Dáil Éireann debate -
Thursday, 11 May 1978

Vol. 306 No. 6

Finance Bill, 1978: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Treacy

I was dealing with matters appertaining to the increase in income tax allowances and had called for increases all round especially for those caught in the PAYE tax net. They are by far the most exploited section of taxpayers. They contribute 87 per cent of the income tax collected and their reliefs particularly under Fianna Fáil administrations have been few and scant. I call special attention to the need for increases in dependent relative allowances, especially in the housekeeper allowance. I pointed out in the Minister's absence that there are many people such as widowers, who are sometimes left with large families, who have to pay out large amounts of money for the care of their children. The children's housekeeper allowance stands at the paltry figure of £165. There is evidence that in some instances widowers are obliged to pay out in the region of £700 per year to have their children properly cared for. The situation is even worse in respect of deserted husbands. Here there is evidence that there are growing numbers of deserted husbands who are trying to maintain their children. This is a very desirable social attribute and these people should be helped to the utmost of our ability. The cost of employing a housekeeper full time to look after children could be £1,000 or £2,000 a year. The housekeeper would have to be insured under the Social Welfare Acts and the Social Welfare stamp which the abandoned parent would have to pay in respect of the housekeeper would be in excess of the present housekeeper allowance. There is a very compelling case to be made for an increase in this allowance which has remained in the Finance Bill for too long in its present form. I sincerely hope that the Minister will give serious consideration to this.

It is to be regretted that there was no increase for children in the budget and in the Finance Bill. There was no increase in children's allowances as such and this injustice has been compounded because the Government do not think fit to give any increase on this occasion in children's allowances, that is, social welfare allowances. I need hardly tell the House how important children's allowances have become in the life of the average housewife. They have become an integral part of the family income and the children's allowances have become of more personal importance to the mothers, because it is the only money they can call their own. It is now credited to them and they can collect it on the first Monday of each month and use it for their own purposes. They are not dependent on the husband or anybody else for it. It is money they have been accustomed to get from the State and it is greatly to be regretted that, while we gave back £8.5 million of the wealth tax to the millionaire classes. we could not provide an increase in children's allowances. Indeed, allowances generally to the social welfare classes in this budget and Finance Bill are meagre.

I also plead with the Minister and the Government to recognise the persistent calls we have made here for a tax free allowance for the use of a car. In this Finance Bill the concession is being granted to certain categories of persons, primarily salesmen and women. It is welcome and proper that the heavy expenditure involved for these workers who are performing a great national service should be acknowledged. But I see no reason why this concession should not be extended to all who are obliged to use cars going to and from work thereby incurring heavy expenditure. I should like to hear the Minister's comments on that. I know many in his own party would support such a tax allowance enthusiastically. I trust that the time is not far off when this just claim will be conceded.

The incidence of taxation on overtime working is excessive and I have always felt it was a disincentive to production. I do not condone excessive overtime working, especially when we have massive unemployment and redundancies. Excessive overtime is to be discouraged. To my surprise, I observed recently that the incidence of overtime working is perhaps highest not in industry supplying goods and services—and sometimes working against the clock to meet essential orders of an urgent nature—but in the Revenue section. Revenue officers work in excess of ten or even 20 hours per week on the collection of taxes and the multifarious duties they perform.

I am not the only one to complain about it; their own trade union has complained bitterly about it. It is a particularly disgraceful situation when so many are unemployed. There must be hundreds if not thousands of highly competent boys and girls with degees of very high educational qualifications who would look anxiously for work in the Department of Finance. The Minister should not condone excessive overtime working of this kind. He should see that an assessment is made and the necessary number recruited and put to work.

An Leas-Cheann Comhairle

The Deputy may deal with tax on overtime but he certainly cannot deal with administration on this Bill. The number employed can more appropriately be raised on the Estimate.

Mr. Treacy

I have been dealing with allowances.

An Leas-Cheann Comhairle

The Deputy is entitled to deal with tax on overtime payments.

Mr. Treacy

I have been referring to the incidence of overtime and I have deplored the application of tax measures to it because of the importance of the work, especially in industry where essential goods and services are required urgently and overtime is necessary. On the other hand, I have been pointing out the unnecessary element of overtime especially in the Minister's Department. If the Chair feels there is something fundamentally wrong——

An Leas-Cheann Comhairle

The Chair is only carrying out the rules. We cannot go into administration on this Bill. The Deputy will appreciate that.

Mr. Colley

The Deputy will appreciate it more than most.

Mr. Treacy

I do. I have been elaborating on some aspects of the income tax code. Section 45 of the Bill refers to disclosures by the Revenue Commissioners. The Minister himself said that the section deals with two matters relating to the disclosure of information by the Revenue Commissioners. He said:

In relation to the scheme of £1,000 grants introduced by the Government last year to help first-time owner occupiers of new houses, Revenue staff will be empowered to disclose certain information to staff of the Department of the Environment.

I should like the Minister to elaborate on the implications of this new decision.

He also said:

...a similar authority in relation to pay related social welfare benefits is provided by section 12 of the Social Welfare (Pay Related Benefit) Act, 1973. The section also empowers the Revenue Commissioners to disclose information to rating authorities in relation to the occupation of agricultural land for the purpose of establishing the entitlement of persons with valuations at or above the valuation threshold for income tax liability when the system of national aggregation of valuations provided for in the Rates on Agricultural Land (Relief), Bill, 1978, is brought into operation.

These are ominous indications of a further extension of power and authority to the Revenue Commissioners to pry and probe into the private affairs of the individual. It is right that the House, the country and the people particularly concerned should have a full realisation and understanding of what this entails. I have come to the conclusion, on the basis of representations made to me, that already the confidence of the public has been very seriously affected in the whole matter of the powers of the Revenue Commissioners to seek information appertaining to a person's private affairs. There is concern that the confidentiality which should exist between the bank and the customer is seriously eroded under Finance Acts. It has now reached the stage when desirable things such as savings, thrift and all these things we laud and support are placed in jeopardy. People want to be assured and feel confident that their reasonable investments, especially of small amounts which are generally set aside for what is termed the rainy day, in respect of death or retirement, are not open to investigation except for grave reasons. I trust that the Minister will allay the growing anxiety in this regard. The evidence is that more people are being told to their consternation that they are not revealing their total income. It eventually transpires that by reason of a small saving in some bank it has come to the notice of the Revenue Commissioners. It is fair enough if they owe tax on it but the matter of retrospection has arisen in many instances. People have found to their astonishment that their little nest egg which they thought was safely deposited in a bank has been clawed at by the tax man with the result that sizeable amounts were being demanded for retrospective tax.

In most cases such deposits represent a lifetime saving and therefore one can well imagine the feelings of shock and dismay with which people learn of the arrival of the Revenue Commissioners. For the sake of our economy, and the future of the country, I hope that there will be a greater respect for secrecy and that confidentiality shall be maintained. If that does not happen the conception we have of thrift and saving will go by the board and more people will be forced to resort to putting their money in a tin box under their bed, something which we all deplore because it is a dangerous arrangement. I hope the Tánaiste will find time to explain the rights, duties and obligations devolving on the Revenue Commissioners to gain access to accounts in banks, post offices and financial institutions and the corresponding obligation, if any, which devolves upon those institutions to reveal information to the Revenue Commissioners—obviously it is twoway traffic. We should all be aware of our liabilities in this matter. Many of the people to whom I have referred are anxious to pay their proper share of tax but they are unaware of their obligation to pay tax in respect of interest earned on savings. Where the amount of interest exceeds £70 tax is being claimed retrospectively. That is sad. If there is an obligation on such people to pay tax I believe it would be better if it was taxed at source, as is done by the building societies. We should have the conformity to pay-as-you-earn as such and avoid the element of retrospection because that is a frightening and costly prospect for many people. Before passing from the question of confidentiality about one's private transactions between a person and a bank and the powers of the Revenue Commissioners in the matter of disclosure of information, I should like to know if the Tánaiste condones the procedure whereby Revenue officers adopt what to my mind appears to be an unorthodox method of collecting tax in that they now converge on certain towns, including my own town of Clonmel, in large numbers. The number of such officials amounts to 18 or 19 at a time.

An Leas-Cheann Comhairle

The Deputy is now getting back to administration, something which should be raised on the Estimate.

Mr. Treacy

It is a matter which I have brought to the notice of the Tánaiste in the course of a question and this is a matter which I will pursue at another time because of the anxiety expressed about the matter of an invasion of this kind and the systematic interrogation of people and the element of intimidation that must of necessity go with that. I hope that policy is not condoned or extended because it is reminiscent of a police state and gestapo tactics which we all deplore. I will have an opportunity of dealing with the Bill in more detail on Committee Stage.

Dr. O'Hanlon

The Finance Bill which gives effect to the taxation changes announced in the budget is in line with Fianna Fáil policy as put forward at the last general election. It should be remembered that the people returned Fianna Fáil with the largest majority ever obtained by any party. The first thing to say about the financial policy of the Government is that it created confidence where there was despondency. That was obvious immediately after the election was over and most of what was in the budget had been announced during the election campaign. There was an air of confidence created in the country before the Government took office because of the despondency that existed in the previous four years when the financial policy of the National Coalition almost crippled most people, particularly the workers. During that campaign it was obvious that workers were concerned about the amount of tax they were being asked to pay. They were concerned that it was becoming more attractive not to work. The most important thing about our policy is that it created an atmosphere of confidence, an enthusiasm amongst people to go to work again.

It is important to stress that there has been a 10 per cent increase in social welfare benefits. It is important also to recognise that for the first time for a number of years there is a real increase for such recipients. That increase is coming at a time when the inflation figure will be as low as 7 per cent. We must compare this with the increases given in the previous two years, increases of 15 per cent at a time when inflation was running at 26 per cent in 1975 and 20 per cent in 1976.

It is important to stress that, for the first time, the Minister is introducing unemployment assistance for single women and widows. This was a right and proper decision. In October this will increase the numbers on the unemployment register. It is important to recognise that, because it would not be correct to suggest the unemployment figure will be up at that time without giving the reason for it. It has been estimated that as many as 30,000 single girls and widows will qualify for benefit. As the Minister pointed out, farmers' tax will bring in £14 million in 1977-78. It is estimated that in 1978-79 £24 million will be collected in farmers' tax. I am sure farmers will agree that is not an exorbitant increase.

There is a good financial stimulus in the Finance Bill for industry and for the creation of more jobs. While I do not intend to go into detail, it is important that all those concerned with the creation of jobs should play their part in making 1978 job creation year. The IDA are playing their part in creating jobs. The local authorities have a role to play in creating infrastructures for new factories and in relation to planning permissions and speeding up of planning permissions for new industries. An Bord Pleanála also have a role to play in dealing with plans for new industries. We have the highest growth in the EEC and we can be justly proud of that this year. Much credit must be given to the Government as a whole.

I agree entirely with the abolition of wealth tax. Over the past four years a great deal of money left this country The fact that wealth tax has been abolished will encourage that money to come back. We must have private money to help to create the jobs we need. The State alone cannot do it out of public funds. In our mixed economy we must have successful business people and wealthy people and we must encourage them to invest their money here and not send it abroad.

I want to deal with a few points raised by Deputy Treacy. He referred to the housing policy and said he believed it is causing financial ruin to young couples who wish to own their own houses. The facts do not support that. Over 11,000 people have applied for the new housing grant since it was introduced. That shows the confidence people have in the housing policy and the desire of young couples to own their own houses.

An Leas-Cheann Comhairle

I accept that Deputy O'Hanlon is replying to something said by Deputy Treacy. I tried to stop Deputy Treacy and I am afraid I did not succeed very well. I would ask Deputy O'Hanlon to curtail his comments on housing, which are appropriate to another Estimate.

Dr. O'Hanlon

Deputy Treacy said he believes the abolition of car tax on cars under 16 h.p. was an unnecessary gimmick but on a number of occasions during his speech he called for more relief for motorists. The abolition of car tax was an ideal way of giving relief to motorists because it gave relief to those who are not paying income tax as well as to those who are paying it, particularly in the lower income group who would be expected to drive cars under 16 h.p.

I know a widow with two children who drives her car on Saturday to go to town to do her shopping and on Sunday to go to Mass. Her car is a modest one, a Ford Anglia, and she found the doubling of the car tax a real hardship when it was introduced by the Coalition Government. Listening to Deputy Treacy one thought of the tremendous increase in the price of petrol during the four years of Coalition Government and particularly the fact that 35p of that increase was caused by indirect taxation by the Government and was not due to outside events.

I was surprised to hear Deputy Treacy suggesting farmers were not taxed sufficiently. He said 87 per cent of all income tax is paid by those covered by PAYE and he complained those outside PAYE were not taxed sufficiently. He also referred to the statement made by the Minister for Economic Planning and Development that his economic policy was a gamble. The Minister explained this quite clearly. He did not introduce that word into the conversation. When he was being interviewed it was introduced into the conversation by the person interviewing him.

I do not want to go into the Bill in detail. I have no doubt the financial policy of the Government will create the right atmosphere to improve the economy as a whole, to continue to create new jobs, and bring down inflation as it is intended to do.

Mr. O'Donnell

Ba mhaith liom glacadh leis an ócáid seo chun cúpla focail a rá ar an mBille Airgeadais seo. I do not propose to delay the House or the Minister, as most of what I have to say has already been said by my colleagues. The debate has been interesting. The Minister's opening speech was interesting and significant in the sense that this Bill is what could be described as the legislative instrument giving effect to the 1978 budgetary provisions.

The advantage of having a discussion on the Finance Bill at this stage is that the expectations, the forecasts, the promises and the assurances which are inevitably contained in a budget speech at the beginning of the year can be assessed and analysed against the actual performance. We are now half-way through the current financial year.

This financial package gives effect to the taxation measures and other financial provisions to enable the Government to implement their main budgetary strategy. It is true to say that the raison d'être of the 1978 budget was the creation of employment, the regeneration of the economic climate, the encouragement of investment at home and the attraction of investment from abroad, all geared to the creation of employment which is of paramount importance. We all agree with the creation of employment.

Today, four months later, when we are discussing the Finance Bill, some very serious questions arise. Bearing in mind the ominous speech of the Taoiseach which he made 24 hours ago, in which he indicated that the purse strings were about to be tightened and that there was not unlimited finance available in this or any other country, I believe——

Mr. Colley

That, too, is in the manifesto.

Mr. O'Donnell

Strangely enough, the most striking aspect of the Taoiseach's speech of yesterday and of the speeches of Ministers in recent weeks is their similarity to the sentiments expressed a year ago by the then Taoiseach and by the corresponding Ministers. We had the Taoiseach warning us that there were problems and in Limerick on Monday the Minister for Industry, Commerce and Energy pointed out the problems in relation to industry and so on. A year ago it was very different with Fianna Fáil. According to their election manifesto nothing was impossible; they would get the country moving again and so on. When one considers the great need to generate employment and the Government's performance to date, one must have grave doubts about the budgetary strategy and the ability of the financial package to generate the economic activity which would, in turn, create employment.

The taxation measures contained in the Bill were designed to give a fillip to the private sector. Certain tax measures have been tailor-made with the express purpose of encouraging the private sector to bear the larger part of the responsibility for the creation of employment. I submit that the private sector alone cannot produce the necessary jobs to meet the national objective of maximum employment opportunities for our growing population and a better educated labour force than ever before, a labour force whose job aspirations are increasing all the time. I doubt the ability of the Government to meet employment targets through the measures contained in this Bill. In the light of the Taoiseach's speech I had hoped that the euphoria of the last six or eight months would end and that the Taoiseach and the other members of the Government would return to reality. I hoped they would face the fact that the election manifesto was dishonest, the budgetary strategy wrong and that this financial package would not do the job.

Much has been said during this debate about the provisions in the Bill. There has been much public comment about what is, perhaps, the most extraordinary and unexpected aspect of this Bill, that is, the abolition of wealth tax. The Government's defence of their decision to abolish wealth tax has been centred around the argument for the need to encourage investment. This aspect was bandied about by both the Minister and the Taoiseach during the course of the budget debate. They wanted to abolish the wealth tax because it was an impediment to investment of a certain type. Of course we need to attract foreign investment and to encourage domestic investment. I submit that the wealth tax per se and the argument that it was an impediment to investment has been greatly exaggerated. Apart from the economic aspects of the wealth tax, the decision to abolish it must be condemned on social grounds as it has been by many commentators. A noble Lord from my county left the country in a blare of publicity when the tax was introduced in 1974. He had other reasons for leaving the country at the time. The same person has now returned.

An Leas-Cheann Comhairle

We should not discuss identifiable persons.

Mr. O'Donnell

I would gladly name him if it was permitted. If the cap fits the same gentleman he can wear it.

An Leas-Cheann Comhairle

The Deputy can make his case very well without naming individuals outside the House.

Mr. O'Donnell

The decision to abolish the wealth tax was a bad one. It pandered to certain potential investors whose value to this country has been greatly exaggerated. It is inequitable too because, side by side with the decision to abolish the wealth tax, the tax net has been widened in so far as the farming community are concerned. Perhaps when the Minister is replying he will indicate if he has any definite evidence of the amount of money that left the country because of the wealth tax and the amount that has returned since the decision to abolish the wealth tax. I submit that there has been no evidence in this regard. I further submit that the damage done by the introduction of the wealth tax to sources of investment was negligible compared with the damage that has been done to the image of this country abroad because of the gross mishandling by the Government of issues like the Ferenka dispute and the telecommunications dispute.

An Leas-Cheann Comhairle

The Deputy cannot discuss those on this Bill. It is purely a taxation measure and we cannot discuss industrial relations or companies on it.

Mr. O'Donnell

I submit that I am allowed to relate the provisions of the Bill in a relevant way to matters which might be related thereto.

The decision to abolish the wealth tax was a bad decision. There is no evidence that it was justified on economic grounds. I challenge the Minister when he is replying to the debate to give some indication of what amount of money left this country and how many potential investors were frightened away because of the introduction of the wealth tax and how many have still to come back since the announcement of the abolition of it.

The other much-debated topic in recent years has been farm taxation. I was born and reared on a farm and I still live on a farm and have continuous contact with the farming community. It has been reiterated time and time again that the farming community are prepared and willing to pay their fair share of taxation, provided it is equitable. The National Coalition Government when in office introduced a concept of farm taxation and started the implementation of it on a very small scale. There was considerable controversy about it. Of course nobody likes being taxed. Various arguments and formulae were put forward, but it is fair to say that no really acceptable formula has yet been conceived that could be regarded as being absolutely fair, just and equitable. The farming community and their organisations' spokesmen have time and time again confirmed that they recognise that they must bear their fair share of taxation. During the general election almost a year ago this subject was very topical, particularly in farming and rural constituencies. It was a burning political issue. However much the farming community might be dismayed and disappointed that the National Coalition Government felt obliged to introduce farm taxation, nobody expected that the Fianna Fáil Government in their very first budget would broaden the net by lowering the threshold and enlarging the multiplier. A considerable number of additional farmers have now been brought into the taxation net.

These measures are bad enough, but in addition there is the decision, implemented by the Minister for the Environment, to change the whole system of agricultural grants, as it is commonly referred to, and thereby make many farmers liable for a considerable increase in the amount of local rates. This was an invidious decision. The rates have now been changed and many farmers are liable for a considerable additional sum of money every year and no account is taken of the farmer's ability to pay that additional money. We thought the Minister for Finance might have taken into account the real problem, which is that, irrespective of whether a farmer is liable for taxation or not, he will have to pay the additional rates, which can amount to a substantial sum. This is unjust, inequitable and a very great disincentive to the farming community. It is a clever, subtle and effective means of ensuring that money can be extracted from the farming community irrespective of whether or not they are liable to pay income tax on the notional system or the accounts system.

Another aspect which is a cause of considerable concern is the decision that farmers must opt for a three-year period for either the notional system or the accounts system. If they opt for the notional system, they stay with it for three years. If they opt for the accounts system, they stay with that for a period of three years. Considering the practicalities, problems, difficulties and so forth of farming and the variations from one year to another in production, income and so on, it is desirable that farmers be encouraged to plan ahead, to keep accounts and to operate to a farm plan but it is not good policy to confine them to a certain system of taxation for a fixed number of years.

A couple of years ago farming organisations in general were in favour of the notional system. That system has major advantages when the multiplier is low; but as the multiplier increases the notional system loses most, if not all, its advantages. I do not know what is the present situation but it is my opinion that the vast majority of farmers would opt for the accounts system. Perhaps the Minister has very good reasons for insisting that farmers opt for one or other system for a specified period. But, as has been pointed out, the problem of opting for either system is that the multiplier and the valuation threshold may change from year to year. This year the valuation has been lowered but the multiplier is increased. It is acknowledged by all experts that farmers should work in accordance with plans but that there must be flexibility within those plans. This flexibility must be on a yearly basis. The circumstances which obtain in any one year may or may not be repeated in the succeeding year, depending on weather conditions and so on.

Deputy Bruton spoke at length on the question of capital acquisitions tax and pointed out certain aspects of that tax of which I was unaware but which have serious implications regarding the whole future of the family holding and the desirability of encouraging older farmers to transfer their holdings to their successors at a relatively early age.

One of the most worth-while decisions ever taken in the history of this State in regard to taxation was the decision to abolish estate duty. Estate duty constituted a penal tax and caused great hardship in many cases. Because of it holdings had to be sold in some instances. There were cases in which a farmer had been ill for a number of years prior to his death and consequently the circumstances of the family were such that after the father's death the holding had to be sold in order to pay the estate duty. In regard to capital acquisitions tax special consideration should be given to the social circumstances in rural Ireland, to the traditional tendency for farmers to hold on to their holdings for as long as possible. That is why it is importan that there be an incentive for a farmer to transfer his holding at a relatively early age. If farmers hold on to their farms for too long there are serious economic implications from the point of view not only of farming productivity but of the social situation.

In regard to capital gains tax there has been a basic change from a flat rate of 26 per cent to a graduated rate of 30 per cent diminishing at three or four-yearly periods. The general principle behind this is good but there might have been scope to go even a little further in regard to the rate in order to ensure that the person who was solely a speculator would be caught substantially in terms of tax. However, the general principle in having a graduated scale is good.

All the evidence would seem now to indicate that the Government's employment targets will not be met.

Mr. Colley

Which evidence is that?

Mr. O'Donnell

There is a report today based on the findings of an assessment made by an independent company, people who have no axe to grind, and this report indicates that there is no likelihood of the Government's employment target for this year being met.

This is a very serious matter, one that transcends party politics. The Government and this Parliament as a whole may be sitting on social dynamite in regard to the employment problem. I am not suggesting that the problem is one that can be solved easily. The governments of western Europe as well as the EEC and the governments of many other countries are confronted with employment problems. The Taoiseach, the Minister for Finance, the Minister for Industry and Commerce and all the other Ministers are now aware of the problem, but they were not so aware 12 months ago. It was a great pity. In time it will prove to be regrettable that expectations were raised to such a pitch by the Fianna Fáil manifesto and more recently by the budget statement. I believe that the strategy indicated in the budget and in the Finance Bill of over-reliance on the private sector cannot produce a job creation rate of the magnitude needed to meet the problem.

I understand that there is an indication now of an acceleration in the rate of emigration. I submit sincerely that this question of the creation of employment is one which transcends party politics. It is a national problem which cannot be solved on the basis of promises in an election manifesto or expectations which cannot be realised—that leads to disillusionment. There is need for a proper financial strategy, an appropriate taxation strategy and a national policy which will co-ordinate the maximum input from both the public and private sectors in order to generate the maximum employment. This cannot be done without honest leadership and practical policies and these are not forthcoming from the present Government.

Mr. B. Desmond

The basic purpose of the Finance Bill is to ensure that the State has sufficient revenue to look after the well-being of the economy and the citizens. However, when one examines this Bill one would almost marvel at the irrelevance of the Bill in the long-term to the fulfilment of these objectives.

A couple of years after I first became a Deputy I remember reading a speech by the then Minister for Finance, Deputy Colley. It was an extremely good, most elaborate, effective and honest speech and I will quote a few paragraphs from it later in my speech. I was in Cork at that time and Deputy Colley was speaking at a Fianna Fáil meeting. He read a most interesting and illuminating paper on the problems of State revenue and the growth of State expenditure. I read the speech several times and kept a copy of it in my files. It gave an analysis of the growth of State revenue and State expenditure right through the sixties. It is hard to believe that we are now at the end of the seventies and looking back at that growth period. Deputy Colley outlined what he regarded as the very hard options open to the people in terms of the insatiable demands of the electorate to have more houses, better health services and better educational services and said that if they wanted all these things and to have a decent life and full employment they would have to face the concomitant problems of raising revenue. He very honestly pointed out the political unpopularity of having to face people with these extremely difficult options. I thought it was an entirely legitimate exercise which was very convincing.

The Fianna Fáil Party narrowly lost the general election in 1973; it was a cliffhanger. People tend to regard the Coalition as having swept into power but, in fact, it was a very marginal victory. Fianna Fáil actually increased their share of the vote and the most outstanding point was the tightening up of transfers between the parties anxious to form a coalition.

I remember Deputy Colley speaking on the Finance Bills in 1971 and 1972 and pointing out the unpalatable truths to the Opposition and to the people. Our response at that time was not irresponsible. It was relatively low key and we did not indulge during that period in making massive promises about taxation of the kind which are now hanging around the neck of the Minister in this Bill like a rather decaying revenue albatross. We promised to do certain things. We made promises in relation to death duties which we subsequently kept. We promised to make the taxation system more egalitarian, reasonable and fair; and to the everlasting credit of that much maligned former Minister for Finance, Deputy Ryan, he attempted in an historic series of Finance Bills to put the situation right.

The only problem about the former Minister is that he gave the impression that he enjoyed the introduction of some of the undoubtedly tough measures. I remember that Deputy Ryan made a long and typical speech at a bankers' function about interest claims on income tax and one individual almost had to be carried out. He had suddenly realised that the very substantial claim which he had sent in against his income tax had disappeared. Deputy Ryan made this retrospective. It was the correct thing to do. In that case there had been wholesale and outrageous evasion. Deputy Ryan had the support of the Labour Party in that. Perhaps he had even more support from me than he wanted on these occasions and he became hysterically worked up by certain Deputies on the Fianna Fáil front bench. Deputy Ryan became a "hate" figure in the business community. He may have lacked certain political adroitness and may have conveyed the impression that he rather enjoyed cleaning out some of the dirty money from the Irish economy, but nevertheless he deserves credit.

It is a pity, and most undesirable in the long-term national interest, that the promises made by the Minister for Finance and the Minister for Economic Planning and Development have had to be incorporated in the Finance Bill. What we have seen is the raising of national expectations that cannot be fulfilled. We see groups of workers seeking increases in excess of the national pay agreement—there have been two notable cases—and we see a take-over of one newspaper by another with the director of the company concerned being told that he will be bought out for £1 million and will get a salary of £22,000 in addition. When we see that kind of development in Irish society—presumably in the best Fianna Fáil aspirations for economic growth—it will be very difficult in the Finance Bills for 1979 and 1980 to meet the expectations that have been aroused. What will be the position if in the next Finance Bill the Minister for Finance introduces a clawback on, for example, children's allowances on income tax? We introduced such a measure but, quite wrongly, under pressure we abolished it. There was a vociferous outcry from those who had substantial taxable incomes and they twisted the arm of the then Government who subsequently abolished the measure. The Minister will have a very difficult problem in the coming years. We will have to become a nation of alcoholics and drink ourselves into revenue buoyancy from drink and cigarettes and hope that that will provide sufficient revenue— which is fairly unlikely as the national capacity is fairly loaded in that area already—or we must have a total reversal on the income tax side.

A central point that must be made about this Finance Bill is the very large increase in public service pay, with the many new posts that have to be filled and paid for in full next year. There are also enormous demands on a chaotic and creaking system of health care. The nation is wasting millions of pounds, but many interest groups on the health side are not prepared to accept any control. There is also the enormous population explosion in the school-going sector and their demands are great. Inevitably we will be faced with increases in social welfare that must be met. The Minister when confronted with all these expectations will be faced with a crisis of public expenditure and State revenue of appalling magnitude, particularly in the 1980 budget. It will be bad enough next year but I do not think any of the expectations of the nation will be fulfilled in 1980.

Mr. Colley

The Deputy does not have to go as far as 1980. We had to face it this year. We inherited from last year this crisis in regard to public expenditure.

Mr. B. Desmond

I concede that. It would be utterly dishonest on the part of the Coalition not to admit that we had enormous difficulties in the 1977 period right up to the general election with regard to public expenditure. I remember saying to the former Tántaiste, Deputy Corish, that in view of what was done with regard to health and social welfare and the commitments we had made I should not like to have to make unpopular decisions around the Cabinet table coming into a general election period. I do not diminish the extraordinarily difficult problem that the Minister for Finance had to face and is now facing.

To his eternal credit, the Minister for Finance when in Opposition worked unceasingly to be returned to power. He cannot have been unaware at all times, even during the course of the 1977 Finance Bill and in the run in to the general election, of the magnitude of the problems. However, his party maintained that they would be swept aside. Without the slightest difficultly, we were going to get to the three-stage Colley rocket. We were going to blast off.

Debate adjourned.