Before the proceeding were——
Finance Bill, 1976: Committee Stage (Resumed).
Debate resumed on amendment No. 28:
In page 27, line 33, before section 32, to insert the following section:
"32.—(1) In this section—
`society' means a society registered under the Industrial and Provident Societies Acts, 1893 to 1971, which is an agricultural society or a fishery society within the meaning of section 220 of the Income Tax Act, 1967;
`period of account' has the meaning assigned to it by section 155 (5) of the Corporation Tax Act, 1976; `wear and tear allowance' means an allowance under section 241 of the Income Tax Act, 1967;
`initial allowance' means an allowance under Chapter I, Part XV of the Income Tax Act, 1967;
`investment allowance' means an allowance under section 22 of the Finance Act, 1971.
(2) In the case of a trade carried on by a society no transaction on or after the 6th day of April, 1976, shall be regarded as an exempted transaction for the purposes of section 220 of the Income Tax Act, 1967.
(3) Where a society comes within the charge to corporation tax in respect of a trade before the 6th day of April, 1976, an accounting period of the society shall end for purposes of corporation tax on the 5th day of April, 1976.
(4) Where a society carrying on a trade incurred before the 6th day of April, 1976, capital expenditure on the provision of machinery or plant for the purposes of the trade and that expenditure was either—
(a) qualifying expenditure within the meaning of section 11 of the Finance Act, 1967, or
(b) expenditure on qualifying machinery or plant within the meaning of section 26 of the Finance Act, 1971,
an allowance equal to the specified amount of that capital expenditure may at the election of the society be made in taxing the trade of the society for the accounting period which commences on the 6th day of April, 1976, as if it were an allowance on account of the wear and tear of the machinery or plant in that accounting period, and where such an election is made, the amount of the capital expenditure on the provision of the machinery or plant still unallowed as at the time of any subsequent event shall for the purposes of Chapter II of Part XVI of the Income Tax Act, 1967, be deemed to be nil.
(5) For the purposes of subsection (4) the specified amount of the capital expenditure means the amount of that capital expenditure together with any investment allowance in respect of that expenditure after deducting from the aggregate amount thereof—
(a) the amount, as diminished by section 220 (5) of the Income Tax Act, 1967, of any investment allowance made to the society in respect of that expenditure;
(b) the aggregate amount, as diminished by the said section 220 (5), of the wear and tear allowances and initial allowances made to the society in respect of that expenditure for all chargeable periods before the accounting period commencing on the 6th day of April, 1976:
(c) the aggregate of the amounts by which the wear and tear allowances in respect of that expenditure would have been diminished by the said section 220 (5) if the only wear and tear allowances for those chargeable periods in respect of that expenditure were the amounts which would have been made if a proper claim had been duly made by the society for each chargeable period without regard to section 11 of the Finance Act, 1967, or section 26 of the Finance Act, 1971.
(6) Where—
(a) a society comes within the charge to corporation tax in respect of a trade,
(b) the society was within the charge to income tax for the year 1975-76 in respect of the trade, and
(c) a period of account of the society commences before the 6th day of April, 1976, and ends on or after that date,
the income from the trade for the period of account shall be computed (in accordance with the provisions applicable to Case I of Schedule D) without regard to the provisions of section 220 (3) of the Income Tax Act, 1967, and the income as so computed shall be apportioned to the part of the period of account falling before the 6th day of April, 1976, and the part falling after that date, and for the purposes of subsections (3) and (4) of section 220 of the Income Tax Act, 1967, and section 70 (5) of the Finance Act, 1963, each such part shall be deemed to be a period of account and the income from the trade for that part shall be the amount apportioned to it under the provisions of this section.
(7) Any apportionment to different periods under this section shall be made on a time basis according to the respective lengths of those periods.".
—(Minister for Finance.)
I am asking whether this matter should or not be referred to the Committee on Procedure and Privileges as being much less frivolous than the last matter that was referred to them. I am asking the Ceann Comhairle who is entitled to answer, and not some member of the Government sitting in the back benches at the moment. I am asking in an orderly manner, which is more than I was allowed to do for five minutes when Deputies yelled their heads off——
Deputy Conor Cruise-O'Brien has come in. I will be revealing the true facts about him.
If order is not going to be restored to the House immediately I will be compelled to adjourn the proceedings.
Deputies
Hear, hear.
I was explaining that the clerk-typist is obliged to pay——
(Interruptions.)
Deputy Blaney is being disorderly.
I am not being disorderly. The Chair knows I am asking a question I am entitled to ask.
The Chair has no function in the matter.
If it is not your function you cannot say yes or no.
The ordinary taxpayer has no opportunity to avoid tax. A clerk-typist has to pay on average £300 a year, a married industrial worker £500 a year, a business man servicing the farming community with profits of £50,000 will pay £25,000 or £26,000 a year, and many agricultural and fishery co-operative societies who qualify for various exemptions under existing law may find themselves paying no more than about £1,000 or £1,500 a year.
Is it against the rules of order for the Minister to repeat what he has already said?
Deputy Gibbons, on a point of order.
It is not against the rules of order for the Minister to repeat something he said already before the expulsion of Deputy Meaney? We have had all this before. Is it not against the rules of order?
Repetition is not in order.
On a point of order, should the Minister not be seated during a point of order?
The Minister was so seated.
On a further point of order, may we take it that when the Minister repeated now what he had said in his previous speech he left out the word "so called"——
That is not a point of order. I would ask Deputies to desist.
——and is now withdrawing the remark to which Deputy Meaney took exception. Am I to take it that he is now withdrawing the remark? We feel strongly about this. Are we to take it that he is now withdrawing? I think we are entitled to know that.
That is not a point of order. Deputy Power will be afforded an opportunity to speak.
I propose to deal with a number of activities which enjoy tax exemption, which will show at the very least that there are many activities enjoying tax exemption at the moment which cannot be properly——
(Interruptions.)
On a point of order——
Deputy Power asked a question and I want to hear the answer. Is the Minister now withdrawing the words "so-called" over which Deputy Meaney was suspended from the House?
The Minister must be allowed to make his speech in his own way.
There are some Members of this House who might be so-called and there are others who are not, and Deputies may make what they like of that, but in order to show some respect for the rules of order and let this debate——
(Interruptions.)
I must ask Members to desist from making frivolous points of order.
I do not consider that is a frivolous point of order. If the Minister is wrong he should say he is wrong.
The Deputy has made his point. Order.
I am saying there are several activities which at present enjoy privileges and associated privileges which were originally introduced to assist farmers and fishermen that today have very distant relationships with the welfare of the people for whom the exemptions were first introduced.
That is a disgraceful allegation.
I must point out, for instance, that recently at the meeting which I am told unanimously requested the withdrawal of the proposal to remove the exemptions for agricultural and fishery co-operatives, at the same meeting they decided that £400,000 should be speculated in prospecting for oil off our coasts. It is straining the imagination and the intelligence rather far to say that when exemption was given to the traditional agricultural and fishery co-operatives it was indicated that tax exemptions should extend to the speculation of money for oil off our coasts. There are many other activities now engaged in by organisations which are qualified for relief which certainly very few farmers are engaged in. For instance, one of the requests made in recent years for exemption was for the wholesale sale of ice cream by these people. It is far from ice cream some of the small farmers or fishermen of Ireland were reared, or for whom the taxation exemptions were first introduced. It is a fair indication of the justice of our case when you have such heat and venom turned on, when in fact all we are doing is trying to put people in business on an equal footing. Certain suggestions have been made by members of the Opposition and others that this Government do not know the difference between working for profit and working within a co-operative. This has had the support of the Opposition which leads me to believe——
You would prefer them not working.
——that they regard profit as wrong, as something unworthy for which to work, as something undeserving of consideration by Governments, because that has been the argument advanced, in favour of giving special treatment to the co-operatives and of taxing those who are engaged in business for profit.
Look over your shoulder for profit.
We cannot accept that. We totally repudiate the type of approach that Deputy Colley enunciated here once again this evening, which was full of sneers and jeers about the Government's efforts to bring equity into the taxation system, to ensure that people engaged in comparable activities and with comparable incomes pay a comparable amount of tax.
Do you mean that?
As long as equity is achievable without disruption of the whole economic and commercial system, as long as it is achievable without any harm to the viability of industries, we will do it.
Now the qualification comes in.
I want to assert this, because I believe it, and I now have evidence of it on the basis of accounts on records which have been returned to us——
(Interruptions.)
Will the Deputies allow the Minister to continue?
One of the best things that has happened to the agricultural and fishery co-operative movement in this country, is the removal of the exemptions, because many of them, not all of them, were run on lines which no reasonable business would be run on, and the result was that the farmers who ought to have been getting the full benefit out of it were not getting the benefit to which they were entitled and which would have been got if the business was run on proper lines.
(Interruptions.)
The Minister is entitled to make his statement.
For the sake of the House and for the sake of the Members on this side would the Minister clarify what he means by his last statement?
The Minister is making a statement. Every Deputy will have an opportunity to speak. The House is in Committee. Inquiries can come at a later stage.
Can the Minister be specific?
Deputies opposite know well that I am not permitted to name particular companies or individuals. It would be unfair of me to name particular organisations or individuals in relation to their tax liability. But the accounts disclosed by the co-operative movements themselves indicate that they are not run on lines which would be acceptable to reasonable business people.
(Interruptions.)
Deputies. Deputies.
On a point of order——
Before Deputy Gibbons raises his point of order I would ask the Deputies to remember that the House is in Committee and Deputies who have not spoken will have an opportunity to make their points of view known in the House. They ought not to interrupt speakers in possession.
Is it in order for the Minister to hurl general sneers at co-operative movements generally on the grounds that if he named individual co-operative undertakings, which in his opinion were at fault in some way or other, it would be wrong for him to do that? Instead he hurls a general sneer at them all. Is that in order?
Yes. It has always been the accepted practice of the House that names of individuals or anybody who might be recognised should not be used by Members of the House.
Following on that, general offensive sneers at the boards of movements generally should be ruled out completely.
The Chair always deprecates anything that is offensive in the ordinary way.
I wish the Chair would appeal to the Minister.
(Interruptions.)
If Deputies will await their opportunity, everyone will have an opportunity to speak.
What we have heard during the last few minutes is just a typical example of the gross misinterpretation that we have heard ever since January last when this tax measure was first proposed. There are Deputies opposite who know well that there are some co-operatives in relation to which my words of censure are well deserved. Farmers know this too. Some of them have written into The Farmers' Journal. One farmer said he was a member of his own co-operative for 20 years and had never received an account. There are many efficiently run co-operatives and some of those have written to me and have said that what we propose is justified.
Deputies
Name them.
The interesting thing is that the volume of representations which I received prior to the introduction of the amendment was less than what I received afterwards. The representations which I received afterwards were in protest that I was delaying the impact of the taxation.
From the co-operatives?
They were protests from people who for many years knew they were being unfairly competed against by people who were engaged in identical business. There are many business people who have suffered and there are employees who have suffered because certain sections of the co-operative movement have competed against them on terms which were not equal, because one section was exempt from taxation and others were not. The Farmers' Journal records cases of farmers expressing their disagreement with the way in which particular co-operatives have been operated. There are examples of industries and other activities in which there was unfair competition because some are exempt and some are not. There is unfair competition in milk powder production, in cheese production, in livestock marketing, cattle slaughtering, in marketing of fertilisers, marketing of animal feed and the marketing of seeds. These are just some of the areas in which there is unfair competition. We also have it in relation to the manufacture and supply of equipment to the agricultural industry.
Whether Deputies opposite like it or not these are areas of unfair competition. You may argue that there is a case to be made in favour of the co-operatives but it cannot be denied that there is unequal competition. I have received representations from farmers saying they could not understand the reason for the opposition to the taxation because they had on most occasions got better terms outside the co-operative movement than from the co-ops. These are the views of farmers engaged in the activities that can be serviced by either of these.
I do not believe one word of it.
Their views are as respectable and as worthy of consideration as are any other views that may be expressed.
The Minister is doing beautifully.
Order.
The involvement of co-operatives has extended far beyond what anybody could reasonably have anticipated in relation to agricultural and fisheries activities. For instance, one well-known company, which I shall not name but which can be ascertained by anyone who refers to the financial and farming press in recent weeks, have had a substantial stake in a motor assembly industry. In this case disputes have arisen because shareholders were not consulted in relation to selling a 49 per cent stake in the assembly industry concerned.
Is the Minister saying that these co-operatives were not subject to tax?
These activities are not quite in keeping with the exemption. I come now to the question of the line drawn between taxed activities and those not taxed. The difference is very hard to find, as any person familar with accounts must realise. Another area in which the co-operative movement has been engaged and engaged legitimately—let no one be under the impression that I am questioning the propriety of their being engaged in these activities—is in the manufacture of equipment not merely for small farmers but for the whole farming community and for the food processing industry. It is good for the farmers, for the co-ops and for the country that there is this activity, but let them all be subject to the same regime of tax so that they all start at the line together, thereby allowing the biggest profits to be made by the most efficient concerns. I want to see more of this activity. Can those who are so vehement in defence of the co-operative movement justify why there should be any difference in the ultimate amount of tax paid by people who are engaged in like activities? A number of those are exempt totally because of the descriptions given in various orders that have been made and under which almost anything can be exempt from tax so long as somebody can show that the particular equipment or activity will result ultimately in assisting the agricultural or fishery community.
But not car assembly: let us be clear on what the Minister is alleging.
The Minister is talking about shareholders.
It has been alleged wrongly that the taxation of farming co-operatives will mean bringing into the tax net small farmers who are not now within that net. There is no such proposal and anybody who has asserted otherwise has given reason for having his or her integrity called into question. Yet that is the basis of the Fianna Fáil political campaign. That party have gone around the country pretending to people whose existence has never been made known to the Revenue Commissioners and is unlikely ever to be made known to them that because they happen to be small shareholders they will become liable to taxation. There is no basis for any such allegation but it is the one which has brought many unfortunate farmers away from their fields earlier than was necessary so that they might attend meetings which had no relevance to their welfare.
In opposing the proposal to abolish tax exemption the claim has been made that co-operatives are not strictly business concerns and should not be taxed as such. There is a claim that they are mutual societies acting solely for the benefit of their members by providing goods and services essential to the activity of farming at reasonable cost and passing on all benefits gained from their commercial activities to their members. The general contention is that the co-op is for the small farmer and to tax the co-op is to tax the small farmer. That is not true.
Why not?
In view of what has been outlined already in regard to the activities of the co-operatives as they are evolving it is difficult to understand how anyone could take that contention at its face value, or is it being suggested that the small farmer in the west who has a small share holding in the local co-op will receive the reward of speculation in offshore oil or investment in the motor assembly industry?
Are the co-operatives to pay tax?
Yes, like everybody else.
The Minister.
Deputy Desmond is protected by the royal border of Kingstown.
Deputy Colley has been Minister for Finance. He is no yob. He knows that the notion he is trying to sow has no basis whatever.
Will the Minister spell out in detail what is to be the position.
The miserable dividend which a small farmer would receive from his small investment would not come within the reckoning of the Revenue Commissioners.
Will the dividend be taxed?
The Deputy knows that the situation in that regard is not being changed one iota by this legislation. We hear a great deal about the inadequacy of the investment by farmers in the co-operative movement.
Let us have the truth.
The Minister, without interruption.
We are told that investment by the farmer and the fisherman in the co-operative movement is to be encouraged. If for half a century exemption from tax has not provided the necessary encouragement, the subjecting of profits to taxation for the next half century is hardly likely to alter the situation. I suggest that those who have been embroiled politically and emotionally in one of the most dishonest campaigns ever in relation to taxation should turn their attention towards trying genuinely to promote the co-operative movement.
Hear, hear.
The Minister should be doing that.
With encouragement that movement can grow, but it will not grow so long as there are the powerful wealthy elements supported by the main Opposition that have opposed every taxation reform proposed by this Government, arguing that the treatment of agriculture and fishery co-ops within the taxation system is something which should not happen.
What we propose will result in farmers thinking about what is happening in their co-ops, in their seeing whether they are getting value for money, whether they have over borrowed or whether the return on their capital is adequate. This action, not only in the long term but in the short term too, will operate to the advantage of the farmers for whom the co-operative movement is intended to operate.
Another problem arising from the present position of exemption is that of the competition from private traders. This has led to complaints by those traders who are liable to taxation. In one area there was a complaint from a reputable organisation alleging unfair competition on the part of one of the large co-operative societies. The complaint was about the activities of a large co-operative organisation which were importing large quantities of tinned fruits and juices which were being sold at profit margins very much below that which was customary in the trade. A further complaint was to the effect that certain co-operative groups were diversifying into a variety of trades and commercial ventures which had previously been the traditional business of recognised sectors of industry. Incidentally, I would not consider that such a complaint was deserving of particular sympathy: I believe in competition, I believe in allowing them to do it, but on equal terms, not on unequal terms.
The activity about which the complaint was made was in relation to constructional steel. I was interested today to hear so many Deputies opposite waxing eloquent about certain complaints being made in regard to the construction industry, including the constructional steel sector concerning a certain State company. Is it not extraordinary how they can change their attitudes as they think votes may be gained or lost? In relation to this element of competition, I consider it is proper the co-operatives should be involved in the constructional steel industry if they want to do so, but I suggest that all these things should be on an equal basis. However, because of the way in which the rules and regulations are drawn up at the moment, the co-operatives can engage in that activity free of tax while others who are competing with them are subject to tax. I do not consider that to be fair. Other activities of commercial concerns are in competition with co-operatives and there is unequal competition because the private sector are subject to tax and the others are not, including meat processing, livestock marts and poultry.
The spate of criticism which has followed my announcement of the decision to terminate exemption for co-operatives should not cloud the real issue involved. The expected yield of taxation when this proposal is fully effective will not be very great. It will be in the region of £2 million to £3 million a year. If profits rise, of course the figure will rise as well, but against a turnover of £750 million, it is peanuts. It may be argued that it is not worth bothering about. That is the kind of attitude that gets countries into a mess in relation to tax laws and ultimately generates frustration and political and social revolution. If the profits are as small as alleged and if the return to the Revenue is as small as we believe it may be, it is fair to ask why there is all this excitement and opposition. The answer is simple: It has little or no business or commercial impact on the co-op movement but it is good political manure and that is why so much of it has been flung around in recent months. It is not based on any business-like assessment of the real position.
That is very poor stuff. The Minister will have to do better than that.
Poor, coming from a Minister.
Some of the Deputies may have seen the annual report of the co-operative movement. Very few of the critics have even bothered to read it. It shows that ten leading co-ops in the year 1974 made profits of between £4.5 million and £4.7 million apiece. Not bad at all, very good, and I am delighted to see them making these profits, but I consider that these profits having been made it is not inappropriate that they should bear some share of taxation.
Let us have the turnover.
I have no figure ready to hand but no doubt this is not the last word I shall be saying on this matter before the conclusion of the debate. If I can find the figure I will certainly give it. In the case of the co-op which made £4.5 million, the turnover was £97.3 million.
That is not a wildly exciting percentage.
It is not, but there are many private businesses who have a similar experience but this does not exempt them from tax. Anybody who knows anything about co-ops knows that co-ops may adjust their distribution in such a way as to reduce their book profits and pass on benefits direct to members. This is one of the arguments advanced in favour of not taxing co-operatives at all—that co-operatives are set up not to generate profit—I will quote from the official representations made and the official handouts given to newspapers and others with great PRO backing—but for the purpose of passing back the benefits to the members. If the operation of a tax code means that more benefits go back to members, the members should have no cause for complaint.
We come back again to the central issue which is important to some people, and that is what they regard as the inadequate investment by the farming community in their own co-ops. That position existed long before now, indeed from the beginning of the co-operative movement, and I do not believe it will be materially affected by the taxation of farming co-ops. I am not prepared to succumb or surrender to the kind of attack Deputy Colley has so often led on me and on the Government in the House when he argues that we are wrong to be concerned with endeavouring to achieve equity in the tax system.
The time to be squeezing is when the Government get the economy expanded.
One man's tax foregone is another man's tax load increased. The Deputy cannot gainsay that because it is true. Tax ought to be related to capacity to bear it. I have received strong representations during the years, particularly in relation to this proposal, that it would be inequitable to the general body of taxpayers to allow the exemption enjoyed by agriculture and fishery co-ops to be continued. If the tax now to be levied on the co-ops is not to be paid by them it will have to be paid by the ordinary wage and salary earners who last year paid more than £359 million, which is 76.5 per cent. Indeed, this year it is estimated that employees will pay more than 80 per cent of the income tax load.
It would be impossible in equity to defend a situation under which a sector of the community with business turnover of more than £750 million should be excused a very small tax load at a time when employees have been carrying such a massive tax burden. The claim was also wrongly made that the imposition of income tax on co-operatives will result in the tax falling on the farming community, most of whom are not liable to tax. Of course, it is true that most farmers are not liable to tax; 95 per cent to 96 per cent of them are exempt from tax.
Not exempt.
But even if the total tax bill from this new tax over the next few years was to be distributed over the total co-operative tax membership, which exceeds 160,000—and remember all farmers are not in co-operatives—the tax would turn out at something exceedingly small, probably about £10 per head per year. The clerk-typist, paying digs along with many other burdens, will be paying on average £336 in income tax in the present year.
What would the clerk-typist working for a co-operative be paying?
She will be paying that, too. I am sure no decent farmer in this country likes to see the situation in which his daughter has to pay that rate of tax while he pays nothing at all.
If the Minister thinks that all farmers should pay income tax, why does he not tax them? The Minister should make up his mind which way he is going on this one.
The Minister.
Perhaps the Opposition would make up their minds and indicate whether they are for or against a fair system of taxation, when we could get somewhere. It is fair to look for a moment at the attitude of the Opposition. Since they went into Opposition they have attacked virtually every tax reform of this Government. They have attacked all the taxes that we introduced which sought to remove some of the burden from ordinary taxpayers on to those who previously enjoyed exemption. Therefore let us see this fight for what it is. It is a fight between privilege, on the one hand, supported by an Opposition which in power left privilege untouched and, on the other hand, a fight on the part of a Government concerned with looking after the general body of taxpayers as best they can.
Like the blood-stock holders.
And insists that, in looking after them, it must introduce and maintain an equitable system of taxation. We see that this is a fight for the maintenance of a privileged tax free position——
It is a fight for growth or contraction in our economy.
(Interruptions.)
The Minister.
It is a fight for the maintenance of a tax free position for one section of the community, whose share of the tax burden will then have to be carried by the ordinary taxpayer, the small person who has no strong organisation to create difficulties on his or her behalf. One naturally expects the representatives of people who were not previously subject to tax to protest when they are asked to pay tax Thanks be to God they do it for, if they did not do it, we would think there was something wrong with them. None of us likes to pay tax and from the moment we realise we are doing so we harbour a certain sense of resentment. That has always been so. It will always be so, I suppose one could almost say, in a healthy society. If people succumbed without protest, then probably there would be something wrong.
The Minister could put a tune to that.
But protest ought to be reasonable. I would suggest that, if they want to get a hearing, those who protest about changes ought to justify their protest on facts and not on emotion. I think there is some cause to be alarmed at the virulence and ferocity of the campaign that has been mounted in relation to the taxation of agricultural co-operatives. I am sorry to say that "intimidation" might be the most appropriate word. We have been told that strong organisations are actually keeping dossiers on Members of this House and of the Seanad——
Why not?
——in which their words and actions are going to be recorded so that, if they are not in keeping with the wishes of the intimidators, they will be punished on the next occasion when the people go to the polls. I believe this is a gross interference with not merely the rights but the obligations, which are far more important, of Members of this House. Insofar as Members of this House have rights they are rights to be exercised for the welfare of the people, but their obligation is to all the people. The obligation of Deputies is to ensure as best they can that all burdens on our society are equitably spread. They are not discharging those burdens if for the sake of temporary political gain—it is certainly temporary but no doubt they hope it will be more than temporary —they champion the cause of one sector which is annoyed and thereby impose a greater burden on others. These issues go to the very foundations of democracy. I shudder to think what would happen were the same tactics to be used throughout the length and breadth of our community.
Those are not merely my thoughts. I should like to put on the record of the House the views of Mr. Raymond Smith who wrote in The Irish Independent of 1st April last. He recorded words that I believe should be put on record here. They are the words of an impartial observer who has from time to time applauded Members from both sides of the House and criticised Members from both sides of the House. Nobody can say he has any particular axe to grind. This is what he says, and I quote:
The demarcation line between——
Who is this impartial observer?
Mr. Raymond Smith.
The demarcation line between asking a Fine Gael or Labour Deputy where he stands on the Bill and conveying to him that farmers will vote against him in the next General Election—if he supports taxation of co-operatives— is, to my mind, a very thin one. Farmers cannot always be expected to stay on the right side of that line —if not properly guided from the top.
There is a fear in political circles in Dublin that what might start as innocent questioning of Dáil Deputies could grow into something decidedly ugly.
In the higher councils of the IFA itself, the danger is fully recognised. And it is accepted that individual farmers might be tempted to use intimidation and that this would be a blatant interference with the normal democratic processes.
This should be a cause of concern to Members of this House.
This concern is very touching. I did not notice it before the last election.
And individual Deputies have come to me conveying the pressures that have been brought upon them which could, if they succumbed to them, operate in such a way as to prevent them from exercising their obligation to pass judgment impartially upon proposals which they receive from the Government.
Would the Minister mind elaborating on that last one?
The Opposition have suggested that if they return to power they will repeal this legislation. Well, the legislation will be so long on the Statute Book before they return to power they may as well not bother making that pledge.
The graveyard speech.
It will be such a part of our system then, I am sure, that if any effort is made by them to repeal it, it will be very strongly resented. Of course, at least that is consistent. It is consistent with their approach of protecting established, privileged organisations and classes in our community who enjoy freedom from——
And reducing the dole queues. Do not forget them. That is what this is all about; it is about getting this country moving.
It is time Deputy Colley stopped that cant.
It is time the Minister woke up and started doing something.
Throughout the world there has been a massive growth in unemployment in recent years. I must bring Deputy Colley abroad some time——
By helicopter.
——because I think he badly needs to be educated. Some of his colleagues were in Brussels recently. They really ought to have contacted Dr. Hillery if nobody else, if they cannot talk to anybody else there. Or, when he is home, perhaps they ought to have a word with him and he will tell them all about unemployment throughout the world at present.
We are well off, I suppose.
Deputy Colley and his colleagues would suggest it is all attributable to the tax reform of the National Coalition in Ireland from 1973 to 1976. Look, it is time that nonsense was stopped.
What is the Minister doing with the tax system to create jobs.
We are dealing with a section of the Bill.
We have not suffered as big an increase in unemployment as other countries. I should like to recall that——
Our unemployment rate is the highest in Europe—the Minister knows it—and so is our inflation.
The Minister.
In 1969 when Fianna Fáil were in power they wrote into legislation an extraordinary provision to ensure that, notwithstanding exemption from tax on farming profits, farmers who had other incomes, whether from investment or from business of any sort, could set their farming losses off against other income. This enabled and encouraged wealthy hobby farmers in our midst to spend very heavily in purchasing farms against legitimate, full-time farmers and then spend very heavily on amenities of various kinds for their farms so that the resultant book losses could be set off against their profits thereby reducing the tax on their other incomes.
I was very interested that when we brought this scandal to an end we received the encouragement—not merely verbally but in writing—from the farming organisations in support of our action terminating the growth of the special privilege of hobby farmers who were doing such damage to the legitimate interests of Irish farmers. That is described as poppycock by a Fianna Fáil Deputy. I would like to put that on the record so that the farmers will know that our efforts to protect them are regarded as poppycock by a Fianna Fáil spokesman.
Fianna Fáil are making this pledge in relation to the taxation of farming co-operatives. How many other pledges have been given? Why not tell the PAYE payers, which is something they ought to tell because it is quite clear from their actions this is what they intend, that they will also abolish wealth tax and capital gains tax because their Ard Fheis mandated them not to introduce it and to oppose it.
That statement is not true, like the other statements the Minister has made about this party.
No doubt Fianna Fáil will also proceed to restore many other privileges that we have removed, including the privilege of exemption from taxation on mines.
(Interruptions.)
The Minister, without interruption.
That is another interesting example. It will be recalled that when Fianna Fáil were in power in 1967 they granted a period of exemption for 20 years to the mining industry. The interesting thing is that they granted that exemption although nobody asked them for it. They are now giving pledges when they are being asked for them and because they are succumbing to intimidation which our Deputies will not succumb to. We are being told about many other privileges they will restore.
Where are the Government Deputies now?
We might have a House, just to hear the Minister. It would be no harm to get a little support from them.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
I was pointing out that just nine years ago the Fianna Fáil Party gave a 20 year exemption from taxation on mining profits although nobody asked them for it. My distinguished predecessor, the late Deputy Gerard Sweetman, was present at the meeting when this bonanza was thrown out, although unasked for. As he said in this House, God be good to him, he nearly fell off his chair with shock and so did his colleagues.
(Interruptions.)
It is also the attitude of Fianna Fáil in relation to many other things: let off those who are best in a position to pay but screw those who have no opportunity of avoiding it. That is not acceptable to this Government. We will never subscribe to that attitude. All this should be carefully weighed by people when they consider a very fundamental issue: the whole approach of political parties in the country to the question of who should pay to run the country.
And who should produce the wealth and what has happened to our economy.
We believe that all should make their fair contribution. To listen to the Fianna Fáil Party one would think that wealth was not generated by anybody in the country except the wealthy. The labourer who sweats and dirties his hands generates wealth and yet has to pay income tax under PAYE.
There are 150,000 of them on the unemployment register and they are not wealthy.
The person who receives and invests money is also generating wealth and also has an obligation to pay tax just as much as the labourer because all enjoy the blessings and the benefits of our society. No person should get exemption because he happens to have more wealth than another. All should pay their fair share. That is all this Government have ever endeavoured to do.
Like the export companies.
The export companies, as Deputy Colley knows well, —this is about the only point he can make—got exemption from us because of the need to attract them to Ireland.
(Interruptions.)
The Minister, without interruption.
Many of them would not be here if they did not get exemption from tax. Exemption from tax attracted them into markets where they had never previously considered going. All of those things have helped to provide jobs which in turn have generated wealth and have given an opportunity for people in the country to expand. If we carry Deputy Colley's argument to its logical conclusion we should abolish all taxation——
Let the Minister apply that to the co-operatives.
——on effort, not merely by the entrepreneur who invests but also the worker. Fair enough. Where then do you collect it? Deputy Colley knows that you have then to collect it by way of indirect taxation. We had months of opposition by the Fianna Fáil Party going on while we discussed this Finance Bill, objecting to indirect taxation on some of the less essentials of life. There has to be a balance. We never pretended otherwise. We are very far from even striking a balance but we are at least taking a step in the right direction when we are asking for a contribution of a couple of million pounds from an activity which has a turnover of £750 million, which has disclosed profits of £18 million and which is on a growth path.
On borrowed money.
That is where I met their problem.
Progress reported; Committee to sit again.
The Dáil adjourned at 8.30 p.m. until 10.30 a.m. on Wednesday, 19th May, 1976.