Amendment No. 7 in the name of Deputy Colley has been ruled out of order. Amendments Nos. 8 and 10 in the name of Deputy O'Malley are cognate and may be taken together.
Private Members' Business. - Finance Bill, 1975: Report Stage (Resumed) and Final Stages.
I move amendment No. 8:
In pages 36 and 37, paragraph (1), Part I, Fourth Schedule, to delete "one thousand pounds" in each place where it occurs and substitute "two thousand pounds".
The effect of the two amendments is to increase the exemption limit in respect of stamp duty on very small sales from £1,000 to £2,000. The £1,000 limit was fixed in 1973 and since then there has been a very considerable drop in the value of money and, because of inflation, the price of most types of property has increased, not in real terms but in paper money terms. If £1,000 was regarded as a reasonable figure in 1973, £2,000 should be regarded as a reasonable figure now.
The amendments I put down to some extent arise from an amendment I put down on Committee Stage when I sought to extend the exemption on small sales to an exemption on small lettings also. While the Minister agreed with my reasoning on that occasion and with the principle of what I sought to achieve, he told the House the Revenue Commissioners used the stamping of tenancy agreements and similar documents to obtain information for the purpose of charging income tax. He said this was a good way of getting information that they might not be in a position to obtain otherwise. I do not know if the same reasoning is supposed to apply to what I propose in relation to outright sales. I trust it is not. There are not very many sales of property other than plots for the building of a house where the consideration would be less than £2,000. Plots for house building would mainly be exempted here. It would be some small contribution towards lowering the costs for people who are endeavouring to build their own houses if this amendment were accepted.
The figure I have suggested is reasonable and, for the most part, it would cover the sales of plots but not anything else. I do not think any type of house would be sold for less than £2,000. Part of the reason involved in the introduction of this exemption in 1973 was that it was doubtful whether it was economic for the Revenue Commissioners to collect the very small amounts involved in these small sales. I think the same reasoning applies today. The rate of duty between £1,000 and £2,000 is only ½ per cent. The duty on £1,100 would be £5.50 which is not a figure that will enrich the Revenue Commissioners in any way.
I do not think the principle the Minister enunciated on Committee Stage with regard to tenancy agreements and his refusal then to exempt agreements, even for very small amounts where the duty was as low as 5p, 10p or 15p, would apply here. There is no income accruing to anyone from the sale of small pieces of property for less than £2,000 and, therefore, the question of checking up on their income tax would not arise. For these reasons I would ask the Minister to accept my amendments.
As the Deputy pointed out, the amount of stamp duty in these cases is very small. It is only one-half of 1 per cent and, therefore, it cannot be said it imposes a hardship on anyone involved in the transaction. The ceiling of £1,000 was fixed in the Finance Bill, 1973—only two years ago. Having regard to the fact that inflation has not doubled in two years and that property values have tended to fall in the last year, I do not consider any change in the ceiling would be warranted at this stage.
I should like to support Deputy O'Malley's amendment. I heard the Minister argue in regard to this matter on Committee Stage. Having regard to all the circumstances and the relatively small amount of duty involved, he should accept this amendment. If I understood the Minister correctly, he made the case that the amount of duty was not very great and, therefore, he said there was not any hardship. However, when he argued such matters before, he abolished duty where it was not great because the cost to the Exchequer of collecting the small amount of duty exceeded the return to the Exchequer. In most cases that principle is a sound one and I suggest the Minister could apply it here. As he pointed out, in 1973 he applied the exemption to amounts up to £1,000. I thought the Minister might give us some information as to how much the yield would be on transactions between £1,000 and £2,000 and, correspondingly, what the cost of collection of that would be but he did not appear to give that kind of information. Naturally, we do not have that kind of information available. It is true, as the Minister said, that inflation has not gone up by 100 per cent in the interval. Nevertheless, it is almost certain that if the cost of collection up to 1973 exceeded the revenue on transactions of up to £1,000, it is more than likely that the cost of collection on transactions between £1,000 and £2,000 now, having regard to the inflation which has occured since, does exceed the revenue.
In these circumstances, I would have thought that the Minister would have thought it a good idea to accept Deputy O'Malley's amendment. I am surprised he has not done so and surprised that, if he is justified in not doing so, he did not give us figures to show that he is so justified in refusing to accept the amendment. I would be surprised if his brief did not contain those figures. If his brief did contain those figures and he did not give them, then one assumes that they may not have suited his case and that he had some other reason for not accepting it. Owing to the rules of order, the Minister cannot tell us now I suppose whether he has such figures or not although I imagine the House would not object if the Minister wanted to intervene briefly just to give that information. It would help us in our approach to this amendment if we knew the estimated revenue and the estimated cost of collection in regard to the transactions between £1,000 and £2,000.
I anticipated that the Minister would just reject the amendment out of hand without giving any valid reason for so doing. He pointed out that because the duty involved was small it would not cause any hardship. Of course, when he created an exemption limit of £1,000 the duty involved was even smaller and created even less hardship so I do not see the force of that argument.
It seems to me foolish that the Revenue Commissioners would have to retain machinery for collecting these small sums of duty which hardly seem worth the cost of collecting. I would have thought that the Minister would have been prepared to accept this amendment. He did not make any reference to the Revenue Commissioners using this as a means of obtaining information. I do not suppose it arises on these kinds of sales because, even if stamp duty is not payable on them, provided they are not registered land with an unredeemed annuity, the stamp has to be affixed in any event to the deed even though it is free of duty and in that way the Revenue Commissioners will get the information they require in relation to the transaction even though no stamp duty is payable.
I do not think the Minister's argument that these duties create no hardship is a valid one because the duties which were abolished in 1973 created even less hardship. I regret that the Minister has adopted the approach he has and I would ask him, even at this stage, to change his mind. I do not think he will lose the Exchequer any large sum of money. As Deputy Colley said, it was rather a pity that the Minister did not give us the figures in relation to the deeds which would fall into this category. They cannot be very significant either in number or in the duty that would potentially be collected on them. We would be in a better position to form a judgment if we had that information. I understand the Revenue Commissioners keep a very accurate set of statistics in relation to deeds which they stamp, about the consideration, the number of deeds and the various other details which would be of value to us on this occasion, which are readily available but which, unfortunately, the House has not been given.
Question: "That the words proposed to be deleted stand" put and declared carried.
Amendments Nos. 9 and 11 are cognate and may be discussed together.
I move amendment No. 9:
In page 38, paragraph (8), Part I, Fourth Schedule, to delete "£2.00" and substitute "£1.50".
The effect of this amendment would be to reduce the stamp duty on transactions between £20,000 and £50,000 from 4 per cent to 3 per cent which it was before the recent budget. Since the 1st March last the duty has been raised under some order which was made subsequent to the budget from 3 to 4 per cent in respect of transactions falling within this bracket. It was also raised in relation to transactions in excess of £50,000 from 5 to 6 per cent but I have no amendment in relation to that because I am less concerned about the properties involved there and the considerations are such that it will probably cause less difficulty to the individuals involved and who are liable for the payment of duty.
I want to point out to the House that nowadays all but the smallest of farms would make £20,000 and most businesses, if they are of any signifinance, would make £20,000 on sale. Very little land which a builder might buy in order to build houses on it for people could be bought for less than £20,000 unless it was a very small quantity for just a few houses. Therefore, a huge volume of transactions by quite small people are caught by this unwarranted increase which was introduced in the budget. I cannot believe that the Government are justified in once again increasing the direct cost for people who are trying to acquire a farm or business or land for the purpose of building houses.
Costs are being increased and here, again, we have a perfect example of the Government contributing deliberately and directly to and creating inflation. The amount of money that the State might get from the individuals concerned by this increase would be fairly sizeable. Overall, I do not know what it would be because, unfortunately, we do not get estimates from the Minister for Finance in relation to most of the changes in taxation. Even in respect of the most major new taxes we are fobbed off with the excuse that, basically, he does not know the amounts involved. Perhaps he does not know.
Perhaps the state of the country is such that it is impossible to estimate as accurately as one could have done in the past what will be the net effect of various taxation changes. We were not given this information in relation to the last pair of amendments I had tabled and I can only assume that we will not get the information in relation to these two amendments either. Therefore, it is difficult to know precisely how much is involved overall but for the individuals concerned there is a significant amount added to their costs. The Minister may argue that in some cases the figure may be only £100, £150 or £200 but all the bits and pieces add up. It is this kind of unnecessary action by the Government that is forcing up prices of what are, for the most part, productive assets, that is forcing up costs on those who are trying to produce goods from those productive assets and all of this is adding continuously to inflation.
This is a comparatively minor example of it, perhaps, speaking comparatively, a very minor example. We have seen this attitude in relation to such matters as health and social welfare contributions, both by employer and employee, in relation to the with-drawal of various subsidies, to the enormous increases in postal and telephone charges and in many other matters of this kind where the Government are pushing up the costs deliberately of goods and services that are part of the everyday economic life of the country.
In this instance moderately-sized farms and businesses are costing more to buy because more duty is being levied on them. It is the purchaser, who, perhaps, is already short of money, who is called on to pay on these occasions. The Minister may argue that because the increase is no more than 33? per cent on the existing tax, by present day standards of this Government, the increase is comparatively moderate. However, it is an increase that will mean several hundred pounds extra on the purchase price of a moderately small farm or business.
If this House is serious in its dislike of inflation and if it recognises the dreadful damage that inflation is causing to our economy, this amendment should be accepted regardless of whether the Minister agrees with it if only to make some kind of gesture that is within our power in trying to keep down inflation and costs for people who are trying to produce goods for the betterment of the country.
If the Opposition are serious about wanting to reduce Government expenditure, they should stop demanding daily additional public expenditure. The way to cut public expenditure is to refrain from demanding it. When somebody asks the Government to spend more money, the Opposition should tell them that it is not right to make such requests but they never do that except when it comes to taxation. Then, they say: "Forget all the demands we are making on you to spend more money; simply reduce taxation." Deputy O'Malley was in Government long enough to know that that kind of trick cannot be performed. The cost to the Exchequer of accepting the amendment would be £500,000. As I announced in the budget, the increase was imposed to raise additional taxation to provide additional revenue for necessary purposes. The consequences of foregoing this revenue would be that the State would not be in a position to expend the money on the necessary services which the Opposition are demanding so generously. In fairness to the Opposition, who wish for increased Government expenditure all the time except when they are dealing with the Finance Bill, I am sorry but I am not able to join in their contradictory demands.
It is interesting to hear the Minister on this topic. I have heard some of his colleagues on the same topic during the past few years. What is interesting about it is that to them either you increase Government expenditure and you increase taxation or you do not increase taxation and you do not increase Government expenditure. It is not as simple as that. The real problem is that the Minister for Finance, primarily and before any other Minister, is charged with the responsibility of so arranging Government expenditure as to ensure that it does not entail enormous increases in taxation. I will not say this is a science. It is an art at which the present Minister is singularly inept. It never seems to occur to him that another course open to him and a duty that rests on him as Minister is to examine all items of Government expenditure and, where it is appropriate, to prune them. This does not mean to cut back radically in such a way that there is the kind of problem we have now whereby secondary schools are about to come to a halt. It means a proper balance of expenditure with revenue.
This Minister has proved himself to be inept in what he has just said— he has underlined this—in dealing with this kind of problem. That kind of thinking on his part makes one realise the reasons for the enormous increases we have had in all kinds of taxation and in matters under the control of the Government and as referred to by Deputy O'Malley.
The latest figures available for the increase in the cost of living relate to the quarter ending in mid-February. In that quarter the increase was 8 per cent of which 40 per cent was a direct consequence of Government action. It was by far the highest increase we have ever had. This illustrates very clearly the whole approach of the Minister and his colleagues to the problem of taxation, revenue and expenditure. The very obvious consequence of where taxes are increased with a consequential increase in the cost of living, resulting in increased claims under the national pay agreement, is that the cost to the community—to Irish industry and business—is inordinately high compared with the revenue the Minister gets from these increases. The net effect on our whole economy is disastrous. Somewhere, somebody must cry halt and take a stand on this question of inflation.
I have not much hope that the Minister or any of his colleagues will ever take a stand on inflation. Their whole record is one of having abdicated their responsibilities in the fight against inflation. Instead of fighting every inch of the way, and every small item that contributes to it, and resisting it as far as it is humanly possible to do so, they appear to have opened the floodgates and said: "We cannot do anything about it. We have to wait for foreign Governments to change their policies and we will cash in on it when that happens." In my view, that is a total abdication by the Government, or by any Government, of their responsibilities. As Deputy O'Malley said, this is a very minor matter in relation to all the other increases which have been imposed by this Minister and this Government. This is a place to make a start. By making a start we say: "We will not add to the cost of housing or acquiring farms or businesses." The saving may be very small in each individual case but our inflation is made up of a whole lot of small items like this.
It is not enough for the Minister to tell us the estimated revenue and ask: "Where do we get the money for our expenditure if we do not have this £500,000 revenue?" The Minister has the responsibility to tailor his expenditure to his revenue. He cannot evade liability and responsibility for the consequences of shoving on taxation and raising our cost of living further and further with that accumulating throughout our economy. If you do the sum you will see that the total cost to the economy of most of the actions the Minister has been taking is absolutely out of line with the alleged need to get in revenue. Listening to the Minister one would think he went in for balancing budgets. Of course, he does not. He has not balanced one budget yet. I do not want to stray too far from the amendment before the House, Sir, but you will recall that the Minister opened up the topic of Exchequer receipts and expenditure.
The Chair hoped that the Deputy had replied to that.
I have. I just want to say to the Minister that relatively this may be small. In fact, it is small relative to the size of the Exchequer receipts and relative to most of the transactions which will be affected. It is by taking the small step I suggest here that we can start, if we want to, to fight inflation. The Minister's dismissal of the whole matter on the grounds on which he dismissed it is very disheartening and the outlook is very inauspicious for the economy as long as he is charged with responsibility for its management. Clearly, either he is unable or unwilling to manage our economy. This is another small but significant example of that inability or unwillingness on the Minister's part.
As I said in relation to the last amendment, we have had the sort of reaction one anticipates from this Minister except that, on this occasion, it was a little more contemptuous and a further ignoring of the facts of our present situation than is usual even from the Minister. We got a lecture from him on the need to have expenditure paid for by taxation. As Deputy Colley has said, if there was anyone ever in the history of this country from whom those sentiments come more ill, I do not know who it was. The Minister is beggaring the country with foreign borrowing and enormous deficits to try to keep going and to try to curry as much favour with as many people as possible. I would not grudge the Minister the £500,000 involved here if he would spend it, and a bit more besides, on our school children. Is it not extraordinary that money can be found for things in which there are votes? He can have this £500,000 and a lot more if he will spend it on giving back to our school children what they got in 1967 and what has been taken away from them in 1975, that is, free education.
The Deputy is aware that we cannot stray from the amendment.
With respect, I do not think I have strayed much further than the Minister.
The point was answered.
It was answered very well by Deputy Colley. I will not deal with that aspect of it any further. To come back to the provision in the amendment, I should like to point out that in the Minister's view this does not matter. This is simply an increase of 33? per cent in the taxation on the transfer of land and houses valued between £20,000 and £50,000. What about it? It is only an increase of 33? per cent. It helps to keep costs up and, if costs are kept up, the returns from VAT are up and that helps the Government. That is a good thing. It puts up the price of each house by perhaps £10. That might be the effect where someone has bought building land for £30,000 or £40,000. This increase of 33? per cent might increase the cost of each house by £10, but what harm. There is more VAT to be got out of it. That is the Minister's attitude. It does not matter if it costs an extra £10. The price will probably increase by another £1,000 in the next few months so it does not matter. Farmers' costs buying small or moderately small farms in this category are put up. They need to borrow more money. They have more to repay. They have more interest to pay but that does not matter. They can look for more for their produce and keep things going up. Basically, it is beneficial to the Government that prices are going up. The fact that this is crucifying the country is immaterial to the Minister as he has demonstrated very ably.
He told us it was necessary to impose taxation in order to finance expenditure. I wonder has the Minister such a short memory that he cannot recall what he said here with his tongue in his cheek at the end of November, 1974, when he increased the price of petrol by 15p per gallon. He told us it was not to obtain any revenue but simply to prevent people living in Northern Ireland coming across the Border to buy it. I wonder if the considerations of which he is now so conscious about balancing budgets and getting in taxation in order to pay for Government expenditure were present to his mind on that occasion, or was he totally misleading the House.
While only £500,000 is involved in this, a matter of principle is involved. We in this party believe it is wrong to increase the taxation on the transfer of small and moderately sized farms by 33? per cent and let it slide through this House as if it did not matter twopence. This stamp duty is considerable and significant and creates hardship for many people. I know this from my own personal experience in dealing with people. It creates hardship for people. They forget about it. They do not know that the Government get a rake off. They have all their bits and pieces added up and they are down to their last penny and you have to tell them that they have to pay 2, 3 or 4 per cent, or whatever the figure is, in stamp duty as well. This duty is additional to other duties which may be payable as a result of the sale of a farm, in one or other of the various capital taxation measures at present before the House.
As a matter of principle someone has got to make a stand sometime, somewhere. This is one place—I know of better places—where one can make a stand and say it is wrong from the point of view of our economy that the tax on the transfer of comparatively small property such as is involved here should be increased at this time of tremendous inflation by 33? per cent. That is, unfortunately, what the Government have already done.
Question put: "That the figures proposed to be deleted stand."
The Dáil divided: Tá, 55; Níl, 50.
Tá
- Barry, Peter.
- Barry, Richard.
- Begley, Michael.
- Belton, Luke.
- Belton, Paddy.
- Bermingham, Joseph.
- Bruton, John.
- Burke, Dick.
- Burke, Joan T.
- Burke, Liam.
- Byrne, Hugh.
- Donnellan, John.
- Enright, Thomas.
- Esmonde, John G.
- Finn, Martin.
- Flanagan, Oliver J.
- Gilhawley, Eugene.
- Governey, Desmond.
- Griffin, Brendan.
- Harte, Patrick D.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Keating, Justin.
- Kelly, John.
- Kenny, Henry.
- Kyne, Thomas A.
- L'Estrange, Gerald.
- Lynch, Gerard.
- Cluskey, Frank.
- Collins, Edward.
- Conlan, John F.
- Coogan, Fintan.
- Cooney, Patrick M.
- Crotty, Kieran.
- Cruise-O'Brien, Conor.
- Desmond, Barry.
- Desmond, Eileen.
- Dockrell, Henry P.
- Dockrell, Maurice.
- McLaughlin, Joseph.
- McMahon, Larry.
- Malone, Patrick.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Connell, John.
- O'Donnell, Tom.
- O'Sullivan, John L.
- Pattison, Seamus.
- Ryan, John J.
- Ryan, Richie.
- Spring, Dan.
- Staunton, Myles.
- Taylor, Frank.
- Timmins, Godfrey.
- Toal, Brendan.
Níl
- Allen, Lorcan.
- Andrews, David.
- Barrett, Sylvester.
- Brady, Philip A.
- Brennan, Joseph.
- Breslin, Cormac.
- Briscoe, Ben.
- Browne, Seán.
- Brugha, Ruairí.
- Burke, Raphael P.
- Calleary, Seán.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard.
- Crinion, Brendan.
- Crowley, Flor.
- Cunningham, Liam.
- Daly, Brendan.
- Davern, Noel.
- Dowling, Joe.
- Fahey, Jackie.
- Fitzgerald, Gene.
- Fitzgerald, Tom (Dublin Central).
- French, Seán.
- Gallagher, Denis.
- Geoghegan-Quinn, Máire.
- Healy, Augustine A.
- Hussey, Thomas.
- Kenneally, William.
- Kitt, Michael P.
- Lalor, Patrick J.
- Lemass, Noel T.
- Leonard, James.
- Lynch, Celia.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Molloy, Robert.
- Moore, Seán.
- Murphy, Ciarán.
- Noonan, Michael.
- O'Connor, Timothy.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Patrick.
- Smith, Patrick.
- Timmons, Eugene.
- Walsh, Seán.
- Wilson, John P.
- Wyse, Pearse.
Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.
Question declared carried.
I would like to put on record the fact that we were short 18 as a result of conceding 18 official pairs to the Government.
I could not hear a single word Deputy Lalor said.
The matter was not relevant.
I was putting on record the fact that we were 18 short due to official pairs with the Government.
Amendment No. 10 was disposed of with amendment No. 8.
Amendment No. 10 not moved.
Amendment No. 11 was discussed with amendment No. 9 which has just been disposed of.
Amendment No. 11 not moved.
Question: "That the Bill, as amended, be received for final consideration", put and agreed to.
Question proposed: "That the Bill do now pass."
The Finance Bill, 1975, is close to passing through this House and on to the other House. Before we let it pass it would, I think, be no harm if we recorded our views on some of the matters contained in the Bill.
The first matter that needs to be underscored is that the Bill—this appeared from the debate to be deliberate policy on the part of the Minister—provides for increases in personal allowances under the income tax code deliberately restricted to 15 per cent although the cost of living increase is 25 per cent. The Minister indicated that he thought efforts were being made in the national pay agreement, and otherwise, to compensate workers for increased taxes and he apparently thought this should not be done and he deliberately therefore kept down the increase in tax allowances to 15 per cent. The figures he talked about in regard to the items of taxation he thought should not have been recovered did not come to anything like 10 per cent; nevertheless, that was the justification given by the Minister for failing to increase income tax allowances commensurate with the increase in the cost of living, an enormous and unprecedented increase.
No effort was made to provide any compensation for the increased imposition on both employees and employers in respect of increased social welfare contributions and health charges. At the same time the Bill contains a statutory provision for the unprecedented increases in taxes imposed by the Minister on beer, tobacco, wine, table waters and bets. In addition, increased revenue is being taken from gaming machine licence duty and dogs. Indeed it is difficult to avoid the impression that the Minister was searching around everywhere he could possibly go, scraping the bottom of the barrel, for revenue from any source from which he could get it without any regard whatever to the consequences of what he was doing on the cost of living and the consequential claims arising on foot of the national pay agreement. As I pointed out a little earlier, the cost to our economy of these increases in the cost of living, produced directly by Government action, is far greater than the amount of revenue to be received by the Exchequer. I also drew the attention of the House to the fact that the most recent figures available for quarterly increases in the cost of living, at mid-February, disclosed an all time high of 8 per cent increase in one quarter, of which 40 per cent was the direct consequence of Government action.
I have tried on a number of occasions to impress on the Minister the folly of imposing increases and allowing increases in Government controlled circles which, when the whole sum is done, cost the Exchequer, in many cases and certainly cost the community, a great deal more than is received from the Exchequer on foot of those increases. This general attitude of the Government on the imposition of taxation, the cost of living and the effect it has on our economy is the primary cause of why we are now suffering a rate of inflation of at least 25 per cent per annum and also why we are at the head of the league for inflation.
There was a time not so long ago when the Minister and some of his colleagues were fond of drawing attention to the cost of living figures and inflation rates in other countries. We do not hear them talking about that now because we are away ahead of practically all the other countries in Europe. Some of them are at a rate almost one-third of our rate of inflation. This is not happening by accident but because the Government long ago gave up the battle against inflation.
This Bill contains more of the same from the Government. It contains more of the enormous increases in taxation imposed without regard to the economic consequences. The Minister, in dealing with these matters, attempts to talk about the amount of revenue to be received and the amount of expenditure he has to face as though he has no control over the expenditure and as though these were the only relevant calculations and that the effect of what he is doing on the cost of living and on wage claims is irrelevant.
Of course, it is highly relevant and goes to the root of his responsibility. As Minister for Finance he has prime responsibility for the management of our economy. Apart from that this Bill contains, as we indicated earlier, section 45, which is referred to in the index as "Abolition of death duties." If there was any doubt we demonstrated clearly today, and so did the Minister, that whatever the section is doing it is not abolishing death duties. The Minister was given the opportunity, with an amendment of ours, to repeal death duty legislation but he refused point blank to do so. I will not labour that point as I think the facts speak for themselves.
This Bill also contains provisions which were designed by the Minister to assist certain types of businesses which are in difficulties by making special provision in regard to relief on income tax and corporation profits tax arising out of the consequence of inflation on stock values. He said the estimated cost of this was £12 million. The relief which he is giving in this Bill is certainly a step in the right direction but it does not apply to many firms which are at least as much in need of it as those who will benefit, people who are likely, as the result of failing to get any relief, to have to create further redundancies and further unemployment.
I believe it is also true to say that when this relief was announced on budget day and the cost of it given at £12 million the Minister was, in announcing it, acknowledging what we had been telling him for some time, that there were a number of businesses on the verge of bankruptcy and in dire need of assistance. He was acknowledging the truth of that even if the steps he has taken to deal with it are inadequate and too little. The Minister, having acknowledged the necessity for this assistance, was then a party, with his colleagues in Government, to imposing on businesses the cost of additional social welfare contributions and health charges far in excess of the relief he was purporting to give.
I do not understand the logic behind that approach by the Government. I have not heard the Minister attempt to explain if there is any logic behind it. The reasoning behind it escapes me. If that relief was necessary how can one justify imposing greater burdens subsequently than the amount of the relief? I suggest this performance illustrates the total, if I may use a colloquial phrase, "ad hocery" of the Government. They run up against a problem and they may try to find a solution, which sometimes they do not. If they do they produce some solution and then they come up against another problem. They try to find some solution to that without any reference to what went before. It all adds up to the fact that the whole approach illustrated in this Bill is one of absence of even the remotest semblance of planning or programming.
We are all aware of the difficulties involved, particularly at a time like this, in producing and adhering to any programme or any plan. That does not mean one can run the affairs of this country effectively simply by rushing from one problem to another without any regard to an overall approach. Surely by now it is clear to the Minister and to his colleagues that it is essential to lay down a general assessment of our resources and our likely resources over the next few years, of the demands which will be made on those resources, and to out-line the order of priority which the Government see and the general manner in which they see, over the course of a few years to come, the economic management of our affairs being conducted. I freely acknowledge that any such approach has to be flexible. The absence of any such approach has produced the kind of situation in which the Minister provides in this Bill for relief which is absolutely necessary to prevent businesses closing down, throwing their workers on the unemployment heap and subsequently imposing even greater charges on them. That, and the lack of logic involved, are the clearest illustrations one could get of the great need there is for some general, overall approach to the economy. Such an overall approach has been singularly absent and there is all the appearance of running from one problem to the next and dealing with each on a purely ad hoc basis without reference either to decisions taken on previous problems or ones that will have to be made on further problems looming up.
There is little that we on this side of the House can do except as we have done—and indeed will continue to do—to spell out the kind of approach the Government should adopt, and should have adopted, if we are to make any attempt to get over the enormous economic difficulties in which we now find ourselves. Apart from the question of drawing up some very flexible plan or programme, is it not clear that the first priority of the Government should be to start fighting inflation, something they are not doing? It is suggested in some quarters that there is some dichotomy between, on the one hand, fighting inflation and, on the other, fighting unemployment. Of course, there is not any such dichotomy because, if we allow inflation to continue at its present rate, there is nothing we can do that will prevent the growth of unemployment. Unless we can conquer inflation unemployment will continue to rise. That is the reality of the situation. If we are to conquer, we must conquer the two, both go together. If we cannot tackle inflation, we can forget about trying to tackle unemployment.
I have urged the Minister on a number of items in this Bill and in some of the amendments we put forward to take a stand somewhere in the battle against inflation. He has refused to do so. Instead, we find he is piling on more and more taxation, allowing more and more charges under the control of the Government to increase, at frightening rates and with frightening rapidity, without apparently the slightest regard to the economic consequences of this when it works its way through the economy into wage claims and is added to the impositions he has already imposed both in regard to the costs of manufacturing industry and business generally and of the individual citizen.
The spiral continues. It is being fed by the Government in a most irresponsible fashion, reaching its climax—I suppose it could get worse under this Government—where 40 per cent of the absolute record increase in inflation for one quarter, of 8 per cent is a direct consequence of Government action. I do not know what we can do on this side of the House beyond spelling out, as we have done and will continue to do, where the duty of the Government lies and where they are failing in that duty. We have tried to do that on this Bill and other matters, obviously with very little success. But we will continue to do our duty as far as we can.
I have no doubt that in due course the public—who were misled by the Minister and his colleagues in many ways and, in particular, as illustrated in section 46 of this Bill—will get their opportunity. When they do I believe that this Minister will not get a further opportunity to preside over the enormous economic damage he is doing or permitting to be done to our community.
(Dublin Central): I shall not delay the House very long. We have discussed this Bill for a considerable time. We all know that the Finance Bill is undoubtedly one of the most important Bills coming before the House in any year. This year's Finance Bill was reckoned to be one of the most important ever to come before the House. I say that throwing my mind back over the past 12 months before the last budget. If we had been reading the papers, taking heed of what leading economists throughout the country were saying we would have seen that they were warning the Government about what would happen, telling them what type of budget they should introduce and what this Finance Bill should be like. This is not a time for playing politics with our economy and I have no intention of so doing because it is too serious a matter. One has only to look at industry and business people today to see the precarious positions in which they find themselves.
We were all looking for certain guidelines in the budget and in the Finance Bill. It was spelled out time and time again by leading economists what would happen if some help was not given by the Government. Certainly, I looked forward to some definite help being given to industry and business generally in an effort to check inflation. At present it is quite obvious that if we do not take some stand in checking inflation this country will go bankrupt.
Instead of such help being granted to them, what did industry get? What help did they receive from the budget we are finalising in this Finance Bill? They got a deferred payment of £12 million. It was obvious that that was of no help to them at all at that time. Anyone who has been following the trend of industry here and who throws his mind back over the past four or five years will see that we were losing in foreign markets. I know exports were good last year. But, if one observed a unit cost four or five years ago, we were then in a competitive position vis-á-vis our European partners. In my opinion we have lost out on this and it is something for which we will pay dearly in years to come. I would recommend that we do not look back on last year's exports too much because it will probably be very difficult to maintain them at that level this coming year.
This situation has been developing and, if it is allowed continue, there is no doubt that we will lose on foreign markets. In his last budget the Minister gave a deferred £12 million to industry which, even at that time, was of no significance. Certainly, it would not have helped industry or business generally in the position in which they then found themselves. The fact that £12 million was deferred was some help but six weeks later he imposed on business people a contribution for social welfare that was equivalent to £12 million. That cannot be regarded as anything other than double-thinking.
What the Minister has done is having its effect on industry. Business people will be under considerable strain to keep their firms going. There are increases under the National Wage Agreement that will have to be paid but it will not be possible to implement the agreement unless the Government take some positive action to check inflation. The workers were entitled to seek a 25 per cent increase in the National Wage Agreement when we consider how the cost of living has soared, but we should not underestimate the impact it will have on industry.
In the newspapers this evening there is the statement that the ESB have sought to increase their charges by 18 per cent. Rates are increasing, as is the cost of living generally. In the present economic climate I do not see any hope of reducing the unemployment figure——
I hesitate to interrupt the Deputy but I am anxious that remarks be confined to what is in the amended Bill before the House. That is the subject matter of the discussion, and I should like to dissuade the Deputy and others from embarking on a general debate on the economy.
(Dublin Central): I do not intend to extend the debate in that manner, but we are talking about the Finance Bill which is a continuation of the budget and which affects every person. The Government will have to do something positive if inflation is to be checked. I do not believe the trade unions will cut their standard of living and they are right not to do so. If industry and business cut back on profits they will go out of business. It is the duty of the Government to give a lead and if they do not do so the economic situation will deteriorate even more.
If a businessman were asked to relate his profits to those of three or four years ago he would soon give an answer. I am convinced the Government took the decision to introduce capital taxation at the wrong time. Although I realise death duties are not abolished to any great extent, I welcome what has been done in effecting any reduction. However, to introduce capital taxation at a time when the economy is at its weakest ebb—indeed, it is at its weakest point in 40 years— is most undesirable. The Government should try to encourage people to invest and to expand. Perhaps it might be possible in ten years' time to introduce a wealth tax when we get the return from our oil resources and from our mines but it is fatal to penalise industry at the wrong time and this is where the Government have made a mistake. If I were the Minister for Finance or the Minister for Industry and Commerce I would scrap the capital taxation measures and would concentrate on economic policies. We could come back to capital taxation in five or six years' time when the economy is on a proper footing.
According to the Minister for Finance, only £13 million will be collected. That sum has little significance in a current budget of £1,200 million. Our aim should be to build up confidence in the country and abroad so that industrialists will invest here. The approach in this Finance Bill is a negative one and will not help. The £12 million will not be of any assistance to the economy. I agree that trade unions and business can help but it is up to the Government to give the lead. Without that lead there will not be any response. The worker and the business man realise their responsibilities and are fully alive to the situation but the Government are pushing ahead with their inflationary policies with regard to increased taxation. At least the revenue obtained from beer and spirits went towards social welfare benefits but the social welfare contribution placed a severe burden on industry.
I am disappointed with this Finance Bill, and this disappointment is shared by people in industry. The Government have not laid down any guidelines. We are just drifting along without any target in view. It is not in the power of the ordinary person to check inflation, but the Minister for Finance and the Minister for Industry and Commerce could do much to help. Confidence is lacking and I have never seen the economy is such a weakened state.
Germany and France are trying to get inflation under control. Many of the other European countries are doing it. What sort of situation will we face if next year we have inflation running at 25 per cent and European countries are down to 7, 8 or 9 per cent? Then we will want to see what our exports are like but it will be too late. The time is now. The Minister for Industry and Commerce and the Minister for Finance should get down to working out a good economic policy and put the rest of their capital taxation into cold storage until such time as the country attains prosperity.
The Finance Bill, 1975 will be remembered as the most significant tax reform Bill in the life of this Parliament to date. It abolishes death duties with effect from 1st April, 1975 which means that all persons dying after that date will not be affected by the Legacy Duty Acts which were introduced in 1796, the Succession Acts introduced in 1853 and the Estate Duty Acts introduced in 1894. That, perhaps, is why the Opposition have spent so many hours opposing the Finance Bill, 1975 because it makes a most dramatic improvement in the whole tax code.
The debate on this year's Finance Bill has been the longest in my memory. More hours have been spent on it. We have heard more irrelevant speeches. We have had many budget speeches virtually on every Stage and section and we have had ad nauseum mischievous, malicious comment about matters which are not in this Bill but related to the Government package of capital taxes. We will now get an opportunity of getting down to the nitty gritty of those Bills which the Opposition do not want to have discussed. Deputy Fitzpatrick asked for a delay of five or six years. What he really wants is to allow Fianna Fáil five or six more years in which to cause mischief and suspicion and fear in the hearts of people who, if they were to live to be 100, would not be affected by the capital taxation proposals.
They would, at the rate inflation is going.
We will not afford them that opportunity because we intend to see to it that the capital taxation proposals are implemented this year so that people will see that all the mischievous, outrageous, outlandish suggestion made about them are without any foundation whatever.
This Finance Bill copperfastens the Government's economic policy in what is admittedly the most difficult economic situation in which this country has found itself since it achieved its freedom in 1921. The world is going through a greater economic upheaval than anything it has previously experienced. The world is now more inter-dependent than ever before and in that situation, in which we have become more dependent on the outside world for our prosperity, it is not extraordinary that we should be experiencing economic difficulties at present. In the face of those difficulties we produced a budget which was carefully expansionary. It was indeed the most expansionary budget ever produced in this Dáil, with a deficit of £125 million. We have given, in two successive budgets, personal income tax reliefs costing the Exchequer £60 million. We have given to companies this year tax reliefs costing £12 million in one year and £24 million in two years. We are also abolishing death duties. The Opposition, who increased the rate of company taxation from 50 to 58 per cent in the recent past, who failed for 11 years to make any adjustment in income tax allowances and then gave totally inadequate adjustments in the autumn of their years in office, chastise us for not doing more.
Of course no Minister for Finance is ever satisfied that a Finance Bill is all that he would desire. It is not this year. It could not be in any year but in a year of considerable international difficulty which is reflected in our domestic situation it certainly could not achieve that situation. It is well to remember that out of every £10 of current Government expenditure which is meeting necessary needs £1 is borrowed from abroad. Out of every £10 which is being expended for capital and current purposes £2.50 is being borrowed from abroad. This has been criticised by the Opposition who, at the same time, criticise the level of taxation as being too high. The only alternative to these borrowings is to have further taxation at home at a time when the economy is suffering because of lack of demand, a lack of demand which is the pattern in the whole western world particularly in those countries which are oil-importing. To have increased the tax load and not resorted to the degree of borrowing we have resorted to would have been the wrong economic package. What we have produced is one which is carefully expansionary in a most difficult situation and if the forecasters are right and the end of 1975 sees an improvement in the economic performance of the industrial countries with which we are associated in OECD then it will be seen that our budgetary policy is the right one and that the incentives and the reliefs and the taxation in this budget were the right ones in that difficult situation.
Question put and agreed to.
This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.