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Dáil Éireann debate -
Tuesday, 9 Jul 1974

Vol. 274 No. 4

Finance Bill, 1974: Second Stage.

I move: "That the Bill be now read a Second Time."

The purpose of the Bill is to give effect to the taxation changes and anti-avoidance measures proposed in my budget statement as well as providing for a number of other matters.

This Bill is the instrument by which the Government hope to achieve one of the main aims of this year's budget, namely tax reform, with the object of ensuring greater equity in the distribution and sharing of the tax burden. To bring this about the Government are carrying out a fundamental reshaping of the whole tax code. This Bill deals in particular with the simplification and reform of income taxation, the provision of major income tax reliefs and the widening of the tax base to include wealthier farmers.

In the interests of fair play the Bill contains a number of significant provisions to counteract tax avoidance and evasion. In Irish tax law some of these changes may appear to be radical but they have long been part and parcel of the taxation code of most enlightened countries. The Government's objective is that people with similar incomes should pay a comparable amount of tax. There will be one law for all, not one for the rich and another for the poor. It must be realised, however, that a thorough reform of any system of taxation is a complex and prolonged exercise.

Nevertheless, the fact that perfection cannot be achieved in one move is no reason why we should not make an effort to make some advance in the right direction. This Bill is not a panacea for all taxation imperfections but it is a real and significant step on the road to an equitable, acceptable and reformed code of taxation.

By far the greater part of the Bill relates to income tax and corporation profits tax, which are covered in Part I, which is in turn subdivided into a number of chapters. Chapter I provides for the new unified structure of personal income tax; Chapter II covers the taxation of farming profits; Chapter III deals with the restriction of tax relief on loan interest; Chapter IV comprises various anti-avoidance measures and Chapters V and VI contain a number of miscellaneous provisions in the field of income tax and corporation profits tax.

Reverting to Chapter I the principal changes in the personal tax structure are outlined in section 3, 6 and 8. Section 3 provides for the new structure of tax rates, comprising a standard rate of 35 per cent, a reduced rate of 26 per cent applicable to the first £1,550 of an individual's taxable income, and higher rates of 50 per cent, 65 per cent and 80 per cent, applicable to the various bands of an individual's taxable income over £4,350. Sections 6 and 8 outline the new personal reliefs which take account of the increases in the personal allowances announced in the budget as well as the withdrawal of earned income relief. One section which was not mentioned in my budget statement is section 9 which makes a change in regard to the amount of life assurance premiums which may qualify for tax relief. Under the old tax code, relief from surtax was not given in respect of life assurance premiums but under the new system it is not possible to retain this exclusion. Accordingly, relief may now arise at rates up to 80 per cent on the appropriate fraction of premium payments in the case of individuals with high incomes. It is reasonable, therefore, to take some offsetting measure to limit the effect of this change, and it has been decided to restrict to a maximum of £1,000 the amount of qualifying premiums. This limit should not adversely affect the vast majority of taxpayers who are saving through the medium of life assurance. Furthermore, in any case where a taxpayer before budget day was paying premiums in excess of this figure, such higher figure will continue to be eligible for appropriate relief.

Section 5 is another item which was not referred to in the budget statement. As recommended by the Commission on Income Taxation, it provides that on payment of dividends, interest and other similar payments tax will in future be deducted at the standard rate in force at the time of payment and not, as at present, calculated by reference to the tax rates in force in the various tax years over which the payment may have been accruing. Having regard to the fact that the standard rate of income tax is unchanged since 1966-67 this alteration affecting deductions will make little material difference. The other sections in Chapter I together with the First Schedule are largely of a consequential nature.

Chapter II of the Bill, comprising sections 13 to 28 deals with the taxation of farming profits.

As I announced in my budget statement, the Government, after careful consideration of all the factors involved, decided that farmers, the rateable valuation of whose land is £100 and upwards, would be subject to income tax as from 6th April, 1974. I indicated that tax liability would normally be based on actual profits derived from farm accounts but that, since this would be the first time that farming profits would be assessed, certain options would be provided to meet the difficulties of farmers who had not been keeping accounts. I promised that full cognisance would be taken of the particular problems of farmers who were now being brought into income taxation for the first time, in effect. I also undertook that relief would be provided for farmers the rateable valuation of whose land only slightly exceeded £100 and said that steps would be taken to guard against avoidance of liability by the fragmentation of holdings so as to bring the rateable valuation below £100. This Bill accordingly includes the provisions necessary to give effect to these proposals.

Since my budget statement, very useful consultations have been held with the National Economic and Social Council and with representative farming organisations regarding the considerations to be borne in mind in the taxation of farm profits.

The views of the National Economic and Social Council and of farming organisations have been taken into account in framing the provisions in the Bill. Some of the problems facing farmers in relation to taxation require further study before decisions can be taken.

Section 13 is concerned with definitions and is self-explanatory.

Section 14 repeals section 18 (2) (a) of the Finance Act, 1969, which exempted farming profits from income tax.

Section 15 is the general charging section which brings farming profits into tax under Case I of Schedule D. The section is so framed that, to be outside the charge, it will be necessary for the rateable valuation of the farm land to be under £100, subject to section 16 throughout the year of assessment. For the purposes of the £100 valuation test account will be taken of all farm land occupied by a farmer— or deemed to be occupied by him—in accordance with the provisions of section 17, which I shall describe shortly.

Section 16—which is an anti-evasion measure—brings into charge farm profits in cases where the rateable valuation of the farm occupied by an individual or his wife exceeds £50 and where either of them carried on at any time during the year another trade or profession or held a directorship of a company carrying on a trade or profession in which one or other of them controls more than 25 per cent of the ordinary share capital. In my budget statement, I referred specifically to the fact that the exemption of farming profit had given a spur to tax evasion and avoidance which, I indicated, I was determined to take firm action against. The exemption of farming profits encouraged certain people with other substantial income to buy farms so that they could attribute an undue amount of their income to farming activities and thereby reduce and in some cases actually cancel their tax bill. This section is intended, therefore, to curb this type of evasion. Persons with holdings of £50 valuation and under will not be affected by the section. This floor has been introduced so as to avoid bringing into the charge to tax the smaller farmer who has to supplement his farm income by working, for example, as a tradesman on his own account or as a small contractor.

Section 17 defines occupation for the purpose of the £100 valuation test and contains measures designed to counteract the fragmentation of holdings with a view to bringing them below the £100 figure and so outside the charge to tax. It provides that beneficial ownership and/or occupation of land will be the test for determining whether the £100 valuation applies rather than legal title. Where an individual's wife occupies a farm—or where a farm is beneficially owned by an individual or his wife but is occupied by any other person—the individual is deemed to be the occupier of the farm for the purposes of the £100 test. Provision is also made for apportionment of the rateable valuation, where a farm is owned or occupied by a partnership. Apportionment is also provided for in section 18 in cases where property does not consist entirely of farm land or where farm land is divided into two or more distinct occupations.

Section 19 provides for the marginal relief which I indicated in my budget speech would be provided in the case of farmers the rateable valuation of whose land only slightly exceeds £100. The section provides for the easing into the tax net of farmers who have rateable valuations of £100 and above that figure up to £119 valuation. It does so by providing for a graduated diminishing remission of the tax which would otherwise actually be payable in the particular case. At £100 valuation, only one-twentieth of the tax will be payable; at £101 two-twentieths; at £102 three-twentieths, and so on up to £119 valuation where the full tax will be payable. The extra amount of tax payable in respect of each additional £1 valuation should not exceed the notional extra income from that extra £1, namely, £40. Consequently, the section also provides for a £40 ceiling to the extra tax payable for each additional £1 valuation; that is the purpose of the proviso in the section.

The next section, section 20, provides for one of the special options I referred to earlier. In the normal way, farm profits for 1974-75 would be assessed on the basis of the profits of the preceding year. However, as this is the first year of assessment, the option of actual profits for 1974-75 is being given. As well, following my consultations with the farming organisations, I am providing—in subsection (2)—that if a person so wishes, the profits or gains of the calendar year 1974 may be taken instead.

Section 21 provides for another option which will, I think, prove particularly valuable to farmers. While tax liability would normally be based on actual profits, the alternative of a notional basis of assessment will be given for a transitional period because of the difficulties that would arise for farmers who have not kept accounts up to now. Under the national basis for 1974-75, profits are arrived at by multiplying the rateable valuation of-the farm land by forty. From that figure rates on land, depreciation of farm plant and machinery and the wages paid to farm labour can be deducted.

In response to requests from farming organisations, I am also providing that payments to contractors for work performed on a farm will be allowed as a deduction since such payments are broadly equivalent to a payment for labour and, to a certain extent, depreciation. I should point out that only these three types of deductions will be admitted in cases of assessment on the notional basis, since this notional basis of assessment by reference to a valuation-multiplier of 40 represents, as matters stand, a very favourable arrangement for farmers and there is no case for making it even more so by allowing further items to be deducted.

Section 22 provides for allowances for capital expenditure on construction of buildings and other works. It has been represented to me during the course of the consultations I have had with the various farming organisations that such an allowance should be given at a rate which would take account of the more rapid obsolescence of many modern farm buildings. I have decided that in all the circumstances an annual allowance of 10 per cent would be reasonable. I am providing accordingly. The allowance will also apply to up to one-third of the expenditure incurred on farm dwelling-houses. For the reason I have given in connection with the previous section these allowances will not be given where assessment is on the notional basis.

Section 23 is a technical provision designed to ensure that relief, under section 20 of the Finance Act, 1969, will continue where dividends are paid by a company after 6th April, 1974. either totally or partly out of farming profits which were exempt up to 5th April last.

I now come to the first of three sections that is, sections 24, 26 and 27 dealing with the treatment of farming losses.

Section 24 is designed to ensure that losses incurred in farming during the years when farming profits were exempt from tax cannot be carried forward against profits assessed for 1974-75 or any subsequent year. In other words, where loss relief is admissable against farming profits, only losses incurred in 1974-75 or subsequently will qualify. In the light in particular of a basic change in the approach to this matter of farming losses generally which is being provided for under section 26, it would clearly not be reasonable that losses incurred prior to the bringing of farm profits into tax should be allowed.

Before coming to the remaining sections dealing with farming losses, I shall deal with section 25 which provides for the apportionment of wear and tear allowances as between what would be referable to the period prior to 1974-75, on the one hand, and to 1974-75 and subsequent years, on the other. It could not reasonably be expected that depreciation referable to the period when farming profits were not taxed should now be allowed against chargeable profits.

Sections 26 and 27 are the other sections relating to losses and are essentially anti-avoidance measures. As I pointed out in my budget statement, the exemption of farming profits has encouraged tax avoidance in that these losses could be set off against other income so as to reduce or wipe out tax liability. Logically, when farming profits were exempted from income tax in 1969, the relief for farming losses should have ceased. It did not cease and the relief constituted a benefit which, together with the availability of the full appropriate personal allowances as a set off against non-farming income—this is dealt with in section 28 —made the exemption of farm profits much more valuable than a simple remission of tax. Now that there are farmers who are subject to tax it would be particularly difficult to justify providing the same loss relief for those farmers who are not suitable to tax. The Government have therefore decided that, subject to the overriding requirement contained in section 27, relief in respect of farm losses will, as from 1974-75, be allowable only in cases where the farm profits are liable to tax. Section 26 provides accordingly.

Section 27 contains an overriding restriction which will apply to the grant of farming loss relief and, as well, to losses on market gardening. As from 1974-75, the grant of such relief will be subject to the overriding condition that the holding is being run on a commercial basis and with a view to the realisation of profits. This section is designed to exclude from the loss relief so-called hobby farmers, that is, persons for whom farming is not a way of making a living but who engage in it as a pasttime.

Their main source of income is from non-farming sources and losses on farming are incurred by them—in the knowledge that these losses will be set against their non-farming income—on a scale or for a period of years that would not be accepted if the farm were being run on a commercial basis. Such hobby farmers will now be excluded from the relief as also will those who incur losses in the immediately preceding three successive years of assessment—since such recurrent losses are an indication that the farm is not being run on a commercial basis. It is necessary to include market gardening in the restriction as otherwise a hobby farmer might claim that he was not farming but engaged in market gardening.

Following my consultations with the farming organisations, I am satisfied that the measures relating to losses in sections 26 and 27 will be welcomed by the odinary farmer.

I now come to the last section, section 28, in the chapter relating to the taxation of farming profits.

I referred in my budget statement to one of the incidental, and unjustifiable, effects of the exemption of farming profits which enabled a farmer to set off the full appropriate personal allowances against the non-farming income of himself and his wife. I have already indicated that to deal with such cases, where farmers were not now being brought within the scope of income taxation, only one-half of the appropriate personal allowances would be allowed to be set off against non-farming income, whether of the farmer or of his wife, but that the restriction would apply only where the valuation of the farm was over £20. As part of the scheme there will be a sliding scale designed to graduate the tax payable by those persons whose valuations are only a few pounds over £20—this is provided for in section 28 (2) (b). Secondly, where a farmer shows that his farming income is less than one-half of the personal allowances, then the restriction will be abated accordingly.

Chapter III deals with the restriction of tax relief on loan interest. Early this year I announced that in order to curb the use of credit for speculative and tax avoidance purposes I intend to include provisions in the Finance Bill to restrict to a maximum of £2,000 a year the amount of loan interest allowed to qualify for tax relief, subject to an exclusion for bona fide business and professional borrowings. The further subsidisation by the Exchequer of vast personal borrowings for speculation, tax avoidance, betterment of one's own physical amenities or for any purpose would be unwarrantable.

The detailed provisions for the restriction of loan interest relief are contained in sections 29 to 51.

The main features are provided for in section 29, which includes a transitional provision limiting to £500 relief for the period 10th January, 1974—the date specified in my original announcement in the matter— to 5th April, 1974, the end of the tax year. Sections 30, 38 and 39 also include provisions of a transitional nature which ensure that there is no gap in relief for allowable interest and, conversely, that there will be no double allowance.

To ensure that genuine business activities will not be affected by the general restriction, sections 32 to 35 provide relief for borrowings to acquire an interest in a business in whose direction and management the borrower is actively involved.

Section 34, 36, 37 and 40 include anti-avoidance provisions which counter artificial transactions involving, for example, withdrawal from an undertaking of capital in respect of which relief has been claimed and its replacement by fresh borrowings or the spreading of interest charges between connected persons.

Sections 41 and 50 provide two consequential amendments of the present legislation to ensure the continuance of relief for business interest. Sections 46, 47 and 48 also effect consequential changes relating to co-operative societies and retirement benefit schemes.

Sections 31 and 49 effect some procedural changes concerning the payment of tax on loan interest. With certain exceptions, including bank interest, companies will be required to deduct tax on payment of annual interest. On the other hand, individuals, except in the case of foreign interest and interest payable to finance houses under "net loan" arrangements entered into before 6th April, 1974, will be required to pay interest in full, that is, without deduction of tax. Sections 42 and 44 are of a technical nature and provide for a consistent basis of assessment to tax in the case of interest affected by these changes.

Sections 43, 45 and 51 secure that interest payable by an Irish resident from income arising outside the State will be subject to the general restriction specified in section 29. Unrestricted interest relief will be available against trading and rental income which arises abroad; this will accord such income the same treatment as similar income arising within the State.

Chapter IV, comprising sections 52 to 61, is designed to counter various avoidance techniques and so prevent loss of tax. The purpose of each measure is set out clearly in the explanatory memorandum and accordingly it is not necessary for me to deal with each in detail. With the exceptions of sections 52 and 54 these matters have already been referred to in my budget statement.

Section 52 is directed against abuse of the tax reliefs which are provided in the legislation to encourage industrial exports. It has come to notice that some tax-relieved companies have given their directors and senior executives tax-free dividends in lieu of remuneration which would be subject to income taxation. The purpose of this section is to enable the Revenue Commissioners to treat the remuneration portion of such dividends as being emoluments assessable to tax. The usual rights of appeal are provided.

Section 53 is designed to counter the avoidance device which I mentioned in my budget statement by which a number of persons have avoided tax in the past by selling certificates of deposit before maturity so as to produce a capital sum instead of taxable interest. The section ensures that gains arising in these circumstances will be subject to income taxation in the ordinary way.

The purpose of section 54 is to remedy a defect in the existing law whereby a shareholder in a company who accepts additional shares in lieu of a dividend avoids the taxation leviable on the dividend. The section provides that such shares shall be regarded as income up to the value of the dividend which could have been accepted.

Sections 55 to 59 provide for the taxation of income arising from the transfer of assets abroad. I mentioned in my budget statement that tax havens abroad were being used for the avoidance of Irish taxation. The absence of legislation to deal with income arising in these tax havens has been a major deficiency in our tax code for some years and the sections mentioned are designed to ensure that individuals who are ordinarily resident in the State cannot continue to use these tax havens as a means of avoiding their fair share of tax. There is a saver for bona fide commercial transactions and the usual appeals provision is included. Section 57 will enable the Revenue Commissioners, subject to certain safeguards to respect confidential relationships between solicitors and banks and their clients, to obtain necessary information to enable these new measures to be implemented.

In my budget statement I also referred to two loopholes which have been used by property development companies to avoid tax. Section 60 counters an artificial arrangement under which some of the costs of a development could be charged against the subsequent rental income thereby reducing the proper tax liability, while section 61 remedies a flaw in earlier anti-avoidance legislation which did not fully cover development achieved by reconstruction, alteration and extension.

Chapter V, comprising section 62 to 72, provides some taxation reliefs and also effects some changes in procedures and administrative controls. With the exception of the subject matter of sections 62 to 65, the items in this chapter have not already been announced in the budget.

Section 62 provides that directors and employees who are, in effect, owners or part owners of their businesses may be admitted to membership of approved retirement benefit schemes. Sections 63, 64 and 65, which are concerned with relief for retirement annuity premiums, provide for the grant of benefits to dependants, the commutation of part of the annuity and an increase in the limits of premiums deductible for tax purposes.

Section 66 provides what is essentially a technical change to enable exports of milk products and bacon products to continue to qualify for export sales relief. The export of Irish milk and bacon products was in the past compulsorily centralised through An Bord Bainne and the Pigs and Bacon Commission, respectively. In accordance with EEC requirements these arrangements have now been replaced by voluntary arrangements, and the section will ensure that the present tax reliefs will be continued in the new circumstances.

Sections 67 to 71 provide for improved administrative and other procedures to facilitate the working of the tax system.

Under the present law taxpayers who appeal to a Circuit Court judge against decisions of the appeal commissioners must have their cases formally heard and decided upon by the judge even if, as happens in many cases, the appellant and the inspector of taxes reach agreement beforehand on the matter in dispute. Section 67 obviates the necessity for a formal hearing in such agreed cases; it should help to reduce the work-load of the Circuit Courts and of Revenue staff and will, no doubt, be welcomed also by taxpayers and their agents.

Section 68 obviates the necessity for the personal attendance by the Collector-General at District or Circuit Court proceedings for the recovery of tax.

Section 69 terminates the stamp book system of remitting PAYE tax. The arrangement was always somewhat cumbersome and there has been a marked decline in its use in recent years. Moreover, the introduction from 6th April, 1974, of the collection of pay-related social welfare contributions through the PAYE machinery has increased practical difficulties associated with this system.

Section 70 is designed to prevent difficulties which at present arise out of the failure of an employer to notify his tax office when he becomes liable to register for PAYE or when he ceases to be liable to remit PAYE tax or to be registered for PAYE purposes.

Section 71 obliges a rating authority to furnish on request to the Revenue Commissioners information relating to rates and rateable valuations. A similar requirement existed up to 1969 when farming profits became exempt from income tax. The restoration of the obligation is necessary now, not merely in connection with the taxation of farming profits, but also as a general anti-evasion measure.

Section 72, which is the last in Chapter V, deals with arrangements for allowing tax relief for marginal coal mines. The relief is on the same lines as the provision for marginally profitable mines of non-bedded minerals which was included in the Finance (Taxation of Profits of Certain Mines) Bill recently before this House.

Chapter VI provides for the further continuance, up to 31st December, 1974, of the exemption from corporation profits tax which has been accorded to building societies and certain other bodies for many years.

I now turn to Part II of the Bill which deals with customs and excise duties. These relate to a number of miscellaneous matters none of which was referred to in the budget.

Section 74 increases from 13p to 50p the exemption limit from customs duty on certain small consignments or parcels. This increase in the exemption limit which will benefit consignees is partly to take account of price increases but it is also proposed as an administrative economy as the cost of collecting small amounts exceeds the revenue collected.

Section 75 removes the spirits duty chargeable on spirits used in recognised medical preparations or for scientific purposes. The rates of duty are small and have not been increased since 1915. The cost of collection has been disproportionate to the small duty yield.

Section 76 gives officers of the Revenue Commissioners and members of the Garda authority to enter premises, other than dwellings, to take samples of oil in the tanks of vehicles, for the purpose of checking whether rebated oil is being illegally used. Access to places of business, such as marts and sandpits, is necessary for the effective administration of the rebate provision.

Section 77 increases the rate of rebate on unmanufactured tobacco where the quantity of leaf received by a licensed manufacturer in any year does not exceed 50,000 lbs. This provision is intended to assist small companies and to prevent loss of employment.

Section 78 confirms three orders made by the Government under the Imposition of Duties Act, 1957, as amended, details of which are outlined in the explanatory memorandum.

Part III of the Bill is concerned with stamp duties. The effect of sections 79 and 80 is to replace on a permanent basis the Order made last year which restricted to office blocks in the Dublin area the 15 per cent rate of stamp duty imposed by last year's Finance Act.

Section 81 which is another item not referred to in the budget, provides for the doubling of the existing rates of stamp duty on transfers of non-Irish stocks and marketable securities in line with the doubling of the duties in Britain and Northern Ireland in this year's British budget. Similar action was taken in 1947 when the UK last increased the rate. I might add that even if we did not increase our rates, Irish purchasers of British securities by virtue of our double taxation arrangement with the UK would still have to pay the new doubled rate in the UK before transfers could be registered.

Part IV of the Bill contains a number of sections of a routine nature. Section 82 is the annual provision relating to the capital services redemption account while section 83 gives effect to the repeals specified in the Second Schedule. Sections 84 and 85 are self-explanatory.

Accordingly, I commend the Bill to the House for a Second Reading.

Finance Bills are traditionally much more suited to discussion on Committee Stage than on this Stage of the reading of the Bill by the House. Nevertheless, there are a number of matters to which I wish to refer. The Finance Bill each year is substantially the implementation of the budget announcements by the Minister for Finance. The budget is economic policy, but it is merely a series of announcements. This Bill is the place where effect is being given legally to those announcements. Unfortunately, this Finance Bill, despite its considerable length and complexity for which I am not faulting the Minister because that could be said of every Finance Bill ever brought in here, is doing nothing to help an economy which is creaking at the joints.

It is not doing anything to overcome the effect of the irresponsible deficit introduced in the budget by the Minister, the effects of which are becoming daily more clear. It is doing nothing to provide more money for building societies, which appear to be without money to give loans for house purchases. It is not doing anything to remedy the gross mismanagement by the Minister of his capital budget, the details of which I have spelled out in this House on a number of occasions. It does not appear to be doing anything to encourage savings which is a vital matter for the future of our economy and to give the Minister some, even remote chance, of handling the problem with which he is faced on the capital side. It does not appear to be doing anything to improve employment prospects. There are now more than three thousand people unemployed over and above the numbers unemployed this time last year. It does not appear to be making any adequate effort to ease the burden especially on the lower income taxpayer at a time of raging inflation such as we have never before experienced and at a time when it appears that the rate of inflation in this present year could well end up at 20 per cent. The Minister may say he is providing income tax relief for taxpayers and for those in the lower income group who are paying tax. That is true but he is not providing adequately for them, as I said in the budget debate. Later I shall go into the matter in more detail.

In his speech the Minister said that the views of the National Economic and Social Council were taken into account in framing the provisions in the Bill. I think he meant that in relation to taxation of farming profits. I wonder if the advice of the council can be made available to Deputies? If not, perhaps the Minister in his reply will explain why it cannot be made available to us. I have always understood the role of the council to be that of an independent body expressing views on the economy and the steps that should be taken to improve it and their views should be made available not only to Members of this House but to the public in general. Their views can carry a great deal of weight because of the widely representative character of the council. Consequently, I should like to know if the views of the council will be made available to us and, if not, the Minister might give the reason.

I understand the council will publish their views in due course. It is a matter for the council to publish them but I understand that is their intention; in fact, the report may be with the printers at the moment.

I appreciate that information. I am sure the Minister will agree that it would have been helpful if we had them before this debate but I do not hold the Minister responsible in this matter. In the course of the budget debate I indicated I was greatly disappointed with the amount of income tax allowances the Minister proposed to provide and which are now spelled out in detail in this Bill. I also indicated that the allowances granted could reasonably have been expected, having regard to the circumstances which obtained in relation to the national pay agreement, to the refusal of the Government to make a commitment in regard to income tax allowances, although we urged that commitment on them, the Government's subsequent reversal of that posture, and the public commitment to increase income tax allowances, clearly a commitment made to improve the climate when voting was about to take place on the national pay agreement.

I put forward the view, which has not been controverted by the Minister or any of his colleagues, that in all these circumstances it was reasonable to expect at the very least that the income tax allowances would restore the taxpayer's position to what it was under the last Fianna Fáil Government. I pointed out to the Minister that he did not do so and I gave quite a number of figures which I do not propose to go over now. However, to refresh the Minister's memory, they are set out in columns 1479 and 1480 of the Official Report dated 3rd April, 1974. He will see from those figures that in many cases the allowances provided for here do not even go half way to the figure necessary to restore the position to what it was under the Fianna Fáil Government in 1972.

I gave a number of examples at the time. To the best of my knowledge, the Minister made no effort to controvert what I said. When speaking in reply to the budget debate, he made an assertion that what I said was not correct but he did not attempt in any way to spell this out with specific figures, to controvert the figures I gave him. I now invite and challenge the Minister, when replying to this stage of this debate, to controvert the figures I gave. I would remind him that in doing so it is necessary to allow for the fall in the value of money since 1972. Making allowance for that, I challenge him to show that my figures were incorrect. When I gave the figures I said they might not be absolutely accurate because they were calculated very rapidly on budget day, but I also said the Minister would find them substantially accurate and I still maintain this.

The fact that emerges quite clearly is that the income tax allowances provided for in this Bill for single men, for married men, for married men with children and for various other categories, do not go anywhere near restoring the position to what it was in 1972. I contend that at the very least those who heard the Government's commitment to increase income tax allowances were entitled to expect that. There are many people who would argue that income tax payers were entitled to expect a great deal more than restoring the position as it was under Fianna Fáil, particularly in the light of the Government's statement. However, they did not get that and I am challenging the Minister to dispute my statement that was backed up with the figures I gave.

On a number of occasions as well as today, the Minister has referred to a major reform of our taxation system. In his statement he stated that this Bill is not a panacea for all taxation imperfections. He can safely say that because no Bill could claim to be such. The Minister added that it is a real and significant step on the road to an equitable, acceptable and reformed code of taxation. Whatever view the Minister or anyone else would like to take of other measures, the fact is that this Bill is being grossly over-rated if the Minister describes it in those terms. From the taxation point of view, what does it do, apart from the usual closing of loopholes which has to be done every year, which will have to be done next year and the year after whatever Government is in office? Apart from that and apart from applying income tax to certain categories of farmers, what does it do?

The Minister would have us believe it introduces at totally new, reformed, system of income tax. But what is it? It is, I think, a direct or almost a direct copy of what was done in Britain a few years ago. I would suggest to the Minister that, if we are to copy things that happen in Britain—and there are some things we could copy— we should be very wary of trying to copy their taxation system not only because their circumstances are different but because the taxation system has a substantial bearing on the economic development of a country. Nothing that has occurred in recent years in Britain or that is likely to happen for quite a number of years to come is such as to inspire confidence that the British economy in so far it is shaped by its taxation system is a good model for us. Of course what clearly emerges from all of this is that, as far as substantial reform of the income tax system is concerned, there is no fresh thinking on the part of the Minister.

The Minister for Industry and Commerce, speaking in the budget debate, said, on a number of occasions, that the exclusion of 60,000 taxpayers from the tax net was a major reform. In the same speech he said that there had been no significant reform of the income tax system under Fianna Fáil, conveniently ignoring that in the last Fianna Fáil budget 50,000 taxpayers were taken out of the tax net. Obviously, there is a different test as to what is a major reform when done by the Coalition and when done by Fianna Fáil. As the Minister then responsible, certainly I never claimed that that was a major tax reform and I think it ridiculous to claim that such is contained in this Bill.

It is notable in this Bill, too, that the Minister has pulled back from the announcement he made in the budget in regard to having the allowances available to farmers who had non-farm income as well as farm income. His statement in the budget, and, indeed, in the accompanying table and memorandum issued to Deputies, was quite clear and unequivocal to the extent that he has pulled back from that in this Bill and provided that this will apply only in the case of valuations above £20. The credit, if credit it need be called, is due clearly to this side of the House which exposed, I may say mercilessly, the on-thinking nature of that proposal in the budget and the serious consequences which could ensue therefrom. I do not believe that the Minister has totally remedied the situation and I propose to say a little more about that in a moment. But I do think it is worth recording that what is in this Bill is not what the Minister announced in the budget. In fact, it is quite contrary to what he announced in the budget and represents a change which, I believe, was brought about by the exposure from this side of the House of what was involved in this budget proposal.

One of the major ommissions from this Bill in relation particularly to income tax allowances is that there is not built into it a provision to adjust such allowances in line with inflation, a provision on the lines on what we called for on this side of the House in our Private Members' Motion some months ago. The Minister may say that there never was any such provision inserted in a Finance Bill in our time and that is perfectly true. There was not. But I wonder does he appreciate the difference in the situation now obtaining where we have inflation running at the rate it is—I do not wish to be alarmist but I believe it is quite possible that it may turn out to be 20 per cent this year; certainly that is not an expectation that many economists would go to the stake to refute —with that kind of inflation or even if it is a little less this is a totally different situation from anything we have faced in the past. As a result, the figures, inadequate as they are at the moment, being prescribed in this Bill as allowances to taxpayers will be eaten into at such a rate that taxpayers will be worse off at the end of this year from an income tax point of view than they were at the beginning. If one could say that the end of this raging inflation was in sight and that one could hope reasonably that the graph would start sliding downwards quite quickly, then I think the Minister would be justified in resisting the proposal that such a built-in cushion against inflation in relation to income tax allowances should be inserted here. But that is not the position. I do not believe that the Minister can in all conscience tell this House that, in the relatively near future, he can see the crest of the wave of inflation.

Certainly, I cannot see it and I do not know anybody who can. I should certainly like to be able to see it but there is no point in being unrealistic about it. The chances are that for quite some time to come inflation will continue at a very high rate and we will be very fortunate if we can even hold it at what it is going to be this year.

That being so, it is a totally new situation from that with which various Governments in the past have been confronted. In those circumstances, I believe it extremely important that there should be built into this legislation a provision which would automatically adjust the income tax allowances in line with inflation. That would have a number of consequences. One, let me acknowledge it immediately, would present difficulties for the Minister and, indeed, for any Government in office in the future, that is, that it would automatically pre-empt the amount that would have to be foregone by the Exchequer in respect of income tax allowances. But it would introduce a form of discipline in budgeting which clearly this Government need and no Government would be any the worse for having.

But the strongest argument for this is that in this situation of raging inflation, double figures, equity demands that the taxpayer should have this kind of protection, not, that it is going to make an enormous difference to the taxpayer, having regard to all the effect of inflation on his cost of living but it is one area which the Government can control and on which the Government can take action to ease the effects of inflation on its citizens and, in particular, on the lower paid. It is true that if this was done it would pre-empt the amount that had to be foregone by the Exchequer out of income tax. The Minister knows as well as I do that in this raging inflationary situation the actual receipts which the Exchequer will get will almost inevitably be considerably higher than was estimated because inflation is going to be considerably higher than was estimated.

The only exception or thing that can fault that argument is that if the economy continues to creak further in the way it has been doing, then it is true that the amount of economic activity of all kinds may well reduce sufficiently to affect the income available to the Exchequer from income tax. One cannot, I am aware, on this Bill deal with this matter in any great detail but I would suggest to the Minister that even if that were to happen the indications are that inflation is going to go roaring on. That being so, there is in those circumstances an unanswerable case for the inclusion in this Bill of the provision which will have the effect of automatically adjusting income tax allowances with the movement of inflation.

I should now like to refer to section 3 subsection (2) which sets out a table giving the higher rates of income tax. That subsection reads:

Part of excess over £4,350

Higher rate

The first £2,000

50 per cent

The next £2,000

65 per cent

The remainder

80 per cent

The Minister has indicated in the context of the proposed wealth tax that the higher rates of income tax will be reduced but in this section it is proposed to apply the existing rates for 1974-75 and subsequent years. I should like to ask the Minister to indicate when does he propose to announce the new higher rates of income tax and when does he propose to implement them.

Next year.

In 1975-76?

Yes, to coincide with the introduction of the wealth tax.

In that case why does the Minister provide in section 3, subsection (1) :

Income tax shall be charged for the year 1974-75 and for each subsequent year of assessment and, subject to subsection (2), shall be so charged at the rate of 35 per cent...

The Minister will not dispute that this table sets out rates which this Bill proposes to apply for 1974-75 and subsequent years of assessment. Is that correct?

There is a good technical reason for this. This is the formula that is always used.

I appreciate that but to say the least it does appear peculiar to be providing for these higher rates for 1974-75 and for each subsequent year of assessment when the Minister has announced, outside of this House, that he proposes to reduce some of those rates.

The same thought occurred to me having been trained in the same background as the Deputy. I have been advised that it is necessary to apply this formula.

I should now like to refer the Minister to section 9 of the Bill which deals with the income tax allowance to be made in respect of insurance premiums. The effect of this proposal is that, taking account of the unified tax system provided for in other sections of the Bill, the rate at which those in the lower income groups will get relief will be reduced. In this context I am talking broadly of those earning under £3,500. With the introduction of the £1,000 limit provided in this section the effective rate at which relief will be payable for those at the higher end of the income spectrum—here I am talking about people earning over £6,000 a year—will have disimproved significantly.

In the course of some recent exchanges following on parliamentary questions the Minister maintained that everybody was going to be better off. It was in the context of questions about reductions and relief being granted for insurance premiums. The fact of the matter is that the amount of relief being granted in respect of insurance premiums is being reduced. Whether people are going to be better off or not as a result of the overall allowances proposed here is, in my view, totally irrelevant. If one assumes that no tax payer is paying insurance premiums and claiming relief, then everybody is in the same category but the fact is that some taxpayers are paying insurance premiums, are for good reasons of public policy entitled to some relief in respect of those premiums, and are going to get a smaller allowance of income tax in respect of those premiums than they did heretofore. That is the fact and I do not think the Minister will dispute it.

What we ought to do is to direct our attention to see what can be done about this because I do not accept that this is a sound approach from a public policy point of view. Before I come to that there is another aspect of this section which disturbs me considerably. I do not know if the Minister was conscious of a certain dichotomy in what he said but I would ask him to refer to his own script, on page 3 where he stated:

Furthermore, in any case where a taxpayer before budget day was paying premiums in excess of this figure, such higher figure will continue to be eligible for appropriate relief.

The Minister provides in this section that anybody who entered into contracts of insurance since 4th April of this year is going to find himself not getting the allowance he thought he would be getting. The Minister does admit that this provision, section 9, was not mentioned in his budget statement. I do not think the Minister can seriously suggest that it is right to make no announcement whatever and then to come in with a Bill at this stage which provides that this new arrangement, which is effectively a reduction in the allowance in respect of premiums, and to apply this where the contract was made before 3rd April, 1974.

The announcement of this limitation in section 9 is contained in this Bill and there was no announcement before it. It is proposed effectively to make this new reduced allowance retrospective to 3rd April and, therefore, to affect insurance policies which were entered into in good faith in the interim period by people quite in ignorance of any intention on the part of the Minister to do this. I think this is an indefensible provision and I would earnestly urge the Minister to change it.

If the position is, and I contend it is, that what is being done in this section is to reduce the income tax allowance available in respect of insurance premiums, then what the Minister is asking us to do is to approve of changes in the tax structure which will reduce the incentive for the head of a family, particularly in lower income groups, to make provision for himself and his dependants through life assurance. The lower income groups are the people who are most in need of life assurance, normally anyway, and where the greatest amount of encouragement is socially desirable. I would think that at the very least provision should be made that the first £200 of premiums are treated exceptionally. At least if this were done the incentive to protect dependants could be retained at the current level for the majority of policy holders in the lower income group. That is the very minimum I believe that should be done. I think that the provision as it stands is misguided and can have serious social consequences.

This section, in addition to what I have mentioned, also introduces a limit of £1,000 on the total amount of premiums which will be allowed to be claimed for income tax relief purposes. The introduction of this limit will certainly reduce significantly the comparative advantage of relief at the higher marginal rates. The Minister ought to consider again whether a limit in this kind of case is desirable. I certainly have some doubts about it. I think I know what he is trying to achieve by introducing the limit but I am not at all convinced that this is the way to do it, that his objective cannot be achieved in another way which will not have the effects that this provision can have. If the limit must be retained, I would suggest that there is a strong case for increasing it to £2,000. I will give two reasons for that. Firstly, if the interest on borrowed money is allowable up to £2,000, as is provided for in another part of the Bill, then surely premiums set aside to make provision for dependants and, perhaps, to make future provision for a man's family should be allowable at least to the same level as that allowable in the case of money borrowed. Another reason, I would suggest, is that the limit on interest allowable on money borrowed is quite independent, in its effects, of the age of the borrower but, in the case of life assurance, the effect of this restriction is quite different, depending on the age of the person concerned and, therefore, I would suggest is discriminatory. For example, I understand that £1,000 per annum of premium would purchase roughly £100,000 of whole life assurance if it is effected at age 25, £35,000 if effected at age 45 and only £15,000 if effected at age 65.

It must be a bad insurance company. At the 25 mark it would be about £200,000.

I do not profess to be an expert on insurance but I have these figures from people who are in the business. If the Deputy is correct in what he is saying, he is merely reinforcing the argument I am making. I thank him for that.

Proportionately on the way up again.

I am prepared to stand on the figures I have given but if Deputy Belton's figures are correct, then the case I am making is doubly made.

Proportionately on the way up again.

Would the Deputy explain to me what he means?

The Deputy presumably agrees with me at any rate that there is a substantial difference in the amount of insurance which may be purchased for the same sum of money depending on the age of the purchaser and, if he agrees with that, he will accept that the provision limiting the amount claimable to £1,000 is, therefore, discriminatory in its effect depending on the age of the taxpayer. That is the argument I am making at this point.

He is not necessarily a poor man if my figures are correct.

I do not wish to be offensive to the Deputy but his idea of a poor man might be very different from other people's ideas of a poor man. Furthermore, what is involved here is a question of equity, of trying to treat, as far as you can, taxpayers the same way. It is not always possible to do it but we should, if we can, do so. I would suggest that for a self-employed man with a family— we are not talking now about people in the kind of bracket that Deputy Belton may be more familiar with than I am but we are talking about people who, I believe, are entitled to consideration by this House.

I would refer now to section 21 (1). You will appreciate, Sir, that I am not going into this matter in detail, I am merely drawing the Minister's attention to certain points so that when he replies we can get his view and then decide whether we should or should not put down amendments for the next Stage. Section 21 (1) starts off: "Where, for the year of assessment 1974-75..." and goes on from there. I should like to know whether it is intended to allow the notional basis of assessment provided for in section 21 only for 1974-75 or for subsequent years of assessment. On the basis of what the Minister said in relation to an earlier section, it would appear that what the section means is that it is only intended to allow it for 1974-75 because, as I pointed out in the other context, there was provision for subsequent years of assessment although the Minister has publicly announced that he intends to change it and he said here today that he intends it to be changed next year.

On the face of it, it would appear that this notional basis of assessment in the case of farmers is only to apply for 1974-75. It would, however, be important for the Minister to make clear if this is his intention. In section 21 (2) it appears that the allowable deductions will be less in the case of the use by the taxpayer of the notional basis of assessment. I would not quarrel with that as an unreasonable proposition but I would like to know how the Minister arrived at what will be allowed and what will not be allowed. Would he specify the allowances which will not be given in the case of notional assessment but which will be given otherwise?

Section 25, which deals with wear and tear allowance deemed to have been made in certain cases, balancing charges and things like that, appears to treat these allowances and charges as if they were allowed when the farmer was not liable to income tax, thus apparently depriving him of the right to claim for these in respect of any year prior to 1974-75. On the other hand, the capital expenditure allowances provided for in section 22 are not allowed in respect of any expenditure incurred prior to 1974-75. On the face of it, this seems to mean that the Minister is trying to have it both ways, that where people would have been entitled to allowances in the past they are not getting them because he says: "you were not liable to tax". On the other hand, where he is creating these capital expenditure allowances for farmers, he is restricting them to 1974-75. It seems to me there is some dichotomy in approach between these two sections.

I draw the Minister's attention to the fact that if you look at sections 16 and 21 they seem to discriminate against a farmer who has another trade compared with one who is a company director. In the first case he may be earning only £100 per year but he must still pay tax if his valuation is over £50 and he cannot use the notional basis of assessment. The director of a company, on the other hand, could hold up to 25 per cent of the shares of a large company and still benefit from the £100 limit and apparently from the notional basis of assessment. It seems to me there is a strong case for amending this to provide that farmers are allowed to benefit from both of those concessions provided they do not earn more than 50 per cent of their total income from a non-farming source.

Has the Minister considered the effect of these provisions on the farm holiday industry which was developed in recent years? It has been very successful and very satisfactory from the point of view of the economy in general. Foreign and home based tourists have commented very favourably on the farm holiday scheme and on the value they have got. It appears to me that that industry could be very seriously hit by the provisions I have been referring to. I am not sure it is fair and equitable if a farmer's wife takes on a part-time job that he should lose the concession to use the notional tax basis. Farmers who are not allowed to use the notional basis for this or any other reason will be in the same position as ordinary businessmen and, therefore, have a strong case to make to be given some allowance because a large proportion of their output is exported. If they are to be treated in the same way as businessmen and industry generally some method will have to be found for actually treating them the same way, having regard to the considerable value of the export tax reliefs relating to industry.

One matter which I know is regarded by farming organisations as a very serious omission in this Bill is that rates on agricultural land cannot be completely offset against a farmer's income tax bill. It is not enough to allow rates as an expense since in the case of farmers they are such a large part of their costs. If the Minister is proclaiming that his objective is to achieve equity in the tax system he has got to go the whole hog. He simply cannot just construct a special system of income tax for farmers which, admittedly, in some aspects is favourable to them as compared with other taxpayers, but in so far as that favourable basis of assessment is not available to them they appear to be treated the same as other taxpayers. They are being treated in such a way because they are in business and are earning profits. That being so, equity requires that they should be treated the same way and be entitled to the same reliefs and allowances.

I come now to section 28, the section restricting personal allowances in the case of farm profits. First, I should like the Minister, when replying, to spell out precisely how the marginal reliefs under this section will work out. I take it on trust that they are contained in the section but on a quick reading of it they are not obvious to me. Some of the wording of this section is particularly convoluted. Perhaps the Minister would spell out how these marginal reliefs will work. In general, in regard to this section, which restricts the availability of the full personal allowances to cases where the poor law valuation of the land does not exceed £20, I think the Minister could not have picked a worse time to introduce a provision such as this.

The Minister is, I am sure, familiar with the research which has shown that the effect of having industrial employment available to small farmers is to improve considerably their performance on the agricultural side, primarily because they have some money available which they can invest in their small farms. There has been considerable research to establish that this is what happens. I am not talking about research abroad. I am talking about research in this country. This is quite clearly established. In this year which, without undue exaggeration can be described as a disastrous year for most branches of agriculture, to introduce this provision seems to me, to say the least, to be unfortunate. This year there is, more than ever, a need to help small farmers and medium farmers.

The Minister said:

Persons with holdings of £50 valuation and under will not be affected by the section. This floor has been introduced so as to avoid bringing into the charge to tax the smaller farmer who has to supplement his farm income by working, for example, as a tradesman on his own account or as a small contractor

The Minister seems to me there to have spelled out, in relation to another section admittedly, his view of where the dividing line should be drawn. That view is much more realistic than the provision of the £20 valuation limit in this section. I would urge him very strongly to consider changing that limit from £20 to £50 as indicated by the Minister in the context of another section admittedly, as the area that would cover the smaller farmer.

Apart from that amendment I want to press on the Minister the view that, having regard both to the consequences on agricultural performance of part-time or off farm employment, and to the present depressed and disastrous state of agriculture, there is an extremely strong case for postponing the whole operation of section 28, and not applying it at this extremely bad time for agriculture. I am urging that, not only in the interests of those who would be affected by it—although I think their interests require that and, perhaps, in some cases their survival as any kind of viable farmers requires that—but also in the interests of the community in general, the economy in general, and the social fabric of rural Ireland in particular.

I do not know whether the Minister appreciates how bad the situation is for smaller farmers around the country. Anything which disimproves their position in this very difficult time surely should not be done by the Minister and surely he should not be encouraged by this House to do it. I would ask him very strongly to think again about the postponement of the operation of section 28.

I come now to Chapter III dealing with the restriction of relief in respect of interest. In general I would say that the Minister's approach in this chapter has been that of using a shotgun rather than a rifle, of using a shotgun where he should have been using a rifle, with the consequence that he is shooting down targets which should never have been touched, and he is missing some targets which he was aiming at.

So far as these proposals would operate to eliminate abuse and tax evasion they have my full support. Unfortunately, they do not by any means eliminate all the abuses and, at the same time, they create quite serious problems for genuine non-speculators, if I may call them that. The whole justification for this chapter is to restrict the operations of speculators in evading income tax. The first thing I would urge on the Minister in relation to the various provisions in Chapter III is to consider that, since bridging loans for private residences are considered to be in a special category by the Central Bank, they should also receive special consideration under section 29. Secondly, I would point out to the Minister that the sudden and abrupt change in these provisions, without notice, because the provisions operate from the date of the Minister's announcement on 10th January, I think——

I think I spoke on 9th.

From the date of the Minister's announcement in January.

In accordance with best budgetary practice.

That would be all right if it were affecting only the speculators the Minister said he was trying to get at. I wonder does the Minister realise the effect of what is in this, and the lack of any advance notice for what I have called genuine non-speculators.

There are quite a number of people who have made vital personal decisions and commitments particularly in relation to house purchase. They made those commitments and decisions based on the law as it stood for 50 years. Now those people, without any notice, without any opportunity to change their arrangements—which would have been very difficult for them anyway—find themselves in the position that the financial commitments which they thought they were taking on are far greater than they budgeted for and, perhaps, far greater than they can afford.

I am sure the Minister is aware that people borrowing for house purchase the sum of approximately £14,000 and upwards can be affected by this provision because of current rates of interest and the Government-dictated restriction on loans from building societies to £7,500. That being so, this section affects very many people buying a house and not necessarily—as we all know if we know anything about the housing market—a very elaborate or showy type of house, a quite ordinary house. They are borrowing £14,000, or £15,000, or £16,000, or thereabouts, and they are being heavily penalised under this provision, a provision which the Minister says was designed to get at people who were, in effect, speculators availing of a loophole in the law to avoid the payment of income tax.

We are totally with the Minister in getting at these people in so far as they can effectively be got at. I will have one or two suggestions for the Minister as to how he might do it more effectively. Surely the Minister did not mean, when doing this, to get at people who are not speculators, who are simply buying their own homes, who do not have any great amount of capital and, in fact, may have no capital but just their incomes. Overnight these people have found that the commitments they entered into have become grossly inflated and away beyond their means. For the moment, until the Minister proves the contrary, I am giving him the benefit of the doubt and assuming that that is not what he wants to do.

He still gets the set-off in respect of the £2,000 of interest. It is only in excess of that that he would not enjoy.

Does the Minister appreciate that to borrow today, let us say, a sum of £16,000 for the purchase of a house (a) does not mean you are buying a very large house and (b) means you are going to be affected by the section? You are not going to be allowed any income tax relief on the repayment of approximately £2,000 of the £16,000. To the extent that your repayments on £16,000 exceed what they would be on £14,000 you will be allowed no income tax relief. Does the Minister appreciate that the people who enter into these commitments calculated on getting income tax relief and that not getting it can make an enormous difference to their household budget?

They are still getting it on about £14,000 and in so doing they will be getting capital acquisition at the expense of the taxpayers. If anyone gets a concession, it is at the expense of other taxpayers because the burden has to be shared by somebody else.

That may be so, but if the Minister wants to be logical on that he should abolish the limit altogether and say that no purchaser of a house should get this benefit, but he will not say that, I am sure.

(Dublin Central): Building societies allow you to borrow 2½ times your salary.

They also get concessions at the expense of the general body of tax payers. There has to be a limit drawn somewhere or else it is the extremely wealthy that get the benefit.

From the Minister's intervention I am not so sure of what I was giving him the benefit of the doubt about. I thought he did not really mean to do this; now I am beginning to think that perhaps he did.

I know what I am doing, and the wealthy know what I am doing too.

Then we may take the Minister as saying that a man who buys a house which requires him to borrow in excess of £14,000 is wealthy and is not entitled to any income tax allowance on the repayments.

In excess of £2,000.

That is his calculation——

Of interest.

——of whether a man is wealthy or not, that he would borrow at a rate that would require, say, £14,000 for a house. Does the Minister know the price of quite modest, ordinary houses in Dublin today? What kind of a house does he think he will get, for instance, for £20,000 in Dublin? Would it be a mansion? He knows very well it would not. The Minister is getting not at the wealthy speculator here; he is getting at many people who, as I say, have no capital at all, who simply have a reasonably good income. They are probably in the higher level of the middle income group but could not remotely be described as wealthy people. I thought the Minister was getting at them inadvertently, but now it appears to be deliberate, which makes it even worse.

A person with no capital would not be able to get a loan of the size the Deputy is talking about. I even go further and say he should not be able to get a loan for £20,000 unless he has shown some ability to save.

He may have been thrifty and taken out some insurance policies which he could use to get a bridging loan even, or he may have a smaller house which he is selling because his family is growing—this is the normal pattern—and he will make something on that sale, and that will be his deposit. The Minister is also getting at the unfortunate who is thrifty enough to take out an insurance policy under the earlier section to which I referred.

As I said, the failure to give any advance notice of this is a very unpleasant feature of what has happened in the context of the people I am talking about. I do not want advance notice for the people whom the Minister should really be trying to get at, but I would distinguish in these provisions between those two. He should not include in such provisions people who are trying to purchase their own homes to live in. The lack of concern for the effect of doing this without notice in the case of the kind of people I have mentioned can be contrasted with the concern shown by the Minister, in the White Paper on corporation tax issued in March, for the financial institutions and various other concerns in respect of permanent interest. There is a stark contrast between the attitude adopted towards them and the attitude adopted towards these people who in all good faith entered into commitments for the purchase of their homes and now find, by direct action of the Minister, the outgoings they will have to meet are very substantially increased.

There is a further effect of these provisions and that is that the existing British tax provisions and our own tax arrangements with Britain will greatly favour British taxpayers and encourage them to buy houses and office blocks in this country. In the case of those British taxpayers the interest charges concerned will be tax deductible, whereas in the case of the Irish taxpayer they will not. I do not accept that this is a good public policy, that this is the kind of thing we want. At the very least the Minister should undertake to close that loophole by negotiations with the British, if that is the only way to do it.

It is clear enough from the provisions that in a number of business ventures the interest on loans genuinely negotiated for business purposes will not be deductible, but it is also clear that for the operation of Shell companies and certain other speculative approaches to this problem, the people the Minister is really to get at will get full tax deductibility.

I wonder has the Minister considered the anomalies and the loopholes provided in this chapter by such things as subsidised interest on loans or benefits in kind, and various forms of return on capital other than interest. If the Minister is genuine concerned to close loopholes and make these provisions equitable and therefore generally acceptable, he will amend these provisions in the Bill to cover such things. There should not be any restrictions on interest on loans borrowed for the purchase of a principal residence, and I would ask the Minister, when replying, to indicate the case against this proposition. I can conceive of one way in which people might be able to abuse this, but I am quite certain that that loophole can be closed. However, on the general principle involved I would like the Minister to indicate his thinking. Does he believe it is right in principle to refuse income tax relief to any portion of the interest payments on loans for the purchase of a taxpayer's principal residence?

It is not being refused. There is no case of refusing it. We are not contemplating refusing to any portion below the £2,000.

Does the Minister believe it should be refused in respect of a figure over £2,000 and, if he does, what justification is there for allowing it under £2,000? There is a principle involved here. One may argue against allowing it at all and, while I do not support it, I am aware of the argu ment for it. I am asking the Minister to justify the restriction of this to £2,000 and the refusal to grant it in excess of £2,000. I shall be very interested to hear the Minister develop his views on the principle involved here.

It would appear that, in general, the provisions will favour the rental of houses rather than their purchase. I question whether this is a desirable development from the point of view of public policy. I want to see as many people as possible buying and owning their own houses. I do not know if the Minister wants that. I assume he does. Perhaps he does not. If he does not, when he is replying, he should say so but, if he does want that, is he aware that one of the effects of these provisions will be to make rental of property more attractive than purchase? This could well develop into a most undesirable trend from the point of view of public policy.

I confess I am concerned about the provisions of section 57. This section appears to contain dangerous provisions in so far as they relate to compelling the disclosure of certain information by solicitors and by banks. I know the section sets out limitations on what solicitors and banks can disclose, but I am unhappy about the provisions even with the limitations. I am unhappy not because it is necessarily unreasonable in the context in which it is provided here—apparently it is designed to enable the Revenue Commissioners to get information about property transferred abroad and trusts set up abroad, and so on, by Irish residents; in that context these provisions can be regarded as not, perhaps, being unreasonable—but I would ask the Minister to consider very seriously the possible implications of the establishment of this precedent. It could be built on. It could be built on in circumstances which would appear to justify this kind of provision but, considering this in toto, what is being done is eroding the basis of confidentiality on which a client can deal with a solicitor or a customer with a bank. The Minister knows that, if we start on that road, we will be in very serious trouble.

I am sure the Deputy would not suggest that a person should be able to escape liability by sheltering behind a solicitor or a bank. That would be an abuse. All we are providing here is an obligation to disclose the name and address of the person. After that it will be open to the Revenue Commissioners to pursue the person involved. It will not require the disclosure of confidential information.

I think it goes a little further than that. I shall deal with it in more detail on Committee Stage. I am asking the Minister to consider the principle involved. In the context of enabling the Revenue Commissioners to pursue Irish residents who have transferred property abroad or set up trusts abroad it may not be an unreasonable provision but, if such provisions are justified in this context, is it not possible that in another Finance Bill another Minister for Finance will, in another context, bring in a provision based on this as a precedent, extending it until eventually the stage is reached at which no client will be able to approach a solicitor or customer a bank without the fear that details heretofore confidential will be disclosed. If such a situation were to develop—it does not have to develop in law; all it has to do is develop in the minds of the citizens—a situation in which one cannot consult one's solicitor or deal with one's bank with absolute confidence, the consequences will be far more serious than the failure to insert these provisions in this Bill.

I do not wish to exaggerate. I do not wish to draw the long bow. I am not saying the provisions here will of themselves produce such a situation. What I am saying is that acceptance of these provisions will provide the foundation for the building up eventually of a structure which will produce the situation I have described. If such a situation should develop the consequences could be extremely serious, particularly from the point of view of the Revenue Commissioners, because people will not disclose to their banks what they are really doing or give details of their assets. In the case of solicitors they will not be prepared to give the essential confidential information to enable solicitors to advise adequately. What they will do is probably secretly transfer assets abroad—nothing to the bank, nothing to the solicitor and nothing to the Revenue Commissioners—and there will be less and less possibility of the Revenue Commissioners checking if that situation develops. I do not say that is what is provided here, but I am asking the Minister to look seriously at the possibilities. We will listen with interest to what the Minister will say and we may well have a good deal more to say on this on Committee Stage.

Finally, the Minister will remember —this is a small point—that in section 72 he is providing for the making available of a tax relief to marginal coalmines. This is an admirable provision. I want to ask the Minister one question. Does he recall not very long ago when I questioned if such a provision existed telling me that it did?

I acknowledge that I had misinterpreted my intention as being a fact. It was as good as that.

I accept that this can happen to the best of Ministers for Finance.

I had already given an assurance to some people vitally involved in this area and I thought I had already done so.

I accept that without question because, as I said, it can happen to the best of Ministers for Finance. They are the only, if I might call them, general detailed points to which I wanted to direct the Minister's attention. This is not to convey that there are not many aspects of this Bill on which we would require detailed explanations from the Minister and on which we may, unless we are satisfied with the Minister's approach, be putting down amendments.

It is impossible and undesirable at this stage to go through the whole Bill and raise every particular point of detail. I have tried to indicate some of the general principles of approach which I questioned and some of the most important matters of detail on which we think it very important that he should express his opinion clearly when replying in order to enable us to judge what line of approach we should take on Committee Stage. Subject to these various points, our attitude on the next Stage will be largely determined by what the Minister has to say when replying.

I must confess that I am not sure whether it is with disappointment or surprise that I notice there is nobody on the Government side except the Minister. I know it is only the second year for the Coalition Government but one would expect to find some interest among the 73 Deputies who sit on the Coalition benches.

I welcome some items in this Finance Bill, such as the closing of loopholes for tax avoidance, tax havens abroad, and the taxing of property developers and hobby farmers. I particularly welcome the efforts of the Minister in this area because I regard it as totally unfair that people should be able to evade tax because they are relatively well off.

I welcome the doubling of stamp duty rates on foreign share transfers which do not include the Irish Stock Exchange.

The Minister is doing that because otherwise it would go to the British Exchequer.

That is as good a reason as any.

It is a good thing to do anyway. The Minister has given sanction to directors working in businesses where they are excluded from participating in insurance policies because they hold shares.

As a businessman, I must disagree totally with what he says about the rights of farmers who will be paying tax and their right to claim on any losses. In the past 12 months farmers have had serious losses and everybody knows this. It is totally unfair that the first time these people are to be taxed, they should not be able to make some type of recoupment on at least their first year. I urge the Minister to use a little imagination here. He should approciate that he is dealing with human beings with real problems. They are not machines whose future should be decided in a backroom without consultation of any kind. Like myself, the Minister and most of his colleagues are from Dublin and may not be closely in touch with rural areas. Whether the Minister likes it or not, farming is a vital industry in this country. Therefore, I recommend that he reconsider this particular aspect of his proposals.

I find the Finance Bill fundamentally unimaginative. It does not contain anything which would encourage this community to work its way out of the economic problems which have developed during the past two years, partly due to external circumstances and partly in my opinion, to Government policy. For example, the Minister is currently working on a large deficit and inflation is now running at up to 20 per cent. What would the Minister and his colleagues be saying about this 20 per cent inflation if they were in Opposition? I am sure they would try to tear the Government apart. As a result of this inflation the increases in social welfare payments which were paid this week have disappeared.

The Minister has not shown any imagination with regard to the expected tax reliefs. Earned income relief is crucial to the expansion of our economy. The housing situation in this city is depressing. Many houses are empty and left on builders' hands because people cannot borrow money due, to a considerable extent, to the policy of the Minister and the Government. What happened to the famous target of 25,000 houses to be built this year? What way is the trade deficit which the Minister in his budget speech forecast as being of £140 million, going? How much greater will it be? In an inflationary situation it is inevitable that the trade deficit will increase. How much concern is there on the Government side about these serious matters?

In my view, the Government have not got much idea of how to handle the economy, judging by results over the past six months. What happened to the Minister's White Paper on Capital Taxation? Has it been left aside? If so, that was a wise move. If taxation is the Minister's main interest he should be directing his attention more to catching out share and land speculators, wherever they may be. He should give up his socialist ideas of putting penal taxes on energy and enterprise. I am not concerned how much tax he takes from people who can afford it. But, as a person who wants to live here, I am very concerned about the effects of disincentive which could be caused by proposals such as those contained in the White Paper.

By thinking up ideas of this kind the Minister and his colleagues do not know or have forgotten the history of this country. This nation has had centuries of a deliberate policy of underdevelopment and economic depression. Any young person who had any drive or confidence emigrated to create wealth and industry for other countries. The Government should encourage anyone with money to use it in a worthwhile way to benefit the economy and to provide employment. The taxation policy put forward earlier this year will make us dependent on foreign corporations to start industry and to provide jobs.

The Minister should realise that such a policy will not help his Labour Party colleagues whose existence in this House depends on votes from ordinary working people. This, in turn, depends on the people having jobs. If young people are forced to leave the country because we have not the industry, energy and enterprise necessary, the Labour Party will not get their votes. Taxation should be directed towards speculation and easy money. The Minister should introduce into his fiscal policy some element of imagination to encourage enterprise and the development of our economy.

(Dublin Central): The Finance Bill gives effect to proposals contained in the budget. Normally we would assume that the Finance Bill would take us forward until next year's budget but I have the impression that perhaps in the late autumn another Finance Bill will be introduced here. Many of the statements made by various Ministers, including the Minister for Finance, following the White Paper on capital taxation are not referred to here. I should like to see many of the provisions in the White Paper embodied in a Finance Bill although I object strongly to some of the proposals.

We know that prior to the last election, the Minister for Finance as well as the Ministers for Labour and Industry and Commerce, gave undertakings to the trade union movement that were not properly fulfilled. At the time of the national wage agreement, various Ministers indicated to trade unionists that the budget would contain substantial concessions. We know what was contained in the budget, and is now embodied in the Finance Bill.

The concessions given are not sufficient in the society of today. Inflation is running at the rate of 14 per cent or 15 per cent, with every possibility of it reaching 18 or 20 per cent, and the concessions granted by the Minister have long been eroded. It is no use for the Government to point out that they have given certain allowances and that these should be sufficient for the next 12 months. This would be all right in a stable economy but we have not a normal economy today. Three or four years ago we were talking about an inflationary rate of 3 or 4 per cent but this is in stark contrast to the rate prevailing now. In this morning's newspapers there was an announcement that public transport charges will be increased by 20 per cent; the small allowance given to the workers of this city will be of little help having regard to the astronomical increases in public transport costs, fuel and all types of commodities which the housewife and the worker must purchase.

As Deputy Colley stated, the budget or the Finance Bill did not take account of inflation. Whether we like it or not, something will have to be done about the income of the average worker. There must be a built-in clause providing for an annual adjustment. The small concession given by the Minister, something in the region of £51 to a single person, is of no value today when we consider the enormous increase in prices.

In his budget speech the Minister said that the increases given to single and married people meant that some 60,000 people would be outside the income tax net. I believe that on budget day this figure was correct and I am sure the Minister could contradict anyone who would deny this. However, had I asked the Minister one month or six weeks later the number of people outside the tax limit after the first phase of the national wage agreement, I am sure that quite a substantial number of the taxpayers whom the Minister claimed were outside the limit were automatically in that income tax net once again.

In the majority of cases of single persons—to my knowledge anyway and I can speak only of certain trades —the first phase of the national wage agreement meant an increase of only £2.15 to £3.00. And the single person finds he is back in the tax net. Therefore, it is frustrating on such taxpayers voting in their trade unions for the national wage agreement, voting on a promise and an undertaking given by the Minister for Finance and various other Ministers that there would be substantial tax concessions. But the taxpayer finds after a very short time that these have not materialised. I believe this has been most disappointing for the majority of taxpayers, and I am sure the Minister is as aware as I am of the frustration of the average taxpayer when he finds that his position has not improved to any great extent.

Indeed, this is a situation I find difficult to understand. Many workers take home wages on a Friday evening out of which a substantial amount of tax has been deducted. I am quite convinced that the same workers, with families, and paying substantial rents, have not sufficient money to provide the needs of their wives and families. Bearing in mind today's prices, it is quite obvious to anybody who investigates the cost of keeping a family today how frustrating and annoying it must be that a substantial amount of tax is deducted at source. One finds, with the wage packet one takes home, one has not sufficient to buy the necessities of life. This is certainly common in Dublin and I am sure throughout the country.

The Minister has not given the substantial concessions in the tax-free allowances which everybody had expected he would grant. The Minister has changed the tax system. I welcome any action taken in order to simplify the tax system and I am sure it is welcomed by the majority of taxpayers who, in my opinion, have no idea of the workings of the tax system. They have not a full knowledge of their tax-free allowances and they find it very difficult to dispute them. I think the Minister was correct to do away with the earned income relief, which was confusing and not understood by the majority of people. Any other way by which the tax system could be simplified would be welcomed also.

Perhaps the Minister could explain in his reply the relief to be granted at 26 per cent. Under the new taxation structure, the first £1,500 of taxable income is to be charged at 26 per cent. This was always the case but, in effect, we are spelling it out now. What I would like to know is if the average person is gaining by 26 per cent when he claims for his insurance policies, his bank interest and various other commitments. I should like this explained, especially with regard to the person earning £3,000 per annum who normally claimed those expenses at 35 per cent. But I believe that the man earning £3,000 per annum is losing; that he is being allowed now only 26 per cent because it is obvious that the deduction of allowances for, say, his wife and three children will bring him into the £1,500 taxable income net.

What the Deputy is arguing is that if we abolished income tax altogether, he would be losing still more because he would be getting no income tax allowance whatsoever. If you like, the arithmetic on the income tax side looks less but the person is, in fact, no worse off and everybody, in fact, has a saving on income tax.

(Dublin Central): I wish the Minister would explain it because I can foresee the man on £5,000 per annum coming into the upper bracket for relief at 35 per cent. Certainly, he will be better off than the man who falls into the £1,500 taxable income bracket. The man on £5,000 per annum can claim for his insurance policies, his bank charges and so on at 35 per cent because he will qualify for the higher rate, whereas the man with the taxable income of £1,500 will be on the losing side. I shall not dispute the fact with the Minister but I should like it explained again. I have been asked on several occasions how the person with the taxable income of £1,500 will not benefit to the same extent. If the Minister says he will benefit, I shall accept his word but I think he will not. I foresee that the man earning £5,000 per annum will still be better off because he will be able to claim his charges at the 35 per cent rate but the man on the lower figure can claim only at 26 per cent and is bound to lose on this occasion. I cannot explain it but I am sure the Minister will clarify the position.

In former years there was always mention of death duties in the Finance Bill. On this occasion I know that has been omitted completely. There is no reference to death duties. With inflation running at its present rate and with property continuing its present position, normally there would be an adjustment of the rate of death duties and succession duties. In his White Paper the Minister has promised to abolish death duties as we know them today. I welcome that decision. I think it is right and proper. But, in respect of a person who may die between now and April next and who is subject to the present rate of death duties, it will make no difference if the Minister did not bring in his Bill for the next thousand years. Some provision should be incorporated increasing the amount of concession to be given with regard to death duties in the interim period.

The Minister should give some undertaking because it is unfair that many of the widows and children of those who die in the coming months will be subject to the rate of death duty as it is at present. In line with other matters dealt with in the Finance Bill the Minister should have adjusted death duty figures to keep in line with inflation. This Finance Bill does not take account of death duties. In view of the fact that the Minister has committed himself to abolish death duties he should have made some concession in this regard in the Finance Bill. The widows and children of those who die in the next nine months will be faced with enormous problems because of the neglect of the Minister in this regard.

I am aware that these difficulties will not apply to all families because a number of forward looking people have taken out policies to offset this situation. However, there are many business people who are not alive to this fact or who are not in a financial position to take out such policies or are prevented from doing so by the state of their health. No provision has been made to assist the widows and children of such businessmen should they die in the next nine months.

If a promise had not been made to abolish death duties the situation would not have been too bad but the Minister has committed himself on this matter. On the death of the head of a household the surviving widow and children will find that his estate is subject to a substantial amount of death duty. This is a matter which is being talked about by many people but those who are doing the talking, naturally, have made provisions for such an eventuality. Those who are not aware of the position in regard to death duties, should they die before 5th April next, will leave their widows and children in a very difficult situation.

This Finance Bill does not give any encouragement for an expansion in the economy. Like all Finance Bills, it contains anti-avoidance measures which are desirable. I am convinced that no matter what Finance Bill is brought into this House it will not be perfect because there are people who appear to spend a life time trying to get around provisions of Finance Bills. In many cases they have succeeded in doing so but, nevertheless, it is the duty of this House to legislate in order to ensure that everybody pays a fair share of tax. I accept that this is a difficult thing to do.

Many business people have employed auditors for the purpose of dealing with the Revenue Commissioners but quite a number of people are unaware of the allowances they are entitled to. Last week in this House when we were discussing with the Minister for Transport and Power the granting of additional moneys to the ESB I drew attention to the huge rise in the cost of fuel and, particularly, in the cost of electricity. The ESB statements circulating at present include a fuel variation cost.

I hesitate to interrupt the Deputy but I must advise him that the Bill before the House is purely a taxation measure and does not involve Government expenditure nor is the same latitude allowed as on the budget debate.

(Dublin Central): I agree but what I am coming to has direct dealing with the Minister for Finance and the Finance Bill. I am talking about VAT being charged on the fuel variation charge in ESB bills. It is bad enough that people have to pay a fuel variation cost without having to pay VAT on that charge.

Prices would be a matter for an Estimate.

(Dublin Central): There should be no fuel variation charge.

Ireland still has the cheapest petrol and oil in Europe because I did not increase the taxes.

(Dublin Central): If the Minister told that to the people of Dublin he would be very disappointed with the reply.

That happens to be the position. The Deputy knows that the import prices did rise.

(Dublin Central): I am aware of that but it is unfair to add VAT to the fuel variation charge which means that ESB bills have risen astronomically.

Taxation should be designed so that everybody will pay equal to their income. A considerable portion of this Finance Bill deals with a new type of taxation, the imposition of tax on farmers. The Minister has stated that farmers with a valuation of £100 and over will be subject to income tax. I doubt very much if this will be very accurate or fair. I can see the situation arising where a farmer with a valuation of £90 will have a substantially higher income than a farmer with a valuation of £120. This will depend to a great extent on the person's initiative, availability of capital, what type of machinery he has and his whole outlook on life. It will be difficult for the Minister and he will find that the £100 valuation will not be very fair. I am not sure whether the Minister intends the notional figure to be for one year or whether it will be written into the Finance Bill as a permanent thing. The farmer can opt for accounts or a notional figure of 40 times his valuation. I can see a farmer complaining that he is taxed and pointing to his neighbour across the way. I am not sure that the situation will be very satisfactory.

Anybody employed in an outside trade or profession will not be allowed the £100 valuation. He will come in at a valuation of £50. I would be more concerned for people under £20 valuation. The bigger people will be able to carry their weight in this situation but we should not discourage the very small farmer who is employed in a small industry and this provision may discourage him from continuing in industry. The same would apply to farm house holidays and things like that.

Section 29 deals with a restriction on relief in respect of interest rates. The Minister made a statement in this regard earlier in the year. The maximum will be £2,000. I know the ordinary business does not come into this and this is right but the sum of £2,000 may not be sufficient. It was put to me recently that we are trying to encourage top executives to come to this country. When a person is purchasing a house, whether through a building society or through an insurance company, the figure is usually 2½ times his salary. That is regarded as what a man should spend on his home. A top executive who borrows 2½ times his salary will not get the allowance if the limit is £2,000. Such people probably fare better in England and other countries in that regard. A considerable part of this Bill deals with the avoidance of tax. The explanatory memorandum reads:

Section 57 empowers the Revenue Commissioners or an officer appointed by them to obtain by notice in writing such particulars as may be necessary for the purpose of implementing sections 55, 56 and 58. Included is a special limitation of the type of information that solicitors and banks may be required to furnish.

I did not know that solicitors were compelled to furnish information to the Revenue Commissioners. Is it a new power we are giving to the Revenue Commissioners to get all private documentation regarding my private affairs from the solicitor in question? I know that banks must supply certain information to the Revenue Commissioners but I wonder is it fair to give this power to the Revenue Commissioners. This particular section is not very specific and I am not sure whether it is only a certain type of information that solicitors or banks may be required to furnish. The Bill should be more specific. I do not believe we should give power to the Revenue Commissioners to go back and get very personal information which has been built up between a solicitor and the average businessman. I cannot see in the Bill whether there is a time limit. Can they go back and seek information regarding a person's private transactions down through the years? That section should be more specific.

I welcome the section in the Bill which makes provision whereby a self-employed person can take out a policy of an unpensionable nature. This is welcome. It is very necessary and will be more necessary as time goes on. Business people normally make provision for their retirement by accumulating a certain proportion of wealth. People working in the public service are protected by their pension rights, which are adjusted from time to time, but the normal unpensionable businessman has also to make provision for his retirement. He does that by building up a certain amount of capital or expanding his business so that when he retires he has a certain income to live on. I doubt very much, with the policy on wealth tax being pursued by this Government, that he will have any capital left when he retires.

Section 76 gives officers of the Revenue Commissioners and members of the Garda Síochána authority to enter premises, other than dwellings, to sample oil in the tanks of vehicles found there for the purpose of checking whether rebated oil is being illegally used in the vehicles. I agree that people should not be allowed get away with using rebated oil but the system of checking throughout the country is wrong. I hesitate to give officers of the Revenue Commissioners and members of the Garda Síochána permission to enter premises and inspect everything in the farmyard. They should do it on the public road. I certainly can see big problems if officers of the Revenue Commissioners enter such premises. Farmers throughout the country like their privacy and would not like to see anything like this happening. This section could be improved on. I know what the Revenue Commissioners are after and if there is an abuse it should be tightened but I am not sure the way the Minister is doing it in this section is right. We could find officers of the Revenue Commissioners descending on a farm at 12 o'clock at night and checking the tanks of lorries in a yard.

Cavan): The time is specified in the Bill. It is between 8 a.m. and 6 p.m.

(Dublin Central): I do not like this provision. I should like to know how far the Revenue Commissioners can go with solicitors and what type of information they would seek from them. Generally, there is not a lot in the Bill except, as usual, some new taxation. That is what all Finance Bills are about. None of them is perfect. We had quite a lot of criticism about this Finance Bill and I have no doubt we will hear the same criticism on many Finance Bills in the future. I find the present Bill very disappointing because of the small allowance given to income tax payers. The concessions granted by the budget have now been eroded by inflation. Almost all the 60,000 people, which the Minister stated at that time would be moved outside the income tax net, are now back in because of the first phase of the national wage agreement. The Minister should see if a built-in clause can be provided, which can be adjusted every year to give recognition to the fact that the substantial part of man's salary today is eaten up with inflation and income tax. If we had a 6 or 7 per cent inflation rate and adjustments made every year or every two years that would be all right but when we see an inflation rate of 15 per cent we find that workers are getting dissatisfied. It is not good enough to make a lot of rosy promises before a budget when we find that they amount to very little on budget day.

I believe that national wage agreements are very good for this country and we should try to encourage them. Confidence in them has been undermined by the failure of the present Government to live up to their promises as regards concessions in taxation. When we come to the next national wage agreement the congress of trade unions should be able to look back and tell their members: "We got a deal for you last April. We asked you to accept a national wage agreement and in return we promised you substantial reliefs following consultations we had with members of the Government." Will the congress of trade unions be able to tell their members that next year? That is the question we should ask ourselves. The Government should have built a solid foundation. They should have gained the confidence of the congress of trade unions but they have not and, by and large, there was disappointment throughout the trade unions.

It might be much more difficult for the Ministers of the Fianna Fáil Party to convince the congress of trade unions on the next occasion. The Government should have confidence in the trade union movement and they should have confidence in the Government. They have been misled. The Minister should have given far more substantial allowances and he should have made a commitment about a built-in escalating clause to allow for inflation. This has not been done. The average worker is totally dissatisfied. Unless the Minister can give some undertaking before the next national wage agreement comes up for negotiation, he will find it very difficult to convince the unions that he honoured the promise he made before the last national wage agreement was signed.

There is nothing in the Finance Bill to give any great encouragement to additional production. There is nothing in it to give guidelines with regard to credit. There is nothing in it to enable the Central Bank to control the credit which is available. The Central Bank give certain guidelines for the private sector as to where money should be channelled. They have done that in the past. There is very little use in the Central Bank laying down guidelines for the private sector when the very people who abuse those guidelines and completely disregard them are the Government.

On numerous occasions we have seen the Government—I know this is necessary but it is very difficult to see how you can have a good financial monetary policy with it—creating their own guidelines with regard to foreign loans, with the Central Bank saying at the same time what would be best to deflate the economy or to inflate the economy as the case might be. One of the greatest problems in regard to inflation is that of bank rates. The banks say: "We have been instructed to increase our interest rates if we are to stop the flow of money out of the country and to increase our deposit rates and we have to pass them on to increase our lending rates." The banks do not increase their deposit rates and they are not paying the high deposit rate on all their deposits, but they certainly increase their lending rates right across the board.

We know that more than half, probably three-quarters, of the deposits in the banks today are under £5,000. People with £40,000 or £50,000 very seldom leave that money on deposit in the Associated Banks. We know that there is a certain guideline laid down with regard to what interest is given on deposits under £5,000. It is much lower than the interest on deposits of £25,000 and over. If the banks have to pay the higher interest on less than half their deposits, they are paying the lower interest on more than half of their deposits, those under £5,000. That is how the poor get poorer and the rich get richer.

My point is that in their lending rates they make no distinction. All their lending rates are from about 14 per cent and upwards. It is quite obvious that the banks must make large profits since they can get that proportion of their money at a cheap rate. This all comes back to inflation. The banks have a special lending rate which is operated right throughout the private sector. Money is being negotiated over a five-year repayable period.

The Chair is very anxious that the Deputy should relate his remarks to the Finance Bill and the taxation proposals contained in it. I am afraid the Deputy has been straying for some time. The Chair was hesitant to intervene.

(Dublin Central): I was hoping that there would be some better guidelines in the Finance Bill to control inflation with regard to bank interest. I will not pursue the matter any further except to say that bank charges are definitely inflationary. If you have to pay such high rates for money, naturally it has a fundamental effect on the unit costs of production.

I hope the Government will be able to bring in some measures to curb inflation. Unless this is undertaken, many small businesses and small industries will go to the wall. There will be a complete polarisation of society and people will not be able to meet the demands made upon them. I said earlier that the Bill lacks any reference to death duties. I know the reason why. The Minister has given an undertaking to abolish death duties. It makes no difference to a man who dies between now and next April whether that Bill is ever brought in. Some interim allowances should have been made in this Finance Bill with regard to death duties.

Unless one is trained in the same school as Professor Keynes or some of our illustrious Ministers for Finance, one finds it difficult to accept that the Government in this Finance Bill are really trying to bring about an equitable taxation system. The Minister says:

This Bill is the instrument by which the Government hope to achieve one of the main aims of this year's budget, namely tax reform, with the object of ensuring greater equity in the distribution and sharing of the tax burden.

I suggest that that is a mere platitude. In fact, the Bill does nothing of the kind. It does not make for a more equitable taxation system. The Government have failed to grasp the basic problem of our whole taxation system, which is the damage to and erosion of our incomes being caused by uncontrolled inflation. At the moment I think the rate is 13 per cent and it has been suggested this may well rise to 20 per cent. Therefore, of what benefit are the increases in social welfare or the increased salaries and wages as a result of the national wage agreements? Is it any wonder that we see the unemployment figures rising and that industrial unrest is growing? This may be traced back to a sense of disillusionment on the part of the workers. When I say "workers" I mean any person who performs some task for a living.

Therefore, the Finance Bill must be examined not having regard to what it is suggested it is going to do but having regard to what each one of us who is keeping a home knows very well what is happening. As Deputy Tom Fitzpatrick said a moment ago, it may be much more difficult next time to bring about a national wage agreement because the increases have been eroded by inflation. While saying that I would still back any Government that would seek to have a national wage agreement, because whatever about their defects, the lack of one would be absolutely chaotic and people would suffer much more than they do at the moment.

Had the Government, in presenting this Finance Bill, taken the people into their confidence and said: "Because we have a rising unemployment rate and a rising inflation rate and more industrial unrest, we must examine the cause of this and decide to take bold action to counteract these evils." The Minister has done no such thing. He has uttered some platitudes in his brief here which do not stand up to examination. When this Bill is passed, as it will be, of course, the people who have been afflicted for some time past now as a result of inflation and of the uncontrolled rise in the cost of living will be no better off. Therefore, we will still have this disillusionment in every area of our living. If the Government believe that the family is the basic unit of our society, why do the Government not take courage and bring about a system whereby the family unit will be protected? In that regard I want to refer to a gem of a statement on the first page of the Minister's brief:

The Government's objective is that people with similar incomes should pay a comparable amount of tax.

That does not make sense. There could be two men with similar incomes, but one man might have more demands on that income than the man next door. If we are going for social justice we do not make that kind of surface examination here. We will study the matter carefully and ask: "What can we do to ensure that those men who are over-burdened with tax can at least be guaranteed a frugal existence for themselves and their families?"

Last week I spoke to a well-known, very successful businessman in the city, a man who has done very well under our system of free enterprise and for whom I have a certain amount of admiration. He told me, and produced some figures which would convince my untutored mind anyway, that because of Government policy money is flowing out of this country. I cannot see anything in this Finance Bill which will encourage anybody not to take his money out. I refer to the big financiers who are taking it out because they get better returns elsewhere. One does not expect any great testimony of sheer patriotism from financiers. They will invest their money where it makes the most, and I suppose this is what a free enterprise society is all about. However, it is the duty of the Government to curb these people and to ensure that the wealth produced in the country is devoted to the betterment of the people in the country. I submit that this Finance Bill will not do anything to bring about a better and more stable system of economic expansion. I defy the Minister to point out any one part of the Bill which will encourage a person to work harder or contribute more to the economic development of the nation. Furthermore there is nothing in this Bill which will reduce our unemployment figures which are up by about 2,000.

Therefore, at every stage of this Bill we must be critical, always appreciating that the Minister has a very tough task. As somebody once said : "Nobody has the wit to tax and to please." In this age we do not expect to be pleased by our taxes, but I think, one gets some pleasure from paying tax if one fully accepts the fact that what one is paying is going to help the standard of living of all the people. This Bill will not convince anyone of that. There are several places in his brief where the Minister just skims over what could be a great source of revenue. He says :

In my budget statement I also referred to two loopholes which have been used by property development companies to avoid tax. Section 60 counters an artificial arrangement under which some of the costs of a development could be charged against the subsequent rental income thereby reducing the proper tax liability, while section 61 remedies a flaw in earlier anti-avoidance legislation which did not fully cover development achieved by reconstruction, alteration and extension.

While the draftsman may be able to make sense of that, I can make very little of it. I wonder how effective it will be or what sense it will make to any man who is trying to rear a family, who has to pay his income tax, and pay taxes through VAT or whatever system we would have to replace VAT if we ever thought of doing so. I submit that this Bill is away above the heads of the vast majority of the people and does not hold out any hope of their lot being bettered as a result of the adoption of this Bill by this House and the Seanad.

Therefore, I can only register a deep sense of disappointment at the fact that having waited for longer than we have ever had to wait before for a Finance Bill, there is so little in it, notwithstanding that members of the Government have spoken at different times about their desire to bring about a new social order. It may come but certainly not as a result of the 1974 Finance Bill. I do not know if it is the duty of an Opposition to suggest ways and means whereby the Government could improve matters for the mass of the people. I agree with the Parliamentary Secretary to the Minister for Social Welfare, Deputy Cluskey, when he says there are whole areas of absolute poverty in our society, and any public representative who is doing his work must know this.

I do not suggest that I am more concerned than the Minister is for people with inadequate incomes, but the Minister has the duty to change the system. He has the opportunity. We have not got it on this side of the House. Something we advocated in previous years has been adopted by the Minister and we do not criticise him for this. The Minister mentions the 15 per cent tax on office buildings in Dublin. Some years ago a tax of 10 per cent was brought in by the Fianna Fáil Government. This has been increased now by the Minister to 15 per cent. I was hoping the Minister would be a bit more imaginative. If I had my way I would take the tax off office blocks provided these people made housing accommodation available to the extent of the tax on these office blocks. That would be a more imaginative approach. I am not against blocks per se but living accommodation must take precedence. If we can afford massive office blocks we can also afford proper housing.

Young people saving for their own homes will not find much hope in this Bill because the Minister has failed completely to bring in any real reforms of our taxation system. He has merely patched up the existing system. This is just not good enough. It may have been all right in the past but our people have now become used to being members of the European Community and they are aware of the high standard of living in these European countries. I do not suggest all these countries are lands flowing with milk and honey. In Sweden 90 per cent of the property is in the hands of private individuals; the type of socialism there, while it may seem effective in ensuring a high standard of living, is not the type of socialism we hear preached by left wing members of this House.

The Minister tried to raise hopes with some platitudes, but he certainly did not sustain them. As I said, there are no worthwhile reforms. Under the existing system of taxation an old age pensioner who draws £4 by way of pension from his former employer has 35p stopped several times during the year for income tax. Public representatives may point out the inequity of such a system, but that does not alter the system. This old man worked all his life and, in doing so, he contributed to the wealth of the nation. Now, in our generosity, we ensure that he is taxed up to the hilt. Perhaps this is due to a bookkeeping error in Revenue. If the Minister wants the details I will let him have them.

I would be glad to have them.

I will give the Minister the details. Saving incentives are vitally important but, if one were to suggest to people that they should save, one would be laughed at because of the insecurity of the State. The philosophy seems to be eat, drink and be merry today because no one knows what tomorrow may bring. This makes for instability. It is the Government's duty to show there is some virtue in and some reward for saving. Some speakers today said that inflation will rise to 20 per cent. If it does there will be absolute chaos. The country would stand for stern measures designed to curb inflation because increases in salaries, wages and pensions are no use while inflation is rampant. There is every indication that inflation will continue to rise. I admit this is a world wide problem, but the rate is something our economy cannot stand. Countries like Japan can take inflation because theirs is a strong economy.

I have no confidence in this Bill. There are very few reforms in it. It is like the Victorian reformer who thought that by not having children working at eight years of age he was himself an avant garde socialist. There is no hope here to encourage anyone to work harder and to save. There was talk about not having one law for the rich and another for the poor. I do not know what the law of the present Government is. I do not know if the wealth tax is on. I do not know if the capital gains tax is on. I was gullible enough initially to believe the Minister would bring in a wealth tax. A colleague of his said we were not going to have a wealth tax. Then we get something so watered down one could hardly describe it as a wealth tax. The only wealth was a wealth of divergent views on the Government benches. There was no indication that the Government were sincere about not having one tax for the rich and another for the poor. Wealth is, of course, relative. Some people may think themselves poor if they cannot afford a Mercedes and a big house. The vast majority who have houses and a weekly income are not too badly off.

This Finance Bill will not lighten the burden on anyone's back. As regards a more equitable system of taxation, we shall have to await another Finance Bill and another Government.

I should like to make a few brief points on this Bill. The Minister stated that the Bill deals in particular with the simplification and reform of income taxation, the provision of major income tax reliefs and the widening of the tax base to include wealthier farmers. While the Minister has decided to broaden the net, I am very disappointed he has not found it possible to be more lenient towards the people who, for such a long time, have been carrying the can where income tax is concerned. I refer in particular to those in the middle income group, whose salaries range from £2,500 to £3,000 and who find themselves worse off than they were.

The so-called reliefs do not help to relieve the burdens which this group must bear. They are not eligible for any benefits under the health services. If they want to buy or build a house they do not qualify for local government loans. They are tied down in every possible way. It is unfortunate that the Minister did not see fit to try to provide some help for the people in this category. The person on a fixed income, whose wage is clearly defined, must bear the brunt of taxation.

It is unfortunate that the Minister decided to include farmers in his net in this particular year. When one considers the hardships they had to endure and the way their profits were so drastically cut as a result of recent happenings in agriculture the Minister was unwise to cause further unrest among the farming community by putting a further burden on them by way of tax. There is hardly any need for me to go into the problems the farmer faces. We were told that this tax was being introduced because farmers were making huge profits. Anybody close to rural Ireland will realise the work a farmer must do. It is hard to know when a farmer's year starts and finishes, unlike any other business. Many farmers enjoy a better standard of living since our entry to the EEC. Nobody begrudges this to them. They slogged away over a long number of years without any real return for their labour.

I appreciate that the Minister intends to tax only the well-off farmers. It is hard to define a "well off farmer". A progressive farmer with a valuation of £50 may get a better return for his labours than a farmer with a valuation of £100. The Minister will find it hard to introduce a scheme which will be fair to everybody. I am not sure that using a man's valuation as a yardstick for tax is the best approach.

While the Minister states quite clearly that only these big farmers will be caught in the net, in a subtle way he has also caught the smaller farmers. The farmer with a low valuation may find it necessary to work in the factories in the nearest town or on a drainage scheme with the county council. In my area there are such people working in the factories in the smaller towns. They are delighted with this employment. If they got a good return from their farms they would not need to take up this type of employment in order to get a week's wages. Many of them get up at 5.30 a.m. or 6 a.m., milk nine or ten cows and then go to their day's work. When they return from their outside jobs they have another day's work ahead of them. Their working hours are extensive and any profit they make from the land is a very small bonus when the hours they work and the time they put in on this job are taken into account.

The Minister is being unfair to such a person who will be caught because he has a valuation in excess of £20. The yardstick of the £20 valuation may work against those who are trying hard and using their initiative to provide a higher standard of living for themselves and their families. There are many people in my constituency who will be seriously affected by this. Much play was made recently about an announcement that in some part of Kerry work would be organised for small farmers to ensure that they could take a job while running their farms. This has been going on in the Westport area for some time and it is nothing new to our county.

Many people will be disappointed about the Minister's decision. It will kill initiative and people will question why they should work when they are able to draw unemployment assistance or unemployment benefit. The result of the new measure will be that people will be encouraged to remain idle rather than use their initiative and do something worthwhile.

The matters I have mentioned refer specifically to my own constituency. There is very little in the Bill which one could welcome. Many slogans were used about tax reforms but when one reads the Bill it is obvious that we are following a pattern established over a number of years. I do not see anything in the Bill that will be of much benefit to the ordinary worker. When the Minister decided to make some reforms he should have tried to be more generous to the lower and middle income groups who have been carrying the can for so long.

There has been much talk about a fairer system of taxation. I wish to make it clear that, as a farmer, I am not objecting to taxing people who should be taxed. However, it is unfortunate that the tax is being imposed at a time when the confidence of the farming community is completely gone. We entered the EEC with bright hopes that at last the income of the farmer would be brought in line with that of other sections.

It is most unfair to tax people on a valuation basis. Certainly there is a case for taxing people who are earning a high income but this should be done on a different assessment system. In the last six months the income of the farmer has fallen rapidly at a time when his expenses have increased tremendously. I must be honest and say I do not see any green light at the moment. Young cattle cannot be sold except at a give-away price but the cost of feeding them has doubled or trebled. The outlook for the coming winter is gloomy if something does not happen. The market for sheep was good last year but the lamb trade has declined considerably. I am selling lambs at the moment and I know that the price now is less than that of a month ago; there has been a drop of 4p or 5p per lb. I was glad to hear the Minister for Agriculture and Fisheries say recently that pigs will shortly be making a profit. All of us know the hardships the pig producers have endured recently. The only sector that has not been adversely affected is milk but in this case production costs have risen so high that the profit has decreased considerably.

People forget many of the hardships the farmer must endure. Not many Members in this House have practical experience of farming. It is one thing to know about the industry in theory but it is a different matter to do the work, as I have done. A farmer must work a seven-day week, unlike other people who have leisure time. He cannot work a five-day week. I have said that milk is the only part of the industry that is showing a reasonable profit but a farmer will need plenty of help to engage in this side of the industry. Otherwise he is completely tied down, with no prospect of holidays or free time.

Under the EEC directives we are going to classify farmers into three categories. There will be the commercial farmer who will earn more than £1,800, which is the target set to bring him into line with other sectors. The development farmer will be brought up to the £1,800 figure but there will be hundreds of development farmers who will be over the £20 and the £50 limit. If they are over the £50 limit they will not be able to engage in the farm holiday scheme.

We are giving grants to development farmers to give them a decent standard of living but we are taxing them at the same time. With regard to the transitional farmers, there will be some with valuations in excess of £50 because of the injustices of the valuation system operating here. So far as taxing the three categories is concerned, the transitional farmers are definitely out, and it is unjust to tax the development farmers if they are to be given a reasonable standard of living.

Then you have the commercial farmer, the speculator, whom I would always wish the Minister to tax. I do not know how many of these there would be but anyway they would be in the taxable bracket. Neither the development nor the transitional farmer should be touched but both will be affected on the valuation basis. I have said this here before and I shall repeat it—there are lands along the Shannon, flooded for half the year and valued as high as £2 a statute acre in some cases. A man with 51 acres there would come into the bracket of the higher income group, of the 100 acres for taxation under this Bill.

I would ask the Minister to accept amendments to this Bill. I think it is the wrong year to introduce this taxation of the farmer. I am not objecting to the principle of any man earning a taxable income being taxed. I do not think any farmer in this country would object to that principle and, if he did, I would have no sympathy for him. But, as I have said before, we are producers in this country and we have had a very raw deal down through the years. To use an ignorant phrase, the farmer was always on the back tit anyway and suffered a lot, particularly the smaller type of farmer. I am of the opinion that the way in which the Minister is introducing this is extending the net. Many farmers with slightly over £50 valuation used to operate farmhouse holidays to supplement their incomes. They will be caught. To say that those with a valuation of under £20 will be excluded is ridiculous; we all know that the number of farmers with valuations under £20 is very few. None of them will become development farmers under the new EEC directives.

I want to emphasise to the Minister that there are two categories: one is the development farmer to whom grants will be given if they qualify, and a lot of whom will be brought within this net. In my opinion this is unfair. To say that grants will be given to people to bring them up to a certain standard of living and then tax them when they reach that level is entirely wrong. Had the Minister been thinking of farm incomes of, perhaps, last year, he would have been justified in thinking that there were certain farmers who should pay tax—and whom I always thought should pay tax—but the present outlook in farming is grim. This applies even to sheep wool. I sold some the other day at 10p per lb. less than last year, and the cost of taking off the fleece has gone up by 5p, that would amount to 80p for an 8 lb. fleece. This is the type of decrease in money return we have to accept this year which nobody seems to understand. Then this is the year found suitable to tax the farmer.

I would ask the Minister to take another look at this whole question of taxation of farmers because the future does not look healthy. I would ask the Minister not to place a further burden on them. Twelve months ago the banks and other lending institutions were generous in giving credit to people to stock land but they are tightening the belt now. If the farmer were to sell now that in respect of which he had been given credit to purchase, he would be a long way short of what he had paid the banks. The Minister said himself that the Agricultural Credit Corporation would give loans only to those who had invested with them or would give preference to such people. In the constituency I represent—and I have said this before—very few farmers have investments anywhere; whatever few shillings they have will be invested in their farms. Now somebody with money invested in the Agricultural Credit Corporation will get preference. It boils down to the fact that if one does not want money one will get it. That has always been the way.

I would make an appeal to the Minister to consider amendments to this Bill. I have not had time to study it but I could not let the occasion pass without pointing out to the Minister the serious situation in which the farming community finds itself at the moment. Just when we were hoping that our standard of living would come up to that of other sections of the community, we have this suddenly thrown at us. We have had geniuses and experts telling us what to do. I want to say quite frankly here that if ever again I hear somebody, supposed to be an expert, telling me about world conditions and prices and if I have an egg, he will not be very safe. Everything ever said about the price of this or that, or the future of this or that commodity has gone haywire. Everybody admits that, nobody can say now what way things will be in six months' time. I should not like to be the man who will say what will be the situation in a month's time but we all know the situation at the moment. I am not speaking here to make a political football out of it. World conditions have played a large part in this situation but the fact is that costs, and particularly those to the farmer, have risen astronomically. I was with a merchant the other day who said: "What am I going to do? I cannot sell a machine at all this year. People are not buying, they are not able to buy." They may have had a little capital but it has dwindled away gradually. On top of all that we are being taxed this year.

I consider the Minister is doing a grave injustice by this imposition. At least he should delete the valuation basis which is an unjust method of assessment. As I have said before— and I shall conclude on this note— there are three classes of farmers. I believe there will be very few farmers classed as commercial. But I would appeal to the Minister to exclude any man who is a developer and, of course, also the transitional farmer; no matter what "off the farm" income he may have, he needs it because he will receive very few grants now.

I would make a final appeal to the Minister and, as I have said before, I am not making a political football out of it. I would say the same thing no matter what Minister sat there, no matter to which party he belonged and I think I have proved that since I came into this House. The facts exist and we should not let them go without taking serious consideration of their effect on the farming community. I am not saying that the farming community is any better than any other section but it is an important section of the community and it is having a raw deal at the moment. Finally, I would ask the Minister to consider some amendments to this Bill as now presented to us.

I think I should commence my few remarks by contrasting budget day, the crowded galleries we had on that day and the rapt attention with which every word the Minister uttered was received, with the quietness and anti-climax here this evening because I feel that the statements made on budget day and all the promises made have to be implemented under this Bill. It gives us an impression of what the public must feel about it when we see the lack of attention here this evening, particularly the lack of support the Minister has from his own benches and a particular section of the benches remarkably bare.

We are anxious to allow the Deputy and his party off on holiday.

I am sure the farmers would need a considerable refund before they would be in a position to go on holiday this year and I think Deputy Johnny Callanan would bear me out there. When last year's budget was introduced by the Minister many people felt he was not long enough there to stamp his presence on the Department, that he had inherited certain things from the previous Administration which he could not change in a hurry and any of the shortcomings of that budget could be attributed to the previous Administration. But the Minister must stand over the last budget, he has no excuse now. The budget, and the implementation of its provisions in the Finance Bill, are the result of deliberations of the Cabinet of intellectual brilliance and individual flair. They have now produced this Finance Bill and it must stand alone before the searching footlights of public opinion.

I am glad to examine this Bill, not as a master of economics, but from the ordinary man's point of view. I will look at it from the point of view of what the Government intend doing, what they are doing to realise the expectations that everyone had of them, and what steps they are taking to reach the great goals set by this Administration to bring the horizons they pointed out to us within our grasp. This is the moment of truth for the Minister for Finance and I shall endeavour to examine the great new deal he has given the people in this Finance Bill.

The Minister mentioned that other Government speakers are anxious to go away on their holidays but I do not think the public will accept that. I fear that many of the Minister's colleagues are ashamed to be on the Government side. If they were not so ashamed they should be in this House tonight to back up the Minister. It should be essential, in order not to create a wrong impression which some hasty words of his may have created in the public mind, that the Minister for Defence, particularly, should be here to ensure that collective responsibility and collective thinking is to be seen at work in this Finance Bill.

I would like to see the members of the Labour Party in this House. I would like to see those pseudo-socialists whom many blame for pressing the Minister for Finance to bring in legislation which many consider to be political suicide for the party the Minister represents here. They should be here for the deliberations before the final wake of the Minister's party. The Minister does not seem to have received any support from the Labour Party. It appears that the Government have decided, in regard to the Finance Bill, that their Deputies will say nothing and will allow the Minister to carry the can and, like the Brazilian soccer team, adopt defensive tactics rather than attack. The glories that people saw in by-gone days are now dimmed.

I should now like to come to the question which is uppermost in my mind, the taxation of farming profits. It would appear, as far as this is concerned, that the Minister cast the first stone. I accept that the Minister was without stain but no one else has followed and he is left alone. I accept that there is a need for change when we have a situation which allows those whose income is easily assessed to be those who have had to pay tax for years. Everyone admits there was a flaw and that it had to be changed. It was unfair that those whose income was easily known and easily assessed bore the brunt of the taxation.

However, when the Minister was deciding how he was going to change this one of the thoughts which should have been uppermost in his mind was that a new taxation system should be fair. Many other provisions with regard to taxation of farming profits seem to be unfair and on that account will lead to avoidance. It is easy to salve one's conscience when one feels that the law which affects one is not fair. When one feels like that it is very easy to look for every possible means of avoiding compliance with that law.

It is a pity, seeing that the Minister announced on budget day that those with a rateable farming valuation of over £100 would now be taxed and that this would bring 9,000 people into the tax net, that Deputy Bermingham of the Labour Party, who was quoted in the newspapers as agreeing wholeheartedly with the Minister and referred to the new legislation as "good", is not here to defend the Minister tonight.

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

Before we had the break to allow those Government Deputies who were so busy packing their bags for their holidays to return to the House I was referring to the fact that on budget day when the Minister observed that his new idea of taxing farmers whose rateable valuation was over £100 would bring 9,000 farmers into the tax net my colleague on the Labour benches was carried away and remarked that this was "good". It is unfortunate that he, and other members of his pseudo-socialist party, cannot find time to come in here to defend the Minister or to speak on his behalf. Perhaps, now that the harm has been done, they are satisfied. It was a pity that the Minister, who we feel is without stain and on that account was capable of casting the first stone, did not get some backing from his fellow partymen.

We know that Deputies on that side are all under orders to keep the debate going at all costs.

There is no member of the Labour Party in the House.

We fixed the Deputy last night.

No bother; democracy out the door.

Last year there were 17 Fianna Fáil speakers at this stage and I suppose that party will be aiming to beat that record.

It is no imposition on me to come into the House to speak on this.

The Deputy was asked to speak?

Naturally. We observe a courtesy within our party not to speak out of turn. It is no imposition on me to speak on this because I promised at a meeting of farmers in Kildare, which was also attended by the other two Deputies who have the honour to represent Kildare with me, to speak on this. I am surprised that the other two Deputies have not spoken because at that meeting they expressed extreme concern over the implications of this Bill.

The Deputy was asked by his Whip to speak to keep the debate going until Deputy Haughey could find time to come in to speak.

The Parliamentary Secretary told the Deputies on his side not to speak so what is the difference?

When Kelly the Boy from Killane has spoken everybody else listens.

The Deputy should be allowed to proceed without interruption.

I am grateful for the intervention of the Chair because it would be a great help to me if I was permitted to speak without interruption. The Chair will appreciate that these interventions upset Members.

That would not have happened had Deputy Dowling not brought us all in.

I am delighted to see the Deputies on the other side, they have such pleasing faces.

That meeting was held in Lawlor's Ballroom in Naas and attended by many members of the Irish Farmers' Association. On that night also Deputy Oliver Flanagan, from the nearby constituency, graced the ballroom with his presence and gave us a long talk geared mostly towards our entry to the EEC and the pitfalls which his brother-in-law, I am sure, would be quite willing to point out to us are there. It is a pity that those people who showed such concern at home that night cannot translate that concern into action here tonight and be here to speak to the Minister. I am sure if the Minister got a certain amount of criticism from his own party colleagues, particularly those in the Labour Party who, many think, were instrumental in helping to bring in this legislation, it would be much more effective than any criticism that would come from this side of the House.

The writing is on the wall for the Taca men. Watch it.

A very good contribution.

There were many strong farmers present at that meeting. I doubt if we had any titled farmers there. There may have been some but they did not make their titles known on that occasion. We had people with double-barrelled names and people to whom the party opposite would always feel a very close allegiance. They were there that night to hear what was going to happen with regard to the future of farmers and particularly the farmers with over £100 valuation. Deputy Malone, before we concluded on that night, promised all those farmers present that he would wait until this Bill was published and the small print could be seen and that he would, with his organisation, examine the small print and the implications of this Bill very minutely, indeed, and he would go into all the details and then, in conjunction with his organisation in Kildare, he would decide how he would vote and he would vote in this House as his organisation asked him to do.

His constituents, yes.

His constituents. The organisation within his constituency. That was the promise that was made on that night.

To get back to why I think the Minister has made a mistake with regard to the taxation of farming profits, the whole concept is based on something that is unfair. I have done a little research, not very much, into how rateable valuations in Ireland were arrived at. It only needs the most cursory examination to prove to anyone that the rateable valuations in Ireland today are all wrong and that the yardstick which the Minister is using is a wrong one and, on that account, those who are subjected to heavy taxation, because of those wrong guidelines, will feel that they are being unjustly taxed and that is the core of the problem. Those who feel that the taxation that is being imposed on them is unjust will always feel that it is something to be avoided. I believe that the rateable valuations which were decided on for the different holdings in our country were arrived at in a very short period, seven or eight years. The valuers, who may not have been very well trained, did a rather arduous job quickly. They started in the south of the country and worked their way north. On that account values, based on the market value of ordinary farm produce at the time, tend to favour those in Kerry and places like that where they started and do not favour people in Donegal and the northern parts of Ireland. It may be some consolation to the people in the midlands to feel that they may have been the lucky ones but it will be poor consolation to the people in Donegal, where farms should bear a lower valuation than in the south, to feel that they are being subjected to taxes because the Minister accepted a system of valuation which is completely outmoded and outdated.

It was a lazy attitude. It was something handy to grasp at. The £100 is a fine round figure which, if it is accepted this year, can be levelled down in other years because I note that all the legislation we are discussing here is geared towards implementing the desires and the ambitions which the Minister outlined in his White Paper—a levelling down rather than a levelling up. Our party would favour a levelling up. I think we can claim to have done more than any other party to bring up the standard of living of those in the lower income bracket without having recourse to dragging anybody down if that could be helped at all. The provisions of this Bill are geared towards a levelling down rather than a levelling up. I have not examined the matter closely but——

We guessed that all right.

The Deputy's observations would be very much appreciated at a later stage. References were made to Taca people a few minutes ago. We would like to hear Deputy Belton's remarks. I am sure he would have much to contribute. We would love to hear a contribution rather than little snide remarks from time to time. I should like to know from the Minister, for the guidance of mere mortals like myself who are not well acquainted with economic matters and have not got the knowledge that a great amount of wealth imparts to people such as Deputy Belton, what will be done about those farmers who have purchased land and are paying interest at the rate of 14 per cent. In many cases the purchase of this land would have brought their valuation over the £100 and if they accept the notional value multiplied by 40, I wonder will they be allowed for this interest or is there a limit on the amount of interest which will be allowed to them?

This is something that is of great importance particularly to farmers who were hoping to increase their holdings and bring them into line with what is considered to be a viable unit in present day terms. Some of the provisions in this and the 10 per cent that is allowed for farm buildings may have the effect of holding back those who would otherwise spend very much needed money on silage layouts, milking parlours and farm improvements generally. Those provisions may have the effect of being a disincentive to farmers who should improve their holdings. Does the Minister feel that the proposals he has outlined here are geared at all towards improving a farm or will they have the effect of running down the farm? Would it not be frightful to think that in 1974 provisions were made which brought back the era of the penal days when those who improved their holdings had to pay taxes on that account? That would be very wrong and it is something the Minister should be very careful about. I would consider the £100 valuation to be unfair. I would consider the £50 valuation for the individual with another job as not being a fair guide either.

Most people will agree that our farms at the moment are in a developing stage and that farmers who for far too long were tied to a market that was geared towards cheap food— they only got an opportunity of selling their wares to the best advantage during the last few years and enjoyed one very good year in the meantime—who are now hoping to compete in Europe, are to be faced with taxation which could cripple them. We had an opportunity of giving our farmers a chance to sell their produce abroad. Previous speakers, who were all from this side of the House, which is not our fault, tried to instill into the Minister that farmers are now faced with one of the worst years they have had for a long time. I spoke to a vet yesterday and when I asked him what business was like he told me that it was very slack, that, in the case of young calves and cattle in particular, nobody bothers to send for the vet when they get sick. If they get better, well and good but the price they get for calves nowadays would not pay for the visit of the vet.

Has the Minister made provision in the Bill so that each year will not be taken separately? There is no reason to believe that the income a farmer gets in 1975 will be the same as he gets in 1974. It may be the same for those involved in milk but those who are involved in grazing, and who might sell some cattle in one year and, perhaps, none at all the following year, could find that their profits in one year would be set against those for another year.

The Minister has made provision so that the losses before 1974 will not be carried forward. Is he prepared to have a global look at this and take a five-year period as being the most acceptable when a proper balance could be arrived at between sales and profits? The losses which farmers are expected to suffer in 1974 should be offset against the profits which we hope they will make in 1975. I am sure when the beef market becomes stabilised farmers will make profits. Those who suffer losses this year will have a chance of balancing them against the profits they probably will make next year.

I welcome the remarks of the Minister regarding his scheme for anti-avoidance. We all agree that everyone should pay his share. If everybody did so the burden would be spread more equally and it would not lie too heavily on anyone. The motives the Minister has are good but I am very doubtful about the results. If the public feel that this taxation is based on something that is unjust, they will try to avoid it. They will feel it is a penal tax which is based on something unjust and they will have no compunction about avoiding it if possible.

In regard to customs and excise, the Imposition of Duties (Beer, Spirits and Tobacco) Order, 1973 provided for certain reductions in the rates of customs and excise duties on beer, spirits and tobacco. Far too much is spent on such commodities. Very shortly after the last budget announcements were made the Minister for Labour was quoted in very big headlines in the paper as saying: "We live in a lounge bar mentality in this country." I am sure Deputy Belton knows what I mean by that. Far too much is spent on drink. Our lounge bars are crowded with young people drinking. A bachelor who is out more often at night than some of the Deputies who are family men would be aware of these things. He pointed out the difficulties and the dangers of this lounge bar mentality.

It is a wonder, seeing that the Cabinet are so brilliant, that they did not put their heads together and decide that more taxation should be put on drink and tobacco. First of all, it would bring in extra money to run the country. I was foolish enough at one stage to believe that we had reached the point of diminishing returns with the taxation of beer, spirits and tobacco but I am convinced that those who want to drink and smoke are prepared to pay. If they are, they should pay more in taxes. The Minister was very remiss in not dealing with this matter. He may have felt he would lose a few votes but he should have been more mature in his attitude and put increased tax on beer, spirits and tobacco. He could have used the extra money to reduce the price of food or he could even have reduced the cost of petrol which has an overall effect on the economy and makes our goods less competitive abroad.

The Deputy must be aware that we have the cheapest petrol in Europe.

I am sure the motorists who are filling up will be glad to hear that.

The Government took VAT off food.

They put up prices.

When VAT was removed from food it had no effect so far as the ordinary housewife was concerned. Extra taxation was put on other goods. The Minister should remember that we are now faced with a frightful recession in the building trade. The people who are now trying to provide a home for themselves are faced with frightful costs pay much more in VAT on the materials going into their homes than the combined grants they get from the Government and from the county councils, if their incomes are low enough. It is no credit to any Government to charge VAT at such a high rate on a home for people which they badly need and then give them a paltry grant afterwards. I imagine that the cost of houses has gone beyond the pockets of even the Government.

The Minister could have a look at the delicate balance which must be maintained between the loans, the number of workers involved in the building trade and the materials which we were told in the Sunday papers were stockpiled all over the country and no demand for them. It would be a good thing if materials could be reduced in some way. I read two accounts about this in the Sunday papers. This is an indication to me that the supply and the demand are not balanced as delicately as they were under the Fianna Fáil administration.

So delicately that the houses could not be built.

There are those who would maintain that we fell down on the job. I maintain that the foundations for the 25,000 houses built last year were laid under the Fianna Fáil Administration. I am convinced of that. We had almost reached that target the year before.

If in a year's time they are in a position to stand up here and say that on their own as a National Coalition Government they produced the same figure, I will clap them.

This is purely a taxation measure. The Deputy's remarks would be more appropriate to an Estimate. I must ask him to confine his remarks to the Finance Bill and the taxation matters referred to in it.

What about the 25,000 houses?

The Chair cannot allow the same latitude as we had, for instance, on the budget debate on these matters.

I thank you for your sage guidance. Perhaps, I got somewhat carried away because I felt the situation demanded urgent attention from the Minister. Perhaps, the fact that I ran off the lines a little might help the Minister to decide what he could do to help in this very delicate situation.

I suggest that a new system of valuation should be decided on. I think he will agree that the old system is not just and that it should be based on something realistic. Apparently, under the present system your valuation will not be changed unless you ask to have it changed. It is so archaic and it goes back for so many years that very few will ask to have that done. The Minister should decide what can be done to improve the situation. Above all else, he should let taxation be seen to be fair. I do not think that the system devised by the Minister can be seen to be fair. If he can do anything to spread the burden more evenly more luck to him, and there will be no recriminations from this side of the House.

I feel that the Minister has been somewhat railroaded into a situation where it has been accepted by some that the wealthy should pay through the nose in order that there would be no poor people. This could be carried to an extreme. The labourer is worthy of his hire and those who are prepared to work should get a financial incentive to do so. The Minister should have a look at the question of overtime and evolve some new attitude towards it. I welcome the attitude of the Minister for Local Government that, in assessing people's rent, a certain amount of overtime can be disregarded. There is no incentive to anyone to work overtime now because the tax charges on the overtime makes it hardly worth while.

It might be no harm if Deputy Esmond were to read The Irish People of Friday 21st June in relation to Fine Gael and the capital branch in Hume Street. There is an article which proves that Taca still lives in a different form. He seems to have such an interest in Taca and he should see how the Fine Gael branch of Taca works so well.

There is a concept which has been enunciated recently that we should take from the wealthy in order to help the poor. While this is a good idea and a socialistic idea, and I suppose we should all be socialists in this respect, it could be carried to an extreme. On the night we met all those farmers in Kildare, Deputy Bermingham was anxious to say that his party and, I presume, the Coalition Parties stand for taking from the very rich to help the poor. There have been many announcements recently. There has been a push in the media. Ministers and Parliamentary Secretaries have made statements conveying that there is much poverty in the country. Percentages have been quoted. I am not too happy with the percentages quoted. Poverty is not as widespread as we are led to believe.

I hesitate again to interrupt the Deputy, but I fail to see the connection between his remarks just now and the Bill under discussion.

Do you feel, Sir, that the concept expressed in the White Paper and being implemented in this Bill of taking from the wealthy in order to assist the poor should not be discussed by me?

I would be grateful if the Deputy would relate his remarks more closely to the measure under discussion.

I will endeavour to do that. I felt I was keeping quite near to the marrow of the matter. While experts would express different views with regard to the amount of poverty in the country, I feel that very few people experience poverty apart from those who are unfortunate or those who are very lazy. While it is a very nice target to keep before one's mind, I doubt that anyone will ever succeed in eliminating poverty completely. The poor we will always have with us.

Detail in respect of poverty is a matter for an Estimate as the Deputy well knows.

It is only right that in provisions dealing with taxation, capital gains tax, and taxation of farming profits, the Minister should ensure that a wealthy person should not be able to live too easily without using his wealth properly, and having his wealth work for him, so that there will be a difference between earned and unearned income. While I would subscribe to the view that wealthy people should be made to use their wealth, I would also subscribe to the view that it should not be made too easy for lazy people to live without working. Fortunately, we have not got a welfare State to the same extent they have in England. We should be careful to ensure that there is not an incentive to people not to work at all, as Deputy Gallagher pointed out. Our taxation proposals should not be so geared that those who do not want to work can live easily.

After the budget I criticised the Minister for taking no steps to curb inflation. In the provisions of this Finance Bill I see no steps which will help to curb inflation. The Minister should have made some effort to curb rising prices. The inflation he mentioned has helped to create poverty. He and the Tanaiste should put their heads together and discuss this matter. Before the last election Deputy Corish assured everyone that there was an alternative to rising prices, and that there was an alternative to redundancies and to the crippling rates burden.

Prices are a matter for the Estimate for the Department of Industry and Commerce. That matter is not relevant on this occasion.

On a previous occasion when I attempted to use the same quotation you cut me short, too, Sir.

The Chair merely seeks to govern affairs in accordance with the measure under discussion—nothing else.

An arduous task, Sir. The people expected that the Government would make an honest effort to keep down prices. I see no provision in the wide earthly world for doing that. The Minister should realise he has a duty to keep the promises he made, the promises which placed him on that side of the House. He has a duty to do that, and he should make some attempt to do it.

The Minister could well ask himself two questions in regard to the provisions of this Finance Bill: (1) Am I getting all the money? And (2) am I raising the money in the right way? I believe that in conscience he cannot say he is doing that and that he is doing all he could do. This is the Minister's first real budget. The budget of 1973 was not a budget for which he could claim sole credit. This is the Minister's budget and I pronounce it a failure, and the people of Ireland will also pronounce it a failure when they get an opportunity of doing so.

I had no intention of intervening in this debate but I have been forced to my feet by the Member from Kildare who was defending from taxation the £100 valuation people. If I saw a man in my area with a valuation of £100. I would wonder at him being there. I come from an area where the valuation is as low as 40 pence. I am not here to defend the ranchers of the east, of the Killing Kildare plains.

What about your Galway Blazers?

They are glad to come there with their racehorses.

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

I was saying when I was interrupted by the rancher who has now disappeared, the Killing Kildares——

Members should be referred to as Deputies. No other appendage should be applied.

The Deputy decided to attack the valuation system, which is 100 years old. Of that hundred years Fianna Fáil have been in power for 30 years. What have they done in the last 30 years? Only tonight they realise there is something wrong with the valuation system that affects the ranchers in Kildare. I referred to men in the west whose valuation is 40 pence. What would they give to get into these ranches? Let the people who are complaining get out. We have men who will go in and work that land.

We took a lot of them in the Land Commission days. They were happy and they never went back.

We sent them down and they showed you how to work the land. They came down from the rocks among the gentry, and they were looked down on by you.

I defy the Deputy to produce one who was looked down on. They were received with open arms, and if the position was reversed it would be different.

Could we get back to the Finance Bill?

The Deputy is here to defend the ranchers because they are going to be squeezed. Who would Fianna Fáil squeezed? Is it the 40 pence valuation man in the west? I expect that Deputy Dowling will defend the ranchers. Coming from Dublin it will sound well, Joe.

Deputy Dowling.

The Opposition are not prepared to admit that our entry into the EEC has affected the cost of living to a degree, but let me remind the defenders of the ranchers that it was the then Taoiseach, Deputy Jack Lynch, who signed us into the EEC, membership of which has affected our cost of living here today.

This is not relevant to the measure under discussion. The Finance Bill and the taxation measures contained therein— that is what is under discussion.

With respect to the Chair, the cost of living has been bandied about for the last hour before you came in, Sir, and it was allowed. Let us get to the root cause of the cost of living. They talk about petrol. One would think we had oil wells in this country instead of holy wells.

We have oil wells.


I was forced to my feet having listened to a lot of rubbish from Kildare. The men of the west will show you how to work the land if it is given over to them. You are afraid to say a word against them for fear you would lose a few votes.

I have no fear of them, or you.

Where are your own colleagues who are not talking tonight?

You have defended——

I must ask Deputy Coogan to address his remarks to the Chair and not directly to any other Member of the House.

I had no intention of speaking tonight, but when I hear those members of the party who were shedding tears for the people of the west now talking for the ranchers— they are afraid they will be squeezed by taxation—I say to the Minister: Go to where you can get it, and you are the man that can do it.

I should like to say a few brief words on the Minister's Second Reading speech. I found it, to say the least of it, confusing having previously read the White Paper, the document condemned so vigorously by another Government Minister, the document relating to tax reforms, the tax reforms we were going to have in a short time. The Minister for Defence, Deputy Donegan, on the instructions of the Taoiseach, torpedoed the White Paper at an early stage. The country at large, having examined the proposed tax reforms the Minister for Finance was about to launch, the greatest tax reforms ever known here, now find that the Minister had modifications forced upon him by faceless individuals, possibly the same individuals addressed by the Minister for Foreign Affairs, Deputy Dr. Garret FitzGerald, when he spoke to the stockbroker belt prior to the general election and gave several indications of alterations in the tax structure and the manner in which taxes would be levied.

I should like to know if it was the present Minister, the present Government or, in fact, this group of faceless men, the stockbrokers and the bankers, who were responsible for the issue of this special document from Fine Gael explaining the changes that would take place, clearly outlined in Hibernia of Friday, 30th March. There you have the various statements made by the Minister for Foreign Affairs and it is quite clear that this influential group, as it has been described, small but influential, a group of bankers, financiers and stockbrokers, received this special document that Members of this House and even ordinary Fine Gael Deputies did not have a chance to examine. Indeed, they knew nothing whatsoever of the contents.

Was it this small but influential group who changed the Government's attitude and the Minister's mind? Was it this group of faceless people who got the assurances that certain changes would take place and other proposed changes, mooted prior to the election by the Labour Party, would not take place? They got the assurance from the Minister in relation to the attitude of the Fine Gael Party to the Labour Party. They got an assurance from the Minister that the aims of the Labour Party would not be tolerated in a Coalition Government and that Fine Gael were outlining what would take place in relation to the proposed changes. These changes, outlined prior to any budget, gave an indication of alterations in various tax structures. As we know, this was a violation of this House: information was given which could have lined pockets and possibly did line the pockets of this small but influential group of financiers, stockbrokers and bankers. Even in the first budget in which the value-added tax was a factor they got a complete insight into the changes the Government proposed to make.

On a point of order, Deputy Dowling has made an allegation that the Minister for Finance leaked information to the public before presenting this budget.

That is exactly what I said.

The budget debate has long since passed and I deem the allegation to be a political charge.

That is exactly what I said.

Deputy Dowling, the Chair is addressing you. I am anxious that you would grapple with the Finance Bill before the House and its taxation proposals. The Deputy is dealing with the past tense; I want him to deal in the present tense. I want him to deal with the Finance Bill before the House.

Proposed alteration in the tax structure as previously indicated by the Minister for Finance and, indeed, by some members of the Government, the broad question of taxation, the failure of the Government to live up to promises made previously, their backing out of their responsibilities, their being pressurised into modifying the legislation to the extent to which it has been modified, surely these are all factors with which one can deal in relation to the Finance Bill because the Finance Bill is the measure which alters taxation in a very substantial way and any Member is entitled to comment on the attitude of the Government to taxation over a period of years and not just in relation to one year or two years. It is only fair and reasonable that any Member should be able to convey his views as to the inadequacies of the present Bill, as to the provisions he feels should have been modified, the provisions which may have been modified or the provisions which should have been embodied in the Bill in a much more substantial way. In doing so, it is necessary to refer to other factors, not specifically mentioned but, nevertheless, bordering on the Bill. I mentioned one, the one about which I was questioned by Deputy Esmonde. I repeat what I said: the disclosure was made by personnel of the present Government in relation to certain matters of taxation to an influential group of people outside this House. That small but influential group were given that information and possibly lined their pockets as a result of that. If Deputy Esmonde wants to read about it, he can read about it in Hibernia of Friday, March 30th, 1973. If he wants me to quote I will quote. This was a breach of confidence of this House. That was the situation and if Deputy Esmonde reads the article he will see there was this disclosure.

I have no retainer from Hibernia.

The budget has been passed and the debate on the budget is over and done with. We cannot now have a rehash of that debate.

The Deputy is not rehashing the budget of this year but last year's budget.

The Parliamentary Secretary should not try to suppress free speech. He has suppressed his own Deputies. Why try to suppress our Deputies?

Because they are deliberately wasting Parliamentary time just as they did last year.

Do not be so irate.

Order. Deputy Dowling on the Finance Bill.

I will come back to value-added tax at a later stage.

Notice taken that 20 Members were not present; House counted and 12 Members being present.

Deputy Dowling on the Finance Bill.

And not on last year's budget.

I am amazed that the Government Chief Whip should indicate that Members of the Opposition should not speak on this important debate. I am sure the Minister for Finance would welcome the views of Members from both sides of the House. The only contribution made from the Government side today came from Deputy Coogan who spoke for three minutes. If one were to divide those three minutes into the cost to the taxpayer, one would find that it is costing the taxpayers a very substantial amount.

Did the Minister, or a faceless group of people, force the changes in this Bill? Changes were promised in the taxation system which are not now forthcoming. Why this watered down version in the present Bill? Was this modified version the result of pressures from a variety of people? The Labour Party must have been instrumental in bringing about some of these modifications. We have not had any contributions from the Labour benches. In fact, we have seen very few Labour Deputies in the House during the debate. It is an indication that they do not have any interest in the affairs of this House when they fail to make their contributions. They have not allowed us and the nation to see if they are behind the Government and whether they and the group of faceless bankers, stockbrokers and——

The Deputy is consistently repeating himself. He should endeavour to come to grips with the Finance Bill, 1974.

This and similar pieces of legislation were promised by the Government. Modifications were then made followed by a collapse. This happened with other legislation, such as that dealing with the health services which did not materialise. The Government are incompetent when it comes to dealing with affairs of State. They show their incompetence when dealing with taxation. They are faced with a very big problem. The country faces disaster. The question of relieving the burdens on certain sections of the community——

There is no problem.

Because they have brought the nation to disaster point, the Government may be looking for a way out. This is the considered opinion of many people. This watered down version is meant to appease those who may support them in the elections which may follow.

I should like to deal with the question of taxing farmers. Deputy Coogan said I would probably support the farmers and I do. At the moment the Minister is about to tax the farming community——


He proposes to tax certain sections of the farming community. I have no objection to taxing people who can pay. Let us look at this position of the farmers at the moment. The Dublin housewife will pay 14p for a head of cabbage. Does the farmer get 14p? No. The Dublin housewife must pay 8p for a lettuce. Will the producer get 8p? No. The Dublin housewife pays 17p for three pounds of potatoes. This means she pays approximately £140 a ton. Does the farmer get £140 a ton? No.

This is sour grapes.

Cucumbers cost 27p. Does the producer get this price? When one takes into account the high price which the housewife must pay for farm produce, one realises that farmers are being treated very unfairly. The Minister should ensure that they get a reasonable return for their labours.

The Deputy advocated tax on cabbages.

If that was so, the housewife——


Order, please.

——would not have this appalling bill.

The Fianna Fáil Party advocated a tax on cabbages and Deputy Briscoe agreed.

Order, please. Deputy Dowling, without interruption.

I want to make the point that the Dublin housewife is being robbed by the middleman.

That is irrelevant to the matter under debate.

I am pointing out that there is no provision in the Bill to ensure that the middlemen will be caught. It is almost impossible to get money from some of them. They work in offices, are up to their knees in carpets and merely have a book-keeping transaction which doubles or trebles the price. I am confident that the Minister will not extract 1p extra from that group. If the farmers got a reasonable return, the housewife could purchase their produce at a reasonable price.

The Deputy knows that farm prices should be discussed on an Estimate.

Surely this is a question relating——

Farm prices are not relevant to this Bill.

——to the ability of the farmer to pay. I am merely pointing out in relation to the taxation of farmers that if they got a fair price from consumers the housewives would have cheaper commodities and the Minister would have a greater amount of revenue. At the moment, there are a group of middle-men who are robbing the housewives in the city but the Minister has done nothing to tax them. These gentlemen have large offices, with carpets up to their knees, but they provide only a book-keeping transaction in regard to the produce of the farmers. They charge double or treble the price; for instance, potatoes are £140 per ton——

The Deputy is repeating himself. He knows that repetition is not in order.

I am pointing out that the situation is unrealistic. I am speaking as a Dublin Deputy——

The Deputy has made his point. The Chair would be grateful if he related his remarks to the Bill.

I am dealing with the taxation of farming profits. I want to point out to the Minister how he could get greater revenue if an effort was made to ensure that those middle-men, the people who have been robbing the public for many years, either are eliminated or are taxed on their substantial profits——

Or a special tax on a long-playing record?

If Deputy Esmonde wishes to speak I have no objection to making way for him. However, if that is his only contribution, it is a very poor one.

Will the Deputy tell us about the ranchers?

The Deputy will have an adequate opportunity of making a case if he wishes. However, I am sure he has been told by the Chief Whip not to open his mouth in case he puts his foot into it.

Tell us about the ranchers.

Deputy Coogan has fallen into the habit of referring to a Deputy on the other side of the House by his Christian name. That is not in order. Standing Orders lay down that a Member must be referred to as "Deputy". However friendly disposed the remark may have been, it is not in order.

I am afraid the Chair misunderstood me. I was talking about ranchers. I did not mention any names.

I have heard the Deputy on occasion refer to Deputy Dowling as Joe.

I was pointing out how the Minister could obtain more revenue by way of taxation while, at the same time, giving advantages to the section of the community being victimised by a group of middle-men, or fiddle men, or whatever one might like to call them. I have pointed out that in this city potatoes cost £140 per ton and it is the housewives who have to bear this burden. The Minister should arrange to have an investigation carried out into this matter.

Most of the essential items are beyond the reach of the ordinary worker's family. We know the enormous cost of meat in the shops in this city. An extraordinary situation is that when the price falls on the Dublin cattle market the price in the shops does not decrease at the same time. It may happen that even after two or three weeks when the price has fallen on the cattle market the price in the shops is not decreased but when there is an increase it is immediately passed to the consumer.

I regret having to interrupt the Deputy but what he is saying is not strictly relevant to the measure under discussion. I want him to relate his remarks precisely to the Finance Bill, 1974. As yet the Deputy has not adverted to any section of the Bill.

Chapter II of the Bill, comprising sections 13 to 28, deals with taxation of farming profits. I propose to deal with those sections——

If the Deputy intends going into detail, as seemingly he has been, it would be more appropriate to do so on Committee Stage. I think the Deputy will agree with the Chair in that regard.

Committee Stage is purely for the purpose of putting down amendments for discussion and debate. I do not want to disclose what amendments, if any, may be put forward but I wish to give the Minister some indication of the views of Deputies from the city with regard to farming profits, and to a situation whereby the Minister could obtain a greater amount of tax while giving the farmers a fair return and the housewives a reasonable cut with regard to commodities. If farming profits increase the Minister will get more revenue. Many reforms were promised but they did not materialise. Bearing in mind that the pressure groups have been at work, he may well now, on the realistic side, examine the possibility of ensuring that the promises made by the Government in relation to the cost of living—which is affected by taxation— are carried out and a reduction in food prices is effected; that food prices can in fact——

The Deputy is deviating again.

I am merely indicating that food prices can be reduced as a result of ministerial——

The Deputy may not get around it that way; he knows it is not relevant.

I want to devise a way in which the amount of taxation the Minister can reap can be increased without any undue effort, at the same volume of production, simultaneously, giving two very important sections of the community an advantage and deterring people who set out to wreck family life by putting the cost of many commodities beyond their reach I think that is a fair and reasonable argument. This is probably the only opportunity Dublin Deputies will have to illustrate the plight of the Dublin housewife, to show how her lot can be improved and, at the same time, give the Minister a greater tax return and the farmer more profit. I shall not deal with other matters, such as prices for bread, margarine, cheese or various other items which have risen beyond the reach of the ordinary housewife.

The Deputy said he was not going to deal with them.

Those are aspects with which I shall not deal now but possibly at another stage I will have an opportunity to do so in greater depth. I would ask the Minister again to consider this aspect, if he requires more finance, which I am sure he will get from this sector putting their hands deep into the purses of housewives at the moment. The whole question of pricing of commodities is affected, to some degree, by this budget. Indeed, in the future, foodstuffs may well——

The budget debate has long passed. This is the Finance Bill.

I am dealing with the question of taxation of farming profits. In order to pay taxation which formerly he had not to pay, it will be necessary for the farmer to increase his volume of production or, in order to maintain the profits he had in the past, it will be necessary for him to increase his volume of production. I want to point out that, in relation to foodstuffs essential to the life of the community, and in particular to the weaker sections, substantial efforts can be made.

While taxation does not deal with value-added tax—and one can only relate this Bill to the taxation system as a whole—we have had a variety of tax codes other than those mentioned in this Bill. Take the example of value-added tax and the promises made in the past in relation to a particular form of taxation. If we examine how false and erroneous was the information given to the public in relation to the removal of VAT from foodstuffs, we can well understand the anxiety of different sections of the community with regard to the imposition of additional taxation in other areas, such as that indicated in sections 13 to 28 and, indeed, in other sections of this Bill. They amount to a complete betrayal of promises and undertakings given. This one refers to farming; others refer to housewives.

Prior to the general election we were given the assurance that a certain system of taxation, if modified, would bring about great relief to the weaker sections of the community. However, we found that the modification of value-added tax increased the burden on those sections. We saw the situation which resulted from the alterations; the removal of tax from one item only to be placed on another brought about increases over a much wider field, giving a greater yield and for which the public had to pay. When examining any tax reform or operation, one must take into consideration the experiences of the past in relation to promises and undertakings given by Ministers with regard to taxation. It is worth recording here that the removal of VAT from foodstuffs brought about a substantial increase in the cost of living. If the Minister is as confident now that the taxation being imposed will bring a substantial return to the Exchequer which can be used for other purposes, he may well be just as far off the mark as he was on the occasion when he indicated that VAT being taken off foodstuffs would reduce the cost of living. While tax as a whole may be siphoned off to some necessary service or relief, one can well understand people being fooled into a situation by glib speakers and erroneous propaganda such as occurred prior to the last general election. When we see the realities of the situation, we know what changes in the tax structure can mean to the ordinary people and, indeed, to the depressed sections of this city. We know that the removal of tax from one item to be placed on another can mean enormous difficulties as were created on that occasion by the removal of tax from food and its placement on other essential commodities such as clothing, footwear and others too numerous to mention.

We see from experience, or possibly lack of experience, on the part of some of the Ministers in the Coalition Government that they can make statements, possibly in the belief that they can attain certain standards and bring about a reduction in the cost of living. That will not wash with us any more. We have seen the result of the removal of VAT from food and the alteration of that system, with the placement of the burden on sections of the community unable to fend for themselves, on wheelchairs and medical devices necessary for people afficted in one way or another. We have experienced the lack of thought in relation to the placement of taxation on that occasion which might well recur on this one. With the alteration in the taxation system in relation to VAT disabled people were required to pay a greater amount for such things as wheelchairs or other essential appliances. On this occasion we may well find that the alterations will not measure up to the statements made by Ministers. Indeed, when challenged some time ago about statements made during the general election, one Minister stated that the slogan and the reality were two different things. He realised that only when he came into Government. It may well be that the present Minister will realise too that the slogan and the reality are two different things.

The change in the taxation system which has brought about difficulty and created many problems for the less well off and other unassisted sections of the community in the past may well happen again. The changes were dictated by some pressure groups and I am sure that before the debate on this Bill concludes we will be able to discover the groups responsible for the various motivations which were given great prominence on the television, radio and in the media. The Minister has failed to measure up to the reality of the situation.

I hope that any alteration in the taxation system will ensure that the essential commodities of life will not be affected. I hope that these changes will not further complicate the position of those people who are in some cases hungry because of their inability to procure with their wages and meagre incomes the necessities of life. At present the aged and other less well off sections are endeavouring to ensure that they will have some warmth in the coming winter by stockpiling coal but we should bear in mind that the cost of fuel has doubled, and in some cases trebled, in recent months.

The Minister should siphon off some of the taxation which will be raised as a result of the provisions in this Bill for the relief of the poorer sections. I hope that adequate and favourable consideration will be given to those people who were conned by the statements of Ministers of the present Government. These Ministers should examine their conscience, if they have a conscience, with regard to their treatment of the poor. They should do everything possible to see that the aged do not go cold and hungry this winter and they can best do this by using the additional income which the Minister for Finance will reap as a result of the provisions in this Bill to help these people.

Deputy Barrett, in the course of a debate in this House last week, drew attention to the substantial profits being made by the oil companies as a result of recent price increases. He told the House that the profits amounted to millions of pounds. We are informed by the Minister for Finance that we have the cheapest petrol in Europe but, at the same time, the people who commute to their employment and those who must run a motor car do not earn as much as workers in other European countries. I see a lot of sense in the suggestion made by Deputy Barrett which was to the effect that some of the substantial profits made by the oil companies should be given back to the users of motor vehicles or taken by the Government for the purpose of improving the living standards of the poor. The Minister has two options in this regard.

When the Minister informed us that petrol prices here were the lowest in Europe he did not bear in mind the fact that the other countries of Europe are highly industrialised and that the wage rates are far beyond those which apply here.

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

Because the wage rates are higher in other European countries it is understandable that the price of petrol, and other commodities, should be greater in those countries than it is here. One must measure the situation in a realistic manner. One cannot examine the situation on the basis of a remark by a Minister which was to the effect that the price of petrol here is lower than in any other country in Europe. The Minister has failed to take into consideration the other important factors which I have mentioned. If this is the type of thinking behind this Bill, then I can understand the grave blunders made in the past in relation to VAT and the other promises.

If one was to examine Government policy in recent months in depth, one would find that many of the statements were erroneous. We heard a lot about the reduction that was to take place in the cost of living. We were told of the wonderful opportunities that were being offered to the people of this nation, that their way of life would be completely changed. They would have essential commodities at lower prices. The salesmen did not measure up to their promises and, indeed, one Minister stated that the slogan is different from the reality. This may well happen in relation to this Bill and indeed in relation to other Bills that have been promised. We have defective legislation being put through the House. The Government cannot find agreement among themselves to put through essential legislation or legislation which some Ministers consider essential. They are so divided that there is complete disarray within the two parties.

We hope that the reforms that are contained in the Bill will meet with success. We hope that the anti-avoidance measures will be successful. We hope the Minister will get support for the justifiable parts of the Bill. For the sections of the Bill which measure up to the ideals of all the Members of the House, I am sure he will get support but, as has been pointed out, the Bill is not all that it should be and it needs revamping before it meets with the approval of this House.

Recent wage increases have been eroded by increases in the price of the essentials of life. In many cases the workers are worse off than they were prior to the national wage agreement. One can read between the lines when one sees various trade unions warning the Government in relation to the cost of living, warning the Government that action will be taken against them by trade unions and trade unionists if they do not measure up to their promises and meet their responsibilities in full and ensure that the wage-earner is able to meet his responsibilities. I speak to many workers. I know they feel that the increases they obtained were obtained under false pretences as regards the cost of living. The Government have failed miserably to control living costs. I am sure that if the national wage agreement was re-examined a month after it was signed the results would be different. I would appeal to the Minister to ensure that the Government honour the promises made to the workers, the housewives, the weaker sections. The promises made to the ordinary workers seem to be completely forgotten. Many workers at present are unable to purchase the necessities of life. They will have another day when they can answer the Government in relation to the promises that were given prior to the national wage agreement.

They had it on the 8th June and they beat you two to one in Dublin.

The people will have an opportunity at another time to deal with national affairs. They will deal in an effective way with the people who did not keep their word, who failed miserably in their responsibilities.

I must remind the Deputy that he is going far outside the scope of the Finance Bill.

I was a bit upset by the heckling.


The people will have an opportunity——

Acting Chairman

Will the Deputy return to the Finance Bill?

——to rectify the situation. If promises were dishonoured before, they may well be dishonoured in relation to this legislation. The Government have changed their mind so many times in relation to so many factors that one must doubt every piece of legislation that goes through this House. That is the reason why the Bill must be examined——

I am glad the Deputy said reason, not reasons.

I do not know what type of phraseology Deputy Belton wants. If he wants to speak, I will make way for him but I am quite sure he does not. He has already been told by the Chief Whip not to speack. He does not want him to make a show of himself.


Deputy L'Estrange is sent in to interrupt. That is his role. He is the arch-interruptor. Before I was——

So rudely interrupted.

I was dealing with the promises made to the workers——

Acting Chairman

The Deputy must deal with taxation and the Finance Bill.

I am dealing with the entire question of taxation. There are aspects in the Bill that must be commented on and there are aspects outside the Bill that must be commented on. One cannot divorce the amendments to a taxation system from the entire system because it becomes part of the entire system.

I have mentioned some of the problems which confront the people of this city. The interruptions indicate that the Deputies opposite are in favour of Government action that would bring a about increases in the cost of living, that they see nothing wrong with these substantial increases in the cost of the necessities of life.

Acting Chairman

I must appeal to the Deputy to return to taxation and what is in the Finance Bill. The cost of living is not a subject for discussion.

I am talking about the increases which have been applied to the various essential commodities.

On a point of order, is it not a fact that VAT was removed from foodstuffs by the Minister and the Deputy is harping on that line all the time?

I am well aware that the price of foodstuffs increased before and after the removal of VAT. I am also aware that the prices of other essentials, such as clothing and footwear, have also been increased. As I pointed out, the disabled section of the community have now to pay a higher price for wheelchairs and the essentials which are necessary to keep them in moderate comfort. The Deputy should be well aware that the price of every single item, other than foodstuffs, was increased as a result of the change in VAT. The only item on which there was no alteration, as far as the tax system was concerned, was dancing. There is no doubt we have a Government of dancers.

What about the old age pensioners?

They will not go dancing so it does not affect them. Do the Government feel that the stabilisation of taxation on dancing is a contribution to the old age pensioners, the widows, the orphans, the unemployed and the people in need of the necessities of life? Is that Deputy Coogan's idea of relief to the weaker sections of the community? I dealt with petrol. Today we read of substantial changes made in the fare structure for the travelling public of this city, for the workers and the housewives.

Acting Chairman

I again must interrupt the Deputy to tell him that the fare structure does not arise on this Bill.

As the Chairman is well aware, the substantial subsidies promised to CIE by the Government——

Acting Chairman

The Deputy is now dealing with administration and it does not arise. I must appeal to him to abide by the ruling of the Chair and to refer to what is in the Bill and to taxation.

I have absolute respect for the ruling of the Chair.

Acting Chairman

The Deputy has got wide scope and he has dealt with many matters that are not in the Bill.

I want to point out that the money available to the Minister for Finance to give to various groups, such as CIE, will come from taxation.

Acting Chairman

The Deputy cannot debate in what way the money is to be spent.

Surely if one is to raise finance and to spend it——

Acting Chairman

The Deputy can refer to the spending of the money at another time.

I would like to point out that money is being obtained from the public by this Finance Bill, which will be distributed by the Minister on receipt of a variety of demands. I want to point out that one of the demands for additional finance will come from CIE.

Acting Chairman

I must again ask the Deputy to abide by the ruling of the Chair. Government expenditure is not under discussion. It is taxation.

Can one not refer to the plight of the workers and ask the Minister to ensure that money he will receive as a result of additional taxation——

Acting Chairman

The Deputy will get another opportunity to discuss that. This evening we are discussing the taxation proposals in the Finance Bill.

Before I make up my mind to vote one way or another on the Bill I want the Minister to assure me——

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

As I was pointing out in relation to voting for or against this measure I would like an indication, when the Minister is replying, about the manner in which he may or may not allocate the moneys he receives in taxation. My plea was to ensure that the section of the community I am concerned with would get——

Acting Chairman

I have told the Deputy three times already he cannot discuss expenditure. He must discuss taxation and what is in the Bill.

The grave situation which faces workers as a result of this and other taxation will create a problem that will mean additional taxation on workers, either directly or indirectly. I pointed out some ways in which reliefs could be given to the workers. Where demands come for additional taxation the opportunities are open to producers to increase costs in order to offset the taxation to some degree, to ensure a reasonable profit margin and that the workers will have fair play.

I want to ensure that the workers will get fair play in any alteration in the tax system. I pointed out before that undertakings given by Ministers cannot be trusted. We have had evidence in the past of this. Ministers promised that they would bring down prices and that they would make the lot of the workers happier. The Minister for Industry and Commerce comments upon all important measures in this House and he is noticeably absent today. The Minister for Posts and Telegraphs also makes statements on all important matters in this House. This is a very important matter. The Minister for Industry and Commerce who made so many promises and so many statements prior to the general election——

Acting Chairman

I must again remind the Deputy that he should relate his remarks to what is in the Finance Bill.

I am referring to the taxation which was to be altered. Assurances were given by Government Ministers in and out of office that they would make the lot of the worker and the housewife a happier one. They showed their complete disregard for the workers after they had enterenched themselves in office. There have been substantial increases in prices. Those men failed to come into the House today to justify their actions on this important measure dealing with tax reform. Pressures were applied on the Minister to modify the White Paper and to modify the tax reform measures which were promised on radio, television and in the newspapers. Was it the Minister for Defence who brought about this reversal? He made statements to the effect that certain measures which the Minister for Finance said were necessary and desirable would not come into effect. Has the Minister yielded to that pressure or has he yielded to pressure by the stockbroker group, the bankers and the other people——

The auctioneers.

And the publicans.

Heathens and publicans. They can be classed together. They are in the same category.

A confidential document was circulated to a small and influential group. Was it this small and influential group who changed the Minister's mind or was it the Minister for Defence? One would like to know because it is important that one should have some insight into the pressures that were applied to the Minister and into the way the Minister yielded. Normally speaking, the Minister does not yield to pressure, so some great pressure must have been applied. If the Minister for Defence could persuade the Minister to make the substantial changes which will affect a large number of the bankers and financiers and stockbrokers, fair dues to the Minister for Defence. He has done his job well.

The Minister for Foreign Affairs outlined clearly the tax reforms which would be brought about in the period of office of the Coalition Government. If we had this insight we could examine the Bill to a greater degree. We know that the division in the Government on the alteration in the tax laws is fairly widespread and that it has created problems within the Cabinet. We know that this watered-down version was meant to appease those who support the financiers, the bankers and other important people to whom the secret document was circulated. It is disastrous that we have no stability in regard to promises made by the Government. Piecemeal and defective legislation has been going through the House.

Acting Chairman

The Deputy may not refer to any other Bill.

I was just pointing out that this legislation is no different from the Bill which the Minister for Health introduced to provide free medical treatment for all our people.

Acting Chairman

The Deputy is out of order in mentioning any other Bill except the Bill before the House.

One must compare this Bill with other legislation. If we cannot take the word of the Minister, or the word of the Government, in presenting legislation, we must try to find out the reason. We have ample evidence of the bungling, the conniving and the pressures within the Government which have changed legislation at the stage where the matter has been discussed at length in this House. It may well happen that, like other Bills, this Bill may be shelved or modified, or withdrawn, if the pressure is great enough. There had to be some agreement within the Government to ensure that the Bill would be acceptable to the Coalition Parties.

We have had a two minute sprint from Deputy Coogan. That was the sole contribution from members of the Coalition Parties on this very important aspect of tax reform. The Whip must have issued precise instructions that no backbencher was to speak on this Bill. Only when they were dragged into the House were members of the Labour Party in the House. Their absence is an indication of their lack of support for this Bill. It is a clear indication of the disruption within the Government.

It is clear that the Labour Party were seeking some further changes in the tax code and that the Fine Gael section were not prepared to be diverted from the undertaking given to the influential people I mentioned. The absence of the Labour Party from the House is rather peculiar. We have not heard a socialist speech on tax reform all day. Listening to Labour spokesmen in the past one would think that this was a most important aspect.

We have not even seen a socialist.

Not since Santa Claus. Perhaps we will hear one of them before the debate concludes. We hope that at least one member of the Labour Party will listen to the discussion and inform the group so that they can analyse it. They should express their disapproval of the watered-down Bill which the Minister has presented. Undertakings were given by the socialist party, or the Labour Party, or whatever tag one wishes to apply to them—some call themselves socialists and others call themselves as members of the Labour Party. Undertakings were given to the public and statements were made by these people in relation to changes in taxation and one would have hoped that they would have been here to lend their voices to the voices of the many other Deputies who have an interest in the affairs of this country, who have an interest in tax reform and in the changes that will be taking place in taxation. The fact that the Labour Party members are not in the House but probably listening in on the intercom, is an indication of the divisions that now exist between the socialists and the conservatives on the opposite side. One wonders whether those who have failed to make a contribution from the Fine Gael Party are acting on the dictates of the Whip or whether their absence is due to disgust for the Minister for Finance. If the Labour Party members fail to measure up to their responsibilities, perhaps some member of the Fine Gael Party will make a contribution. The sole contribution from the backbenchers of the Coalition Government was made by Deputy Coogan. The Parliamentary Secretary to the Taoiseach and to the Minister for Defence indicated that the Members on this side of the House should not be speaking on this important aspect of tax reform, indicated that we are taking up too much time, while at the same time on the opposite side we have those who have been silenced by the decree of the Parliamentary Secretary.

A Deputy

Mount Mellary.

I hope that before this debate concludes some Member will get a dispensation and be allowed to speak. We have heard the moans and groans of people who were sent in here to disrupt the debate. We wonder will the Labour Party vote against the Bill with which they disagree. As I say, there was violent disagreement at the Government meetings between the socialists and conservatives in regard to this measure. Will they measure up to their responsibilities and to the promises they made to their constituents? I do not think they will. Again I would appeal to the backbenchers over there——

To both of them.

Yes, the two of them, that at least 50 per cent of the backbenchers present would speak.

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

We have failed miserably to bring the socialists into the House. We have brought plenty of capitalists in.

Acting Chairman

Would Deputy Dowling refer to what is in the Bill?

I would like to draw attention to the complete lack of interest of one of the parties that form the Government.

Acting Chairman

The Deputy is repeating himself. Would he return to what is in the Bill?

Their failure to come into the House is an indication of their disregard for the——

Acting Chairman

The Deputy is completely disregarding the Chair. Would he return to what is in the Bill?


They were not allowed to speak before. Now they can interrupt. It is rather remarkable that one cannot comment on the composition of the House in relation to the debate, to inquire whether all Members of the House are fully behind the aims and the provisions of this Bill. I have quite a lot to say, but if one is to be denied the right to comment upon this aspect of the matter, to comment on the fact that a socialist has not appeared here for quite a long time, then it is time to conclude. I hope, when the Minister is replying, he will cover the various points I and other speakers have made. There is no doubt the Government, in relation to promises——

Acting Chairman

Again, the Deputy is going out of order.

I appear to be out of order all the time. If the Chair does not rule me out of order I am ruled out of order by the backbenchers on the other side of the House.

This Bill, in the light of the Minister's unfulfilled promises, is the worst failure since the Famine. I hope the Minister will reply to the various points made so that we can further study the effects the Bill will have on the community at large.

In conclusion, in the light of the appeals made on behalf of the housewives of this city, caught in the upward spiral of inflation——

Acting Chairman

The Deputy is repeating what he said earlier and repetition is disorderly. If he is concluding, will he please conclude on what is in the Bill before the House?

Sections 13 to 28, inclusive, deal with the taxation of farming profits. I just want to point out that the housewife of this city can get relief at the same time as the farmer gains some advantage if the middleman is cut out. I ask the Minister to ensure that any taxation that is imposed will in no way affect the weaker sections of the community. I have already commented on bus fares. I trust the Minister will deal with all the points made when he is replying.

When one sees a bulky Bill of this nature, comprising 85 sections divided into six chapters, plus two schedules, one anticipates that in such a measure there is ample food for thought, sufficient certainly to stimulate a member of the Government or some members of the Government parties speaking to some effect on the measure. Up to now we have had only a two-minute streak, apart from the Minister's introductory speech. In regard to a reform of taxation, the Minister said:

It must be realised, however, that a thorough reform of any system of taxation is a complex and prolonged exercise. Nevertheless, the fact that perfection cannot be achieved in one move is no reason why we should not make an effort to make some advance in the right direction.

I would have welcomed this afternoon and evening some comment from backbenchers in the Government parties to show us we are going in the right direction, but there were no signposts. They preferred to remain mute. Apart from being silenced by the Parliamentary Secretary to the Taoiseach, perhaps they, too, are tired of this kind of comment.

Again, the Minister said:

The Government's objective is that people with similar incomes should pay a comparable amount of tax. There will be one law for all, not one for the rich and another for the poor.

The people are tired of this kind of comment. What they want is action, action long overdue in a seriously declining economic situation. Inflation at the moment is running at 20 per cent. Under a Fianna Fáil Government it was only 8 to 9 per cent. Since the Coalition Government took office we have had inflation at the rate of 1 per cent per month. Coupled with that is the fact that between February, 1973, and May of this year the value of the £ fell by 17p. The Minister says that, while perfection cannot be achieved, we are going in the right direction.

Government Ministers blame the international situation and world trends for this raging inflation and high prices. To ensure I keep within the rules of order, the Minister in his speech referred to other countries and their enlightened taxation codes. I wish he and his colleagues in the Government would have a look at what other countries are doing to stem the tide of inflation. France has introduced certain remedial measures. So have the United Kingdom and Italy. Last week Italy imposed some very heavy taxation. If remedial measures were introduced here we could say the country was moving in the right direction once more.

While the Government did not increase taxation they did negotiate a credit facility of £83 million for capital expansion. Elementary arithmetic shows this represents a £27 overdraft for every man, woman and child in the State. Surely that is fuel to the inflationary fire.

Would the Minister now like to re-assess his trade deficit forecast of £140 million last April? Perhaps he will adjust that forecast in the light of experience. I will not hazard a guess at the actual extent of our trade deficit. The Minister has available to him all the expertise of an efficient Civil Service and I hope he will in the due course give us an up-to-date forecast. Surely this figure of £140 million has now gone by the board.

Debate adjourned.