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Dáil Éireann debate -
Thursday, 20 May 1976

Vol. 290 No. 12

Finance Bill, 1976: Fifth Stage.

Question proposed: "That the Bill do now pass."

Deputy de Valera has referred to the magnificent performance in producing so quickly the Bill as amended in Committee. Unfortunately, it was not possible for him to congratulate the Minister on the speed with which the Bill was produced originally. While it is legitimate for the Minister to refer to the statutory constraints which apply to us in regard to the passing of this Bill and to the difficulties we face, nevertheless it is not giving the complete picture if reference is not made to the fact that there was an inordinate delay in producing this Bill in the first instance. I was obliged on a few occasions to raise the question in this House and to advert to the dangers of having to rush it through at the end, as we have had to do in the past in the case of Finance Bills, or when we had to sit all night and still were not able to deal adequately with it because it was not produced in time.

As the Minister knows, last year the statutory provisions were changed and extra time was given during which the Finance Bill might be passed. If that had not been done, if we had been operating this year on the statutory provisions under which we have operated for many years, then we would have been two days late for the passing of the Second Stage on the date on which this Bill was produced. There were other delays subsequently. Let us keep in perspective what was the cause of this pressure on us in dealing with the Bill. I submit the major cause of the pressure is delay in producing the Bill and in producing the amendments the Minister announced he was going to introduce.

It is unfortunate that there were important aspects of the Bill we did not get the opportunity to discuss. In particular, I should like to refer to the increase in what is commonly called the road tax on motor vehicles. This has been savage and unjust, particularly as it has been applied to cars already owned. I do not know if the Minister is aware of it, but in many cases following the Minister's announcement in the budget many people have care that overnight were reduced in value by something in the region of £1,000. I do not think this was either justified or necessary. If the increase in rates of duty which the Minister announced were necessary— and many people would question this —there is no reason why they should not have been applied to newly registered cars. If that had been done, at least one could say that if a person chose a car subject to that duty he was doing it with his eyes open and he knew what he was letting himself in for. However if a rate of duty is introduced which has the effect overnight of reducing cars in value perhaps by £1,000 as happened in many cases, the Minister has an obligation to look again at what he is doing and to see if it is necessary and justified. I submit that in that case it was neither necessary nor justified.

Another matter we did not get an opportunity of discussing was the proposal incorporated in this Bill now as part of the law to take away from farmers the refund of 1 per cent to which they had heretofore been entitled as compensation for the value-added tax they paid out on their inputs into farming. I can recall when introducing VAT originally that this figure was higher. Speaking from recollection, I think it was 3 per cent because the VAT was being applied to a wider range of the farmers' inputs than was decided eventually. We managed to avoid that on certain items and thereby to reduce the figure to 1 per cent. It is very important that what is involved here is understood.

Farmers are engaged in business but, because of the nature of their business and their sales, it is extremely difficult to treat them in the same way as other businesses and allow them to recover the value-added tax they pay on their raw materials the business inputs they have. In any other business the trader is entitled to recover the value-added tax he has paid out so that ultimately it is the consumer who pays the net VAT. There is a difficulty in the case of the farmer but this was met reasonably well by working out an average figure that would apply to the average farmer. It worked out at 1 per cent and the farmer was getting this refund.

In addition to the various other things the Minister has been doing some of which have been quite damaging to agriculture, we have this proposal which we did not get an opportunity of discussing of taking away this 1 per cent refund. Whatever reasons might be advanced on a practical level for doing this—I am not aware of them but there may be some —one thing there cannot be any dispute about is that it is wrong in principle under VAT to take this away. What it is doing, in effect, is that it is treating the farmer as the ultimate consumer in the same way as the person who buys in a shop from the retailer is the consumer. It is treating him that way in regard to the items he is using as part of his raw material in the whole process of farming. Whatever reasons may be advanced on a practical level for doing this there is no justification whatever in principle. If this is justified in principle under VAT then there are all sorts of other steps which may be justified in future but which will totally defeat the whole principle of VAT and return us to a form of sales tax. That can have serious consequences for the Revenue and for our contributions and assessments of what we receive from the EEC. I have not time to develop that but I am concerned at this departure from the basic principle of VAT which is also damaging to farmers and which is taking away something which was worked out when we introduced VAT as a fair method of recompensing to farmers the VAT they were paying out on their raw materials.

We have dealt with the other aspects of the Bill as well as we could in the time available—the various income tax provisions and, of course, the pretty savage impositions in regard to beer, spirits and petrol. We have extracted from the Minister the information that the increases in all these items have been in the region of or well beyond 100 per cent since the Government took office. The increases would be extremely serious at the best of times but they have added to them the ignominy of occurring under the regime of a Government who came into power pledged to halt price rises and stabilise prices.

The VAT increases across the board were serious in their own import but more serious in so far as they have contributed this year to the highest rate of inflation in the world of any developed country with the consequent serious repercussions on national pay agreements negotiations. That in turn has serious repercussions on the Government's need for further money to finance the ordinary running of the State which will bring the Government back here squeezing even more any possible area of revenue and stifling even further any chances of growth and entrepreneurial skill that may still be left here. The approach which says: "There is a loophole there; we will close it by affecting everybody," is very common from this Minister and is well exemplified in this Bill.

We touched on one aspect of that a short time ago in relation to the introduction of the concept of continuous liability for tax on motor vehicles, whether one is using them or not, whether they are laid up or not. This is the same approach. We have seen and discussed at considerable length the implications of the abolition of exemption from taxation of the activities of agriculture and fishery co-operatives in so far as they are exempt at present. Of course, many of their activities are not exempt at all. In so far as many of their activities were obtaining exemption and, in the Minister's view, should not have been, the right approach of the Minister would have been to bring in proposals for extending their liability to tax in respect of those activities. The Minister adopted his usual method of the blunt instrument ignoring the consequences for employment, particularly, the key question here today. The net effect of that proposal, and other proposals in the Bill, will be to reduce employment where the Minister should be straining every nerve to increase employment in any way possible. The creation of one job should be vital to the Minister for Finance today whereas it is a question of these measures causing the disappearance of thousands of jobs if one takes all of the provisions and their effect on our economy together.

It is unfortunate that this country at this time should be subjected to the blind and ignorant, in the economic sense, ministrations of this Government. The alternative to that is to assume they are malevolent. I am not prepared to make that assumption. One can only assume that such steps and such results come from sheer economic ignorance. It is sad that this country at this crucial time should have to go through this ordeal with this kind of economic ignorance predominating. However, it will not be for long.

There is a very difficult task ahead of the next Government but it is not insuperable. It can be done and it will be done. This country will be got moving and we will get growth back into our economy. We will get the kind of economy in which it will be possible to achieve real equity, not paper equity in taxation by reducing the level all round but real equity and real equity involves the opportunity for people to get a job. A situation in which people cannot get a job is not equitable. This Bill will not contribute to the creation of a situation in which people can get a job. On the contrary, it will clearly contribute to the situation in which more and more people are losing their employment. I can only hope that in the near future the opportunity will be given to the people to express their verdict on what is in this Bill and on the general performance of the Government. I have no doubt about the result of that verdict.

This Bill goes very much further than the implementation of the budget with some amendments. It has become a complex mass of financial legislation in itself as witness its size and the size of the amendments. It is also to be seen against the background of the history of financial legislation, capital and otherwise, in the past two years under the present Minister.

I endorse what Deputy Colley has said: if there is to be that recovery this House and the Government must function as a democratic institution. We have now reached the stage, largely by putting the pressure of time on us, when the House has become a futility. The machine's weight is now being used—I want this on the record as a warning in addition to other warnings I gave yesterday—to crush and defeat any intelligent effort to control the business of the State in this House. The Government have abdicated and the Minister is a rubber stamp to a large extent, although perhaps he does not know it. The regiment of feet that will follow the Minister into the lobby represents rubber stamps. We have not been able to consider and deal effectively here with the financial business that has come before us.

One may talk of procedure but it is quite clear that the Committee system in this House has been reduced to a farce. The Corporation Tax Bill Committee was a scandal. I agree with the Minister that it may have been done with the best of intentions; and, I sympathise and I appreciate the efficiency of the staff and the efforts that were made. But it does not get away from the fact that introducing this Bill as passed in Committee before it was passed in Committee implies that it did not matter what happened in Committee, that whatever was presented would be put through. How could the Minister consider amendments? The Bill was already printed and ready and what is said on Report Stage will hardly matter because the Report Stage amendments were small.

I am pointing this out as an objective fact, while at the same time accepting and endorsing what the Minister said about the efficiency, devotion and support the staffs are giving. It is the lead being given to the staffs, the attitude and the abdication in many ways of ministerial function that I am criticising. In passing the Bill in this way the machine's weight is being used to defeat any intelligent effort to control the business of the State in this House. The House and the Government are the foundation and support of the machinery and if the House and Government collapse into futility the machinery will be destroyed in the rubble and the consequences are fearsome.

I return to what Deputy Colley said: it is not too late to mend. Due to the situation new under this Government and this Minister we are passing what is in this Bill with incomplete consideration. Obviously, the Minister did not care what was said on this side of the House; he had his Bill printed before the arguments were heard. That is the state we are now in. I want to finish by protesting most strongly and objectively, while appreciating all the other things of which Deputy Colley has expressed appreciation and joining with the Minister in his thanks and acknowledgment of the devoted service that he and the House have got from those who prepared and arranged this very complex legislation —I do all that with a whole heart— against the procedure adopted here. I feel that at this stage somebody must point out the facts of the situation and the background of all we have had in this financial legislation. Having done that, the most that a Deputy on this side of the House can do is to register his protest as strongly as he can.

I accept the sincerity of the protest but I want to point out that there was no amendment from the Opposition since Deputy Colley's last amendment, which was to section 32. Therefore, we had no cause to anticipate that there would be amendments from the Opposition. It was reasonable for the Government to assume that since we have the undivided loyalty of Government supporters, Government amendments would be carried. We acted very properly on that assumption and our amendments were carried. We knew that our amendments, by and large, would be acceptable to the Opposition so that, in fact, we did not do anything atrocious. I think what we did was defensible and desirable and we assisted the House in what we did. Deputy de Valera is correct in that it did involve a certain amount of assumption. The Executive have no right to assume that the Legislature will do anything.

And we have the right to assume that we might be listened to.

On the other hand, that is not the way in which government in this or any other democracy can work having regard to the time, stress and other pressures upon it. I had hoped that, notwithstanding the short time for which the House had the Finance Bill as amended in Committee before it, Deputies would have noticed what is, I think, a significant and, I trust, a helpful departure. I promised that I would bring in descriptions in the Bill that would help Deputies to read the Bill. Instead of setting out in the contents section as has always been the practice in the past amendment to section so-and-so of such-and-such a Bill. I have now put in words describing the impact of the original sections. For instance with "Amendment to section 142 of the Income Tax Act, 1967" I have inserted the words "dependent relative" which obviously alerts the attention of any person concerned with dependent relatives but is not a tax expert.

All that is appreciated.

The work in doing that is ongoing work. Behind the scenes, apart from what we do here in Parliament, the Parliamentary Draftsman, experts of the Revenue Commissioners and the Department of Finance and other Departments concerned such as Local Government—they are primarily concerned with motor taxation—continue to study draft legislation as it is introduced and from time to time they submit to Ministers suggestions for further amendments. It is open to the Ministers to accept or reject them. Ministers ultimately may bring in further amendments. That is all part of the process of democracy but ultimately the decisions lie here and nowhere else. The Government have not for a moment suggested that the decisions lie or ought to lie anywhere else.

I do not accept that the Government, and myself in particular, are not prepared to listen to criticisms and observations of the Opposition. We have had a good, hard-hitting, healthy but reasonably polite debate, and as regards such uncomplimentary things as were said I accept the right of people to utter them and I accept that if I were in the shoes of the utterers I might even be less complimentary to the person doing my job. That is the way in which the process of democracy works.

We still have another House, a House which cannot make amendments to a Finance Bill but which may make recommendations. If any suggestions were made here which the House considered desirable for implementation, the other House could make recommendations and come back to us, even within the severe restraints which are ahead of us. Naturally there is play about the delay in the introduction of a Finance Bill. I am sure I am speaking for all my predecessors when I say that my great desire would be to bring in the Finance Bill the day after the budget. Again, for technical and administrative reasons it is impossible to do that. By the time you translate a simple, clear idea into legislative form many weeks pass as the drafts are looked at by a series of technical experts and then referred to the Minister concerned who must then explain them to the Government and have them passed. They are then referred back again for further and more detailed preparation.

The reason for all these delays is the ingenuity of man, the ingenuity of people who have a disinclination to pay tax, which is a perfectly healthy instinct, but it makes the tax code a complex one and necessitates the preparation of most complex formulae in order to prevent avoidance. This is the reason that any Finance Bill I have had anything to do with was not introduced earlier than it was. It was not at any time due to any political difficulty, because the decisions in the Finance Bill have already been taken and exposed to the nation in the original budget debate.

Not all of them.

Yes. There are some other ones which are of less consequence. The only reason they are not revealed on budget day is that an appeal is invariably made that proceedings on budget day are too long and that the budget speech ought to be abbreviated rather than extended. Extending it to cover all 183 sections of the Finance Bill would create an intolerable burden on those listening to the address and the main impact of the budget message would be lost in a mass of detail which is understandable only to the experts.

As far as this House is concerned, this Bill is now over and done with, unless some recommendations come back from the Seanad. It is not the last time the Finance Act of 1976 will be before the House because there was never a Finance Bill passed in this or any other country that did not have to be referred to in subsequent legislation. It is all a package which continues to grow. I know this causes Deputy de Valera and others to have sleepless nights and upset days, but there is no other way in which the affairs of a country can be run. Every now and then we could have a measure of consolidation like the consolidation of Income Tax Acts of 1967. Those who did that work did a marvellous piece of work, but maybe 1967 was more leisurely than 1976. As a Member of the House at that time I feel it was more leisurely then, and I do not think that my views have been affected by the addition of my ministerial duties.

From time to time it is necessary to have consolidation measures to get rid of deadwood. We did a great deal of that in the income tax code in recent years. We now have a new package of capital taxes, a new baseline from which to look at our whole financial code. We now need a period of stability in which we can make improvements and adjustments as the circumstances of our time may require. In a decade or two we may have occasion to have a new look at our tax code, but three years of the most fundamental work has now come to a conclusion. This Bill is part of it because it tidies up the loose ends which were left after passing the Corporation Profits Tax Act. It also does other things which were not particularly popular this year, or in any other year, but which will correct some of the undesirable trends in our public finances. I hope it is in that spirit that people will bid it adieu in this House.

Will the Minister attempt, even at this last hour, to give the House a chance to consider future legislation in detail without a time limit? We were not able to deal with this Bill as we should have. My protest and my warning is no principle, not as a political attack on the Minister or anyone else. It is meant to be a warning against the consequences of a drift in the direction in which we are now not only drifting but being swept along.

I share the Deputy's desire. I am not blaming or excusing myself or anybody else. We had the Bill for a month or more before the debate in the House. We are under certain constraints. Perhaps we should extend the period within which we have to pass the Finance Bill. I certainly did not want to have any tight constraints. We have had a lengthy debate on the Bill and some sections were debated a little longer than was absolutely necessary. As long as we have freedom of debate we will always differ on that.

When institutions become a futility these institutions pass.

Question put.
The Dáil divided: Tá, 60; Níl, 55.

  • Barry, Peter.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Joan T.
  • Burke, Liam.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Coughlan, Stephen.
  • Crotty, Kieran.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Dockrell, Henry P.
  • Donegan, Patrick S.
  • Donnellan, John.
  • Enright, Thomas.
  • Esmonde, John G.
  • Finn, Martin.
  • FitzGerald, Garret.
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Governey, Desmond.
  • Griffin, Brendan.
  • Hegarty, Patrick.
  • Hogan O'Higgins, Brigid.
  • Jones, Denis F.
  • Keating, Justin.
  • Kelly, John.
  • Kenny, Enda.
  • Kyne, Thomas A.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McLaughlin, Joseph.
  • McMahon, Larry.
  • Malone, Patrick.
  • Murphy, Michael P.
  • O'Brien, Fergus.
  • O'Connell, John.
  • O'Donnell, Tom.
  • O'Sullivan, John L.
  • Pattison, Seamus.
  • Reynolds, Patrick J.
  • Ryan, John J.
  • Ryan, Richie.
  • Spring, Dan.
  • Staunton, Myles.
  • Taylor, Frank.
  • Thornley, David.
  • Timmins, Godfrey.
  • Toal, Brendan.
  • Tully, James.

Níl

  • Allen, Lorcan.
  • Andrews, David.
  • Barrett, Sylvester.
  • Blaney, Neil T.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Breslin, Cormac.
  • Briscoe, Ben.
  • Brosnan, Seán.
  • Browne, Seán.
  • Brugha, Ruairí.
  • Burke, Raphael P.
  • Callanan, John.
  • Carter, Frank.
  • Colley, George.
  • Connolly, Gerard.
  • Crinion, Brendan.
  • Cronin, Jerry.
  • Daly, Brendan.
  • Davern, Noel.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Farrell, Joseph.
  • Faulkner, Pádraig.
  • Fitzgerald, Gene.
  • Fitzpatrick, Tom(Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, Denis.
  • Geoghegan-Quinn, Máire.
  • Gibbons, Hugh.
  • Gibbons, James.
  • Haughey, Charles.
  • Herbert, Michael.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael P.
  • Lalor, Patrick J.
  • Leonard, James.
  • Loughnane, William.
  • Lynch, Celia.
  • Lynch, Jack.
  • MacSharry, Ray.
  • Molloy, Robert.
  • Moore, Seán.
  • Murphy, Ciarán.
  • Noonan, Michael.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Malley, Desmond.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Walsh, Seán.
  • Wyse, Pearse.
Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.
Question declared carried.

This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.

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