Deputy O'Kennedy has 46 minutes remaining of the time allotted to him.
Financial Statement, 1977: Motion (Resumed).
Debate resumed on the following motion:
That Dáil Éireann takes note of the Financial Statement made by the Minister for Finance on 26th January, 1977. —(The Taoiseach).
I had been analysing this budget on the basis of its consistency or lack of consistency. I said it must be tested against consistency with an overall economic plan presented by the Government. On that basis both the Government and the budget fail, because there is no overall economic plan by which the Government or the public can judge the direction of this budget and in the absence of such an overall economic plan, the budget does not fit into any consistent pattern.
The second test of consistency would be the consistency of the budget statement with statements made by the Government themselves within a matter of months before the budget statement here. Again, I refer to the statement of the Taoiseach in which he said the budget would not represent a primrose path, and I referred to the statement made by the Minister for Finance himself, that it was a time for discipline, restraint and so on. I made the point that if it was not a primrose path, obviously the Minister for Finance intended it to be a rose-strewn path, which, like all rose-strewn paths, would have some hidden thorns. I suggested that these thorns would emerge later in the year.
The third test of consistency is the consistency with previous budget policy. I referred again in that connection to the complete turnabout in this year's budget from last year's proposals. Last year there was a taxation provision which yielded £115 million more than the Minister for Finance himself expected he would get. That is an extraordinary admission, in the first instance, of deplorably bad accounting and, secondly, an extraordinary admission of the fact that the tax impositions of last year were excessive and savagely so. Therefore, when we look this year at what is being done we try to see how this year's proposals coincide with last year's or any previous year's.
It is necessary to look, first of all, at the tax allowances being introduced, and it will be seen that last year the imposition of tax was so severe that, even as Deputy Luke Belton, who spoke before me, will have to acknowledge, the budget was not very well received by the ordinary person who had to pay these extra taxes. This year there has been such a surplus from last year's penalties that the Government might have done what we asked them to do last year, that was to give significant tax allowances for the purpose of generating employment and ensuring that the tax which would be accruing to the Exchequer from this increased employment would be applied to the economic and social programme the Government should have.
We are expected then to assume that, by comparison with last year's budget, this year's is a mild budget, in the sense that, whereas last year savage tax increases were imposed, this year there is a measure of tax reliefs. Let us look at some of the tax allowances that have been proposed, and I am referring to the summary of the budget proposals which was presented to us on the evening of the budget debate. For the lower paid man—and the trade unions have for a considerable time been highlighting the need to support and protect him—a married man with no children and whose income is approximately £2,000 per annum the tax saving will amount to £57.40 or a little more than £1 per week. The saving is marginally more —£62.40—for a person in similar circumstances but earning £2,500 per year. But let us look at the position of a person earning £15,000 per year. Government Ministers and, in particular, the Taoiseach come within this category. The tax saving in this instance is £1,200 per annum. Where is the consistency in a budget that provides for a tax allowance of £1 per week for the man earning £2,000 per year and of a saving of up to £30 per week in respect of those in the top income bracket? The Government must be seriously concerned with the divisions that have been created in our society—between urban and rural populations, between the management and employee sectors, for instance. However, the Government go the other direction in this budget by way of reaction, I understand, to the complaints which emerged from the business sector and those in the higher income groups. Suddenly tax concessions are being given to those groups which are of the order of 30 times as much as are being given to those in the lower paid categories. By any standard there is a lack of consistency in this move. Anybody studying the budget must ask what the Government are aiming at. Anybody comparing the budget statement with statements made prior to budget day or even comparing the budget's provisions with each other would not be able to identify any consistency on the part of the Government in relation to policy.
Having regard to the tax impositions of last year, which were penal, it was obvious that a change was needed in the area of tax allowances but the change should have been of the order that Fianna Fáil asked for in their policy document on the economy because it is only by creating an initiative to work that we will get the country moving again. We must assume that the changes were intended in the right direction but by trying to over-compensate all in the one year, instead of redressing the balance in a two- to three-year period, in respect of those groups at the higher level of income and who had become disillusioned with the Government because of a lack of investment confidence, the Government have gone totally in the other direction. The imbalance in our society remains and the comprehensive national response that is needed has been prejudiced further.
Let us take, for example, the whole question of education and, in particular, the higher education grants. The Chair will be aware that, in accordance with the standards of this Government, a man with two children and earning £2,200 per annum is considered to be sufficiently wealthy to be able to pay for those two children at a university or at another institute of third level education. In other words, that man, on £44 a week, is considered to be comfortably off. However, I shall not deal with that issue since it was aired to a considerable extent last evening by Deputy Wilson. Surely a man in that position should be entitled to the same allowances as are given to those in the £10,000 to £20,000 bracket. Instead, the person at the lower income level is getting the worst of both ends of the stick. He is not getting the tax allowance and neither is he getting the benefit of the saving that may be effected in so far as the Government are concerned in relation to the education of his children. The person at the £2,000 to £3,000 level is being included in the same grouping as the man in the £15,000 bracket in so far as ability to provide for the educational needs of children at every level is concerned.
It is not surprising, then, that people such as railway porters, should approach me and ask why, in respect of a child who obtained, say, seven honours in his leaving certificate, there is no entitlement to a grant for third level education. These people say: "We thought there was in operation a higher education grant scheme." We have to tell them that the Government have failed to increase the threshold so as to take account of inflation. Obviously, those people are confused because so far as they are concerned there is no higher education scheme.
Let us turn to the other test in respect of consistency—the test applied objectively by outsiders who look at Ireland in order to see how we stand, to ascertain what kind of economic position we are in. Some months after the Minister for Finance had warned us about the state of the economy, he announced that the recession is over, that he wants to hear no more about it. The gospel, according to this Government, changes from day to day. Apparently, nobody thought of telling people outside the country that the recession was over because people from outside interested in investing in our country or those who we hope will support us to a considerable extent, as the EEC have supported us for the past number of years, take a different view. If we wish to have support for our development programmes either from the Community or from investment sources abroad we must see the position as it is. But the Government do not see the position as it is. They say the recession is over, that henceforth we move onward to glory and prosperity.
However, the EEC do not believe that to be the position because within days of the Minister giving us this news, the Community stated clearly that the position is not as the Minister would have us believe. They did not say this by way of contradicting the Minister because they had reached their conclusion before he made his statement. The Community have laid down the same conditions for loan support or grant support as they have consistently laid down during the course of the recession. Consequently, when they hear that, by a wave of a magic wand, the recession is over so far as Ireland is concerned, they will not be sure as to what position the Minister represents when he is seeking support later.
This attitude on the part of the Minister weakens, if not undermines, our position internationally. The Government tell us that we are marching forward to progress under a competent leader but there are different views in that regard. In this context I should like to quote from Time magazine for February 7. I am not saying that this publication is always expert in its comments but it is a recognised international magazine which takes a broad view of affairs. In an article relating to political life here Time magazine had this to say at page 14 of the issue I have mentioned:
The best-known among them is the uninspiring Prime Minister himself, Liam Cosgrave, 56, son of William T. Cosgrave, Prime Minister of the Irish Free State from 1922 to 1932. Cosgrave, who sometimes seems as much concerned with horse racing as with political complexities, presides over a disparate Coalition of his own conservative Fine Gael party and the left-of-centre Labour Party, which has a program of heavy social spending.
That is how others see us. They go on:
Taking over in 1973, this unlikely partnership launched the Government on the greatest spending spree in Irish history.
We said that at that time. By launching itself on the greatest spending spree in Irish history this Government created expectations in the public mind that it was there for all, although it was quite evident there was need for restraint, discipline and control. Ever since then they have been vainly trying to overcome the consequences of their rush to popularity in their first budget. If we had expressed judgment in those scathing terms we would be accused of being partisan. This is judgment of a political commentator from Time magazine. He goes on to say:
Within a year, the oil crisis has blocked the great leap forward. The trade deficit nearly doubled, to $1.15 billion, forcing the Government to borrow abroad and run deficit budgets at home. As a result inflation flamed up to an annual rate of 19%.
They can see clearly what the Government here are apparently choosing to ignore.
Meanwhile, the ineffectual Cosgrave failed for months to get Ireland's 90 unions to agree to a wage pause. The consequences of his administration's helpless floundering provoked condemnation not only from Common Market officials but also the Bank of Ireland, which noted that the country was running "head-long for disaster".
If that is the picture of our economy which is being presented to the world at large what business has the Minister coming in here and saying that the recession is all over? No one else sees it that way. By any standards of consistency with Government concepts of programmes which do not exist, with previous budgets, within itself as I have illustrated, or with opinions outside, this budget fails utterly. It is necessary to economic policy that we present a picture of Ireland at home and abroad, as being set on a clearly defined path which the Irish people can follow and which people abroad can recognise so that they can have confidence to invest in this country with the knowledge that that consistent path will be followed. There has not been a consistent policy; therefore the lack of investment confidence is a direct consequence of the inconsistency. When speaking on the budget Deputy Luke Belton said that it was a budget which serves as a very useful means to increase the popularity of the Government. We are all in the business of political popularity in a sense, but it should not be used to the disadvantage of our national economic development.
The Minister for Finance has acknowledged that approximately £1 in every £3 collected in revenue from taxation is going to pay the interest on our borrowings abroad. This is a damning indictment of Government policy. We are not that well off that we can afford to pay that to other nations that are in a more secure position than we are to service our ordinary administration. The borrowing could be justified to some extent if it was for productive purposes. We have been borrowing simply to pay our running expenses without having a clearly defined development programme. We are injecting, as we have been doing for the past three or four years inflation into our economy.
Why is the inflation level in Ireland much higher than in other European countries? Is it because trade unionists are less disciplined than in other countries? I believe our trade unionists are as responsible as any other group. If we have a higher level of inflation it must be because of some other factor. The reality is that we have been doing the classic thing as far as inflation fuelling is concerned: we have been borrowing for ordinary administrative purposes. That is why Ireland is suffering where other countries are not suffering to the same extent. The decision lies with us. Although this budget is an improvement it does not correct that to any considerable degree. We are still borrowing at the same level and we are not creating as Fianna Fáil proposed the type of jobs that will give employment, will create productivity and will once again arouse the confidence of our people.
I welcome the fact that the Government to some extent have been able to control the level of State expenditure. Other areas which have not been looked at in public administration such as the health services the possibility of increased domiciliary care which would cost less than institutional care, and so on could be looked at with a view to cutting down on public expenditure. If we are to have deficit budgeting of the kind we have had over the last two or three years there is only one justification. It must be used to promote and maintain growth. To the extent that we have not done that we have fuelled inflation at a rate which is unknown to other European countries and which leaves us in a very unsatisfactory position vis-à-vis the people we have to compete with in this area.
This Government consistently pointed to external factors as being the source of all our problems, and now we find that the inflation rate here is much higher than anywhere else. Therefore inflation can hardly be caused by external factors. If we were a major economy we would be contributing perhaps to inflation in some other country. Fortunately we are not. The European Community has been blamed to some extent. In the last year before this Government came into office the Fianna Fáil administration had to subsidise our farm exports to Britain to the tune of over £35 million which had to be paid by the taxpayers. When we joined the European Community the need to pay a subsidy was obviated. The £35 million was spent on social welfare as had been promised and the Minister for Finance made a great boast about it. If this Government were faced with the position that the Fianna Fáil administration were faced with in comparable terms they would be paying over £100 million of taxpayers' money to subsidise our farm exports to Britain. They are saying that. They are operating under more favourable circumstances than the previous Administration were who had to find this money to maintain our exports. Still they blame external factors. There is a lack of reality there.
To bring us to the question of agricultural exports, it is fairly evident that agriculture prior to our accession to the European Community was starved of the necessary capital. That was the big problem of agriculture, capital starvation. They were not getting a fair market price. They were tied to a limited market which we had to subsidise. Now they get a market price under the operation of the CAP and the result is that capital has increased, new activities have emerged and new confidence is being engendered. There is, and we all knew there would be, an increase in the standard of living in rural Ireland and particularly on the farms but, perhaps understandably, there would be a reaction from urban Ireland saying that farmers are doing so well now that it was time they were included. Everybody, even in the farm organisations, recognises that as a consequence of entry into the European Community and the increase in incomes they have an obligation to pay tax. We are agreed on that. It is the manner, the amount and the level of taxation that we want to question and particularly the application of it to the lower-paid groups and those engaged in off-the-farm employment.
The Minister said last year that the revenue from taxes on farms was £1.6 million or something of that sort and this year he is budgeting for £35 million. He did not tell us how that figure emerged. I cannot understand how if you bring in an extra 6,000 farmers between £100 and £75 valuations where you had 9,000 over the £100 valuation, even allowing for increasing the multiplier from 40 to 65, you are going to get a jump of anywhere near that figure when those included amount to less than half of those who are already included and who by definition have lower valuations and therefore will by definition be paying a lower tax on the notional system. Whatever figure he intends to get from them he did not tell us, but it cannot measure up to anywhere near £35 million.
We come then to the other group who are engaged in off-farm working in one form or another, as Deputy Callanan was pointing out, those who have another trade or profession. The Minister has abolished the threshold of £50 in respect of those. What exactly is meant by trade or profession—trade in particular? I have a fear that all of those who work off the land to earn extra money to put into their lands to create development on their small farms of £20 and £15 valuation are afraid, with justification, that the net is going to include them. Otherwise we do not get anywhere near the figure of £35 million. It is not there on the basis of the inclusion of £75 valuations. That means that the kind of man that we know so well in rural Ireland who goes out doing odd jobs such as an extra bit of building here and there, whom Deputy Callanan might call a handyman and is self-employed, will be caught. He is going to pay tax in any event because under the system of last year he will be accountable to sub-contractors for various things, VAT and so on. If he is to be taxed on the notional basis on his valuation this is going to be a crucifixion for him. How many people supplement their incomes by work off the land?
It is all right to have a threshold of £50. The person with £50 valuation was already fairly secure. When you abolish the thresholds entirely you bring in all kinds of problems. I give as an example a person with a young family with, say, £25 valuation who I think is a reasonably representative animal. If he is already paying tax on his other income, which he should be, and has exhausted his allowances, which he should have, that man would be paying in the order of £9 to £10 tax per week on his land simply because he is engaged in another trade. What is a trade in this sense? Is it a carpenter, a plumber? If he goes out and does jobs for an agricultural contractor is that a trade? I presume it is. Many good farms have been built up on that basis and all those who do these things will be included in this tax net. That is a terrible disincentive. It is going too far too soon. This is lumping all farmers into one group and saying that the farmers are doing too well. It would not make sense even if you lumped all businessmen in one group. There are businessmen and businessmen, from the small shopkeeper to the big supermarket owner, from the small craft industry to the huge multi-national industry. Similarly, to talk of farmers in the same way is wrong. The fact that they work on the land does not put them all in the same group.
This Government, because they want to make concessions to feelings that maybe are understandable in urban areas, have gone too far and have imposed savage penalties on the kind of people who paid terrible penalties last year. We reckon that the ordinary fellow driving a 12 hp car last year to and from work, say an average of ten miles, and using the car at the weekends, under last year's budget had to pay on average an extra £3.50 to £4 per week and yet he is the stuff and soul of rural Ireland. He is the man we want to maintain on the land. Now on top of it if he is travelling to do a small job somewhere or to engage in a trade he is going to pay it again. Where in the name of heaven are we going? In relation to that element the Government have greatly over-reacted without taking any account of the effect that is going to have on the social and economic environment of rural Ireland and in relation to farm tax generally.
It seems only reasonable that farmers should pay their share of tax of course. Taxpayers in business—the only comparable group who would be self-employed—are allowed to write off losses, expenditure for development, rates, any other things. Surely the same principle should apply to farmers. Also, the same principle of payment should apply to the farmers as to businessmen. I sympathise with and support the case being made by the farm organisations that when they need capital it is extraordinary that they should be asked to pay their tax liability on a date before they have earned their income. The Minister said "The fastest way to bring them into line is to introduce this system and this payment". It is the fastest way all right but not the fairest or most effective way. Again we see that the Government have over-reacted in an effort to reassure the urban dweller by having a go at the farmers.
This Government have done damage long before this by creating divisions in our society. The day they announced their wealth tax and the capital gains tax they, by definition, said that there are very wealthy people in this country and many others said "Yes, of course there are". The reality is that by comparison with other countries with enlightened social programmes, such as Sweden, Holland, Belgium and Norway, there is no wealth in this country. It is not a sin to have wealth in these countries. It certainly is a sin not to have adequate Government social programmes to look after those who may not be as wealthy as others. But no, we divided our community at all stages within this last few years and we are still hell-bent on doing it. As long as we continue to play one against the other we will never get that national response on an overall basis that is so vitally important to any climate of comprehensive national development.
We looked at these proposals to generate employment. Again we have a stop-go, itsy-bitsy position. We have development grants, which I recommend and welcome, and tax allowance for industry, particularly those related to productivity. They are the most imaginative and will be the most effective. I have never been convinced of the effectiveness of the employment premium scheme. To encourage people to take on men just for the sake of taking them on is not an answer to any of our problems. To encourage people to create productivity which will demand more men is another matter.
I welcome the incentive for productivity in the tax allowances to industry. There is little or nothing in this budget to encourage productivity in the building construction industry. We all recognise that industry as the touchstone of industrial and economic development. Through the Minister for Local Government, ex post facto, with retrospective effect, the Government cut off the housing grants to certain levels of people and therefore people are not encouraged to build for themselves. They were cut off after the event when many of them had their houses well under way, and some of them were living in their houses. The grants were cancelled because of the tight budgetary situation. At the end of the year what happened? The Government had £115 million more than they expected. Where is the consistency there?
A few weeks ago the same Minister cut off the reconstruction grants. Apart from equity of justice, let us talk about the economic effects of that. Surely we should be in the business of encouraging housing development and housing extensions, and the employment which goes with them. This area has not only not been encouraged, it has been penalised by the decision of the Minister for Local Government on behalf of the Government. That is another inconsistency. How can a small builder who is depending on his house building programme know whether he can take on men from one year to another? Would not a sensible and prudent man say to himself "I will not risk it under this Government". He will not risk it. These small operators are the stuff of national development and they should know where they stand.
I welcome the productivity scheme. The employment premium scheme has not measured up to what the Government expected. I hope its extension will help, but the way to go about it is through productivity. If the Minister is including £4½ million in his budget for the operation of the employment premium scheme, he seems to have made another wrong estimate. It is quite clear from the money which will be saved on social welfare payments, from the increased taxation which will be paid by those who will be taken on, and from the increase in the stamp which will be paid by those who are employed, far from needing extra money there will be a saving to the Exchequer as a result of the employment premium scheme. That is a good thing. It should not be criticised just because there will be a saving. Will the Minister tell us where the figure of £4½ million comes from? On the question of youth unemployment, we have the application of the premium scheme to young people for the first time, excluding the building industry which was an extraordinary decision. Young people will now be included to the tune of £10 per week. To that extent it is to be welcomed, but we cannot look at it in isolation. We have to look at what the Government are doing for young people generally and the educational structures through which these young people will come into employment. The young people I have met who are looking for employment are all of a kind. They are boys and girls who have come through the academic stream of secondary education. Even some of those who have come through the academic stream of third level education are looking for jobs.
You will find BAs and H.Dips. driving buses these days. Young boys and girls with two or three honours in their leaving certificates are looking for jobs. Why? Because the Government have not developed the comprehensive educational programme on which Fianna Fáil had launched themselves over the past number of years. I do not know any young qualified apprentices who are looking for jobs. The need is still there for them. If there is productivity these young men will be needed. I do not know anyone with specialist qualifications who is looking for a job. It has been frustrating to meet young people every weekened for the past two years looking for a job, any job. These young people have not been directed through the proper streams of education. The Government have done a disservice to them in not proceeding with the comprehensive education programme we had in the community schools. They produced the Thurles compromise and other compromises. You cannot compromise all the time for the sake of popularity. You must have the determination to do the right thing. The worse compromise of all was when that magnificent concept— and I say that advisedly—of the Institute for Higher Education in Limerick as the pinnacle of the second level sector, was brought in under the universities. By definition universities are autonomous and they will introduce their programmes to suit their needs. They cannot be blamed for doing so.
We believed the new concept would be geared to the national need and the national potential. What did the Minister for Education do with the support of his Government? He decided there was some reaction somewhere and he brought the concept back under the universities. What a miserable decision to take. What a lack of confidence in the future and a lack of confidence in what these people could achieve and the contribution they could make. If these young people are properly qualified to contribute to developing programmes on the land, in industry, in business they will create opportunities for themselves. I have an arts degree in classics of all things but I recognise there is room for only a few of us.
Last year the census was abolished for the sake of a miserable £1½ million. Assuming £1 million was available for wages and salaries and £500,000 for administration costs, we could have employed 1,000 young people for six months at £40 per week, or 2,000 for the same period at £20 a week. Could there be anything more appropriate for our young people than that they should be engaged in surveying the national scene so that a national plan, such as I have been asking for since I stood up, could be drawn up in which they could play a very effective role in the future? Surely a Government who can find an increase in revenue of £115 million should have a place for a programme to give employment to our young people which would be entirely consistent with proper planning, belief in our young people and the basis for the future. But no, neither was their confidence in the young nor had they concern for the future and so we find that for want of that miserable sum our young people are left wandering and waiting and have no part in our future plans. We come back in the final analysis to the overall concept and the overall plan and we come back to the confidence the people will have. If there is confidence in where the Government are going, I cannot see it because I cannot see how the people can discern where the Government are going. I know that they intend to go but I see no clear path that anyone could follow. I see nobody pointing clearly to that path or identifying it either at home or abroad and until such time as it can be clearly identified, obviously people cannot follow it.
The last time we got significant mention in Time magazine was when the late Seán Lemass was Taoiseach —cover mention—when we were described as a country on the move. We were moving then with confidence. By contrast with their comment then, the comment now is on a Government helplessly floundering not knowing where they are going. We can leave it at that final word, the judgment of other people. Until such time as we get back to tackle these basic problems of confidence and direction, I fear that judgment will prove to be too correct with all the sad consequences it has particularly for the most deserving and least protected elements in our community.
It is usually a pleasure and very often enlightening to listen to Deputy O'Kennedy but the speech to which we have listened has been, to say the least, less than fair to the budget. By nature, he is a fair-minded Deputy but, nevertheless, he has followed the same lines as his colleagues have been pursuing since the Minister for Finance delivered the budget statement. It is pathetic to observe the tortuous antics of an Opposition devoid of an alternative to what the Minister produced. This day week while I listened to Deputy Dowling I had to stop and think for a while to determine whether he was speaking about the budget or whether I was making a mistake and that the House was dealing with the Estimate for the Department of Defence. I admit I felt sorry for the Deputy in his rantings and ravings about the Army because I know he has an interest in the Army and Army affairs but he belongs to a party that for 16 years ignored the Army. In those years, had they spent a few pounds per annum in maintaining the manpower and buying equipment the bill which the National Coalition had to meet for security through the Army in the past three years would have been much less. When this Government took over, the Army was completely run down in manpower and had little in the way of modern equipment. I can assure Deputy Dowling that today we have an Army with the highest manpower ever in peacetime, fully equipped and ready to play its part should the need arise. We hope it will not arise.
The budget has probably had the best reception by the public of any budget as far as I can remember as a Deputy. I should like to add my congratulations to the Minister in having achieved this year what nobody thought was possible, even coming out of a recession. This is one place where I take issue with Deputy O'Kennedy when he quoted from Time magazine and he stated that in the second year the oil crisis blocked the great leap forward. Of course, it did. The oil crisis was but part of the recession out of which the world is now emerging and we in Ireland, a very small cog in a very big wheel, would have felt that recession severely. Now that we are moving out of it, I think the budget produced by the Minister merits the utmost congratulation.
In every sector, in every Department he has been able to make changes or give relief. Probably the most significant improvement has been in the social welfare field. Today social welfare recipients are not going on their knees to their neighbours or near relations begging for help. If one looks back over the past 50 years, those of us who can do so, there were recessions when many people in the country were hungry. Thank God, we can hold our heads high today and say for the past four years when we were really going through the mill economically as a result of the world depression nobody was hungry. If there was, let it be on the heads of the social workers, councillors or Deputies if they ignored anybody who was in need because provision was made in successive budgets to meet the needs of the less well-off sections of the community. I know from experience that they are most grateful.
In a previous budget debate I mentioned the plight of a certain section, single women who, through no fault of their own, had to remain at home looking after a parent. Eventually they found themselves without any means of support, and were like the man in the gospel "to dig I am not able, to beg I am ashamed". In the Finance Bill the Minister brought in a very welcome measure which is appreciated very much by that section of the community.
Has any section of the community not been covered? The answer is probably not but there is. I am referring now to the family where the father is dead or the breadwinner is incapable of working through illness or for any other reason. A teenage member of that family has to go to work to keep the rest. Because he has not custody of the family, he cannot claim the full allowances for them under the income tax code. I ask the Minister to include them now. There will not be many such people, although I know of three in my own constituency. These young people could be starting life with a chip on their shoulder. They had to work to support their families and sometimes to even keep the roof over their heads, yet the tax man takes more than he should from their pay packet and makes it even more difficult for them because the pay packet does not go as far as it should. I know this is a small point but it means a lot to the people concerned. I am sure the Parliamentary Secretary will bring my request to the notice of the Minister and he, in his charity and because he has a way of looking at problems in their true light, will do something for these people.
As a rural Deputy, I might be forgiven for saying that "fools rush in where angels fear to tread". I have no hesitation in saying that on the day before the budget there was not a farmer who did not feel he was going to be caught in the tax net. The day after the budget many of them heaved a sigh of relief and others were not satisfied with their deal. Over the last four or five years, especially since Deputy Clinton became Minister for Agriculture, his work has put farmers in the position where they are no different from any other section of the community. They have earned an income and are prepared to pay their share in taxation.
There are anomalies in the budget proposals. I have already brought these to the attention of the Minister for Finance, as have other rural Deputies. If the farming organisations wish to be received to discuss these proposals, they will be seen by the Minister for Finance and, if necessary, the Minister for Agriculture, so that problems can be ironed out. One point which appears to be escaping the notice of many people, including the farmers, is the date set in the budget which is taken as 1st September. If the bill is not paid by 1st November, they will be charged interest. Although 1st September is mentioned, it is 1st November which is the crucial date.
Many farmers have had dealings with the Agricultural Credit Corporation and their payments fall due on 1st May and 1st November. I have never heard any complaints from them about these dates. I have occasionally been in contact with people who wanted an extension and that was always given. The 1st November is a more realistic date than 1st September. As I said earlier, there are anomalies. People should not be asked to pay tax on what they have not already earned.
The allowances to farmers bear no relation whatsoever to the allowances to other sections of the community. In most jobs, be it the civil service or anywhere else, a man works from 9 a.m. to 5 p.m. as a rule. A farmer, like the veterinary surgeons who made a good case for themselves last year and proved it, very often has a 24-hour day, especially in the spring when there is lambing, cows to be milked, tillage to be done and so on. It often puzzles me how these men can keep going round the clock. They get no allowances for that and that is wrong. Greater allowances should be made in regard to the men and women who do this year after year, not only in their own interests but in the interests of the national economy. These people suffer tremendous hardship to keep the agricultural wheels turning, yet they do not get the compensation in tax reliefs they deserve.
May I digress for a moment and refer to something not mentioned in the budget? The Minister did not increase dog licences by at least £10 a head. This step is long overdue. The amount he would have collected could be used to set up a fund to compensate farmers whose sheep are destroyed by marauding dogs. The situation at the moment is appalling. We talk about the French sheep market being closed to Irish mutton and lamb but unless something is done soon we will have no mutton or lamb to send. The farmers are in despair and I feel that people who own dogs should be made to pay for them, with the possible exception of old people who keep dogs not only as pets but for protection. People should see that their dogs are kept in at night. My neighbour went out the other morning and found eight ewes dead in his small flock of 30 and several more had to be put down by the vet. People say there are other ways of doing away with dogs besides taxing them but I do not agree with this either. If people want to keep pets then they should pay for them.
Deputy O'Kennedy referred to the wealth tax and said that since it was introduced we have found out that there are no wealthy people in the country. My answer is that before there was a wealth tax people had to die before we knew where the wealth was. Farms and business had to be sold to pay death duties. Nowadays when people die their heirs do not have to worry about getting the money to pay these death duties, thanks to the National Coalition.
When the budget debate takes place this time next year I hope that the present Minister for Finance will be congratulated in the same manner as this year. If there was ever a man who was maligned, who took stick unnecessarily and unfairly, then he did. Unlike his two predecessors as Fine Gael Ministers for Finance who had to leave office before the fruits of their labours were seen the present Minister's labours are there to be seen and enjoyed by all.
Listening to the Government speakers and particularly to the last speaker, Deputy Malone, one would imagine that the situation was fine.
The people think so.
I am sure that the people will have an opportunity to decide very shortly and will be able to give their opinion of the budget. This budget has been described as many things. It has rightly been described as inflationary, like previous budgets of the Minister for Finance. Inflation has been running at a rate of up to 25 per cent each year. It has been said that the budget is intended to put business back on its feet and it has also been described as a rich man's budget. It is an attempt to pacify the unions and to pacify the urban dwellers at the expense of the rural people, particularly the farming community. I refer to the unjust system of farming taxation which this Government introduced last year. Certainly nobody can describe this budget as a farmer's budget. Even to describe it as an incentive to industry is to err badly. What the budget gives with one hand it takes away with the other. Far from simplifying an already muffled tax code it merely brings further complication. The help given to industry in the budget is hedged around with "ifs" and "buts". The system is being made more complicated and will make more work for the officials of the Department of Finance. Certainly we will have to pay more in salaries to the Department of Finance and probably to several other Departments. The budget is said to provide an incentive to the management sector but one must ask if it really does that.
Some may take the point of view that it is a bit late to do this when very many of our best managers have left the country. They were taxed out of reason by the Government. As well as-that, the money that was invested in the country in the past during the glorious years of Fianna Fáil Government is now being invested elsewhere. The Irish people are losing the benefit of this investment with the result that the Government now have to borrow heavily abroad.
Deputy O'Kennedy stated that £1 in every £3 now goes to pay for foreign borrowing. This is wrong. If we encouraged investment by our people in the country we would not need outside borrowing. When we have a Government comprised of parties like Fine Gael and Labour we realise why this must be done. We can see how disillusioned most of the managerial section of the community are. Quite recently, I heard a person describe his predicament. He said that he worked from 9 o'clock to 11.30 for himself and that he worked from then onwards until 5 p.m. for the Minister for Finance. It is rather frightening when one realises that a huge proportion of what a man earns each day is given in tax.
Where is the incentive for increased production? Where is the incentive for people in business and our farmers to increase production for the benefit of the country? When people realise that half of their earnings goes in tax there is no incentive. The Government must provide incentives if we want to get the country back on its feet. Income tax is a crippling load for everybody. No country no matter how socialist in outlook it may be can afford to lose the section that are trained for management and for their particular ability in the managerial sphere.
It has been said that the budget has helped the working class and the poorer sections of the community. I do not believe it. A miserable rise has been given to social welfare recipients when one considers inflation and the increase in the cost of living index over the past 12 months. We had an increase in the price of coal about the time the social welfare increases were announced. Those increases do not come into operation until the 1st April. If one assumes that two bags of coal are needed every week to heat a house, one realises that over £1 of the social welfare increase will go in the increased price of that coal. This does not take into consideration the increases in everything that have taken place over the past 12 months. The budget does not take into consideration the vast increases in indirect taxation and the increased price of commodities. It is wrong of the Minister to say that he has helped to any degree the poorer sections of the community. He gave very little help to the worker to whom the hackneyed phrase "backbone of the country" is applied.
Debate adjourned.
The Dáil adjourned at 5 p.m. until 2.30 p.m. on Tuesday, 15th February, 1977.