proposal to standardise the rate of value-added tax, other than the 5.26 per cent rate, at 24 per cent would be to reduce the price of cars and other goods like TV and radio sets by 5 per cent. Increases in prices would occur also; for the great majority of goods now liable to turnover tax only, representing a high proportion, something like two-fifths of total consumption, A 1 per cent increase in price; and for goods which at present involve one-seventh of household consumption an increase of 7 per cent in price.

The effect would be to switch the burden of taxation to a significant and perceptible degree from the lower income group to the higher income group which can afford, on a large scale, the kind of goods on which wholesale tax is paid. Virtually all groups in the community must buy some goods on which wholesale tax is payable but, when you come to the kind of goods which represent only one-seventh of total consumption, and which are in the upper bracket, and which together with cars and TV and radio sets represent one-fifth of consumption, obviously poor families can buy very little and richer families buy more. The shifting of the burden is quite perceptible.

We examined a great number of alternatives. We considered one proposal which was the doubling of the turnover tax on goods not zero-rated but, having examined its social consequences, we found they were not as beneficial as the proposal we put forward and accordingly we did not put it forward. In a statement to the papers, which I found disturbing in its degree of dishonesty, the Minister said that we have not referred to our proposal for the doubling of turnover tax which we intended to put into effect if our first scheme was found to be defective or inoperable. It was not our proposal at any stage. I do not know whether I am now entitled to disclose what the Minister said. I think I am.

Of course the Deputy is now.

Even Deputy O'Donovan agrees.

Since the Deputy disclosed so much why should he draw back now?

Deputy O'Donovan is so sensitive that I do not want to hurt his feelings any more. They were very hurt during the course of the day.

They were not.

The Deputy put on a very good show of being hurt.

Deputy FitzGerald's behaviour was very bad.

We heard the Deputy on that and we heard the answer.

The Deputy will hear more about it.

Since the Deputy has a tendency to repeat we probably will hear more about it.

The honeymoon is over.

The Minister can get any grist he likes out of it.

The Minister will find out in Cork.

I do not think that any little difference between Deputy O'Donovan and myself should be taken too seriously.

He is not the only person the Deputy has differences with.

(Interruptions.)

I am interested in the amendment. We have an amendment down too and we are finishing at 12 o'clock.

I am sorry that I was deflected from my purpose. I am coming to the end of what I want to say on this point. At the committee, after I put forward our proposal which does not involve the doubling of turnover tax, the Minister put forward a number of what he described as possible solutions including the doubling of turnover tax or, to be more precise, the raising of the value-added tax rate from 5.26 per cent to 11½ per cent which he described as equivalent to doubling turnover tax.

None of us commented on this proposal at the time. The discussion was deflected into a different area, the area which lies between the Fine Gael and Labour amendments as to whether we should zero-rate all food or some food. The chairman, Deputy Healy, will confirm this because he was interested in that part of the discussion. The Minister then said he would like to revert—and the word used was "revert"—to the suggestion he put forward, or the point he made, or the proposal he put forward, in relation to increasing the turnover tax rate to 11½ per cent. I cannot quote verbatim. He said he would like to have Deputy FitzGerald's views on it.

Again I cannot quote verbatim but I said something to the effect that we thought our proposal was better from the point of view of social justice and that, while the debate had been going on, I had been doing some calculations because it seemed to me that the Minister had not done any calculations on the question of the social impact on different social groups. My calculations showed that the Minister's suggestion of doubling turnover tax would have some socially beneficial effects but nothing like as many as ours and therefore we rejected it. To find that after that history in the committee the Minister could be so lacking in regard for the truth as to say that this was our proposal was below the standards which we have generally expected from the Minister in question. If he were here I would suggest politely that he might like to withdraw it. He is not here at the moment and I cannot blame him because it has been a long day.

To sum up, the net effect of our proposal would be gains for the lower income group and, roughly speaking, families with less than about £1,250 would benefit from these proposals and only families with about £2,000 a year or more would lose perceptibly. This seems to me to be a good proposal from the social point of view. The Minister tried to suggest to the committee that the problem could be met by provisions in the social welfare code and children's allowances. That seemed an extraordinary suggestion because the kind of people this is designed to help would include, for example, unmarried women living alone—a group, as I have said before in this House, we pay too little attention to—and such unmarried women living alone in Dublin, anyway, have no chance whatever of getting a house in the foreseeable future.

They would have to acquire a husband and two children before they would get a house. Not being able to get a house from the corporation, they must pay private rents. If they want to live anywhere but in a tenement, this involves at least £5 or £6 a week, in many cases much more. The typical pay of such a woman is about £12 a week. We take £1 a week in income tax from her. We refuse to provide her with public accommodation and force her into private accommodation which will be at least £5 or £6 a week. We provide no social benefits. Unless she is an unmarried mother she gets no children's allowances. The Minister says that people like that who would benefit significantly by our proposals, because a very high percentage of their budget is on food, would be benefited by increased social welfare benefits which do not apply to them, or by children's allowances, which do not apply to them. The Minister has no understanding of the problem if he thinks in these terms and it is unfortunate that he holds the purse strings, if that is the level of his interest and concern.

One of the biggest groups in need of assistance here, more than any other single group, are the pensioners whose expenditure on food is an exceptionally high proportion of their total expenditure. One thing about old age pensioners is that they rarely have children. To talk about increasing the children's allowance to help old age pensioners is an absurd proposal. The Minister attempts to get out of his obligation to deal with this problem by trying to suggest that he is going to deal with it, perhaps, in the next budget by increasing social welfare benefits and the spending of the EEC money. We all know what they will try to do with that and how they will try to fob off the elections until then in order to get maximum electoral benefit from it. His suggestion that that will solve the problem of the social groups I have mentioned is nonsensical because, of its nature, in regard to some of these groups, it cannot do that. The Minister knows that and he is misleading the House and the country in putting forward that suggestion. The only way that people like the unmarried women can be helped is, in fact, to accept a proposal of this kind. The Minister knows that and should have regard to that when he comes to reply to this debate. I shall not speak any longer because there are other Deputies who wish to speak.

Thanks to Deputy FitzGerald for being so brief. We have a number of amendments which must be discussed and we have only up to 12 midnight. Deputy FitzGerald has made a case for his amendment and he stated what he considered preferable to ours. If you go back to the special committee on which this matter was discussed, the first item under consideration was selected foods and Deputy E. Collins, who so far has got no credit from anybody, is the person who named the foods which he asked to be costed. It is only fair to say that. The special committee consisted of more than Deputy FitzGerald and the Minister for Finance. There were a number of Fianna Fáil and Fine Gael Deputies on it and there were Deputy O'Donovan and myself. Everybody took part in the debate and there were some very constructive comments made by members of the three parties. Everybody was anxious to provide some kind of solution and to tease it out so that in this House we would not have lengthy speeches on matters already explained to us. I understood that that was the whole idea. I am rather disappointed that that has not been the end product.

Having discussed the question of selected foods, the Minister then said that if we were able to list what we wanted and Deputy Collins gave a list which was costed and also a list of items where we thought the increases should come from, he would consider it. The foods were to be listed and costed. The Minister said we should do it. My suggestion, which was accepted by the special committee, was that since the Minister had the Civil Service at his disposal he was in a better position to get both sides of the story than we were. The Minister produced certain figures to us and we discussed them. The Minister's argument was that the main reason why he did not want to exempt selected foods— what we call essential foods—the essential foods listed in our amendment— bread, tea, sugar, butter, milk, margarine and oranges—was that the cost to the Exchequer of exempting these would be £4.11 million. In view of the fact that the Minister admitted that the excess of revenue to the State as a result of the changeover would be £3.70 million, we felt that these items could, in fact, be covered easily without any upset.

The Minister made the argument that the retailers would not take kindly to those foods being exempted, that, if they were zero-rated, it would be a third rate of tax and that they would object to this. We could not see that point. We told him that we thought that to call a zero-rating a separate tax was ridiculous. The Minister eventually persuaded Deputy FitzGerald that it was so. He also stated that it would be better to try to cost the exemption of all foods, and this also Deputy FitzGerald accepted. Hence the amendment here this evening. The Minister having succeeded at the special committee in persuading Deputy FitzGerald that it was better to discuss the zero-rating of all foods, he then, in answer to a question from me, said he had no intention of zero-rating any foods. In fact, he had taken the ball completely out of our court simply by giving the impression that he proposed to consider zero-rating of foods and then saying that it would cost too much, that it would mean doubling turnover tax and it would mean paying double tax—10.5 per cent it was eventually—on essential items other than foods. Having reached that stage, it was agreed that nothing further could be done about the matter and so we come here today.

We have suggested again that essential foods should be exempted. We do so because we are concerned for the old age pensioner living alone, the widow living alone, the man and wife with a young family on a small wage, persons living on small fixed incomes.

So many people talk about the affluent society and about how people live. The people I have mentioned live mainly on bread and spread—tea, bread and margarine. They use some milk. When I go into houses in country districts where the occupants have not got a very high standard of living, I am appalled to find so many people who would laugh at the mention of the price of meat. They do not buy meat because they cannot afford it. If value-added tax is added on to essential foods they will have to reduce still further the food they eat and the food they give their children.

We talk a great deal about the great Christian country this is, how different we are from pagan England. In England they have excluded all foods from the value-added tax and have been able to do it. Here we are simply asking that essential foods be left out and we are pointing out that the amount of money involved, £4.11 million on the Minister's own figures, is almost counterbalanced by the amount which the Minister says the Revenue Commissioners say will be collected in excess, £3.70 million. The Minister today admitted that he himself felt there would be very much more than that collected but that he was not prepared to put an exact figure on it. He agreed that because of a new system of taxation which it is proposed to introduce and the double or treble check which can be carried out it would be almost impossible for those who should pay value-added tax to avoid it. The result will be that there will be additional revenue. Various figures have been bandied around the country and one can choose any figure one likes from £20 million down to £9 million or £10 million extra, but it is pretty clear that there will be a substantial amount of extra revenue coming in from value-added tax. We are merely asking that the small sum of £410,000 should be used for the purpose of subsidising, if necessary, even if no extra revenue comes in, the food which is used admittedly by almost everybody but is absolutely essential for people who have not enough of this world's goods.

For this reason we did not go for all foods. We know quite well the Minister will prove conclusively, if not to us on this side of the House, to his own Government and his own backbenchers that it should not be done, and he will get their voting strength behind him in the lobby, and therefore we cannot carry it. Nevertheless we feel that, in fairness, the Minister should accept the second alternative.

Briefly to deal with the suggestion that zero taxation is an additional tax, I should like to know how the Minister makes this out. Our biggest problem in regard to taxation is that when the person buys an article in a shop or supermarket—and we have been giving the example of the supermarket, which perhaps is not typical of the country district but it is the simplest way of giving the example—and then goes to the check-out system, the girl on the check-out system has to take two things into account at the present time, the price of the article and, if tax has to be added, what it is. Under the new system, she will have to take into account whether the commodity is taxed at the lower rate of 5.26 or the higher rate of 16.37. If there are certain items of essential food that are not taxed, surely it is unreasonable to suggest that it is an extra burden for anybody to say: "There is no tax on this, how much is that?" They do not have to add it on; they simply take the price as it is.

I dealt earlier with the Minister's suggestion that this question of the two rates of tax could be got over by putting on the 5.26 at shelf level. I disagree entirely with this suggestion because it means that lower-priced articles will be heavily over-taxed if that happens. However, no matter what is done I suggest there are only two rates of tax involved, not three. If the zero-rate is put on the essential foods, then there should be no difficulty. I do not think any trader would object to extra work being put on him because there is no question of having to estimate the tax; there is no tax. Therefore I suggest to the Minister that he should accept the amendment which Deputy O'Donovan and myself have put down on behalf of the Labour Party.

May I be allowed to speak on this occasion before the next member of the Fine Gael Party; it is not because my name is to the amendment but because I have to go away. It was Deputy Tully who first drew up this subject of bread and butter, tea and sugar at the Special Committee and Deputy Eddie Collins added red meats to it. It is all a matter of opinion. I think there should be no tax on any food, but I had to take what I thought we might get, and of course that was destroyed by the very bad behaviour of Deputy FitzGerald. I wrote to the Minister about this matter. I notice Deputy FitzGerald pretended it did not happen at all. He is quite entitled to behave like that if he likes. I wrote long before the private meeting; as a matter of fact the Minister's reply to me was sent to the various Deputies and rightly so. I have not disclosed what I said to the Minister or what the Minister said to me, and I have no intention of disclosing it. That is my standard.

When we came to deal with the matter I understood from what the Minister had said when he asked for the private meeting of the committee that he really wanted to do something, but naturally enough when the thing was blown out in the open by one Deputy running off to the newspapers he dug his heels in. He did not lose his temper; others have not been so kind but perhaps we have more reason because we are more concerned about it. The Minister and the Government have already taxed food, so they are not so concerned about it. I agree with Deputy Tully, and this is why I support him so roundly. I put in only one item, oranges. It is not worth talking about; it would cost only £80,000. The reason I put it in is that there is a serious deficiency of vitamin C in this country, the medicos will talk ad lib about that. Oranges are important. I remember when the war was ending, the first cargo of oranges that came in here were regarded as gold. But the other commodities that are even more important are bread, butter, margarine, tea, sugar and milk. We put down this amendment in this way not because, unlike the Fine Gael Party, we are in favour of taxation on food. Not at all, but because we knew the Minister would not take the tax off anything except these items. He had told us quite significantly at the last public meeting of the committee that he had £3.7 million. We proceeded to see what we could get for the £3.7 million, and this is what we proposed. Like Deputy Tully I heard Deputy Garret FitzGerald talking about figures and how he consulted traders, supermarkets, and so on. He should have been around the slums of Dublin consulting the ordinary residents there.

He has been around.

I will make a bet with the Deputy, that I did more for the St. Vincent de Paul Society than he did. This is one thing I do know something about.

So does Deputy FitzGerald.

He did not tell us in this debate that he knew anything about it.

(Interruptions.)

He pretends that he did. He put down the big amendment. We put down the small one. We do not wear our hearts on our sleeves. He is trying to ride two horses at the same time. This was something which we felt the Minister might agree to but when the matter was blown out into the open the Minister came into the private meeting of the committee and, although, as I say, he was quite polite, he dug his heels in and did not move an iota during all that discussion. There was a complete change of atmosphere, and this is why I object so strongly about the matter this evening.

Let nobody suggest that I am not in favour of taking taxation completely off food. I am, because I have always spoken against the taxation of food, but on this occasion we wanted to get something from the Minister if we could, and we knew what we were up against and so Deputy Tully and I assessed the position. Deputy Tully prepared the amendment and I signed it with him. This is why we did it, not because it represents our real views but because it represents what we thought was practicable. Politics is the art of the possible. One tries to achieve what one can. We are all here to do the best we can for the people and there is no use in pretending that in what we call our affluent society, the great bulk of the population do not have as their basic foods bread, butter margarine, tea, sugar and milk. Nobody need tell me that. The suggestion was made that baby foods might be relieved of tax but most small children are fed on milk and I suggest that 90 per cent of babies are fed on milk.

Mr. J. Lenehan

You are not telling the truth.

It is regrettable that this squabble had to take place on this matter. For once, let me be fair to the Fianna Fáil Party. They had seven members on the committee and not one of them opened his mouth in public, but a real effort was made to make political mileage out of something in respect of which no such attempt should have been made, and it was made in the most objectionable way. In a democracy if the democrats, the people in this House, subvert democracy, we have all had it and above all else, the people who talk most about democracy and do this kind of thing deserve the most blame. I hope that Fine Gael Deputies are going to talk on this, but I am personally not prepared to vote for the Fine Gael amendment but I propose to vote for the Labour Party amendment because I think it the practical thing to do.

As a matter of interest, what amendment are we on?

We are discussing the two.

Amendment No. 40 and with it, amendment No. 41.

I was just wondering which of the two horses the Deputy was riding.

I thought I made it plain enough but if the Deputy could not take it in, perhaps he could not hear me, although Deputy Cooney understood me all right.

I wish to support the amendment moved by Deputy FitzGerald.

Mr. J. Lenehan

Is this the way this House is being run? Deputy O'Donovan had not sat down when this Deputy jumped up, not allowing any other Deputy to get in. It is nothing but a positive disgrace. However, I hope I will get the next chance.

Is the Deputy going to make a contribution?

Mr. J. Lenehan

I could not make any worse contribution than you.

I trust you will vote better than nine years ago.

Mr. J. Lenehan

I will vote whatever way I like but not for your gang anyway.

I was somewhat surprised by Deputy O'Donovan's attitude in relation to this amendment because we did discuss this fully at a number of meetings of the special committee and I think it was agreed by the members at these meetings that partial zero rating would not be the best way of approaching this problem——

It was suggested by the Minister but not agreed by us.

——and that the simplest way of approaching this problem would be a global one of zero rating of foodstuffs and partial zero-rating would not be the best approach. The proposals put forward by Deputy FitzGerald are comprehensive in nature and deserving of credit, and I wish to place on record that in his comprehensive approach in relation to proposals to zero-rate food, he has done a very good service. Allied with this zero-rating of foods would be a simplification of the value-added tax charged at the retail level. He intended to trap the equivalent of a wholesale tax at the manufacturing and wholesale level and at retail level there would be two basic taxes, the zero-rate and 6 per cent VAT. This I think is acceptable to the retailers especially and it has the excellent effect of zero-rating all foodstuffs. This is a principle so far as the Fine Gael Party are concerned which has prevailed down the years. It is a good social principle and one in which I concur fully.

There should be an attempt to zero-rate foods for one major reason, that we are going into the EEC on January 1st. This will bring benefits in relation to some of our food exports, particularly meat, and the cost of living will increase and this increase in the cost of living will bear most heavily on people with smaller incomes, such as old age pensioners and people on fixed incomes who have not the bargaining position of trade unions. There are many in our society who live on the poverty line and the aim of the amendment is to go some way towards protecting their real income. The effect of it would be to decrease the price of foodstuffs by the equivalent of 5 per cent and this would hold back inflation on these people, especially those in the poorer classes who are suffering from a very high level of inflation in the past few years. It is a socially desirable amendment and I approve of it.

I proposed a list of foodstuffs at a meeting of the special committee somewhat more comprehensive than that proposed today by Deputies O'Donovan and Tully. I proposed bread, butter, magarine, tea, sugar, red meats, white meats, fish, potatoes, household vegetables and liquid milk and Deputy O'Donovan added oranges. I feel that the items produced by these Deputies are lacking in protein and not a really well-balanced list of items. Surely it should be the aim to improve if possible, the diet available to everybody. Deputy O'Donovan's item of oranges is a very valid item on medical grounds. I was surprised to find that the Labour amendment excluded fish, potatoes and household vegetables. Surely they should be included. The Minister, in principle, should have made some effort to zero-rate foodstuffs. This would require a marginal recording of the value-added tax rates and we would, of course, support any marginal change in the value-added tax rates provided such a change would benefit the lower income groups. Faced with the EEC, with inflation, with higher prices we must take a positive stand here to protect the less well-off sections of our community. It is for that reason I am more in favour of Deputy FitzGerald's amendment than I am of the Labour Party amendment. I do not think the latter goes far enough. I would like to see the Minister taking positive action to zero-rate foodstuffs. We have put forward a sound financial remodelling of the value-added tax rates. It would be generous of the Minister to acknowledge that this is possible. It would be even more generous of him to accept the amendment in principle and come forward himself with his own zero-rate on foodstuffs and a reorientation of the other value-added tax rates.

Mr. J. Lenehan

I am in some difficulty here in dealing with this because I was refused an answer on two occasions this evening to a very simple question. The answer should have been a simple "Yes" or "No". I am now in the unenviable position that I am not sure which way I shall vote. It would have been as easy for the Minister to answer my question and let me know what exactly the position will be as for someone else to shoot me down. If there is a vote, I am not sure how I shall vote.

The Deputy can do what he likes, but he knows very well that I was forbidden by the Chair to answer the question, which was ruled out of order.

Mr. J. Lenehan

It was a very simple question. If I ask it again——

If the Chair will allow me to answer it, then I will answer it.

Mr. J. Lenehan

If I get the answer it will enable me to sit down sooner than I will sit down if the Minister does not answer it.

Would the Minister answer it, please, quickly.

Mr. J. Lenehan

If the Minister answers the question it will put me on my backside in half the time it would take me normally. The question is a simple one. I admit it was ruled out of order. It is not a hypothetical or a theoretical question. As the Ceann Comhairle probably knows, people do not register for turnover tax unless it can be proved against them that they sell more than £1,100 worth. The answer I want is a simple one. Will this same rule apply in the case of this new tax or am I to take it that an unfortunate publican who sells only £700 worth a month, or less, will have to keep accounts just for the sake of keeping up with this VAT '72 tax? If I get an answer to that question, it will solve a great many problems.

Practically the same exemption applies under VAT.

Sir, are we going to finish the Bill tonight?

I hope we will. I was just about to point out to the Deputy that we are on amendment No. 40.

Mr. J. Lenehan

I have asked the Minister to answer the question.

The Deputy has heard the answer.

Mr. J. Lenehan

The Minister did not answer. This places me in an invidious position. Am I to take it now that these people, who are not now subject to registering for TOT, under which I have suffered a helluva lot, will not be in trouble having to keep accounts under this new regulation?

May I point out to the Deputy that this particular matter arose——

Mr. J. Lenehan

I know, sir——

Will the Deputy please listen? He is asking for information.

Mr. J. Lenehan

And I did not get the information.

I am telling the Deputy now that he should have raised this on section 8. We are now discussing amendment No. 40.

Mr. J. Lenehan

It places me in a very invidious position.

It places us all in an invidious position. I think it is time this nonsense stopped and I think it is time that the Deputy realised that he cannot come in here any time he likes and go on with a lot of nonsense.

The matter referred to by the Deputy arose on section 8.

Mr. J. Lenehan

It has nothing to do with that, sir. Listening to a man a few minutes ago, if you would not mind he was a financial adviser to a Government for seven years and obviously he made it bankrupt. It was not the Fianna Fáil Government.

That contribution is worthy of the Deputy.

It is a scandalous reference to a Deputy who has left the Chamber.

If the Deputy has nothing to say on the amendment, will he please sit down, and allow the Dáil to deal with the amendment.

Mr. J. Lenehan

It is not so much that I have nothing to say, but I just want a "Yes" or "No" answer.

The Deputy got the answer. What is he going on about? He got the answer. He should stop trying to "cod" the House and the constituents.

I think the Ceann Comhairle should rule.

I have ruled. It does not arise on the amendment. It arose on section 8. We are now dealing with the Schedule.

And we want no foxing in relation to how the Deputy will vote.

Mr. J. Lenehan

I cannot agree to debate the section until I get an answer.

If the Deputy will not come to the amendment, then I ask him to resume his seat.

Does he want it by registered post?

Would the Deputy please resume his seat?

Mr. J. Lenehan

All right but somebody will suffer before I leave this House tonight.

He is giving us three minutes to get out.

There seems to be something callous and oppressive about attacks on something as basic as food. I would like to support the pleas that have been made to the Minister to remove food from the value-added tax net. There are two amendments before the Minister by which he can do this. One of these has been tabled by Deputy FitzGerald and seeks total exemption in respect of food and non-alcoholic drinks. The other is an amendment from Deputies Tully and O'Donovan asking that certain specified foods be exempt. Obviously amendments of this nature must be of considerable magnitude in fiscal terms so far as revenue is concerned and the Minister would be entitled to object to them if they were presented to him without being costed fully. The Minister must admit, however, that it is unusual to have two such amendments presented to him and to have them presented with the costings involved.

Deputy FitzGerald's amendment involves a total figure of approximately £17,500,000 and in considerable detail he has spelled out to the Minister how this sum might be recouped. He has spelled out also how this recoupment would have less adverse social effects than would the taxing of food. Deputy O'Donovan was inclined to disagree with the omnibus exclusion on the grounds that politics is the art of the possible and that what was being sought in Deputy FitzGerald's amendment was, by implication, impracticable or impossible. I suggest that Deputy FitzGerald has indicated that far from being impractical or impossible, his amendment is entirely feasible because it has been costed accurately. Consequently Deputy O'Donovan's preference for his own limited amendment falls on that ground.

When supporting his limited amendment, Deputy Tully made the point that the items of food which he seeks to have exempted—bread, tea, sugar, butter, milk, margarine and oranges— represents the basic diet of a large section of our community. It is a sad reflection on our society if this should be the case but is it not an argument in favour of exempting food totally to bring down the cost of all foods in the hope that even that reduction might have the effect of broadening the diet of this unfortunate section of our community? Again, that is an argument in favour of Deputy FitzGerald's amendment. Not only would it result in a reduction in the cost of all foods but if we wish to improve the standard in our society generally we should endeavour to make available at the lowest prices possible, the widest range of foods possible and to as many people as possible.

Our perennial problem is inflation. Inflation is something that is triggered-off very often by non-economic factors. Very often it is triggered-off because of a feeling about prices, and the two areas in which this feeling can be most emotive are in relation to housing costs but above all in relation to food prices. A tremendous psychological blow in the battle against inflation could be struck if food were to be seen to be reduced in price and if it were known to the community generally that this basic commodity was free of taxation. That would ease considerably the perpetual cycle of wages chasing prices and prices increasing consequent on increases in wages. This is a very strong argument for consideration by the Minister in deciding whether to accept the amendments.

If an amendment which is desirable socially—no one can deny that to bring down the cost of food is not desirable socially and at the same time practicable economically—is presented to the Minister. I find it extremely difficult to understand why it is not accepted. Deputy FitzGerald's amendment has been costed and the balance is in favour of accepting it. Deputy Tully's amendment has been costed at £4.11 million and the Minister has admitted that revenue buoyancy following the introduction of value-added tax will give him a figure of £3.70 million. I would suggest to the Minister that he had his tongue in his cheek when he suggested that this would be the extent of the buoyancy to result from the change of taxation. It is my belief that it will be much more than that because, apart from the slight increases involved in certain rates, the accounting procedures will, of necessity, be much tighter and there will be a much better skim-off by the Revenue Commissioners than what they are achieving now. Instead of having a deficit when he puts this buoyancy against the cost of Deputy Tully's proposed exemption, the Minister will have a surplus. Even for this limited range of foodstuffs there is no argument against rejecting that particular amendment. I gather that the argument was put forward that the acceptance of the amendment would lead to complications in accountancy but as Deputy Tully pointed out, the very spot at which this complication would be expected to arise—the check-out in a shop—there are already two items to be dealt with and this is a third item not involving any calculation. By no stretch of the imagination could it be suggested, therefore, that this would lead to complications.

These are the reasons why I am disappointed and puzzled at the Minister's failure to exempt food. Even if there were economic difficulties I would expect the Minister to do everything possible to overcome them or to put up with them in view of the social desirability of exempting food. It has been pointed out clearly to the Minister that under both amendments there would not be any economic difficulties. This must be the case when Great Britain, with a much more complicated economy than ours, complicated apart from its size by its essential complexity, have found it possible to zero-rate food. I am sure that the revenue adjustments that have to be made in that country are on a vast scale. Yet, a Tory Government have found it possible to do so. I suggest to the Minister that when it was found feasible economically and desirable socially to do that in Britain, it defies imagination why it cannot be done here.

I suggest also to the Minister that to accept these amendments and thereby put food in a special position in the social structure of the nation would result in a tremendous blow being struck against inflation. Also, the Minister would be setting a climate in which it would be much more difficult to justify the demands that lead to inflation. There is a great opportunity in this Bill to achieve a result of that size and importance. For these reasons I urge the Minister to accept the amendments.

As has been pointed out already there are at the moment a significant number of Irish families living in poverty. It has been said that one family in seven has a household income of under £7 per week. Bearing that in mind when one considers, as one does in this amendment, that we are discussing a proposal to tax the food which people eat it certainly amazes me that every Deputy in the House should not be concerned to see in what way this can be avoided. We have one family in seven with a household income of under £7 per week, with these families spending 43 to 44 per cent of their income on food, and this House is now solemnly considering a proposal by the Minister for Finance to tax the food that we eat. That is what is involved.

Deputy Lenehan has his qualms of conscience; he had them nine years ago. But he got over them and his little peregrination from that seat over there down to the Minister to exchange a note, deceived nobody, least of all the Minister. Apparently he has gone away satisfied as to what the answer he sought to the question he asked ought to have been. The fact is that when the House last considered a matter as grave as this eight or nine years ago we were told by the then Minister for Finance that it was impossible to exempt food from turnover tax. This was asserted here. There were Deputies in the Labour and Fine Gael Benches who did not accept that but the assertion so clearly made by the then Minister for Finance convinced a number of Deputies, including the then Deputy Lenehan who, as a result, sojourned or hibernated a while in another place before he came back here.

This is now so much water under the bridge and we are again discussing whether food should be subject in this Bill to VAT and in effect whether it should ever have been taxed under turnover taxation. Deputy Dr. FitzGerald has clearly shown, decisively in my view, that there is no need to tax food in this country, that we can get almost every penny of revenue this Bill seeks to get, by altering in no unduly hard way rates of taxation. We can get the same amount without taxing food and if we adopt his proposal the result will be that every single article of food will be reduced by 5 per cent. What are we talking about? In these circumstances, which Deputy will vote against a proposal to reduce articles of food by 5 per cent? What can be the reason for refusing to bring in a piece of social legislation which will have a dramatic effect on the living conditions of at least one family in seven throughout the country?

The Minister has made it clear in the press before Dáil Éireann met that he is not going to budge on this. Why? Who advises him? We can talk about listening to the voice of the people; I regret to say that in my view the Minister is clearly the captive of his advisers in the Revenue Commissioners. They tell him what ought to be done and he is doing what he is told he should do. Of course, it is clear that the VAT rates of taxation in the Minister's proposal are convenient for accountancy and for recording; they are the system the Revenue Commissioners have decided on and I assert that they have already printed the necessary forms. It would be much too difficult to change all these and, therefore, the Minister will stand firm and will refuse to accept this amendment.

Let it be clearly known that that refusal with the present disposition of the House means, in effect, that Dáil Éireann tonight is reimposing taxation on food which it has been clearly demonstrated from these benches has been unnecessarily imposed for the past eight or nine years. As a result of action taken by the Fine Gael Party today the people in at least one constituency in the next three weeks will have an opportunity of saying whether they agree or not. When the people elect a new Government this kind of taxation on food will be removed and those who advise the Minister had better here and now take note of that fact. We cannot afford by our taxation to be boosting an inflation which is at present menacing the way of life and the sources of employment of many of our workers. We are now experiencing the results of rising living costs continued over the last three or four years and growing apace as a result of indiscreet, ill-advised administrative and legislative interventions by the Government. There is no housewife who does not look back with misgiving and some bitterness on the assurances, given prior to February of last year, that decimalisation would not make the slightest difference in living costs. Everybody knows it did and everybody knows that each week now anyone going into a shop faces enormous price increases, many of them stemming from decimalisation.

We were told that VAT would make no difference to the cost of living and that it was merely new taxation to supplant what was already there. This time the people do not accept that. They fear its effects particularly on food. If it were necessary for us to introduce it, if it were part of what we had to do by reason of our entry into Europe, and to achieve a position in the newly arrived European Community, that would be a price we would have to pay, but this is not so.

It is clear now that while VAT as a system of taxation will be obligatory on members of the Community, this proposal is not necessary. This is a Fianna Fáil proposal to tax the food of the Irish people. The British have not done it. The arguments advanced in support of the Fine Gael amendment demonstrate that it is not necessary to achieve the revenue required. Why then is the Minister refusing to accept this amendment?

Let there be no doubt about it, Deputy FitzGerald has demonstrated that, by a slight alteration in the rate of taxation, the same revenue could be achieved. VAT as a system of taxation could go into operation and all food could be excluded with a resultant bonus of a reduction of 5 per cent in the expenditure of the ordinary people of the country. When we are battling inflation, when we are fighting to sell our goods abroad, surely only a madman would assert that this should not be done.

When we vote, as Deputies point their shoes towards the division lobbies they should realise that they are voting to tax the food of the people and that there is no fiscal or financial reason for doing it. It is merely being done because the Minister and the Government have not got the imagination or the sense to realise that this Fine Gael proposal is sound and should be accepted.

I rise to support the Fine Gael amendment the purpose of which is to exempt all food from VAT. This is consistent with the attitude which this party have adopted down through the years. This was our attitude when turnover tax was originally introduced. At that time we felt that food should be exempted because it constitutes such a major proportion of the expenditure of less well-off families in the community.

Indeed, I should like to pay tribute to the work done by the Opposition members of the special committee which dealt with this matter. They went into detail and they elicited the facts which enabled us to debate this matter here today. I am surprised that no member of the Minister's party has yet risen to defend the declared attitude of the Minister. We have had six Opposition speakers on this amendment. The Minister's party had ample opportunity to offer to speak in support of the Minister's attitude. They have not done so. They will support him silently and with guilt.

We seek to exempt food from VAT because food constitutes a relatively higher proportion of the expenditure of low income families than of higher income families. The household budget inquiry estimate shows that in the poorest one-seventh of the community, approximately 43 per cent of their total expenditure is on food. The better-off section of the community spend only about 20 per cent of their total income on food. Therefore, a concession given to make foods cheaper benefits the poorer section of the community much more than the better-off sections of the community.

This proposal by our party is a practical expression of our basic philosophy which is that we need to redistribute income to help those who are earning less than others. It has been alleged by the Minister that this is an impracticable proposal. If it is, how is it that the British can exempt food from VAT? We are not putting forward a proposal which we are not prepared to stand over and for which we are not prepared to face the consequences. We have estimated how much it will cost and we have stated quite clearly where the revenue can be made up to ensure that there is no net loss to the Exchequer if our amendment is accepted. Naturally, there will be higher taxation on certain commodities because you cannot exempt food and not expect to have to raise the money elsewhere.

It has been estimated by Deputy FitzGerald that there will be a net increase in the total VAT load for people with an income in excess of £2,000 but the reason we have put down this amendment is that there will be a substantial decrease in the VAT load for families with an income of less than £1,250. In other words, our proposal would redistribute purchasing power in favour of the less well-off section of the community and to the disfavour of the better-off section. We would prefer if there were no disfavour involved but, when it comes down to hard practicalities, we realise that if the poorer section is to pay less the better-off section has to pay more if we are to raise the same amount of money.

There are additional side effects to this proposal. It will make a substantial contribution towards reducing the rate of inflation. Wage demands in excess of what the community can bear generally arise from the fact that people are afraid that their pay packets will be eroded by inflation in the prices they have to pay. The type of inflation to which most people are sensitive, and to which the housewife is most sensitive, is inflation in the price of foodstuffs. That is the type of inflation that results in the push for higher wage demands which are sometimes in excess of what the community can afford. If we introduce a measure which will reduce the tax load on food, and which will contribute to reducing the rate of increase in food prices, we are making a direct contribution towards a stable incomes policy situation by reducing the necessity for wage demands in excess of what the community can afford.

We also recognise that this is a food-producing country and a food-exporting country. Any tax change which gives a relative advantage to the consumer of food is in the interests of our balance of payments because it means that there is a net incentive to people to consume more food. We produce the vast bulk of the food we eat at home. Therefore, we are helping home industry by helping the food industry. We are also helping those who produce the food, the farming community. We in Fine Gael have always admitted that one of the disadvantages of EEC entry is that it will lead to certain increases in the price of food. Our proposal would also have the effect of reducing the impact of whatever increases in the price of food may result from the EEC entry.

Our primary reason for putting forward this proposal is that we believe food is a basic necessity of life and that it is the largest single item in the expenditure of the vast bulk of our families. It is a relatively larger item in the expenditure of poorer families than it is in the expenditure of better off families. Therefore, we in Fine Gael uphold the amendment to exempt food from value-added tax.

(Dublin Central): First, I should like to reply to Deputy O'Higgins' remark that the Minister had already gone to press about this matter. The Minister was forced to go to press and was forced to explain his position because of the attitude of Deputy FitzGerald. Deputy FitzGerald, before the private meeting, made his intentions known. Naturally, it was the duty of the Minister to state his situation. It is unfair of Deputy O'Higgins to say that the Minister had gone to press already to explain the situation.

I do not quarrel with that particularly but the Deputy will accept that at the private session it was agreed that each of us could publicly state our position immediately afterwards, but not the position of anybody else.

(Dublin Central): I am explaining the Minister's position. Logically, he had to do it.

We can all welcome an amendment such as the one before the House. Any method of reducing the cost of living, especially for the weaker section of the community, is highly desirable. There are probably several ways in which this can be done. If it were practicable to accept the amendment I have no doubt that the Minister would accept it. We must consider who would benefit from this proposal put forward by Fine Gael and Labour. If this were to go entirely back to the weaker section of the community——

I do not think the Labour Party is supporting this particular proposition.

(Dublin Central): Is it being taken separately?

I think there is a difference of approach.

Wait until we hear what the Minister has to say.

I heard what Deputy O'Donovan had to say.

I would be surprised if the Labour Party do not support the amendment.

Presumably, if the Labour Party have a resolution down which is on quite a different basis, that is their approach.

We will be supporting theirs if ours is rejected.

We will make our position clear.

I think the Deputy's position is clear.

(Dublin Central): I can sympathise with this amendment. It is a popular type of amendment to propose in this House, especially if it results in the alleviation of the distress of the poorer section of the community. As the Minister has already said, there are other ways of benefiting the poorer section of the community. There are many other sections of the community, the well-off section, people dining in big hotels tonight. As Deputy Bruton said, there are 20 per cent of the people in the well-off sector of society who would also benefit from the amendment. I do not believe anyone in this House has great sympathy for this section. If we can provide assistance in a different form, the benefits would then go to those who deserve them.

Deputy Fitzpatrick knows that eating out is excluded from the Bill.

(Dublin Central): I am not sure that the purchasing of food by hoteliers would not be exempt. Food bought in a shop would have to be exempt. The benefit could be passed on to those dining and wining in expensive restaurants. If food is exempted, it will benefit the section of the community for whom none of us in this House has any great sympathy.

I should like to see the benefits going to that section of the community that deserve them. The best way to help the weaker section of the community is to give it in the form of children's allowance and social welfare. In this way it is given to that section who are entitled to it and to nobody else. If it were given on a broad basis, the benefits would be spread too thinly. I am convinced that the best way to help the weaker section of the community is in the form of children's allowance and widows' and orphans' allowance.

Everyone gets children's allowance.

(Dublin Central): This also should be considered. Let us hope that as time goes on and new legislation is introduced a closer look will be taken at who should benefit from children's allowances.

If we try to operate the system suggested in the amendment a third level will be introduced. There is the wholesale level, the 5.26, and the zero rating. This would present problems of accountancy for retail outlets.

I have certain sympathy with the amendment but I want to be practical about it. I know what the Minister has in mind as regards the distribution of wealth. It would be better to have it accrue to those really deserving. If increased taxation is to be imposed at wholesale level, we must ensure that the rate is not so high as to put manufacturing firms out of business. These are sensitive points which we should keep in mind.

In Deputy FitzGerald's proposals it was intended to increase certain taxation. I am not sure—I did not see it defined specifically enough—what industries this would affect. I have no doubt that it would affect some industries, and that sales of companies would be diminished.

The policy that I should like to see pursued is one whereby whatever resources we have would be distributed in a more confined sphere so that it would benefit the section of the community that are badly in need of help. I would hope that the benefits would accrue to the poorer section and that the benefits would exceed the 5.26 which they have to pay in respect of their food today. I am quite convinced that this is the mind of the Minister also.

Deputy O'Higgins said a little while ago that anybody who voted against the Fine Gael proposal would be a mad man and certainly he would be if the position were as outlined by the Fine Gael speakers. We heard all about the benefits of taking tax off food. Nobody in this House has to have that idea sold to him. We heard very little about the consequences of the Fine Gael proposals.

That is not true. The Minister is being very unfair.

I detailed——

Wait for it. I am going to take some little time on this, I am afraid, but it is worth doing because it is important that people should know and that Fine Gael members should know what they are committing themselves to, because I do not think they realise it. Under the proposals in this Bill, food will be liable to tax at exactly the same rate, the effective 5.26 per cent rate under value-added tax, as it is at present. Consequently, there will be no reason whatever for food prices to be disturbed on the changeover to value-added tax because it will be precisely the same rate of tax that is charged, and the same situation will apply as far as possible to most other consumer goods and services. The avoidance of de-stabilising price changes was one of the main reasons for making the changeover to value-added tax at the existing rates of sales taxation. As I said earlier today, this is the main reason that we have these rates of 5.26, 16.37 and so on. The Fine Gael proposals for the removal of tax from foods and certain other goods would, on the other hand, have repercussions which in some cases could be quite serious, in the form of compensating tax increases in almost the whole field of industry, commerce and agriculture. We reject the massive levying of extra taxation touching on almost every non-food item involved in the Fine Gael proposals. Almost every non-food purchase made by the consumer would cost from 1¼ per cent to 7½ per cent more, and even then there would be an unfilled revenue gap of over £4 million for which no provision is made in the Fine Gael proposals. Items which would be effected at the lower range would include new houses, electricity, coal, gas, clothing, beer, tobacco and cigarettes.

This is 1 per cent.

One and a quarter per cent, and at the upper range 7½ per cent, the price of household goods such as delph, cutlery, furniture, beds and bedding, stationery, hardware and household appliances could rise by up to 7½ per cent.

What about motor vehicles, television and radio sets?

I did not interrupt Deputies. I listened to a lot of contributions and I would ask Deputies to bear with me.

(Interruptions.)

The Minister is entitled to be heard.

I wonder if it would be expecting too much of Independent Newspapers Limited, who gave such space and prominence to Deputy FitzGerald's proposals, to allow their readers to judge the issue for themselves by letting them know about the wide range of goods which would go up in price under the Fine Gael proposals. They have failed to do that up to now. Apart from any effects on the industries concerned—and Deputy Fitzpatrick touched on this and its quite serious implications—the increases which are proposed by Fine Gael would be a great hardship to young married couples setting up a new home. Over 20,000 couples will marry in the next year. The extra taxation proposed by Fine Gael would add considerably to the cost of trying to furnish a home. There is not one household item from a door mat to a piece of curtain material that would not be substantially dearer, and this extra taxation which Fine Gael want to levy would hit everything, proverbially, from a needle to an anchor. Even then one could not guarantee that the hoped for reductions in food would reach the consumer. Under the Fine Gael proposals you are not even robbing Peter to pay Paul; you are robbing them both.

Price increases would also extend to a variety of farmers' requisites from spades and shovels right up to tractors and other farm machinery, machine parts, seeds, equipment and machinery repairs. The provision in the Fine Gael scheme that part of the increased tax would be built in to the wholesale price is simply not acceptable and not workable, and I shall deal with that later on in more detail.

Apart from the various technical objections that arise in this regard, there is a very real danger that the retailers would apply their normal profit margin to the higher wholesale price with the consequence that prices would rise by more than the increased tax. The most serious objection to the proposal, however, is that there is no in-built guarantee that food prices would fall by the required 5 per cent so as to bring about the relief to the poorer families which we are all seeking. I will not be a party to what amounts to a confidence trick of the housewives of this country. To pretend that the exemption proposed by Deputy FitzGerald would bring about a worthwhile reduction to the housewife is just naive.

Despite the assurances by RGDATA and other trade organisations that they would not increase their margins, there is no certainty that these organisations could ensure compliance in full by their memberships. Disparity in the price of groceries throughout the country revealed in a recent survey will make any housewife, if not Deputy FitzGerald or other Deputies opposite, doubt the capacity of the trade associations to enforce real reductions in any item. In addition, as Deputies know, there are certain large supermarket chains at present who claim that they do not charge turnover tax. Whether this claim be true or not, there is the distinct possibility that some of them might not feel obliged to reduce food prices if the tax were removed, because if there is any validity in their present claims then they should not reduce their present prices.

This turnover tax——

The Deputy must allow the Minister to speak.

The imposition of tax is imperative and the Minister should not take——

Deputy Coughlan should allow the Minister to continue.

Relief of tax is only a joke. It does not happen.

I wonder do the Fine Gael Party believe that Deputy FitzGerald can achieve price control by making half a dozen phone calls to trade associations. I wonder do the Labour Party believe it. The price surveillance machinery of the Department of Industry and Commerce is geared primarily to the control of price increases by the manufacturers, and there is little or no experience of enforcing general price reductions especially at the retail level.

Such an admission.

The Deputy ought to grow up. Has he listened to what has been said in this House time after time, that, with one or two exceptions, there is no control of prices at the retail level? If the Deputy does not know that, he should know it.

We have alleged it, but this is the first time it has been admitted.

It has been said on numerous occasions in this House. The Deputy should not talk about alleging it. Where would he find an allegation that it exists? Where in the law does it say that it exists, apart from bread, milk and one or two other items? I do not want to embarrass Deputy FitzGerald and his colleagues, but there are a number of his colleagues who could explain to him why price control at the retail level is next to impossible. Take a very simple example, the price of a sandwich in a pub or in a café, you fix the price and the next day the size and the content of the sandwich are changed, and there is no control on the article that is produced. You could go on doing this for ever, and as regards other articles, regular purchases, experience shows that the maximum controlled price, which is the only way you can control at retail level, in most cases becomes the standard price. In practice it means that you are eliminating competition over a very wide range of goods. This is known or should be known to the Fine Gael Party, and if it is, they ought not pretend to the public that it is possible to ensure that there would be fully compensating reductions in the price of food if the 5 per cent value-added tax were removed from food items.

If the Minister understood the position about turnover tax and value-added tax——

The Minister must be allowed to speak without interruption.

I am trying to advise the Minister.

Despite his statements at the week-end, if not since, Deputy FitzGerald could not himself guarantee that there would be food price reductions, and in the special committee discussions, he limited himself to an assertion that food prices would at some time in the future settle at a level 5 per cent lower than they would otherwise be. Even granting him this very doubtful point, the retail and wholesale trades would in the meantime be the beneficiaries of the tax reduction at the rate of £17 million a year and the Exchequer and the housewife would be the losers. If even a significant part of the tax reductions is not passed on to the consumer, then the Fine Gael proposals could result in a greater tax burden on the poorer people with the larger families.

Ridiculous.

This is why I am convinced that the problem of helping the less well-off sections can best be handled within a redesigned social welfare system, including a more selective children's allowances scheme, which will channel the increased flow of help to the truly needy. One of the first things I did when I became Minister for Finance was to examine very thoroughly the possibility of taking tax off food, especially in the case of basic foodstuffs.

(Cavan): You put it on a few years ago when one of your predecessors removed the subsidies.

Because everybody in this House would like to take taxes off foodstuffs.

This party more than other parties, apparently.

I found when I went into it that in our circumstances it would be impracticable to do so and apart from that I had no means of ensuring that by doing it, I would be helping in any worthwhile way those whom I most wanted to help. On Committee Stage of this Bill, I invited Opposition suggestions because, despite what may be said on occasions about Fianna Fáil Ministers, we do not think that all wisdom resides in us, and it was possible that some member of the Opposition could devise a scheme which would be feasible and which had eluded me and my officers in the past.

That is your job.

I said that I could not find the way to do it but if the Opposition could do it, I would adopt it. As it turned out, the Opposition were not able to produce a feasible scheme. Of course, it is possible to do it, but what really arises here is if you do it, what are the consequences, and weighing that up against the alleged benefits is it feasible? That is what we mean by: is it feasible?

I think the Labour Party has very clearly indicated their very obvious reservations about this Fine Gael scheme, if only from the limited scope of the amendments which they propose. It may well be that they realise the consequences of the compensatory taxation which Fine Gael would levy on everything except food and it may be that the Labour Party shy away, as I do, from the very dubious social achievement of taking caviare, imported snails, smoked salmon and lobster and grouse in port wine sauce out of the tax net. Maybe they do not like it but that is what Fine Gael are proposing to do.

(Cavan): What about the loaf of bread? You are bankrupt of an argument when you say that.

I repeat that the Fine Gael proposals involve taking all these luxury items out of the tax net.

(Cavan): The Minister is quoting from his own menu.

The Deputy can try anything he likes but nothing is going to get him out of this. Six Fine Gael speakers got up to support this and that is what they are supporting. We will hang it around your neck in the next three weeks. Deputy O'Higgins thought he was going to hang something else around our neck but we will hang it around your neck as what you are supporting.

Your argument is devoid of intelligence.

We will see if the electors think so.

(Cavan): Would the Minister tell us the percentage of population who indulge in caviare?

I will tell you this much——

The Deputy does not want to listen, but if he cannot listen, if he cannot bear any more maybe he would like to go out but would he allow me to make my speech? The fact of the matter is that Deputy FitzGerald is right in saying—and we discussed this in the Special Committee and I will come to it on the Labour Party amendment—that if you want to zero-rate food, you have, when you examine the whole problem, to do it across the board. He is perfectly right in that and one of the consequences of that is that you do start zero-rating these kinds of luxury items.

(Cavan): Who eats them?

The point is that is what you are doing. It is one of the factors and you have to weigh up all the factors involved in this and Fine Gael should not try to run away from it. They may be learning now that if you have to put forward a proposal, it has its disadvantages as well as its advantages. They are finding this out, and this is one of the disadvantages you are faced with, if you put forward a proposal of any practical value, trying to eliminate tax on food, you are taking the tax off caviare, smoked salmon and lobster. You may not like it but that is what you are proposing and supporting.

Let him go on insulting the intelligence of the voters.

There are people who have to depend on the pint of milk, on fish and chips and on bangers and mash, and these are the people we are worried about. We are not worried about caviare or pheasants.

Deputy Coughlan might allow the Chair. For the information of Deputies and the House generally, I would like it to be appreciated that all Stages of this Bill have to be through by midnight and there are other amendments to be dealt with. If Deputies continue to interrupt the Minister, they cannot complain later if the Stages of the Bill are compacted.

Because of the very few luxury items quoted by the Minister, he is prepared to let poor people suffer.

I can see that I am getting under the skin of Fine Gael even more than I thought I was. I have listened to a lot from that side but I am going to make my speech in spite of interruptions. I do not care how many interruptions I get. They will only delay the proceedings but I am going to make my speech. Now, in his weekend statement, Deputy FitzGerald did his best to twist his way out of the consequences of his clearly expressed opinion in the select committee, and I understand that, during my absence this evening, he had the nerve in this connection to say that he expected an apology from me in this regard.

I said I hoped for it. I did not say I expected it.

Every member of the committee who happens to be in this House tonight can verify what I am now about to say. In that committee I asked whether, accepting for the purpose of argument that Deputy FitzGerald's proposal was not feasible, would any member of the committee favour the consequential alternative if one were to zero-rate food, which would be the doubling of the turnover tax on items such as electricity, clothes, gas, footwear, alcohol, tobacco and petrol? Frankly I was trying to eliminate the areas of disagreement and I was sure that every member of the committee would say: "No. We could not contemplate that." To my amazement, Deputy FitzGerald said, and he is the spokesman for Fine Gael and I want those who were not there to listen carefully now, that he did not accept that his original proposal was not feasible but that, if that were so, if it were not feasible, he would favour doubling the turnover tax on those items I have mentioned rather than the present system.

That was not what I said.

Is the Deputy saying that he did not say that?

I will correct it in due course. I did not say that.

Let us be clear. Is it true or is it false?

It is not correct.

Deputy FitzGerald has the right to reply and the Fianna Fáil Party does not like that.

Deputy FitzGerald will get an opportunity to reply.

What Deputy FitzGerald is now saying is what he said in the newspapers and it is not true. He is trying to twist his way out.

The Minister knows I did not say that.

Every Deputy who was at the committee knows that what I state is true and that he did not talk in the context of the household budget inquiry. He said he did not accept that his proposal was not feasible but, if it turned out not to be feasible, he would favour an 11½ per cent rate, doubling the turnover tax on these items, rather than the present system. That is what he said.

The Minister has compounded his argument by saying I did not talk in the context of the household budget.

In that context.

My remarks were solely related to it and I worked that out——

The Deputy will get an opportunity of making his speech.

No wonder the Minister is as he is. He has not a rib of hair on his forehead because he is taking it all too seriously. Sure nobody bothers his head about what he says and why is the Minister devoting all his time to what Deputy FitzGerald says. We do not listen to him and neither do we read him. We have other things to do.

Indeed, we have, but the point I am really at is that this was the attitude taken by Deputy FitzGerald. He is the spokesman for Fine Gael on these matters and, unless his colleagues are prepared to repudiate that view, they will have to accept responsibility for that approach. That will be hung around their necks too. They have their chance tonight. The Deputy can twist any way he likes but he said, in the circumstances I have described, that he would prefer to double the turnover tax on electricity, fuel, clothing, gas, footwear and other items rather than the present system. That is what the Deputy said. He may try to get out of it and, if he wants to get out of it and to get up now and say that he did not mean it, that he said it on the spur of the moment, I will accept that; but, if he is not going to say that, then he is stuck with it and his party is stuck with it too unless they are prepared to repudiate it.

I did say there were a number of reasons—they might be called technical reasons but, from another point of view, some of them could be described as anything but technical— why the Fine Gael proposal is not feasible. The proposal, apart from all the consequences I have mentioned, involves what we describe as trapping tax at the wholesale level. Without that device it does not work and I think Deputy FitzGerald will agree with me on that.

No. I will come back to it.

He disagrees with it?

This is an optional extra, but I think an important one from the point of view of the retailer. The scheme works perfectly, as the Minister knows.

All I can say is that the proposal put forward by Deputy FitzGerald——

I stand over the proposal. It is not an essential feature of it. It is something we have added. That is all.

We can only take the proposal that we discussed, the one that was in front of us today and again tonight on this amendment. I want to point out in regard to the Fine Gael proposal, first of all, that the calculations of the rates of tax which would be required to give effect to the Fine Gael proposals do not appear to take into account the fact that on the changeover to value-added tax the equivalent of wholesale tax will not be effectively paid on building materials, such as timber, glass, paint, et cetera, used by traders. Even accepting that the loss of £3 million on motor cars, radio and television sets, et cetera, would not be made up within the value-added tax system but in some other form of taxation, even if we accept that, the more realistic rates to give effect to the Fine Gael scheme would be food, et cetera, zero; all other taxable goods and services, 6.5 per cent and, at the wholesale level, 26 per cent in place of the 24 per cent that Deputy FitzGerald suggested. I want to get that straight first of all as regards the figures.

Much more important than that is what is involved in this proposal and how it would work. First, if we accepted this, there would be a tax increase of 24 per cent on certain of the more essential goods and services. As I mentioned, the tax element in those goods and services—Deputy FitzGerald said a 24 per cent rate would not apply, but it would, in fact, be a 26 per cent rate, that is, the ones to which it would not apply, would be fuel, clothing, footwear, electricity, petrol, hotel and other services. They would go up under his scheme by 24 per cent—that is, gas, electricity, clothing, footwear, all these basic essentials. There would be an indefinite tax increase in other goods and services. The tax element in goods and services to which the proposed 24 per cent rate would apply would increase by an indeterminate percentage which would depend on the level of the amount of the mark-up price at retail level. If anyone doubts this I can give him examples but I do not want to delay on examples if it is not necessary. Under the proposals in this Bill, on the other hand, the tax element in the final selling price is always a constant percentage. Under the Fine Gael proposal the lower retail mark-up the higher will be the percentage of tax in the selling price. It follows from this that, under the Fine Gael scheme, not only would there be confusion about what was the tax element in goods but also, even when a retailer cuts his profit, he would be unable to pass on to the consumer as great a tax reduction as he would be able to do under the proposals in this Bill.

As I have said, the lower the retail mark-up, the higher the percentage of tax and, therefore, when he cuts his price he cannot correspondingly cut the level of the tax element involved because the tax element increases, whereas, under the scheme in the Bill, if the retailer cuts his prices, the tax element will be reduced by a corresponding amount. The scheme proposed by Fine Gael would be biased very much in favour of the larger traders. It would benefit the big retailer who could obtain the best quantity discounts. If we assume that a trader who was a large retailer could buy a certain quantity of stock for a net price of £900 whereas a small trader would have to pay a £1,000 for the same quantity, the effect of the Fine Gael scheme would be that the price advantage to the large trader, that is the £100 which he has already, would be increased by 20.4 per cent on the deal. We all know what is the attitude of small traders and what is happening to them because of the competitive advantage of the large chains and supermarkets. This proposal involves a direct build-up of increased competitiveness by the large trader against the small shopkeeper. Furthermore the Fine Gael proposal would introduce a cascade effect or double taxation element within the tax system—something that the value-added tax system is designed to take out of the present system.

Any significant element of a cascade in the tax system would make Irish exports less competitive in foreign markets. Of course, this is a factor which must be considered. Deputy FitzGerald has suggested, as have a number of his colleagues, that the prices of zero-rated goods would fall by a full 5 per cent. Indeed it has been implied in what they have said that the prices of goods proposed to be taxed at 26 per cent, or at 24 per cent according to their figures, would be likely to rise by no more than the additional tax element. At present there are such variations in food prices that it would be virtually impossible to determine whether a particular trader had genuinely reduced his prices or whether he was operating merely some sales promotion gimmick.

There are large traders who claim not to charge turnover tax. What would they do in these circumstances? Would they reduce their prices by 5 per cent? If they do, their claims at present would be exposed as being false. The smaller traders would be inclined to say that because of the competition which they suffer from larger retailers by way of the operation of trading stamp schemes and so on, they held back legitimate price increases which they should have put on but which they could not afford to put on because of this competition. It is reasonable to expect that a number of them would not pass on the full 5 per cent reduction and this in particular, when they found that under the Fine Gael scheme the competition that they were suffering from big retailers was being stepped up remarkably because of a built-in feature in the Fine Gael scheme. That would be all the more reason why they would refuse to reduce their prices.

At present retailers are accustomed to take a mark-up on the cost of goods inclusive of any wholesale tax charged to them by their suppliers. This practice continues after the wholesale tax was increased from 5 to 10 per cent and despite any protestations to the contrary, it would be likely to continue in relation to the increased tax proposed under the Fine Gael scheme to be charged at the wholesale level.

In the grocery trade at least, it is accepted that it would be impracticable to operate two rates of tax at the check-out. In order to do this it would be necessary to segregate the goods in such a way as to be able to obtain a separate total of the goods chargeable at each rate. The adoption of a zero-rate would not in any way solve this problem. It would still be necessary to segregate the goods so as to obtain the total to which the zero-rate applied and the total chargeable at 6.5 per cent. The only saving would be that the assistant would have to calculate the tax for one total instead of two, but since the traders agree that it would be impracticable to arrive at separate totals at the check-out, this advantage can be described only as illusory.

All of the member and applicant countries of the EEC, with one exception, either tax food under their present system or propose to tax it on the changeover to VAT. The Commission of the EEC will have power to require new member states to harmonise their VAT system in accordance with the VAT directives which each member must accept. We are not quite sure as to what would be the Commission's attitude in regard to an application by a member State to continue the zero-rating for food after the end of the transition period, which in our case is 1st January, 1974. However, there is a very strong possibility that if food were zero-rated as from the commencement of value-added tax, the tax would have to be reimposed within about 14 months.

Britain is the only one of the ten countries which does not tax food or propose to tax it. I have gone into this before and I do not wish to go over it again except to say briefly that the British position is different from ours. They are changing from a system which is much further removed from VAT that is ours. The impact of entry into the EEC and of VAT on their cost of living will be substantially different and more adverse than it will be in our case. For these reasons and for the reason that they have never taxed food in the past, it is conceivable that they might get an additional transitional period for their system of non-taxation of food under VAT. Our situation is different and the odds are very heavy that if we were to adopt the Fine Gael proposal, in about 14 months time we might well have to reimpose tax on food.

Leaving all these matters aside, if anyone is to judge the merits or the demerits of the Fine Gael proposal he must know, broadly speaking, what are the other items that will be increased in price and how they affect the average person. He must know also what kind of people are affected.

That is very important.

I have pointed out that almost everything that would be purchased by newly-weds in setting up house would be increased in price under the Fine Gael proposal. Also most of the commodities used by farmers would be increased under that proposal.

(Cavan): House prices have been decontrolled as a result of the Prices Bill passed last evening by the deletion of house control from the Prices Bill.

Do not blame us.

Is not the Deputy aware of the announcement made by the Minister for Local Government?

(Cavan): I am aware of it.

Therefore, this is another Fine Gael gimmick to twist the facts, just like Deputy FitzGerald's effort to get out of what he said at the special committee.

I shall be dealing with that in a moment.

The Deputy may deal with it as he wishes but it is very significant, and every member of Fine Gael is stuck with it unless they repudiate it. They would prefer to double the turnover tax on the most essential elements rather than have the present system.

Less essential ones.

Is the Deputy saying that footwear, clothing and fuel are less essential?

Let him go out and sell that idea to the people.

The Minister knows the facts, too.

I know the facts and I know also exactly what Deputy FitzGerald said. I know the attitude he took and I know what the Fine Gael Party will have hung around their necks unless they repudiate him.

Any examination of this situation shows that the overall effect will be that the prices of virtually everything except food will go up, sometimes by quite substantial amounts. There will also be the effects of improving the competitiveness of large retailers against small retailers, the upsetting effect on the overall position in shops and the consequences that flow from that judging by past experience—I am throwing in for full weight the zero rating of the caviare, lobster and so on so beloved of Fine Gael——

(Interruptions.)

It is Fine Gael who are proposing to take off the tax. Adding all these together I think it is quite clear where the interests of the consumers lie.

In taxing food?

Deputy FitzGerald— and more power to him politically— has tried to get the best mileage possible out of this but I fear the day of retribution is coming and his party did not know the full implications of his proposal to them. They have heard a little tonight; they will hear more later on and they will not be very happy or very thankful to Deputy FitzGerald. That is an internal party matter which no doubt, will be sorted out like some other little problems which blew up today in that party. However, that is not my business.

(Interruptions.)

I want to deal as briefly as I can with the Labour Party amendment. I said this in the special committee: my first approach to this matter was something on the lines of the Labour Party approach which was to pick out the most clearly essential items and try to take the tax off them. This is probably the approach most reasonable people would take as a first approach. However, when you get down to it, you find in practice—and I conceded this already, that I believe Deputy FitzGerald is right and indeed I expressed the same view at the special committee—in what he says that when you get down to it you either have to zero-rate all food or none, because, some of the problems of zero-rating that arise are these: first, not everybody will agree as to what are the basic necessities——

Would the Deputy think that eggs and vegetables should be exempt?

I have said what the basic diet of the poor people is in this country for generations, bread, butter, tea and sugar and milk.

Does the Deputy concede that there are many people who might take the view that if you are going to exempt you ought to exempt eggs and vegetables?

A man might take any view.

That is my point. Therefore, whatever you do when you begin selecting you reach a stage where, unless you are prepared to ride roughshod, you cannot get any agreement on what should be exempt. That is only a practical difficulty of application, not a fundamental objection. A fundamental objection—and I think Deputy Tully does not accept this— is that it would create a third rate at the retail level. All the arguments we have received from representatives of retailers and all the experience of the Revenue Commissioners in dealing with retailers confirm that they cannot operate more than two rates. Many of them argue they cannot operate even two rates. I do not think it can be disputed that they cannot operate three rates. It may be said that zero-rating is not another rate, but it is. From the shopkeepers' point of view he must segregate the items which are zero-rated and charge the appropriate tax on what is left. He might as well be charging a tax at 1 per cent. The only difference is that he does not have to do a sum.

That is right; that is the saving.

For his purposes he has three rates and that is his problem. The shopkeepers say, and we believe them, that it is not possible for them to operate three rates. For that reason any selective system brings you up against this problem.

Mr. J. Lenehan

Sir, before the Minister——

The Deputy may not rise to interrupt.

Mr. J. Lenehan

In regard to the small shopkeeper and publican, is the Minister saying that they keep daily accounts or anything like that to meet his requirements or——

Would the Deputy allow the Minister to conclude? Time is running out for this debate.

(Interruptions.)

Mr. J. Lenehan

If the Minister wants to close down every small shopkeeper and publican he can do it as far as I am concerned.

I have already given Deputy Lenehan the answer on two occasions, once across the floor of the House and the Deputy did not like it because I was sitting down when I said it. I am standing up now and I shall say it once more but it is the last time I shall say it. There is an exemption contained in the value-added tax system which is virtually the same as the existing exemption under turnover tax.

Mr. J. Lenehan

Virtually the same means there is a change——

There has to be a change for reasons analogous to that whereby the 5 per cent turnover tax is the same as 5.26 per cent value-added tax. There is no other change involved. As far as the shopkeeper is concerned it is just the same. I was saying that the creation of a third rate makes it impossible for shopkeepers to operate. Further, where you have a selected number of items zero-rated and the other items in the shop subject to different rates of tax you will have a situation in which the housewife will be very confused because she will not know which items are subject to tax and which are not. She will, therefore, be confused as to what should be the price. Furthermore, by selecting certain items and omitting others you are affecting the existing trade pattern in regard to those things and the competition between them, for instance, as between tea and coffee and milk and cocoa. This may not seem a fundamental point but if it has the effect of, perhaps, putting a number of people out of work because of the switchover——

(Interruptions.)

It is quite clear that Deputies over there have not really thought about this because they do not know what is involved. Anybody who thinks you can switch rates of tax, and favour one thing against another, or step up the rates of tax on the more relatively luxurious items, without affecting employment does not know what he is talking about.

(Interruptions.)

The Minister should go back to the one he was at.

I am not talking about Deputy Tully because I think he knows the score. If you alter the trading pattern, one of the possible consequences is that you affect employment. I am not saying this is a fundamental issue but it is another factor you have got to take into account. The main objection I have to the Labour Party proposal which is the one—or something very much on those lines—that I would favour if it could be done, is that it just will not work. The shopkeepers cannot work it. That is the simple explanation.

Give them a try.

Does the Deputy mean force them? They tell us they cannot do it and we believe them so what does the Deputy mean?

They say they cannot collect the VAT at all. They say it is impossible.

They say it will be very difficult and will cost them a lot of money but they do not say it is impossible.

(Interruptions.)

Does that remark by Deputy FitzGerald mean that he thinks they can work three rates? What did the Deputy say?

I said the Minister should continue to expound his incredible beliefs.

Therefore, we may take it that Deputy FitzGerald thinks shopkeepers can work three rates of tax. Right?

We sought to reduce it to one rate.

So he does not believe that they can work three rates of tax?

I tried to get it down to one and the Minister sabotaged my proposal.

The Deputy refers to what I was just saying about the impossibility of having three rates of tax as the Minister's incredible beliefs.

The Minister is proving to be a good pupil of Deputy FitzGerald's at the moment.

I do not regard that as a compliment.

It is not so intended.

Will the Minister allow Deputy FitzGerald to reply?

Deputy Bruton reminded us of the number of Fine Gael speakers we had. Does the Deputy want to add up the time spent by the Opposition on this as against the time spent by this side of the House? Let us have a little balance.

(Cavan): Let us spend tomorrow at it.

I know that the Fine Gael Party do not like the floor to be given to a Fianna Fáil speaker who exposes the nonsense they have been going on with—talking about taking the tax off food and increasing the tax on everything else, hammering the unfortunate newly marrieds, the farmers, anybody you can think of. They want to shove up prices on them, and they ask us to believe that, because Deputy FitzGerald made a few phone calls to a few trade organisations, they will all keep down prices; they will all be good boys. They told Deputy FitzGerald they would not take any advantage of the situation, although they admitted they could, and we in this Parliament are to accept that because they told Deputy FitzGerald this on the phone that is all right. Does Deputy FitzGerald think that there is any housewife outside this House who would accept that?

I did not say it, so I would not expect them to accept it.

Of course, they would not accept it. The Deputy did say it.

Does he want me to quote him?

Would the Deputy care to remind me of what he did say while I am looking for it. If he really wants me to quote I will.

(Interruptions.)

Will the Minister allow Deputy FitzGerald to reply?

The Minister is entitled to make his statement without interruption.

Has Deputy FitzGerald the quotation over there?

I will read it for the Minister.

Deputy FitzGerald cannot intervene at this stage. He cannot drive a coach and four through Standing Orders.

(Interruptions.)

I will bring it over to the Minister.

I am very grateful to the Deputy.

The Minister should read it all and not stop half way through by any unhappy Fianna Fáil chance.

I want to quote from the statements as I saw them in the newspaper. I presume this is what it was. I have not seen the document given to me by Deputy FitzGerald before. I now have my quotation. I am quoting from The Irish Times of 10th July, 1972.

Read the document I gave you.

I have never seen that before in my life. Is the Deputy afraid of the quotation?

Read the full text and not just what was published. We want no selective quotations.

How do I know what part of it was published? This is what I was referring to. Maybe Deputy FitzGerald wants to repudiate it. Was he misquoted in The Irish Times.

I do not know.

He seems to be building up an alibi before I quote him.

The Minister should be allowed to make his speech. The Deputy will get an opportunity of making his own speech.

I told the Fine Gael Deputies I would make my speech, and I am going to do so.

Could I have my document back? It may be necessary to counter the quotation.

With pleasure the Deputy may have it back. I will not be shouted down by Fine Gael. I told them that an hour ago.

Will the Minister quote the statement in full?

Let me quote from The Irish Times of 10th July, 1972? It reads:

Dr. FitzGerald said that Fine Gael has discussed its ideas with retailers and supermarkets. "From all these groups we sought and secured agreement not alone to the passing on of tax reductions in full to the consumer, but also to a reduction in percentage retail mark-ups, necessary to ensure that the operation of a single rate of tax at retail level— one of the attractive features of the Fine Gael scheme—would involve no increase in the size of retail margins in money terms. Finally, we produced a fully documented proposal complete with tabular statements showing the amount of tax involved in each aspect of our scheme, and the precise effects of each of our proposals on tax revenue.

It is not our proposal.

Is the Deputy saying he did not say this? This is the only knowledge I have. I never saw that document before.

The Minister is quoting from a different document altogether.

Let us be quite clear on this. Is Deputy FitzGerald saying he is misquoted here?

Not at all.

Is this correct?

It is incomplete. It does not represent fully what was said in our proposal. It is correct so far as it goes.

It is correct so far as it goes? Good. I said long before that barrage over there started that Deputy FitzGerald expected us to believe, and that no housewife would believe, that wholesalers and retailers would reduce prices by a full 5 per cent, and reduce their mark-ups to achieve the effect mentioned in this quotation, just because Deputy FitzGerald had been told by them, mostly on the telephone, that this was so. I said they would not accept this and Deputy FitzGerald said he never said that. We have had all this carry-on to produce this statement which verifies precisely what I said.

Read the reference to the National Prices Commission.

Stop bluffing. The Fine Gael Party bluff has been called. Let us face up to it.

We will call the Minister's bluff in Mid-Cork.

Is the Deputy recovering from his shock?

I was not shocked.

(Cavan): The Taoiseach said last week that he did not want a by-election.

I have got to hand it to Deputy Fitzpatrick. He would try anything.

(Interruptions.)

Order. Would Deputies cease interrupting?

I would have finished quite a long time ago but for the various efforts to prevent me exposing just what has been involved in these Fine Gael proposals. We could not have had a better example of the carry-on of Fine Gael than we have had in the last few minutes with the denial by Deputy FitzGerald that he had said what I said he did, or the efforts to prevent me actually quoting and then when it was quoted saying, well, it was another document. This indicates very clearly the kind of situation we are dealing with, the kind of "con" job that Fine Gael are trying to do as far as the electorate and particularly the housewives are concerned. I have got news for them. They are not going to succeed.

I think it is time to conclude this interesting debate. I should like, first of all, because it is the matter freshest in our minds, to deal with the way the Minister handled the quotations.

Mr. J. Lenehan

Do I take it that the Deputy is concluding the debate?

I am concluding on this amendment. There are many more to come, if we have time to deal with them.

Mr. J. Lenehan

Are we going on until midnight?

Deputy FitzGerald is concluding on his own amendment. Will the Deputy please sit down and allow him to do so?

Mr. J. Lenehan

I have to go back home. I do not believe in listening to this bunkum for the next three-quarters of an hour.

On the point the Minister raised, at the end of his suggested quotation, I handed over to him the statement issued by us. He refused to read it, for very good reasons, of course——

I had never seen it before in my life.

——because this is the statement issued to the Press which appeared in the newspapers. It contained a reference to the National Prices Commission. In fact, we said in this document—I will now read the text which the Minister tried to suppress.

The Deputy should know that I did not know anything of the document he handed to me and I did not have time to read it. I wanted to quote what I myself had read. The Deputy can twist as much as he likes, but that is the fact.

It was issued to the Press and appeared in the Press and it is as follows:

Dr. Garret FitzGerald, spokesman on Finance for Fine Gael, today received assurances from all these interests that the full benefit of tax reductions would be passed on to the consumer and that the percentage margins or mark-ups on wholesale prices would be adjusted by the amount necessary to maintain existing margins in money terms on any goods the tax rates on which have to be adjusted as part of an arrangement to secure a single tax rate at the retail stage. With these assurances, the implementation of which can be undertaken in consultation with the National Prices Commission, the way is cleared for the implementation of the Fine Gael proposals.

Even that is a very naïve statement.

In a further statement, I pointed out:

The Minister's statement that reduction in food prices "could not be guaranteed", following an elimination of the tax on food imposed by the present Government nine years ago which now stands at 5 per cent shows a total lack of confidence in the Government's price surveillance machinery, which is surely valueless if, as the Minister suggests, it is so ineffective as to be unable to secure that tax cuts are passed on to consumers.

If the Opposition, as distinct from the Minister for Finance, had accused the Government of giving such free rein to price fixing, and of such a failure to secure competition in the retail trade, as to make it impracticable any longer to give the public the benefit of tax reductions even when these are agreed to be desirable and financially possible, they would have been accused of factious opposition and political pointscoring! Yet this is what Mr. Colley has now said about the Government of which he is a member; he must not think much of his colleague in Industry and Commerce, Mr. Paddy Lalor!

Those quotations make it perfectly clear——

An interesting little debating point but disclosing the Deputy's ignorance of what the position is, not convincing the housewife.

No interruptions.

Were there no interruptions when I was speaking?

These quotations make it perfectly clear that there was no naive assumption on our part that the mere receipt of assurances from any interests would necessarily secure this result. I made specific reference to the National Prices Commission to make it clear that these assurances, having been given, would need to be policed to make sure that they were carried into effect.

A nice word. How does the Deputy suggest it should be done? Come on. Stop trying to cod the people.

The price surveillance of this Government is so weak that it would be incapable in consultation with these interests of securing that they carried out these assurances. If the Minister believes that of Fianna Fáil's prices surveillance machinery at this point, first of all, it is no wonder they have no incomes policy and, secondly it is a wonder they have not the sense to get out and let a Government come in that can secure adequate price surveillance.

Now tell us how you would propose to do it. The public want to know. If you cannot tell us, do not go on trying to cod them.

I am endeavouring to make my speech. I will not be unduly diverted from this point. I am not going to be put off answering all the points because of shortage of time.

The Deputy will be diverted from answering that question. I will guarantee that.

The Labour Party also wishes to answer on their amendments. I an anxious to ensure that this is done. Once assurances are given by interests of this kind, it is a matter for the National Prices Commission, in consultation with them to secure—the Minister does not want to listen—that these assurances are carried out and that evidence is produced that margins have been reduced appropriately and that the absolute level of profits has not been increased. A Government incapable of securing that, when assurances have been given by people willing to co-operate with the system, are a Government that should not be here.

Tell that to the housewives.

I am telling it to the housewives through the medium of this House.

They will give you their answer.

Let this go out from this House to the housewives, that there can be no tax reductions any longer because Deputy Colley has told this House that as long as they are in office there cannot be a reduction because he cannot guarantee that they will be passed on and, like the decent man he is if he cannot guarantee that they will be passed on, if the Government are so imcompetent that he cannot pass them on, then he is not going to reduce taxes. The housewives can know that as long as Fianna Fáil are here there will be no tax reduction. That is the message from this House tonight from the Minister for Finance. If the housewives want taxes to be reduced, they will not get it from the Minister who has told us that he is not prepared to do that because he cannot secure that these will be passed on. This is the message from this debate, a very important one, and it will ring loud and clear in mid-Cork in the next few weeks.

To come back to the points made earlier and I will deal with them as briefly as possible, the Minister talked of a de-stabilisation danger, the importance of securing as far as possible that the same taxes are applied under the new system as under the old. He objected to the fact that we were proposing to increase the level of wholesale tax on certain goods. What he has not made clear to this House is that he in this Bill is increasing the present rate of wholesale tax on these goods substantially. The return in the current year from wholesale tax of 10 per cent is estimated at £10½ million. The Bill before the House is designed to secure £14 million on these goods, a £3½ million increase or an increase of one-third in the return from wholesale tax. That £3½ million is the Minister's own figure and the figure of £10½ million and £14 million are estimates I have made. I checked the £14 million with the Revenue Commissioners and arrived at the £10½ million by subtracting £3½ million.

The Deputy is talking about only one section, not giving the correct figures.

The Minister in this Bill is increasing the rate of wholesale tax.

(Interruptions.)

I want to make sure that this message reaches the public: the Minister in this Bill is increasing the rate of wholesale tax from £10½ million to £14 million. He has the nerve to come into the House and complain that we in reducing the tax on food, are prepared to concede increases in this tax.

The Deputy is not telling the truth.

I resent that allegation.

I just want to put it on the record that he is not telling the truth.

Is it in order for the Minister to say I am not telling the truth?

It is not in order.

I withdraw it and say the Deputy's statement is not accurate.

As regards the accuracy of the statement, the figures which I calculated and which are set out in the tabular with our statement here were checked out with the Revenue Commissioners. I have to say there was a difficulty in reconciling the final total for wholesale tax by a small margin, but as they said to me the difference was one that would not be significant, we did not pursue the matter to the last decimal point. Subject to the question of the final decimal point, the figure I have given of £14 million is accurate to within a few hundred thousand pounds, and that figure is the one after the Minister has added £3,500,000. The Minister is increasing this wholesale tax of 10 per cent by one-third and then he has the nerve to criticise us for imposing increases in taxation. That inaccuracy I have now, I think, nailed. The Minister used the following words in his speech: a "massive increase in taxation" and goods would be "substantially dearer". When he spoke about the figures he got muddled between 1¼ and 1½ per cent. He said, in fact, there was a 1¼ per cent increase. I think myself that if you have a 5 per cent turnover tax at the moment making the price of goods 105, that to me is an increase of less than 1 per cent. Our proposal envisages for the wide range of goods mentioned by the Minister which are not food and are not covered by wholesale tax just under 1 per cent.

The figure is going down by the minute.

If the Minister would explain to me how when you add one to 105 you get a 1¼ per cent increase I would be happy to hear it. What we propose is an increase fractionally of 1 per cent, .95 per cent.

That is not what he said publicly.

That is precisely what we have said throughout. That is not a massive increase in taxation. In relation to the other goods to which the Minister refers where the increase in price is of the order of 7 per cent —I do not know where he gets 7½ from, but it is not worth quarrelling about the half—the point here is that these are goods which are purchased in larger quantities by better off people than they are by less well-off people. Indeed this is true of the range of goods on which turnover tax has been increased. The Minister should know that, in respect of goods covered by turnover tax but not covered by wholesale tax and excluding food, at the moment in the lower income group 35 per cent of the budget is covered by these items; it is 53 per cent at the top. If you have a range of goods which feature much more largely in the budgets of rich people than poor and if you increase the tax there and if you reduce the tax on goods like food which feature very much more largely, twice as largely, in the budgets of the poor than the rich, then you are shifting the burden from the poor to the rich. That is what the Minister is trying to obscure in this debate by his curious talk of caviare and other products.

Does the Deputy accept that his proposal takes the tax off caviare?