Dáil Éireann debate -
Wednesday, 16 May 1973

Vol. 265 No. 9

Financial Resolutions, 1973-74. - Financial Resolution No. 1: Income Tax and Sur-Tax.

Minister for Finance (Mr. R. Ryan)

I move:

That where, for any year of assessment, being the year of assessment 1973-74 or any subsequent year of assessment, a claim for an allowance in respect of a child is made under section 141 of the Income Tax Act, 1967 (No. 6 of 1967) by any person whose total income for the relevant year of assessment from all sources, as estimated in accordance with the provisions of the Income Tax Acts, exceeds £2,500 and that person is, or would be on due application, entitled throughout the relevant year of assessment, to an allowance in respect of the said child under the Social Welfare (Children's Allowances) Acts, 1944 to 1970, any allowance which would otherwise be granted under the said section 141 shall be reduced by £42 where the relevant year of assessment is the year 1973-74 and by £50 where the relevant year of assessment is the year 1974-75.

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

Mr. J. Lynch

It is not our intention to oppose this particular resolution but I think it needs some comment in the light of the approach to this item of the budget and the Finance Bill by the Coalition parties in previous years. I have had the experience of being in the Minister's position. In regard to budget after budget that I introduced one of the main targets of the Coalition parties was the maintenance of the income tax allowances at the then existing rates for an inordinate length of time. One would have imagined, having regard to what would have appeared to be their conviction as to the necessity to increase these allowances, that we would have seen something better at this stage than a mere £30 in the wife's earned income allowance—a miserable £30 after all the criticism we have been getting about children's allowances.

Mr. R. Ryan

Would the Deputy yield to me for a moment? This has nothing to do with the allowance for married women. This is the provision which provides for the clawback arrangement in relation to children's allowances being paid to people whose net income exceeds £2,500.

Mr. J. Lynch

My understanding is that even if there is no increase in income tax and even if there is no change whatever, even in any aspect of it, there must be a Financial Resolution on income tax which is open to debate.

Mr. R. Ryan

Again, Deputy Lynch will recall that last year, for the first time, the temporary income tax which was there from Napoleonic days was made permanent. So, the resolution to which he refers is no longer necessary. This specific Financial Resolution relates only to ensuring that the children's allowance goes to the more necessitous people in the community and can be refunded by persons whose net income exceeds £2,500.

Mr. J. Lynch

This was one of the features of the budget presented by the Minister as one of its main attractions. Am I precluded on the Financial Resolutions from discussing this item just because it is not specifically provided for? Is there any other resolution on income tax in the Financial Resolutions before us?

Mr. R. Ryan

I do not like to be unduly critical but I think it is an indication of the failure of the former Government that the Leader of the Opposition who was a Minister for Finance should know so little about the ordinary financial machinery. I am entitled to say that. If the Leader of the Opposition wishes to discuss this matter he can deal with it on the General Resolution, that is, the last one. However, it should not be necessary to give guidance to someone who was Minister for Finance and head of a government.

Mr. J. Lynch

Perhaps the Minister would read section (2) of the resolution which states:

It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927.

I have never known a debate at this stage of the budget where anyone was precluded from discussing income tax reliefs or otherwise under this heading. I submit that the Chair controls what is relevant and what is not relevant— not the Minister for Finance.

An Ceann Comhairle

What is relevant here is what is contained in the resolution relating to income tax and sur-tax.

Mr. J. Lynch

Therefore, there are no other Financial Resolutions——

An Ceann Comhairle

There will be the General Resolution.

Mr. J. Lynch

——where we can discuss today one of the principal features of the budget? Is that the ruling of the Chair?

An Ceann Comhairle

It is not contained here.

Mr. J. Lynch

I have been in the Minister's seat at this stage of proceedings on several occasions and on each occasion the allowances made available for income tax, or not made available, were always discussed.

Mr. Haughey

Surely on an income tax resolution the Leader of the Opposition is entitled to discuss any aspect of income tax?

An Ceann Comhairle

All we can discuss at this juncture is what is contained in this resolution. There will be wide-ranging scope on the General Resolution and Deputies may advert to the matter of income tax in detail.

Mr. Briscoe

Is this a new ruling by the Chair?

An Ceann Comhairle

No, this is the usual procedure.

Ruairí Brugha

Surely we are entitled to discuss what is not in it?

An Ceann Comhairle

I cannot accept that.

Mr. R.P. Burke

Surely the Ceann Comhairle is not suggesting that criticism is not allowed? Is the Leader of the Opposition not entitled to criticise what is in the resolution? The Ceann Comhairle is not suggesting that we must stand up at all times and speak in praise of the resolution?

An Ceann Comhairle

We can discuss only what is contained in this resolution, nothing else.

Mr. J. Lynch

There seems to be a change in procedure here. There is a change in the income tax code but, as I have already pointed out, if there was never a change in the income tax code, if there was no increased income tax or no allowance provided, there would have to be in these resolutions a resolution to re-impose income tax. If the Minister would get advice on that point from his advisers, I think they will confirm what I have said.

Mr. R. Ryan

I do not need the advice. Here is a Deputy who was the leader of a government that last year introduced legislation to make income tax permanent. He does not know the law he passed last year. That is why I am getting rather impatient that we should be wasting the time of the House. He is responsible for the law to which he is taking exception now. This deals only with getting a refund of the children's allowances paid to people who receive an income in excess of £2,500. The Deputy will see that figure stated in the seventh line of the section.

Mr. J. Lynch

This is the only item on the number of sheets before us where we can discuss this miserable allowance which has been given to income tax payers. Under the ruling given by the Chair I will have to wait until the General Resolution. However, it is a matter of wonder to me that Deputies who now form the Government and who support the Government and who were so vociferous in their denunciation of the non-increase in allowances under the income tax code, can support a budget that has granted this miserable allowance. However, I will pass from that and come to what is in the resolution. If I am mistaken under the rules of order in what I have done I will have another opportunity of dealing with it.

We have criticised this budget in relation to children's allowance payments. We have criticised the programme of the National Coalition Government as published in advance of the election on the grounds that with regard to children's allowances we considered that the benefits were not being given to the most deserving. They were to be given right across the board and that is what happened in this budget. We believe that is wasteful expenditure. It would be better to increase the allowances to the categories we intended to provide for, that is, the categories with a certain income related to the number of children in the family——

Minister for Lands (Mr. T.J. Fitzpatrick,

Cavan): That is what the resolution is doing.

Mr. J. Lynch

The Minister should not be too smart. We are not completely devoid of talent and brains on this side and we can develop an argument as well as the Ministers opposite. The pretence was made that this was going to be a right-across-the-board increase but this resolution takes the increase from certain categories of people, those who earn £2,500 per annum. There is in this an inequity. We were going to relate our payments of children's allowances to certain categories related to the size of family. A man earning £2,500 per annum, whether he has one child, 15 children or has no children, is going to suffer as a result of this provision. The Government are giving with one hand and taking away with the other; they are going to deduct £42 and £50 in the full year. I submit the scheme we proposed—and we will try to demonstrate this later—was more equitable. This is another form of eyewash. There are people earning £2,500, skilled men for whom normally we would like to provide increased children's allowances. There is the further inequity that there is no grading system upwards or downwards, as we would have provided. This provision will operate unfairly against some people. It is not giving the benefit to the most needy or in the proportions we would have done.

Mr. Haughey

I should like the Minister to confirm that this resolution will bring in £1 million. Apart from the equity or otherwise of this proposal, it seems to me if it is only going to bring in £1 million in a year, because of the complications it will entail in the administration of the income tax code it is not worth doing. In another part of his speech the Minister speaks rather vaguely about simplifying the income tax code but in this provision he is considerably complicating administration of the code. I should like him to confirm there is £1 million involved in this resolution and, if that is so, in view of the complications involved he is convinced that it is worthwhile.

Mr. Briscoe

I would ask the Minister to spell out very clearly what this means because its terms are complicated to many people in this House.

Mr. R. Ryan

The position is that anybody who has a net income in excess of £2,500 will have the children's allowances substantially withdrawn. The alternative system as proposed by Fianna Fáil to which Deputy Lynch has now made reference, would have required anybody applying for children's allowances to make an individual application each year accompanied by a certificate of income, and if in the course of that year the income of the person were increased, it would have been an offence for the recipient to cash the certificate if the income——

Mr. Colley

Surely that is not true.

Mr. R. Ryan

That is what Fianna Fáil were asking for, which we found repugnant and which the majority of the people did not want. It would mean the introduction of a new means test which would be far more costly and inconvenient to administer than the system which is being applied.

Mr. Colley

Where did the Minister see the regulations which would lead to that situation?

Mr. R. Ryan

There is no other way——

Mr. Colley

Of course there is.

Mr. R. Ryan

—— in which to pay children's allowances on a selective basis except on a means test which would require a certificate of income, a birth certificate and so forth, making it necessary to apply annually to the Department of Social Welfare.

Mr. Brennan

Surely this scheme is the same.

Mr. R. Ryan

No. The person is obliged by law to make a return of income for income tax purposes and it does not call for any further certification or documentation. It is the net income with which we are concerned. Deputy J. Lynch mentioned that it was unfair to bring the ceiling up to £2,500 because we could not say that every man's burden above that was the same. Bank interest, overdraft, house mortgage repayments, superannuation and insurance contributions all would be set off against the man's gross income.

Mr. J. Lynch

It is net income.

Mr. R. Ryan

It is net income.

Mr. Briscoe

After tax?

Mr. R. Ryan

It is net income after the reduction by all the expenses which a person is permitted to deduct.

Mr. Haughey

Did the Minister mention insurance payments?

Mr. R. Ryan

If a person is paying a life insurance contribution it will be set off against the man's income tax.

Mr. Haughey

I understand the position about social insurance contributions, but is the Minister saying that the ordinary life assurance premiums are deductible?

Mr. T.J. Fitzpatrick

(Cavan): There is an allowance.

Mr. Haughey

An allowance is granted in respect of assurance premiums?

Mr. R. Ryan

Superannuation contributions but any insurance contributions under the social welfare scheme are all deductible before income tax is assessed.

Mr. Haughey

But not life assurance?

Mr. R. Ryan

Not what you would call private life assurance.

Mr. O'Malley

The resolution refers to total income, not taxable income.

Mr. R. Ryan

"Income" is taxable income. The phraseology and verbiage used in tax law defines "taxable income" and that is the only income taken into account. Taxable income is defined in a jumble of tax laws, about which the Deputy, who is well up in legal matters, will know. To deal with the other point raised by Deputy Haughey—he spoke about "only a million" and as high as £2 million in one year—it could go to even a higher figure. The point which Deputy Haughey has been making is in conflict with what Deputy Lynch has been saying.

Mr. Haughey

Not at all.

Mr. R. Ryan

There might be severe hardship cases above that limit who would be running into difficulties on that count. The mere fact that only £1 million is coming back out of the £8 million that would be spent this year on this scheme indicates that the majority of families will be getting this benefit. The vast majority of families are well below this limit. There is no social justification for any other approach at a time when there is a limited amount of money for distribution——

Mr. J. Lynch

A fixed sum like that, without a grading upwards or downwards, inevitably causes hardship.

Mr. Brennan

Does this resolution not constitute the entire effort of the Government towards selectivity as far as children's allowances are concerned? I was hammered, particularly from the Labour benches, about the necessity to introduce selectivity in the payment of children's allowances. An interDepartmental committee studied it for months and came up with a number of suggestions. The most acceptable one we adopted and before the elections we spelled out what it was. The former Taoiseach is right in pointing out that this hits at marginal cases and could be rather severe. We had selectivity on valuation and on incomes and it was graduated in accordance with the numbers in the family so that it did not really bear too heavily on any case. Indeed, I thought there was a very nice choice of selectivity from the different permutations put forward at the time. It enabled us to give very generous assistance to those who needed it. We were doing what the demand of this House was during the years, particularly from the Labour benches who now, in this budget, have lost all shreds of pretended socialism.

Mr. Power

This is geared towards those whose incomes are easily assessed. How does the Minister propose to deal with those whose income is not so easily assessed—farmers, for instance? Has the Minister some proposal to deal with such cases?

Dr. Gibbons

On the question of total income, are children's allowances, themselves, taxable? To put a concrete case, is an income of £2,490, to which is added children's allowances aggregating sufficiently to bring the income to more than £2,500 taxable? Are they all included?

Mr. R. Ryan

To deal with the last question first, the answer is "no". Income tax is not charged on children's allowances because that is a statutory income and a statutory income is not——

Mr. Haughey

Are children's allowances included in the £2,500 ceiling?

Mr. R. Ryan

No, not even in measuring the £2,500.

I know the tax law is difficult no matter in what seat you happen to sit in this House. It does not get any less difficult when you get into the one I occupy at the moment. It might help if the Fianna Fáil Party would get together and get their priorities at least agreed upon. On the one hand, we have a complaint that £2,500 is the wrong ceiling, the wrong barrier, and that it will cause hardship and difficulties and so on, and on the other hand we have Deputy Brennan saying that it is puny, that it is ridiculous.

(Interruptions.)

Mr. O'Malley

Answer the question. That is what you are there for.

Mr. R. Ryan

I am answering the question in a way which Deputies apparently do not like.

Mr. O'Malley

Answer the question you were asked.

Mr. R. Ryan

We are being asked to introduce a system which would be full of variations——

Mr. Brennan

Flexible.

Mr. R. Ryan

——graded, flexible, doing the very thing which Deputy Haughey says we should not do: have a multitude of grades and complexities not only in one Department but in several Departments of State; the Revenue Commissioners, Social Welfare, the Department of Health and goodness knows where else——

Mr. Brennan

Nonsense.

Mr. R. Ryan

——the effect of which would be that Deputy Brennan would be having a much lower cut-off point than £2,500, down at £1,000 or £1,500, and so on. I do not want to chase some of the more ridiculous arguments put forward by Deputy Colley today. If he knows a way of doing what he suggested the people opposite were going to do, that is, to give more at less cost, it is high time he disclosed it to the people of Ireland and the world in general, because no man who has ever lived has ever discovered that.

Mr. O'Malley

Answer Deputy Power's question.

Mr. J. Lynch

Perhaps I could ask the Minister again, to remind him of Deputy Power's question. Deputy Power specifically asked whether in the case of people whose incomes are not easily assessed, people who are perhaps otherwise liable for income tax, but especially people who can earn much in excess of £2,500 a year, for example, wealthy farmers, they will get children's allowances willy-nilly irrespective of their income.

Mr. R. Ryan

Any person who is required by law to pay income tax is affected by this resolution. If there are those who feel that there is anybody outside that code who should be brought in—like the Deputies opposite who are recommending that farmers be taxed—they are saying that the farmers should be brought within that code.

Mr. Power

You are saying that. You are the man who slipped up.

Mr. R. Ryan

You said it.

(Interruptions.)

An Ceann Comhairle

Order.

Mr. R. Ryan

You want the farmers brought in.

(Interruptions.)

Mr. O'Malley

Before you put the resolution, Sir, I should like to ask if, as the Minister states, the words "total income for the relevant year of assessment from all sources" mean in fact net income, net taxable income, would it not be much simpler to state that because "net" and "total" seem to be contradictory. So that we will know precisely what is in the resolution, will the Minister agree to the resolution being amended by substituting "net" for "total"? I should also like to bring the Minister's attention to the fact that an income tax payer apparently will have this £42, or £50 in a full year, deducted from him in respect of children's allowances for income tax, irrespective of whether he gets children's allowance under the Social Welfare Acts, which is scarcely equitable.

Mr. R. Ryan

I did not quite get the Deputy's last point but I will deal with the first one and then we can deal with the second one. The word "net" is rather a loose word because the question then arises as to what precisely is net, what allowances do you have, and so on. In fact, a longer phrase is used in the resolution which means "net", the phrase which says, "income for the relevant year of assessment from all sources, as estimated in accordance with the provisions of the Income Tax Acts, exceeds £2,500..." That is, in fact, a net income of £2,500—the income as assessed in accordance with the Income Tax Acts.

Mr. O'Malley

We will remember that and we hope it works out that way. The other point is that a man may not, in fact, be in receipt of an allowance at all but he is charged the £50 a year. Would the Minister not feel it would be more equitable to deduct that only in respect of those who are in receipt of the allowance.

Mr. R. Ryan

Every person who has a child is entitled to apply for children's allowance. It would be extremely difficult administratively to require from each income tax payer proof as to whether that person had or had not applied. In fact, because of the difficulties of operating the code, for any income tax payer even above this ceiling there would be a marginal gain as a result of the figure to-day. There would be a gain of 30p this year and 50p in future years. I understand from the Department of Social Welfare— and I am sure Deputy Brennan will confirm this—that it is not notable that any significant number of people fail to apply for children's allowance. If some person is a well off that he does not bother to apply for children's allowance the chances are that there will be no great hardship involved.

Mr. O'Malley

If people apply and do not get it—I have met such cases.

Mr. R. Ryan

If somebody applies and does not get it he is not eligible because he has not got a child and, therefore, this provision would not apply.

Mr. Blaney

I should like to ask the Minister how does he arrive at this figure and how does he justify such a figures as a stop-off point. This whole business about total income and net income, and the little cross-talk that is going on that one means the same as the other, and that it is too hard to define what "net" is, or that it is too loose, does not impress me at all. In arriving at the figure of £2,500, whether it be described as "total" or "net" income, or by the more lengthy description in the Act, I should like to know will the tax free allowance, the married allowance, the children's allowance be taken into consideration? If not why should they not be? Why should we be talking about anything related to net income or taxable income rather than total income?

My first question is why £2,500? To my mind it does not make a great deal of sense, nor does it make a great deal of sense that somebody with £2,400 or £2,450 will gain £50 in respect of each child as against somebody with a large family who has £5 or £10 over the limit who will not get it. As between £2,550 and £2,450 income, whatever you may term it, net, taxable or total, for the purpose of this cut-off or reduction of the tax free allowance, how do they tally and how do we justify cutting off a person who has £50 over the limit when somebody else gets the full benefit if he has only £5 or £10 or £25 or £30 under the limit? Why should there be such a limit or such a low limit? In limiting it, why should there be a total discarding of the idea that surely has come to be accepted, that children's allowance, for various reasons, have been paid without question and without any consideration of income when those who will contribute most to paying over the £2,500 can expect to get nothing by virtue of this cut-out of £50 which, as I calculated it, is exactly the increase proposed by the Minister to be paid in respect of all the children of those who earn under £2,500. I work it out that there is a matter of pence in the difference. One cancels the other out, as I see it. At any rate, why that figure? How do you deal with the £2,450 versus the £2,550? Why were not the deductible allowances that are normally regarded as tax free taken into consideration in arriving at the figure of £2,500?

Mr. R. Ryan

I know that no matter what cut-off figure one takes, it will be open to criticism. In the case of the old age pensions means test, there are cases of hardship of people who come into the grey area where they are just a little bit above the particular margin or cut-off rate for the higher benefit. Some figure has to be chosen and looking at the existing income levels and the likely burdens that fall on families on these levels, bearing in mind that for identification purposes in revenue laws £2,500 made it possible to identify people with the least possible difficulty—any other system would have multiplied the type of difficulty with which Deputy Haughey is familiar—it was considered that the £2,500 was an appropriate figure. I accept that some people could be just above and suffer a little more hardship than people just below. If you are to proceed to take the individual personal income tax allowances which Deputy Blaney has in mind into account, you are overlooking the fact that they are taken into account in assessing whether a person is liable to income tax at all so that even though you take the £2,500 after deduction of the necessary outgoings permitted by the law and then set off against it all the other allowances which the income tax law allows a person to have in quite a number of cases you could end up with a situation in which you would be arguing theory only because the cases would not arise in practice. The proof of all this is that the amount received back is comparatively small compared with the benefits being given out.

Mr. Briscoe

This is a very complicated and serious matter. Would the Minister take as an example the case of a man in receipt of a gross income before taxation of £2,500? He has eight children and he receives his children's allowances in respect of those children. That man with that large family and the duty to feed and clothe them is going to have to pay back £42 this year and £50 for every year after. Is that the situation? Suppose he is getting £2,501?

Mr. Brennan

He has any reliefs to which he would be entitled. I would like to ask a question before the Ceann Comhairle puts the resolution. An income tax claimant is liable to have allowances to which he would be ordinarily entitled reduced by this amount, even though he does not apply for his children's allowance?

Mr. R. Ryan

Yes.

Mr. Brennan

According to the wording of the resolution, he has it reduced even though he is not in receipt of children's allowances. That is going to make it unduly difficult and is compelling him to apply. Many people would not bother applying in order to save themselves trouble.

Mr. R. Ryan

Deputy Brennan is aware that very few people fail to apply for their children's allowances.

Mr. Brennan

But many forget to draw them.

Mr. R. Ryan

That may be a matter for the Minister for Social Welfare to be more humane in excusing people and giving them credit than perhaps the Deputy was, but in any tax law or social welfare law, there are always hardship cases and one has to choose some area which seems to be reasonably fair and that is what we have done.

Mr. O'Malley

Is it not the truth of the matter, to sum up this resolution, that children's allowances under the Social Welfare Acts have now been abolished for anyone whose total income is £2,500 or more? That is putting it in simple terms and it is better that the House and the country should know that. Instead of these enormous increases across the board, of which we have heard, we now hear, after half an hour of questioning the Minister, the simple fact that children's allowances have now been abolished in respect of anyone whose gross total income is £48 a week.

Mr. R. Ryan

It takes a long time to educate the Fianna Fáil Party.

Mr. Briscoe

The Minister is not a very good teacher.

Mr. R. Ryan

What Deputy O'Malley says is entirely wrong. A person will still receive——

Mr. O'Malley

He will, but he will pay back an equivalent amount. The Minister said that—that the difference is only a matter of pence.

Mr. R. Ryan

He will receive all the children's allowances to which he is entitled.

Mr. O'Malley

And pay it all back in income tax.

Mr. R. Ryan

Not necessarily. He will get all the income tax allowances to which he is entitled and the kind of person Deputy O'Malley has in mind is the person who would probably not be paying income tax anyway, so that we can get into an area of doubt and uncertainty which I am convinced is being deliberately presented here to cause confusion. The truth is that there will be a vast number of people whose income is in excess of £2,500 who will not get any clawback but would Fianna Fáil make up their minds? Do they want children's allowances paid without any selectivity or with a means test? If they want a means test do they want to bring it down to people with an income in excess of £10 or £12 a week? What is their ceiling?

Mr. Colley

We spelled out what we want.

Mr. R. Ryan

They go in for sniping at what we have given but they have offered no figure. They suggest, on the one hand, that they want to give it to everybody, a theory which Deputy O'Malley attacks and, on the other hand, they are indicating that they want to take it back from more of the people than the people we have given it to.

Mr. Brennan

The Minister is quite wrong.

Mr. T.J. Fitzpatrick

(Dublin Central): If you are over £2,500 net, there will be an adjustment in the weekly tax-free allowance. If you are over a net £2,500 and are paying weekly taxation, is the adjustment going to take place in your tax-free allowance?

Mr. R. Ryan

Yes.

Mr. T.J. Fitzpatrick

(Dublin Central): I can see a complication here, where there is an adjustment in salary probably two or three times a year. I can see that at one period you will be free from taxation because your net does not exceed £2,500, and three months and six months later will exceed it. How are you going to adjust the children's allowance books in such a short time? This can happen on two or three occasions during the year, this fluctuation of salary. Will you be in a position to issue children's allowances at short notice?

Mr. Crinion

This is across the board and it discriminates against a man with a large family who would not be paying any income tax. We are trying to help the person with the large family but the man with one or two children will lose the children's allowances and will be paying tax but the man with a very big family will lose the children's allowances and this is somewhat unfair.

Deputy Blaney rose.

An Leas-Cheann Comhairle

Deputy Blaney has already spoken.

Mr. J. Lynch

Are you ruling the Deputy out from speaking again?

An Leas-Cheann Comhairle

He has spoken already.

Mr. J. Lynch

Surely it is traditional in matters such as this that when a proposal is presented to the Dáil in legal language, Deputies are permitted to ask for clarification?

An Leas-Cheann Comhairle

If the Deputy is asking a question.

Mr. Blaney

Several people have already spoken, if speaking you call it, so it is not a precedent. I have not spoken at all so far. I merely asked questions and I am not quite satisfied that I have got replies. The questions are many which I wish to ask. I want to know whether the Minister in his consideration of the composition of this resolution has real clarity as to how the figure of £2,500 is to be arrived at or is it merely a figure that looks good and he probably has some suggestions as to why it should be chosen, and the manner in which it will ultimately be arrived at for general application has yet to be worked out. If that is the case, would it not be better to tell us that? If, again, the knowledge is absolute and there is a definite formula, then I want to know whether, in fact, the tax free allowances in respect of the children of a person whose income is somewhere over the £2,500 are deductible from it before a figure is arrived at that would preclude him from the full allowances in the future? If these are deductible is it on the higher formula or the formula less the £50 that is spoken about in this resolution? Are they deductible at all? If they are, is it the higher or the lower one? If it is not clearly worked out would it not be better if we were told and we could have a look at it again.

Mr. Callanan

Is it an estimated income or a cash income?

Mr. Tunney

A person whose income is in excess of £2,500 a year who has four children will lose in allowances in one year £70. His wife, in respect of additional allowances, will collect £72. This means that the net gain to that household is £2 per year. The Minister spoke about reducing the work devolving on civil servants and Departments. Is it necessary that all calculations must be made in making the adjustments in the case of allowances and all the other alterations in the case of children's allowances so that in respect of a household, which may be typical of many households in the country, there is a net gain of £2 per year? If that is the case, surely it must be possible to make that £2 payable to that household without all the remifications we have here? Would the Minister say if that is correct, partially correct or incorrect?

Mr. R. Ryan

I should be happy to reply to all questions raised but it would probably help to assist the debate if the various points were made and I replied to them then without prejudicing the right of anybody to come back again. I will reply to everybody now if pressed.

Mr. J. Lynch

That is the usual practice.

Mr. R. Ryan

Within limits, but I have seen the contrary done as well, particularly on Financial Resolutions.

Mr. J. Lynch

It is usual on the Financial Resolutions.

Mr. R. Ryan

First of all, Deputy Fitzpatrick raised the point about variations in income that may occur throughout the year and the complexities that may generate. Of course, it is in no way different by reason of the use of the tax code dealing with children's allowances because those variations, as the Deputy knows particularly in his own trade, can vary from month to month. There is a rough and ready estimate as to what a person's income and tax allowances are in any year. Tax free certificates are given on that basis and then there is a readjustment at the end of the year. In fact, any adjustment of variations which occur in consequence of this resolution will be no different from the variations which occur at the moment and will not generate any additional difficulties or paper work which would be generated if he introduced the system as has been suggested by the Opposition.

Mr. Colley

Could I interrupt the Minister for a moment? Does he appreciate that the Fianna Fáil proposals were supplemental to the existing scheme, that in other words they would not have to be applied to every recipient?

The Taoiseach

There was a lower means test. Deputy Brennan said it a minute ago.

Mr. J. Brennan

I did not use the words "lower means". I said a more equitable and flexible one.

Mr. R. Ryan

It would be appropriate for me now to point out that the attack this system is coming under is based on conflicting arguments because the disagreement as to the basis or system is on the Opposition benches who are contradicting one another. This very system they are now attacking is one which they introduced two years ago. They introduced it then right across the board for every income tax payer. Now we are seeing that this reduction applies only to the better off. We are doing the very thing which Deputy Colley says we are not doing. We are withholding this from the better off and we are not withdrawing it from the people who need it. I thought I had answered Deputy Blaney. I will give him the same answer as I gave him originally, that is, the personal children's income tax allowances are not deducted before you assess a man's taxable income.

Mr. Blaney

What is deductible?

Mr. R. Ryan

The Deputy is really asking me to be his income tax adviser and auditor. The whole income tax code is extremely complex, as the Deputy knows but the kind of deductions which can be made from a man's gross income before you assess his taxable income are bank interest, mortgage interest, superannuation fund contributions and such expenses as a person is allowed to deduct. When you have all that you say that a man receives X, you subtract Y and you get a figure. On that you give him the various income tax and personal allowances to which he is entitled which, as I said, in many cases, will mean all this argument will not be applicable to a large number of taxpayers.

Mr. O'Malley

Are children's allowances, marriage allowance, earned income allowance deductible? The Minister has said that all these things will be taken off.

Mr. R. Ryan

Obviously I cannot get through to the Fianna Fáil Party what precisely this is. It was expressed in the simplest form.

Mr. O'Malley

Could I make a suggestion that we adjourn the House for a short while?

An Leas-Cheann Comhairle

The Chair would point out——

Mr. O'Malley

Could we adjourn the House for ten minutes?

An Leas-Cheann Comhairle

No, the Deputy is not in order. The usual procedure is, and this has long been established, that a Member speaks once. I allowed some questions but that is the usual procedure in the House and has been.

Mr. Briscoe

A person's income is £2,500. He has all his allowances and he is told by his income tax inspector that after such and such a thing he will be assessed for income tax on £1,000. Does that person have to pay the £42 this year and the £50 next year? This man's gross income is £2,500 and, therefore, irrespective of any commitments he has in the way of children, house payments or insurance policies, he has to submit £42 this year and £50 next year. Am I correct?

Mr. R. Ryan

There will be no loss whatsoever to any person no matter what his income is as a result of this scheme. The benefits, the increased children's allowances, will go to people whose net income, after assessment in the way in which we have described, is less than £2,500. Anybody above that will not get the benefit but he will not be worse off and he will receive in future the same children's allowance as he is now receiving.

Mr. Tunney

May I ask a question?

An Leas-Cheann Comhairle

The Chair has already pointed out that the procedure is for Deputies to speak once unless the Chair allows a question after that. That is budget day procedure.

Mr. Tunney

I want to ask, or rather repeat, a question I have already asked. If the Minister would not answer me, perhaps I could appeal to him on behalf of the ladies, the womenfolk in whom he is so interested, in respect of the non-working wife, the wife working at home minding four children? Are we to take it that the increase available to her in this marvellous budget in respect of the family of four is £2 per annum? Would the Minister say: "Yes" or "No" or "Partly correct" or "Incorrect" or "Totally incorrect"?

An Leas-Cheann Comhairle

The Chair would like to point out to Deputies that they will have an opportunity of dealing with these matters on the Finance Bill also.

Mr. Cunningham

What will the man tell his wife?

The Taoiseach

Stop the playacting.

Mr. Tunney

Answer the question.

(Interruptions.)

Mr. T.J. Fitzpatrick

(Dublin Central): Is it fair that a man earning £2,500 will lose £50 a year while a man earning £2,495 will gain £45 a year? Is that in effect what the new provision means?

Mr. R. Ryan

No.

Mr. T.J. Fitzpatrick

(Dublin Central): If you earn £2,500 you do not qualify? Is that not right?

Mr. R. Ryan

I am telling the Deputy that what he is saying is not right and that no conceivable reading of this provision could make it right. I have made it perfectly clear that the effect of this resolution is that anybody earning under £2,500 net income receives the increases while anybody above it does not. But nobody above it is at any loss as a result of people below it receiving the increases. Fianna Fáil must make up their minds. Do they want it for everybody or only for those under £2,500?

An Leas-Cheann Comhairle

Deputy Fitzpatrick may not argue on this. He has had his opportunity to ask a question and he evidently got an answer.

Mr. T.J. Fitzpatrick

(Dublin Central): I thought it unfair that a man should lose £50——

Mr. R. Ryan

He does not.

Mr. Donegan

He does not. That is totally untrue.

(Interruptions.)

Mr. O'Malley

I want the Minister to say "yes" or "no" to one question and I do not want any debate. Are earned income relief, marriage allowances and child allowances under the Income Tax Acts deductible in arriving at this figure of £2,500 or are they not?

Mr. R. Ryan

I have answered that question.

Mr. O'Malley

The Minister did not answer it. We are in this position that this provision is brought in; nobody understands it, least of all the Minister——

An Leas-Cheann Comhairle

The Deputy may not speak a second time and he knows that. I am putting Financial Resolution No. 1. Is it agreed?

Deputies

No.

An Ceann Comhairle

I am putting the question: That Financial Resolution No. 1 be agreed to.

Question put and declared carried.