In his Second Reading speech the Minister stated that a precept of the political belief of this Government is that people in similar circumstances should pay similar amounts of tax. We all accept that as being basic justice but it must be said at the outset that when this Government assumed office in 1973 the situation was that people in similar economic circumstances were paying enormously different amounts of taxation. In this regard the Minister referred to those who, at that time, were engaging in tax avoidance measures, who were resorting to tax havens and who, although having incomes that would put them in the 80 per cent tax bracket paid no tax. The Minister referred to people similarly situated, people who made money by way of capital gains—there were those who made a lot of money by way of land and property speculation—but who paid no tax. These people did not have to resort to tax avoidance measures because the law at that time did not render them liable for tax. Similarly there were large landowners who, if they were within the PAYE system, would have been in the 80 per cent bracket but they, too, were not liable for tax.
Regardless of what Deputy Callanan may say about election promises. I predict that there will be various promises from the Opposition during the next few weeks or months or whatever time remains before the general election. However, they cannot expect people to take them seriously in view of their having opposed all reasonable efforts by this Government in the field of tax reform.
During the 16 years of uninterrupted Fianna Fáil rule the only reform in taxation was to bring thousands of workers within the tax net with the result that the burden placed on those who were on the PAYE system increased during those years out of all proportion to the capacity of the workers to pay. We have rough figures which indicate that the income tax factor in so far as PAYE was concerned increased by ten during the last years of the Fianna Fáil reign while the contributions of the self-employed increased by a factor of three and the net contribution from companies increased only by a factor of two. Consequently, we inherited a legacy of injustice in the area of taxation. Some of that injustice prevails yet but, hopefully, the situation will be rectified totally after this Government are returned to power at the next election. During our next term of office we hope to bring about a just system of taxation. Last year alone some 650,000 workers and others within the PAYE system contributed 81.1 per cent of the total income tax paid in the country. This is a colossal figure when one realises that the last figures available show that the employees' share of the GNP was only 30 per cent. I trust that percentage has increased in the meantime. If the tax payable had been in line with income, the tax should have been in the region of 30 to 40 per cent.
Under the PAYE system there is no room for discretion. For instance, claims for expenses connected with one's work are not acceded to. There is no such thing as a car allowance and neither is there any special consideration in respect of overtime. These are matters to which we should be addressing ourselves. The question of transport to one's work has become very much a growing feature of our society, involving a good deal of expense and, consequently, worthy of consideration in terms of tax relief. I am not saying that all money earned from working overtime should be exempt from tax but a case can be made for some concession in this regard. I agree with Deputy Callanan in regard to the hardships associated with life on a small farm, hardships which should be taken into account for the purpose of assessing income tax. Similarly, those people who are prepared to forego family and social life in order to work overtime so that they might be able to buy the necessities of life for their families should be given some consideration in relation to income tax. Very often these people work in very difficult conditions, for instance, where there may be unreasonable noise levels.
However, since this Government came to office considerable improvements have been made in the whole income tax code. Capital taxation is a far greater feature and yields a far greater amount of money in most EEC countries than it does here and I think it is something that will have to be geared here more progressively as the years go by. Wealth tax, also opposed on the Opposition benches, is something basic to a just system of taxation and to the relief of those sections of our community who are paying out of all proportion to their share of the wealth.
Deputy Callanan made a case for tax on farmers and, particularly for the smaller farmer. I take his case, but the case has been made against taxation of farmers—I know Deputy Callanan did not make the case that farmers are paying rates and I think he was right not to make that case— from these benches and elsewhere that rates are a substitute for taxation. It has to be borne in mind that 75 per cent of landowners pay no rates and two-thirds of the rates on agricultural land is borne by the Exchequer and, of course, the Exchequer is the ordinary taxpayer and the ordinary taxpayer in the main is the person paying tax through PAYE so arguing that rates are a substitute for taxes does not make any case effectively and, as I said, Deputy Callanan did not make it.
It is only fair in bringing about a just taxation code to appreciate that there was not enough tax on farmers and it should have been increased as is being done under this Bill. Workers are taxed when they earn over £13 a week. Now that is a very small income. It is certainly not a living income and, when we talk about other sectors, we must realise that these are not contributing that much. There is no other sector other than the person taxed under the PAYE system who is contributing taxation out of income in excess of as low as £13 per week. Whatever multiplier you apply, whatever acreage you are talking about, or whatever other source of income you have, you will not be taxed on an income of £13 a week.
There is an omission from this Finance Bill which disappoints me. I refer to the very low rate of working wife's allowance and the fact that this has not been adjusted. A figure of £230 is very low and the whole attitude towards working wives must be altered. Under the law the husband is liable for the payment of his wife's income tax on the joint incomes of both spouses. I think this situation arises from an outdated common law entitlement of the husband to his wife's property. The theory was that the husband, on undertaking to maintain and support a wife, became entitled to her property. That principle no longer applies in regard to property rights. The Married Woman's Status Act, 1957, made wide changes in the law and ensured that a married woman's property remained her own throughout her life and can be disposed of as she pleases. Nevertheless, in the field of taxation, the out-dated concept that a married woman's existence merges with that of her husband still applies and her income is still deemed to be part of her husband's income. He is legally bound to show her income on his return and he is liable for the payment of income tax on the joint income of both his wife and himself. Even though either spouse has the right to apply to be assessed separately the end result is that the married couple pay the same amount as if they were assessed jointly, the only difference being that the usual allowance is apportioned differently between the husband and wife.
This system works unfairly against the married working wife because the two salaries combined put them into a higher tax bracket much earlier than if their salaries were taxed separately and there is a much higher income tax liability for a married working couple as compared with two single individuals with the same salary, except at the very lowest levels where the wife is earning less than £650 a year. The British system works more beneficially to the married couple even though they are taxed jointly and in most EEC countries this is also the case. In Canada and in the USA they are taxed individually. The working wife's allowance should be substantially increased in the short term and the case can be made to have the working woman treated as a person in her own right, responsible for her own income and getting allowances in the same way as any other person. I hope the next Finance Bill will as a priority take a new look at the taxation of married women. That is essential to the whole concept of equal pay.
I welcome the spread of the tax net generally and the removal of VAT from foodstuffs, clothing, footwear and other essentials. I welcome the subsidisation of foodstuffs. This is very essential. Apart from the fact that inflation is only 3½ per cent lower than it would otherwise be, because of the burden of prices on the lower income groups it is essential to subsidise food. Because income and wealth are so unevenly spread we have this problem of price increases bearing very heavily on those who really have to bear more than their share. The tax system has been used in the past few years to redistribute wealth but a great deal remains to be done. There should be a prescribed minimum income. There should be some way of determining what is an acceptable standard, of pricing that and of ensuring that every individual has that income on which to live. The Government have gone a long way towards that in their social welfare policy over the last few years, upgrading social welfare rates and bringing in categories which were not covered before. But no one in the Government is complacent. There is a backlog and much remains to be done.
I welcome section 7. It is an excellent section and one which will have the support of these benches. It is designed to improve the financial situation of pensioners over 65 years of age on low incomes. It provides for no tax being deducted from a person whose income is less than £1,000 a year, if single, or £1,800 a year if married. That applies to the aged allowance group. With regard to the married allowance of £1,800, does the spouse also have to be in the over age group to qualify because there are situations where the pensioner may well be in the over age group and the spouse a couple of years younger? From my reading of it I believe the pensioner will qualify. This will benefit to a very great extent large numbers of pensioners on small incomes— county council road workers, CIE workers and others who have a small income in addition to their pensions and who, of course, were very unjustly taxed up to now and who certainly need the additional income this provision gives them.
The Minister makes the case that persons with incomes slightly greater than the limits—the limits meaning the limits of State pensions—will get marginal relief designed to reduce the tax payable to one half of the excess of total income over the relevant pension limits. Very definitely the relieving of some 10,000 pensioners is something well justified and I welcome it wholeheartedly.
The Minister said the Government have laid the base of a fair tax system. That is quite true. I am very glad that he makes the case quite clearly that further improvements are desirable and feasible because we did inherit a tremendously unjust system. Large improvements have been made in that system over the last four years consistently in budgets introduced by the Minister on which I compliment him heartily. The burden, particularly that on the lower paid worker, must be further lightened and be tailored to meet his ability to pay. There is no doubt that down the years the person taxed under PAYE has paid far more than his just share to the tax fund.
I thank the Minister for what he has done particularly in relieving pensioners and those on the lowest level of this burden. However, a great deal remains to be done if these workers are not to carry more than their fair share, if all the other sections who have, by tax avoidance devices or because they were not taxed at all, are to be made pay their just share, bringing about a more equitable society.
