Finance Bill, 1978: Second Stage (Resumed).

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

The Bill before the House proposes to give effect to some of the fiscal measures announced in the budget on 1 February this year. In my speech on Tuesday I indicated that the Government through this Bill and through the taxation measures which they propose to enact are giving an enormous benefit to a particular sector of the economy in the belief that this sector will generate the level of employment to which the Government are explicitly and specifically committed in their manifesto and in the budget speech.

In reviewing the taxation proposals contained in the budget and in the Bill before the House, I have attempted to extract from the Minister in his reply specific and detailed explanations or responses as to how exactly the measures contained in the Bill will be translated into real jobs. It is not my intention to repeat points made on Tuesday but there are two areas which I should like to emphasise. How do the Minister and the Government feel that the massive increase in personal expenditure brought about by the increase in personal allowances will be translated into Irish-based jobs of one form or another and not into some importing binge which, according to economic pundits, is something to which the Irish are more prone than other citizens within the Community?

If I may anticipate the Minister's reply, we will be looking for something more than a re-vamped "Buy Irish" campaign. If that is to be the Minister's reply, it will not be acceptable to the Labour Party. Fianna Fáil have now been in office for almost a year and it is no longer adequate to talk in terms of a re-vamped "Buy Irish" campaign. It is unfortunate that the Minister of State who has specific and exclusive responsibility for this campaign is not here but, hopefully, the Minister will draw his attention to this fact. We will be looking for much more than some new patriotic campaign hinged on a vague appeal to the spirit and welfare of the Irish people, an appeal to those who have money on behalf of those who have not jobs. The last time people who have money were asked to share a little of it with those who were poor or unemployed by way of the wealth tax, they left the country very quickly. We should like a hard-edged definition from the Minister and the Government on that point.

I should like some detailed information as to how the Minister expects section 19 of this Bill to function. This is the section which gives major tax concessions to companies which either increase their sales or add to employment. Is the Minister prepared to entertain on Committee Stage amendments from this side of the House or is he prepared to bring in amendments himself which would give an effective say to all the people in a particular enterprise, a say in how the profits of that enterprise would be reinvested with the purpose of achieving the Government's own target of increased employment? In referring to all the people in an enterprise, we do not mean the board of directors and the shareholders: we mean the people who have contributed to the wealth and profitability of the enterprise, as has been frequently reported in the financial sections of our newspapers during the past few weeks.

I made a number of other points in relation to car tax and the tax allowance for companies which have to make a contribution to the local authority with regard to dealing with trade effluent. Perhaps I do not fully understand the complexities of accountancy and fiscal administration, but in my view it appears on the surface to do two things. It appears to deviate substantially from the international principle in environmental law that the polluter should pay when that person damages or interferes seriously with the environment to the detriment of the common good. In countries where there is already a large industrial base I can accept readily that old-established companies that had a major pollutant effect have been given some measure of relief by way of taxes and so on in order to bring them up to a proper level of environmental standards. In our situation, where we are rapidly creating a new industrial base, that kind of standard should not apply.

There appears to be an unnecessary circular transfer between the local authority, the private company and the Revenue Commissioners and to that extent I wonder if the Government accept the principle that the environment is secondary to the overall objective of creating jobs. Then, why make the pretence of this provision? Why not let the local authority clear up the mess and fund them directly, rather than have this complicated system. In reality it will put more money into the pockets of the accountants rather than do anything else.

This Bill proposes to give specific effect to the budget with regard to taxation. That budget statement, to which the Minister for Finance referred on Tuesday, had a very explicit commitment to jobs. The figures came originally from the Fianna Fáil manifesto. This side of the House view with considerable concern the apparent shifting away from the explicit commitment to the creation of a specific number of jobs at a certain date.

What is the evidence for that shift?

I am trying to develop that point without being narrowly political about it. If the Minister can give the House in this debate the same explicit commitment we have had in the past, we shall be happy to hear from him. I shall develop the point on the following lines. I am talking in gross figures and if any of them is wrong I shall be happy to be corrected. In this first year of Fianna Fáil administration we are prepared to say in advance to the Government that we do not believe that what they propose to do can be done, but at this stage neither of us can be tested because we have yet to see the result of what is proposed. We are putting on the record of this House our doubts as to what the Government are proposing to do.

My understanding of page 7 of the Fianna Fáil manifesto was that there was a specific commitment to create 20,000 jobs in 12 months—5,000 jobs in two sectors and presumably the balance in the public and services sectors, such as gardaí and so on. The budget speech on 1 February appeared to us to move the commitment of 20,000 jobs in 12 months to 20,000 jobs in 1978. In effect that means 20,000 jobs in 18 months—not 12 months—and it appears to us to be a shift in the commitment. As I have pointed out, I shall be quite happy to be corrected on that point.

The Deputy has made his point. I should like to warn the House that this does not permit of a general budgetary debate. The terms are much narrower and if the Chair allows the debate to range over too wide an area we shall be departing from the matter before us.

I accept the ruling of the Chair and I shall be very brief on that point. It bears directly on whether the private sector, which will have the benefit of this taxation, can meet the targets declared by the Government and to which they were committed originally.

I should like to comment on the commitment by Fianna Fáil to reduce the number on the live register. The manifesto spoke in terms of reducing the number by 5,000 between June 1977 and December 1977 and by a further reduction of 20,000 during 1978.

Will the Deputy please give the quotation?

I cannot quote it at present, but I will get the reference.

It is on page 6.

Quote it.

I have not got it with me.

I see. The Deputy cannot quote it.

I do not carry it around with me—it is not that important. I have given the page number. Page 6 will hang around the Minister's neck and the neck of his colleague.

Whether it does or not, it does not say what Deputy Quinn has mentioned.

The register is down by approximately 6,000. As I do not have the authority of the Chair to range far and wide in this area, I cannot go into the details. We are not on target. If we were the number would be down 13,000 or 14,000 on the same period last year, but that is not the case. Even allowing for the fact that during the summer it is likely that the employment rate will improve, we doubt seriously whether the Government target is on.

The reason I introduce that is that this Bill, in order to give effect to the fiscal taxation measures in it, has committed this country to undertake borrowing to the extent of £400 million in order to benefit certain sectors of the economy. In the Taoiseach's speech yesterday to the CII luncheon which I attended there was no commitment to specific job targets. When talking in the context of developing the infrastructure for the private sector with the benefit of public money, the only specific commitment to which the Taoiseach committed his Government was the following. I quote from page 5 of the official handout:

One common feature of programmes to develop infrastructure is their appetite for enormous amounts of capital. This has to be reconciled with the objective of reducing Exchequer borrowing from 13 per cent of GNP this year to 10½ per cent next year and to 8 per cent in 1980.

He went on to say:

The Government remains fully committed to these targets. We recognise that the economy simply cannot sustain the burden of the immense servicing load that continued borrowing on the present scale would involve.

He went on to talk about the necessity to accept the commitment overall for the purpose of generating employment for those seeking it.

With this legislation we have been asked to enact taxation proposals that require borrowing £400 million to a level of 13 per cent of GNP if one includes the capital taxation programme on the assertion of the Government that this will create jobs. However, within less than one year of assuming office the commitment, in explicit terms from the leader of the Government, is not what was indicated last June.

What is the evidence?

As I quoted a few minutes ago, it is to reducing the level of borrowing from 13 per cent, to 10½ per cent and to 8 per cent. The Taoiseach did not say that his Government were committed to creating a certain number of jobs by a certain date and to reducing the live register by a certain number. That parallel commitment was not there and because of the absence of that commitment in his speech yesterday we query whether Government are attempting to shift away from the major commitment made by them which was responsible for returning them to office. The economists of the country and indeed the economic supporters of the Government conceded that the economy was beginning to move from the late period of 1976 through 1977. They conceded that in certain sectors the growth was higher than that of any of our partners in the EEC but that the remaining anomaly of all of this was that employment was not being increased in that sector. We see now a shift away from that explicit commitment. The Minister has a lot more experience than I have in politics and in administration. If he can put on the House record the parallel commitment to the creation of new jobs and a reduction in the live register I will be very happy to accept that commitment from him. In the intervention of the Taoiseach yesterday between the start of this debate and its resumption we have a major statement which legitimately entitles us to query the overall commitment of the Government in this regard.

The last section of major importance in the Finance Bill relates to section 36, which is the wealth tax. The Taoiseach made specific reference yesterday to the abolition of wealth tax as a necessary prerequisite to getting the country moving again. He spoke about creating the climate in which the private sector could develop. I understand that wealth tax has not been legally abolished but that it has been suspended and that the revenue which would normally be due from it will not be collected. Am I right in assuming that?

I will deal with that when I am replying.

That is a minor point. The wealth tax is not being collected because it is considered that by removing wealth tax and borrowing to the level of £400 million to give effect to those taxation proposals we can create employment. The specific commitment to the creation of employment now seems to be ebbing away. If the job targets are not met, if the Minister and the Government accept responsibility for the job targets that were published in the manifesto and on which they have their mandate to be in Government, do they propose to re-introduce the wealth tax, to increase corporation taxation up to the levels the Minister had it when he was previously Minister for Finance in the last Fianna Fáil Administration? Do they propose to re-introduce the car tax and to put taxation on excise items such as cigarettes and alcohol? Having made the greatest gamble, to paraphrase the Minister for Economic Planning and Development, with borrowed money, which they will not have to pay back but which the taxpayers will have to pay back, if the horse on which they have gambled all that money does not come home carrying the jobs to which they have pledged themselves who will pay the bet? Will the sector, who have been given so much encouragement be told: "You had your chance, you did not deliver, we have no option but to bring in a new Finance Bill which will effectively attempt to recoup some of the money which was given out by tax allowances or deficit spending in the current account". Those are reasonable questions that should be asked and they are not hypothetical ones. It is the duty of an Opposition to ask such questions and the responsibility of a Government to answer them.

There is a much more fundamental matter I would like to deal with, that is the economic and social philosophy which permeates the thinking embodied in the Finance Bill and in the documentation which supported it, the manifesto, the White Paper and the budget speech. It is believed that in order to create a society where everybody has a job, in order to create that kind of society with full employment which is a kind of society which socialism can and has produced, you first of all have to create an unequal society, you first of all have to create distortions within the distribution of wealth above and beyond those which exist already. There is an assertion that the only way you can develop the economy is by harnessing the greed and the self interest of some people because if the Government believed that that was the vehicle for getting the country moving again they would not have made the statements they made in the past calling for wage restraint.

Why should some people be given enormous incentives to develop by the abolition of wealth tax, personal taxation and so forth and why should others be told that they are restricted to 5 per cent of the national wage agreement even though many of them work in industrial sectors where the productivity and the profitability has been up to a level of at least 8 per cent? This is the first fundamental, philosophical division which appears to this side of the House to permeate the thinking behind this Bill and which will become a reality if the provisions of this Bill are enacted. Fianna Fáil over their 40 years in office have tried all sorts of economic options, all sorts of economic policies with the objective of getting a level of living standards which will be acceptable to the majority of people. As one of the freshmen Deputies in the House it is not for me to talk to anybody else what those measures were. They have tried every one of them, from protection to different kinds of aids and incentives, Irish-owned capitalism, farm participation, except the socialist one. The Minister for Economic Planning and Development in the April issue of Magill indicated that there were basically two approaches in terms of achieving a growth rate, that West Germany and Japan on the one hand had achieved them and that Cuba and the Soviet Union had achieved them on the other hand. He ruled out, as would be natural for him, the second option.

Does the Deputy hold forth the other one for our edification and emulation?

I am glad the Deputy said that. Which one does the Deputy want us to develop?

I am simply saying that we will develop our own policies in our own time. When we sit on that side of the House the Minister and his Government will hear from us in detail the way in which we propose to do it. We will not produce a shopping list for people to take their pick of, and by implication accept the responsibility for the non-delivery of jobs which was promised yesterday by the Taoiseach.

No more 14-point plans.

I think the Minister for Finance can do very well on his own.

Order. These interruptions tend to put Deputies on a general line not in keeping with the Chair's interpretation.

It is not my interpretation or intention.

There are 52 sections and three Schedules in the Bill and I would like Deputies to go through them.

We do have the Committee Stage. The saddest thing of all about this Bill is the total philosophical poverty that permeates it, the total lack of real radical courage that has authored it and the incredible ideological dogmatism stitched into every phrase and clause of it. We have yet to see from the Minister for Finance, the Taoiseach or the Minister for Economic Planning and Development any scientific evidence to substantiate any of the major factors upon which this economic strategy rests. Nor have we heard from the Government any commitment either to revising section 19 of this Bill or to reviewing the public sector as something other than non-jobs, as it has been described in a different time. Have we seen any commitment on the part of the Government to involving all of our people in an enterprise with the State in the future of that enterprise by giving them the right to say how the profits of that enterprise should be invested?

This vision for Ireland contained in this Bill is a miserable one which says to all of our young people—and they are now moving into the majority— that some of them have the right to have their self-interest and greed encouraged, for whatever reason, perhaps because of the school they are attending, because their fathers own particular companies or because of some innate skill they have themselves; some of them have the right to have that greed encouraged, not to have to pay wealth tax at any stage in their lifetime, to receive full encouragement. but that others will have to adhere to the National Wage Agreement, confine their expectations to 5 per cent and, if we hit hard times, as indeed there is the possibility, the corollary is that because they are not amongst the select, if they happen to depend on social welfare, they will have to sit back and wait until times improve or if they happen to depend on public authority housing, equally they will have to sit back and wait for times to improve. Further if they depend on a public sector education and perhaps are attempting to get a primary education in a classroom with 40 to 45 children they will have to wait until the private sector recovers from the international recession and takes off again. That is the most divisive and socially unjust division ever held out to our young people. If we pass the provisions of this Bill giving effect to the budgetary and economic strategy of this Government we will be putting on our statute book legal injustice.

Over the four-year term of office of the Coalition when Finance Bills were being discussed we were doing so in an ever-decreasing climate of prosperity for our people. Unemployment was growing at a colossal rate, our inflation was the highest of any European country, the building industry was coming to a standstill—the figures for cement sales were frequently quoted by us as evidence of the fact that the building industry was falling off. I remember stating quite clearly in the course of the debate last year that the then Government were mistaking people's silence as approval and that, when the general election took place, they would soon find out that people were very dissatisfied with their performance in office.

There is one point I should like to place on the record and have it very clearly stated and, if I am incorrect in this, no doubt the Minister will correct me now or when he is concluding, that is, in relation to the creation of jobs. What we have stated quite clearly in our manifesto is that within the first year of returning to office we would create 20,000 new jobs.

No, that is not what the Deputy's party said.

That is my understanding, that we would create 20,000 new jobs.

They stated that in 1977 they would reduce unemployment by 5,000 and in 1978 by 20,000 further.

No, the Deputy is right on the first bit but wrong on the second.

I will be able to quote when I come in.

Good, and the Deputy will quote the table too, will he?

The Minister is saying that I am——

They said they would reduce unemployment in 1977 by 5,000 and in 1978 by 20,000 further.

And in 1979 by 25,000 and 1980 30,000.

I understand I am correct in saying that we said we would create 20,000 new jobs on returning to office; that would be our target. Am I to understand that I am correct or incorrect in stating that?

They may have said that, but they said other things as well.

The manifesto says "reduce unemployment"; those were the words used.

If Deputies will look at the figures they will see that unemployment has been reduced on present figures.

They are reduced but not by what the Deputy said.

(Interruptions.)

The Deputy is perfectly capable of making his own speech.

I am endeavouring to. Other Deputies will have adequate opportunity of making theirs. What I am saying is that my understanding was that we would create 20,000 new jobs by various incentives.

This is another effort to get these words on the record and they are not correct; that is not what they stated.

Also we did reduce unemployment by 5,000 in the first six months on our return to office despite what members of the Opposition would like to believe.

No, you did not.

We did actually. The Deputy does not understand: every job created reduces unemployment. To reduce the unemployment register is a different measure but every job created reduces unemployment. Does the Deputy accept that proposition? Is it true or false?

It reduces unemployment but not on a 1 : 1 basis.

Now we are getting somewhere—it reduces unemployment —right.

(Interruptions.)

Please, Deputies, Deputy Briscoe.

It reduces unemployment only if new redundancies are not created elsewhere to raise unemployment like Ferenka for instance.

Is the Minister suggesting that to create jobs is exactly equivalent to reducing the unemployment register?

Did I say that? No, I said: does the Deputy accept that to create a new job reduces unemployment by one?

That disposes of that. Deputy Briscoe is in possession.

(Interruptions.)

A Leas-Cheann Comhairle

We are dealing only with the Finance Bill and taxation.

It is very important that we clarify what we are talking about. If new jobs are not created then the unemployment situation continues to grow.

We know that after September every year a fresh group of people come onto the labour market, school-leavers, and a year later those people go on to the unemployment register. In the meantime the people who left school the previous year go on the unemployment register in that year. The position is this, that without the creation of new jobs unemployment figures would be rising. We intend not only to keep unemployment figures from rising but to create new jobs, through direct State intervention, irrespective of private enterprise, and we reckon that private enterprise—with the growth of creation of jobs by the State—will also do their share. But we have not even taken those into our calculations. We are satisfied that we are on target, we will continue to remain on target because now there is an air of confidence in the country that was not there in January and February 1977 before the Coalition left office.

Reference was made by Deputy Quinn to the borrowing by the Government this year. That borrowing is designed to implement our programme. This was clearly stated even before the manifesto was published. It was said it would be necessary to borrow to prime the pump, to use the Minister's own words, in order to get the economy moving again. It was stated this money would be used to create jobs in the public service. This is happening. Extra money has been given for roads and for all those labour intensive sectors of the public service. One example is the Garda Síochána in respect of whom money was badly needed.

Between 1973 and 1976 the last Government borrowed more money than had been borrowed in all the years since the foundation of the State. This was a figure we frequently trotted out during the years of the Coalition. We adverted to the way in which they were borrowing money to spend on purely non-productive purposes. This is where we differ very strongly indeed from the policy of the Coalition.

It was interesting to listen to Deputy Quinn talking about our manifesto. He referred to himself as a freshman in this House. He obviously had no desire to talk about the 14-point plan of the Coalition. The fact is that 14-point plan was a dismal failure. We want to encourage the private entrepreneur. That is the policy of the Government. We believe in a happy marriage between public and private enterprise. I do not think Deputy Bruton would disagree with that. It is a policy Fine Gael would follow if they were on their own and unhindered by the Labour Party. They would encourage private enterprise. That is commonsense. That is the philosophy which underlies our thinking and our social policy, because one can only give social benefits in accordance with one's ability to pay for them and the ability to pay for them results from the way in which one goes about earning the money to pay for them.

Criticism has been levelled at us because of the abolition of the wealth tax, a tax which brought in something in the region of £1.5 million last year.

I do not think we should discuss the wealth tax on this Bill. This is purely a taxation measure.

But the wealth tax was a tax.

I accept the ruling of the Chair. The cost of collecting that tax was far in excess of any money it brought into the Exchequer. We want it to be known that we want people to succeed in business. We want industry to grow and prosper because we know that a thriving industrial atmosphere will induce foreign industrialists to invest in this country. We have probably one of the ablest labour forces in the world. We have had our labour problems. We have had a certain amount of unrest but I believe we are now on the road to recovery. We are within what we predicted would be our growth rate. We said inflation would be reduced below 10 per cent. I think we used a figure of 7 per cent. We based this prediction largely on acceptance of the national wage agreement. Admittedly the agreement has been a little higher than we meant it to be and the Government, in their wisdom, accepted the 1 per cent over and above what had been laid down as desirable. But, despite that, we are below 10 per cent in inflation. Instead of being worst in the European league table I think we are now somewhere up near the top. The Taoiseach stated here that he and his Government had been complimented on the manner in which they had tackled inflation. World conditions are improving but we are still ahead of many others in the EEC. That is evidence of the success of the policies of this Government.

One of the most welcome measures in taxation policy this year is the abolition of rates on private dwellings coupled with the abolition of motor tax last year. This had a very big effect in putting more money into people's pockets, more money for people to spend and, when people are spending money, they are also paying tax through VAT and so on. Next year I hope the Minister will have a look at the possibility of reducing VAT on items like furniture, for instance, an item in which Deputy Bruton will be interested because of his awareness of the situation in his own constituency where there has been a tremendous decline in the furniture manufacturing industry.

We criticised the policy of the last Government on VAT. They removed VAT at 5 per cent off food and they increased it up to as much as 37 per cent on other items, such as motor cars, radios, televisions, which they regarded as luxury items. The result of that was a reduction in the demand for these items which led to unemployment, unemployment directly generated by the financial policy of the Government at the time. If the rate of VAT is too high and demand falls employment is affected. I hope the Minister will work towards reducing this tax in manufacturing industry. That is very important in order to increase sales of merchandise.

The Minister fulfilled yet another pledge given in regard to capital gains tax, a pledge of which the people were well aware when we went before them in the last general election. I refer to the unfairness of the system introduced by the last Government where capital gains tax was concerned. A person who made a killing on the Stock Exchange, netting over £1 milion in a month or two because of a good tip, paid the same capital gains tax as the man who had spent 20 or 30 years building up a business which he sold eventually at a profit and on which he had to pay exactly the same capital gains tax as the man who made the successful killing on the Stock Exchange. That was iniquitous and unfair. Before the last general election, people knew this was one of the taxation measures we would change. Now the man who makes the killing on the Stock Exchange in a short period will pay a much higher rate of capital gains tax than the person who built up a business over five years who will pay at a lower rate. After 13 or 15 years in business a man does not pay any capital gains tax. This is a very important incentive and a just change in the tax law.

As I said before, and the Coalition Parties do not seem to have learned anything from it, we came back here with 84 seats not because the people wanted Fianna Fáil back with that number but because they were totally rejecting the policies pursued by the Coalition. One would expect them to have another look at their policies which proved to be so unpopular, such as their increase in car tax and the large increase in rates. Even though in their last year rates had been reduced by 25 per cent, the fact is that people were still paying more rates than they were the previous year.

On 5 July we will have been in office one year. In that time the taxation policies of this Government will have brought back a confidence not only to business but to the people themselves. There is a new air about. Moving among the people and being involved with them as I am, I recognise this feeling and know there is genuine relief and hope for a brighter future. We have planned to create more jobs. As the Minister for Economic Planning and Development stated as late as last October in this House, it could take anything up to a year to get his plans for his Department ready because you do not have an economic plan which can be put into effect overnight. A lot of thought and planning must take place. I am satisfied that by 5 July 1978 the improvement will be evidenced by the drop in unemployment and the fulfilment of our pledge to create 20,000 new jobs. My words are now on record and can be quoted later if I am wrong, but I believe I am right and I am making this statement with absolute confidence.

It is very easy to pick out items in the Minister's speech of which one does not approve and try to give the impression that Fianna Fáil taxed the farmers more heavily than they said they would do. We have never run away from farmer taxation. I remember former Deputy Reynolds asking me if I was in favour of farmer taxation. I said the farmers themselves were, as long as it was done on an equitable basis. We have made changes with the result that farmer taxation is more equitable than it was under the Coalition. The Coalition vote, especially for Fine Gael, from the farming community indicated very strongly gross dissatisfaction with their policies.

I live in Celbridge, County Kildare, and am fairly close to farmers. I know from my neighbours that they are satisfied that the taxation system under Fianna Fáil is much fairer than it was under the Coalition. Deputy Bruton is raising his eyebrows in disbelief, but at the next election if he goes to the farmers and says the Coalition will reintroduce their taxation system he will see even more raised eyebrows.

I wish the Minister every success in his very difficult task. We are making progress in spite of some very vital strikes. We have never once adverted to them as an excuse for having fallen down on any of our targets or pledges. I am confident we will achieve our targets, even though the Coalition doubted it. At the end of our term of office, be it three and a half years from now, the people will be satisfied with our progress.

Let it not go out from here that we are not interested in young people, because we are. We have definite plans for creating more jobs for them. One might argue that it is not in the nature of young people to be satisfied but no one should ever be satisfied. We will never say we are satisfied with our performance or that we have done a great job. We will say we are doing a better job than our political opponents could do. Evidence will show that every time the Coalition came into power the economy went into a dive. They had all sorts of excuses for this. We had recessions when we were in office, but we came out of them very successfully because we knew exactly the measures to take. It is very important for the Minister for Finance to know this when organising his taxation policy. Recessions are always followed by booms and vice versa. It is important to have a Government which know exactly how tightly to pull the string. If you pull the string too tightly you could be in trouble. We have the necessary experience and knowledge and we have our ears to the ground.

We will have an opportunity to discuss the Finance Bill in detail on the Committee Stage and I do not want to go too far into individual sections. As there seems to be some doubt in the Minister's mind as to what his party promised in the general election in relation to the economy and in particular to the reduction in unemployment, I want to put on record what was promised. I quote from page 9 of the Fianna Fáil manifesto and request that this page be circulated with the Official Report so that it will be on the record of the House. I trust this can be arranged.

It is only if the Deputy quotes from it that it will be included in the Official Report. The Deputy will understand that we can only put in the Official Report what is said in this House.

I do not wish to cite precedent but Deputy Andrews when in opposition was allowed to do that in relation to a table in a debate on youth unemployment some three-and-a-half years ago. Deputy Andrews had a table circulated with the Official Report.

The table might have been circulated to the House but certainly page 9 or no other page of a manifesto can be circulated to the House and put in the Official Report.

Deputy Andrews did not circulate it and yet it was circulated with the Official Report. I was present and I read the debate. If the Chair is in difficulty with the matter I am sure it can be arranged——

The Chair is in no difficulty at all. I do not recollect anything as far as Deputy Andrews is concerned.

The Chair was not here at the time. I was in the House.

What I am saying is that Deputy Bruton cannot ask in the House for something to be put in the official record unless it is part of what he says. A Minister replying to a question can put something in the Official Report in this way. Deputy Bruton can quote from the manifesto.

If Ministers are allowed to circulate documents with the Official Report I do not see why other Members are not allowed to do so, but I will not pursue that.

Page 9 of the Fianna Fáil manifesto which summarises the impact of the economic programme which Fianna Fáil outlined in the previous eight pages says at paragraph 8:

The impact of this programme can be summarised as follows: 1. Reduction in Unemployment 1977, 5,000; 1978, 20,000; 1979, 25,000; 1980, 30,000.

Fianna Fáil promised a reduction in unemployment not the creation of new jobs. If Fianna Fáil meant the creation of new jobs rather than a reduction in unemployment they would have put the words "creation of new jobs" in the manifesto opposite the figures I have quoted.

To reduce unemployment there must be an agreed measure of unemployment. The Fianna Fáil Party never ceased quoting the live register when in opposition as a measure of unemployment and never ceased referring to the increases which took place in the live register in the previous years, so presumably they accepted that the live register was a measure of unemployment. If there is any reduction in unemployment there should be a corresponding reduction in the live register. Any reasonable person reading the manifesto would assume that a reduction in unemployment would mean a reduction in the live register. If Fianna Fáil do not accept the live register as a measure of unemployment, they have now been in office for 10 months and they had the power of the whole State machine to produce an alternative measure of unemployment. They have not produced an alternative measure so one must presume that they accept the live register as an accurate measure.

Fianna Fáil promised in the last general election campaign, a reduction in unemployment and therefore a reduction in the live register of 20,000 for this year. That is what Deputy Quinn said and what the Minister for Finance sought to contradict him on. It seems that the Minister for Finance either did not read the manifesto or forgot what it contained or did not choose to state his knowledge of what it contained. The manifesto is clear and while I cannot circulate it with the Official Report any Member of the House who wishes can read what it contains in the Library.

The Minister for Finance by interrupting Deputy Quinn commenced this discussion and sought to pretend that the creation of jobs meant a reduction in unemployment. It does not mean that. If a job was created on 10 May and on the same day there was a redundancy either in the same firm or in another firm, unemployment would not have been reduced. If a job was created for somebody who was not previously employed, somebody who has just left school, there is no reduction in unemployment. One could not count people who are still at school as being unemployed and if a job is created for a school leaver there is no reduction in unemployment. The Minister for Finance seems to be claiming that if jobs are created there is a reduction in unemployment. Another possibility is that a new job could go to somebody who had not been previously seeking employment such as a married woman who up to the coming available of a job as a result of Government action had been happily at home not seeking employment but because a job becomes available she takes it. There is no way that it can be claimed that by simply creating 20,000 new jobs one reduces unemployment by 20,000.

We will hold the party opposite to the promises they made in relation to the reduction in unemployment of 5,000 in 1977, 20,000 in 1978 25,000 in 1979 and 30,000 in 1980. The people will remember these figures and between now and the next general election if the Government do not achieve what they promised people will know.

In relation to the section of the Finance Bill dealing with personal allowances, in principle all Members of this House will welcome the improvements in some of the personal allowances in the tax. There have been improvements in the allowances for a married man and for a single person; there has been improvement in the allowance for a widowed person but it would be useful to put these increases into perspective. In what I have to say now my criticism can be directed as much at the party of which I am a member in their period of office as at the present Government although they have held office for a much longer period cumulatively over the last 20 years. Let nobody believe that the position of the income tax payer has done anything but worsen in the past 20 years. He is paying proportionately more tax out of income than he was in 1960-61. It must have an effect on incentive to work, if a much larger share of income and of additions to income achieved through extra effort is being taken by income tax now than was the case in 1960-61.

I want to give some figures to illustrate this. I am using as base, the tax year 1960-61, compared with the allowances in the present Finance Bill. In 1960-61 the allowance for a married man was £394 and in this Finance Bill it is £1,730. On the face of it, it looks like a fairly generous increase. It is an increase of 339 per cent. It has not kept pace with the increase in industrial earnings. From June 1960 to June 1977 there has been an increase in industrial earnings, in the income out of which tax is paid, or 632 per cent or, if you take 1961 which is slightly more favourable, the increase from June 1961 to June 1977 has been 592.4 per cent. The increase in the allowance against income for a married man is approximately half the increase in income which has taken place. This means that a married man pays proportionately very much more of his income in tax now than he paid in 1960-61, assuming his income has moved on the same basis as the average.

In the case of a single man, remembering that there has been an increase of about 632 per cent in earnings since 1960, the increase in his allowance is from £234 in 1960-61 to £865 this year. This is an increase of only 270 per cent, significantly less than the increase in the married allowance. I shall not enter into relative needs of married and single persons but obviously the Minister for Finance in 1960-61 was more sympathetic to single people than the Minister for Finance now is, but only marginally, since the increase in the married allowance, as I said, is 339 per cent against 270 per cent for the single person. That 270 per cent is against an increase in the average earnings of single people of about 632 per cent.

The increase in the allowance for a widowed person—this reveals a genuine injustice both in regard to inflation and also in regard to the increase in allowance for both married and single people—has risen from £259 in 1960-61 to £935 in the current finance Bill, an increase of only 261 per cent in that allowance as against an increase of 339 per cent in the married person's allowance and 270 per cent in the single person's allowance. I do not believe that the financial needs of a widowed person have increased by almost 70 per cent less since 1960-61 than the financial needs of a married person. Indeed, many widowed people are far worse off because, as many of them are older people they have diminished physical ability to fend for themselves. It seems to be an injustice that the widowed person's allowance since 1960-61—that takes a sufficiently long period to avoid occasional fluctuations in individual budgets—should have increased by so much less than either the married allowance or the single allowance. All income tax payers are suffering considerably because of the fact that basic allowances for married, single or widowed persons which are between 260 per cent and 339 per cent are very much less than the increases in earnings which are between 590 per cent and 632 per cent since 1960-61.

That is not the worst aspect of it. Many people, because they are widowed, have special problems. I am thinking particularly of a widowed man with young children. He has to go out to earn a living and must arrange for somebody to look after the children while he is away. Under the tax code since 1949, under a Coalition budget, he is allowed a housekeeper allowance which was £100 then and now is £165. That has increased by only 65 per cent since 1949-50. These are people who really need help, whether man or woman. Yet their allowances have been increased by only 65 per cent. I do not know what inflation since 1949-50 has been but I think we can safely say it is about 600 per cent. Therefore, the increase in the housekeeper allowance is only approximately one-tenth of the increase in inflation since then. It is only one-sixth of the increase in the married person's allowance since 1961. Although the housekeeper allowance has been in existence since 1949 it has only increased since then by one-sixth of the amount by which married person's allowance has increasel since 1961, 20 years later.

The same applies to the dependent relative allowance which relates to the 1956-57 Coalition budget. Again it is a very well-merited, sensible and a good allowance and one that saves the Exchequer money. Many Members must know of cases in their constituency where a couple decide to look after one or other of their parents in their own homes, to look after people who would otherwise have to go to a county home or some old persons' establishment where they would be maintained at a very high cost to the State. Yet the tax allowance which such a married man or woman is given for looking after a dependent relative has increased by only 58 per cent since it was introduced in 1956-57. When it was introduced the allowance was £60 and stands now at £95, an increase of 58 per cent in 20 years. If that is not an injustice in the code I do not know what anybody could describe as an injustice. When one compares that with the increase in the allowance for married persons of 339 per cent and with the increase in earnings of 632 per cent since 1960-61, one can see the enormity of the injustice done to the people who are more in need than the ordinary married couple, both of whom are in good health.

I am sure everybody agrees that the person who is a widower and has to bring in a housekeeper or the person who must look after an elderly relative is more in need of help through the tax code than the ordinary regular married couple or the ordinary regular single person, like myself, whose expenses are not all that enormous. A single person like myself has got an increase in tax allowances since 1960-61 —I was not paying tax in that year— of the order of 270 per cent. It is unjust that single people should have been given such an increase and that a person who looks after an elderly relative or a relative not able to fend for himself should only get an increase of 58 per cent. That should be attended to by amendment to this Finance Bill.

I looked up these figures at the weekend and it was only as a result of doing some calculations that I discovered the difference in the rate of increase in the various allowances. I cannot imagine how a Minister or some of his officials —in this criticism, if it can be called a criticism, I must include my own colleague—did not discover the blatant injustice disclosed in the figures I quoted. I should like to refer briefly to some other allowances where the case is not as clear but where there is also an indication of a degree of injustice. According to my calculations children's allowances, which were first introduced in 1966-67, have only increased by 100 per cent for children under 11 and by 60 per cent for children over that age since they were introduced. I am sure I can safely say that inflation since that year has gone up by about 200 per cent. That is also unjust. We should encourage large families. It is not a good thing that the increases in children's allowances should be so small by comparison with the rate of inflation and with the increase in married or single person's tax allowances.

An allowance is given for an employed person taking care of an incapacitated individual. That was introduced in 1969-70 but it has only been increased by 65 per cent since even though inflation has gone up by 200 per cent in that period. That is also unjust. I suppose any Minister for Finance faces the problem that all political pressures are on him to look after the big number of votes that can be got by looking after those who are concerned about married and single allowances.

The number of people who are employed and taking care of an incapacitated individual, the number of people who must take in a housekeeper because they are widowed, the number of people with a dependent relative at home, while significant is not big enough to win an election. If one succeeds in getting them on one's side one does not win an election. I suppose successive Ministers for Finance, looking for a good cosmetic budget, for something that would appeal, have always tended to look at the basic allowances and forgotten about the other allowances. That is not the way the tax code should operate. It should not operate strictly on political considerations but on the basis of equity and justice. I do not believe that the categories of persons I have mentioned have been treated with equity or justice by successive Ministers for Finance. I hope that by bringing these figures to the notice of the House that it will encourage the Minister to make changes in the next Finance Bill. I accept that the Minister has made this calculation in relation to this Finance Bill and that it may not be possible to change it at this stage, but he should bring about dramatic increases in the various allowances in the next Finance Bill. None of the allowances I mentioned has kept pace with the rate of increases in industrial earnings since 1960-61. Therefore, proportionately more of the income of some people is being taken by tax.

I should like now to deal with the provisions in relation to farming taxation. Most of these are matters that can be teased out in the course of the debate on Committee Stage. There are certain matters which need to be clarified. There has been a suggestion made that, if a man at any stage in his career as a farming tax payer opts for the accounts system, he can never again go back to the notional system. I am aware that the Bill states clearly that a farmer who opts for the notional system must stay on it for three years but I heard it claimed by a reputable tax consultant who knows financial legislation better than I that this will be the case. It is very hard to understand such legislation and one would need to have the whole groups of Finance Acts in front of one to find out what is meant in any one of them. It is like the old missals with cross-references to different pages and eventually you are completely confused unless you are very good at retaining what is said in about four other different places when you are reading something said in one place. Apart from requiring people to stay on the notional system for three years, there is a suggestion that, if people opt for the accounts system, they must stay on it indefinitely and cannot go back onto the notional system. I would ask the Minister for State if he would ensure that the Minister for Finance will clarify this point when he is replying, because it could prevent problems arising on Committee Stage.

There is a serious, and to a large extent inexplicable, injustice in the farming tax proposal in so far as it provides that if you go onto the notional system you must stay on it for three years. Under the notional system, instead of assessing your actual income, your income is assessed on a multiplication of the poor law valuation of your farm. Under the present Finance Bill, your income is assessed at 90 times the valuation of your farm. If you have a farm valuation of £100, your income is assessed at £9,000. That is just the figure for this year.

A farmer is told that if he opts to go on the notional system this year on the figure of 90 he must stay on it for three years, but there is nothing to stop the Minister for Finance saying next year that 90 is no longer an appropriate multiplier and increasing it to 200. The farmer may have made his calculations and said "The notional system is a fair and simple system for me this year on the basis that the multiplier is 90, and I will go onto it". Next year he may find it has been increased to 200. All his calculations must be changed. He changes them but finds he cannot go off the notional system. He must stay on it at 200. The following year the Minister for Finance may increase the multiplier to 400. The farmer is still stuck on the notional system. He cannot get off it.

A farmer with a valuation of £100 who went on the notional system in 1978 with a multiplier of 90 would be considered to have an income of £9,000 and, with all the allowances. that might be reasonable. But if the multiplier was changed to 400 in two years' time, even though he might make a loss in that year, he would be told that for the purposes of income tax his income in 1980 was £40,000. There could be no argument. There would be no possibility of saying he made a loss. He would be told "It does not matter what loss you made. You went on to a notional system in 1978. You are on it now. The Minister increased the multiplier from 90 to 200 last year and 400 this year, and you must pay on the basis that you earn £40,000". That is unjust. I do not think there is any need for me to elaborate on it. Anybody can see it is unjust. I do not understand why it is necessary to have this requirement.

Under the previous Government. farmers paying income tax did not have to stay on the notional system for three years. They could go on to it for a year. That was possible when we were in office and the Revenue Commissioners were able to operate it. Why has it suddenly become impossible now that Fianna Fáil are in office? Why was this promised? Let us be honest about it. The farmers were not deceived in this respect. They were told in the election campaign that this three year provision would operate. I am not blaming the party opposite for deceiving the farmers on this point. Farmers voted for it. But the fact that the farmers voted for it does not make it any less unjust, and unjust it is.

There is another very important injustice in the tax code. I am not objecting to the principle of farmer taxation. It is fair that farmers should pay the same share of their income as others so long as there is a reasonable allowance for investment. This is accepted by the farming community. The other injustice relates to the rates. We were discussing this yesterday and we were told at certain stages in the discussions, not by the Chair so much as by the Minister, that it was a matter for the Finance Bill and not for him when we talked about the income tax concession.

The fact that farmers will have to pay very dramatically increased rates as a result of the abolition of the primary and supplementary allowances if their valuations are in excess of £75 this year and £60 next year was justified by the party opposite—not before the election but after it—by the provision that they can set off their increased rates against their income tax. In some cases their rates will be increased by 100 to 200 per cent as a result of the abolition of these allowances. We were told by Deputy Briscoe a few moments ago that the Fianna Fáil farmer taxation policy is far fairer than the farmer taxation policy of the Coalition.

This aspect is not fair and I tell the House why it is not fair. It will hit the farmer who makes no income in a particular year harder than the farmer who makes an income. The farmer who makes an income will be able to set off the increase against his income because he will have an income out of which he will be paying income tax. If his income exceeds the amount of his rates, he will get the full allowance for his rates. Let it not be thought in this House that farmers will always make big incomes. They may have had big incomes in some years, or some farmers may have made big incomes, but that will not necessarily always be the case. Indeed, there are indications to the contrary.

Next year and the year after there will be many farmers who will make little or no income, who will make a loss. They will still have to pay the increased rates regardless. If our proposal had been accepted and the rates had not been increased, they would not be paying any income tax. These men will now be paying very dramatically increased rates and there will be nothing to set them off against because there will be no income. That is unjust.

There is another unjust aspect. Members of the House, and particularly Members on this side, will remember ruefully the proposals introduced in the budget of 1977, I think, whereby farmers were asked to pay their income tax on 1 September. The tax year commenced in April and they were to pay tax on account on 1 September. If they paid more than they were entitled to pay they would get their money back with interest which, at the time. exceeded the market rate. If they paid more than they were entitled to pay, in terms of investing money in any security they would do better.

The uproar from all sides not only in this House but outside it against the injustice if this proposal had to be heard to be believed. What are we faced with under this combination of tax legislation, this rates proposal combined with the relief in income tax? The farmer will have to pay the first instalment of his increased rates in April 1978 and the second instalment in July 1978. That is when the tax man will get hold of the farmer's money.

When will the farmer get that money back? It is not a question of waiting a few months and getting it back with interest. Under the proposals of the previous Government, if you paid in September you would get it back with interest the following April. He will get his money back on 1 January 1980. The Revenue will have the use of the farmer's money, money which he is entitled to set off against his income tax, money which he should not have to pay if his income exceeds the amount of the rates. The Revenue will have the use of his money, interest free, for 18 to 20 months, and that is unjust. There are other causes that can be argued in relation to income tax but I will not go into them in detail at this stage.

The Coalition promised to revise the threshold for all capital taxes on a three-yearly basis to take account of inflation. In their 1978 budget they would have been revising all capital tax thresholds to take account of the inflation which has occurred since 1975 when these taxes came into effect. Since then inflation is about 100 per cent. I am directly concerned with land values and they have increased by at least 100 per cent since 1975. We promised to increase all the allowances to take account of increases in property values so that the burden of capital acquisitions tax would be the same as a result of the 1978 Budget as it was when the tax was originally introduced in 1975. That was fair because it meant that we were not going to allow inflation to erode the value of allowances.

When estate duty was introduced in 1894 it was only of concern to a minority. When we promised to abolish it in 1973 it had become a threat to the smallest of family farms in the event of the owner dying. Estate duty was a threat hanging over the head of every farmer who had more than 50 acres. If he died without making over the farm to his successor within five years of his death, the estate duty would be such a burden that his successor would be in debt for the remainder of his life, or part or all of the farm would have to be sold. We said we would not allow what had happened to estate duty to happen to the new taxes introduced to replace it. We said there would be a three-year revision of all the thresholds.

What has happened in the 1978 Budget? Has the Minister for Finance kept the promises that were made by his predecessor, Deputy Richie Ryan? Most assuredly he has not. Capital acquisitions tax applies both to transfers during the lifetime of the donor and to transfers on death, so there is no way of avoiding it. In the case of estate duty, if you lived long enough and could foresee the end of your life you could transfer the property to your successor five years beforehand, thereby avoiding estate duty. That cannot be done with capital acquisitions tax because it applies to gifts inter vivos and to gifts on death.

What has happened to allowances under the capital acquisitions tax? For a transfer either in life or on death to a man's wife, his child or the minor child of a deceased child, that would be a grandchild who was a minor, the Minister for Finance has not chosen to make any increase in the thresholds for those transfers. The most common transfers of property in rural and urban areas are transfers from a man to his son or daughter and from a man to his wife. The Minister for Finance has said there shall be no increase in the thresholds for the application of capital acquisitions tax despite the fact that the value of property has doubled since then. In some cases agricultural land has increased to £3,000 an acre. At the time the tax was introduced the going price was about £700 an acre. As a result of inflation more and more people will be involved in this form of tax.

What happened to the other allowances? In his budget speech the Minister said:

Again the Government has no quarrel in principle with the capital acquisitions tax. I do propose, however, to increase certain thresholds. In particular, I intend to double the threshold in Tables II, III and IV of the Second Schedule to the Act which, I believe, were fixed at too low a level in the first instance. These changes will, of course, involve readjustments to the various ranges within these Tables. The cost of all the adjustments is estimated at £1 million in 1978.

In a manner of speaking, the Minister did that. He doubled it in the case of transfers to one's father, to a lineal descendant other than a child or a minor child—that would presumably be an adult grand child. The minimum threshold was increased by 100 per cent, but it was very deceptive. The threshold had previously been £15,000 and now it is increased to £30,000. One would expect, if increased values justified doubling the threshold at the bottom, that there would have been an equivalent increase in the threshold along the line, whether one moved from the initial rate of 5 per cent up to the next rate or from 49 per cent to 50 per cent. If the increase in land values justified doubling the threshold at the bottom, one would expect the same rate of increase along the line if one were intent on retaining relativities. What has happened? In tables 2, 3 and 4 there are 41 thresholds and only three of these have been doubled, as the Minister for Finance sought to convey in his budget speech. The majority of the thresholds, 26 out of 41, have been increased by less than 30 per cent. For instance, the increase in the threshold whereby one would move from the 49 per cent rate of tax in table 2 has gone up from £208,000 to £223,000, an increase of only 7 per cent.

As far as agriculture is concerned, there has been an allowance in relation to capital acquisitions tax in regard to the valuation of agricultural land. It is accepted that agricultural land is unlike any other commodity because there is a limited amount of it on the market at any one time in comparison with the number of people demanding it. It is structurally liable to be persistently overvalued. The same market forces that apply to nuts and bolts do not apply to land; one can make more nuts and bolts if there is an increase in demand for them, thus bringing down the price. If one's wealth consists of nuts and bolts it is not likely to be overvalued for that reason. This does not apply to land because, as Mark Twain said, they have stopped making it. In recognising that, the then Minister for Finance, Deputy Richie Ryan, in introducing the capital acquisitions tax in 1975 said that the thresholds would be revised and that one could, in respect of agricultural land, have a reduction in its value for tax purposes of 50 per cent, up to a maximum of £100,000. This meant that if one had a farm worth £200,000 it would be valued for tax purposes at £100,000. If one had a farm worth £300,000 it would be valued for tax purposes at £200,000, while a farm worth £700,000 would be valued at £600,000. There was a threshold of £100,000 in the limit to which the 50 per cent reduction, taking account of over-valuation of agricultural land, could apply.

The Minister has not increased that threshold either, notwithstanding the fact that through no fault of farmers who may wish to transfer farms to their sons, the price of the land which they own has gone through the roof. Yet this allowance, which may allow people to have their taxes at less value for the purposes of capital acquisitions tax, has not changed since 1975. There should have been a comprehensive revision of thresholds right across the board and an increase of that limit from £100,000 to £200,000. That would be doing no more than taking account of the rate of inflation. By making those adjustments one would be doing no more than ensuring that the burden of capital acquisitions tax would be the same now as when the tax was introduced. It would not be a question of giving concessions in excess of what was given in 1975; it would simply be a question of making sure that the burden in 1978 is the same as it was in 1975.

Let us turn to the practical implications and the effect on agricultural policy. If a farmer is transferring to his son a holding in excess of 125 acres he is now in the net for capital acquisitions tax. If he is transferring it to his nephew he is in the net if his holding is in excess of about 20 acres. The result of this tax is that no farmer will transfer his farm to his son or his nephew. The Revenue Commissioners accept land values now as being £1,600 an acre, about half the going price. Assuming a farmer with a holding of 150 acres wanted to transfer it to his son, as a result of this Bill he would have to pay £10,750. He would have paid no tax whatever in 1975. Let us take the case of a farmer who has no children but has a nephew living with him and working on the farm. If the farmer had wanted to transfer his 150 acre farm to that nephew in 1975 he would have had to pay £14,150, but under the 1978 Budget he will now have to pay £67,000, assuming the land value to be £1,600 per acre. That is five times as much as he would have had to pay in 1975.

We must accept that farmers do not really want to hand over their land to their sons or their nephews. They want to hold on to it as long as they can because it is a sign that they are still active, a sign that they are still the masters of their own lives, and they do not want to transfer. We all recognise that it is desirable in the national interest that younger men should be brought into ownership of land so that the best returns may be obtained. The owner of land will be told that if he is transferring it to his nephew he will have to pay at least £67,000 and that is assuming the Revenue Commissioners accept a valuation of £1,600 per acre and in view of the way land prices are going at the moment they may not. If the man is transferring to his son he will have to pay at least £10,000. The owner may take the view that he will just hold the land and let his relatives pay when he dies. His view may be, why should he pay £67,000 to give something to his nephew or £10,750 to give something to his son. It is a good question.

Because of the failure of the Government to adjust the allowances every three years, as was promised by the National Coalition, this will put a stop to all the talk about farmers retiring in order to let younger men take over. The Government can produce as many schemes as they like and they can send out 60 inspectors into every county but it will do no good. Now we are going to have socioeconomic advisers in each county committee of agriculture. These people will have the job of telling farmers to transfer their holdings to younger people. What hope would a socioeconomic adviser have of persuading a man to give over his farm to his nephew if he has to pay £67,000 to do it? He would have very little hope —he would be nearly as well off to stay at home.

What will be the situation in three years' time? We promised to adjust the allowances this year but the Minister for Finance is breaking that promise. Previously we assured the people that the adjustment would be carried out every three years but by refusing to do this the Minister has broken the notion that had been fixed, somewhat fragilely, in people's minds that these taxes were not an immediate threat because they would be revised. By failing to make the change this year the Minister has shown clearly that he is not committed to the idea of making a three-yearly revision. The National Coalition promised that the thresholds would be revised in 1978, 1981, 1984 and 1987, but under Fianna Fáil that will not be done. They will give whatever allowances they can whenever it suits them. They are giving some paltry allowances now to transfers at the bottom of the threshold to people other than one's own immediate family but that is all. They are showing that they are not too concerned with the future. The idea of a revision every three years has gone down the drain. This tax progressively will bite larger chunks out of the hard-won property of the farmers. More and more will be taken because the tax will not be adjusted in line with inflation and many more holdings will be caught.

According to the National Coalition a revision should be carried out in 1981. Assuming land values are now £3,000 per acre, let us take a figure of £4,000 per acre in 1981. A farmer with 30 or 40 acres who wants to transfer it to his son will have to pay a substantial amount of capital acquisitions tax having regard to the rate of land values and because of the failure of the Minister to revise the allowance. A farmer with 150 acres will have to pay £150,000 assuming land values continue at the present rate. It is questionable whether there will be any transfers of land in such circumstances.

What has happened in the budget and in the Finance Bill is of great concern in 1978 but it is of even greater concern that the Government have thrown out the promise of the previous Government to have a three-yearly revision of the thresholds. Regardless of what is happening now, it is obvious that in future this tax will be allowed to run riot, that taxation will run riot and property owners will live in dread of transferring their land to their successors.

I cannot understand the mentality of the Minister and his colleagues in allowing this to happen. It has not sunk home to the farming community as yet. They do not realise the full significance of what is proposed in the Finance Bill or the failure of the Minister to honour the promise in relation to revising the thresholds which was made by his predecessor. The farmers or their organisations do not realise yet what this means. If they did they would be a lot more vocal. Up to now they have not been vocal but I think they will. I and my party intend to make sure that they fully realise what has happened. The Minister for Finance will hear a lot more about Tables I, II, III and IV of the Third Schedule.

I do not believe the farmers or anyone else will accept the reintroduction of estate duty. They fought hard and long enough to get rid of it. During the election campaign in 1973 when it was put to them Fianna Fáil refused to abolish estate duty and they were beaten. Now they are back in office and they want to reintroduce estate duty although they will not call it by that name. It was their policy in 1973 to retain that duty regardless of the fact that it was threatening holdings of 30 or 40 acres. They are reintroducing it now because they are not allowing the thresholds to be raised although inflation is rising. That means that small farmers will be involved.

In my contribution I pointed out clearly that the Government are committed to a reduction in unemployment of 5,000 in 1977, 20,000 in 1978, 25,000 in 1979 and 30,000 in 1980. That is a reduction in unemployment, not the creation of new jobs. Secondly, I pointed out that tax-free allowances have not kept pace with the increase in inflation. Since 1961 earnings have increased by 632 per cent, the married person's allowance has increased by only 339 per cent, the single person's allowance has increased by only 270 per cent and the widowed person's allowance has increased by only 270 cent. They have not kept pace with the increase in earnings and it means that proportionately people are paying much more tax now than then.

The housekeeper allowance for a widow or widower who has to employ a housekeeper to look after his children since 1949-50 has been increased by only 65 per cent. The dependent relative allowance since 1956-57 has been increased by only 58 per cent. That is against increases of around 300 per cent in the other allowances which is clearly unjust to the minority of people who are in the dependent relative category or the housekeeper allowance category.

I also pointed out that it is unjust that farmers have to opt for the notional system for three years regardless of the fact that the notional which is now 90 may be increased to 200, 300 or 400 next year. Farmers have been asked to buy a pig in a poke and may be faced with huge tax bills as a result of the decision taken now in the absence of knowledge of what the multiplier will be in two or three years. I pointed out that it is unjust that farmers should have to pay very substantially increased rates which they might not be able to set off against income if in a particular year they had not sufficient income which would put them in the tax net. That is a regressive taxation because it will hit the farmer with no income far harder than the farmer with an income.

I pointed out that this was unjust under this rates provision that the Exchequer should have the use of the farmers' money for 18 months tax free. I pointed out finally that the failure to revise the capital acquisitions tax threshold means that estate duty in its full force, as sustained and supported by Fianna Fáil in the 1973 election, is now being reintroduced by them in 1978.

I support this Finance Bill introduced by the Minister for Finance. I realise it must be very difficult for the Opposition to make comprehensive arguments against the Bill because it puts into effect many of the detailed provisions outlined in the budget, which have been very well accepted by the people. We have gone much further ahead this time in applying the measures which are given effect in this Bill.

The Minister pointed out that the budget he introduced on 1 February was framed in the context of the Government's medium-term plans to reduce inflation and tackle the serious problem of unemployment. We all know what the general medium-term plans were. Anybody who is objective will admit that they have been successful. That is very obvious to anybody who looks objectively at the facts and the results, which have been enumerated in the House on several occasions during the budget debate and since then.

The medium-term plans were drawn up one and a half years ago. The opportunity to put them into practice only came last July. The first economic programme was announced by Fianna Fáil while in Opposition in September 1976. Much more detail in relation to that was added in the March-April period last year and it was put to the electorate in a manifesto subsequently. On election Fianna Fáil were given the opportunity of immediately putting those medium-term plans into operation.

The medium-term plans comprise a package. There was never any secret about that. It was put on the table and it was explained to the employer, the employee and to the farmer. It means moderate wage demands for the individual. I congratulate the Irish worker for acceding to this request at this time in our economic development. It involved concessions like the removal of rates which the Government have since conceded in toto as promised. It also involved substantial increases in tax free allowances. I find it very amusing to see Deputy Bruton having to go back to 1949, 1956, 1957 and 1961 to make comparison on tax free allowances and the rates increase over the years. The ordinary man in the street can judge very clearly that in the recent budget, which is given effect in this Bill, he got very substantial increases in his tax free allowances. If he compares them with the period when the Coalition were in power he will find that he has gained very substantially. He knows he can go back to 1910, 1946 or 1959 and make all sorts of statistical comparisons but I believe he is more interested in the immediate and practical comparison with his wage packet of the year before.

The package in general also promised to reduce inflation. While I do not claim that all the reduction in inflation has been due to the medium-term plans they certainly played a fairly major part in the reduction in inflation over the recent past. It has led to very moderate price increases but also to reductions in prices in a number of areas, including the ESB. The package has delivered to the man in the street and the voter an increase in real income which was intended in the short-term.

It offered an encouragement to the investor and the businessman for enterprise, development, to take risks and put money into the economy, to create jobs. If one looks at the results to date one can see that the mediumterms plans here have been very successful. The building industry and agriculture, two of the major indicators of our economy, have a new confidence and a new resourcefulness. There is new investment and growth. I do not believe that one needs to get too involved in statistics to realise that those industries are now doing well.

The public service in the package in the short-term offered an opportunity for direct investment in employment, which has been made. This was the immediate short-term approach which was promised and has been delivered on. In relation to increased employment in various sectors of the public service and increase in capital allocations in the public service to stimulate employment opportunities the medium-term plans have been delivered. Private industry is a somewhat longer term operation but it is quite obvious that the medium-term plans have instilled a new confidence here and that there is a far greater willingness to invest in industry here which will show very much benefit in the longer term.

We have got to look at the medium-term plans as a total package. This package, as the Minister indicated, has been delivered in large measure. It has been promised that in the very near future we will have a more detailed outline of the plans to deal with the somewhat longer term. Plans have to be made well in advance of the events. The plans which we have seen unfolded in recent months were laid quite some time ago. The effects of the next stage will also be spread over quite some time to come. The Minister can be very pleased with the measures he has introduced to date. When we look at personal income tax we find that the increases were quite generous. But if they were they call on all of us, as individuals, to moderate our demands particularly because of the implications for young people and the employment opportunities they seek.

In recent times we have seen that the EEC have proposals for the encouragement of employment of people under the age of 25. We have a very special problem here since 47.6 per cent of our unemployed are in that age bracket which compares with an average EEC level of 36 per cent. The EEC are proposing ideas for recruitment and employment premium programmes and to give us 55 per cent assistance by way of grant aid to these two schemes. Of course these will be very valuable and at least will bolster and back up actions taken by our Government and, in fairness, by the previous Government. But something more than this will be needed if we are to meet real needs. In this respect I am somewhat disappointed that the EEC are not moving fast enough.

I should like to see them take more positive measures, that is, in all EEC countries, to stimulate growth in employment, particularly in economies such as ours with a very high rate of youth unemployment. The EEC should not merely be backing up the schemes already there but should be providing more creative thinking in relation to the problem confronting all of us in the EEC and very specially here.

If we think in terms of the creativity such young people possess, I believe it is a very real thing in the age group between 20 and 35. Indeed, we might like to think it obtains up to age 40. But these young people in that bracket, especially up to say, age 35, have a tremendous capacity for work, innovation and creativity. When one thinks of many of the new difficult challenges one finds that such people are prepared to take them on. When we get a little older perhaps we become a little too wise, too cautious and too knowledgeable. Consequently, we are less inclined to take risks younger people are prepared to undertake. These young people must be stimulated. While I very much welcome the measures proposed by the EEC I should like to see them giving us a lead and assistance in relation to the encouragement of enterprise amongst such young people.

The Minister for Finance in his plans has a package of business incentives designed to encourage a spirit of enterprise and expansion in the private sector. The enterprise development programme is a notable feature of that package, a novel one and is apparently getting off the ground quite well. There is the danger in such programmes that we look for too much when we seek the entrepreneur, when we seek also a great deal of experience and knowledge in this area and, consequently, tend to look for quite mature people. That is as it should be but I should like to see that enterprise development programme extended by placing greater emphasis on the creativity existent in the age group particularly up to 35. Perhaps this is an area in which the EEC could give some assistance. At times we are too inclined to see problems without visualising their solution. One of the benefits of being young is that one cannot see all the problems, and consequently, one gets on with solutions. In research it is quite common that when people go beyond age 30 it is assumed that they have made their main impact and given their main input especially in relation to fundamental research. They are then very frequently moved on to other areas of development and so on. This point recognises that here is a tremendous pool of creative talent in that age bracket and we should be aiming at that particularly, with the EEC backing us in that effort.

The development enterprise embodied in the Minister's package is something we should encourage also, such as the mobility of personnel in the semi-State and State service. We should encourage such personnel to take over other jobs and responsibilities and also to move out into the economy as a whole, putting their experience at work there. It is not an easy thing to do because of the degree of security available to an individual who has developed to a certain extent in the State or semi-State service but there is a tremendous challenge and opportunity in industry. The Minister has recognised this fact in the measures contained in this Bill. I recognise also that there are difficulties in relation to pension rights but surely we can find some means of overcoming these difficulties in any transfer to private industry by providing some degree of security in the long-term for people who are prepared to take that chance. We need these people, their brains and experience. We need it in industry and in various facets of agriculture where such people would be afforded ample opportunity of utilising their talents.

I have heard various people say in in this House, particularly people who believe in socialism and the more extreme Left view, that we should nationalise everything. Deputy Dr. Browne quite frequently raises this issue in the House—that the solution for most of our problems is nationalisation. The Minister, in his enterprise development programme, is providing the basis on which we can develop abilities and enterprise existing in our community. It is a question of working at it. I do not believe that an over-emphasis on nationalisation would achieve that level of enterprise. I believe that the measures the Minister is taking are well directed in this respect.

Turning to Part 1 which contains a number of income tax provisions I notice that the increases for married persons are proportionately greater than those for other people and that the married persons' allowance is now double that of the single person. Of course, this was a major step ahead and constituted a tremendous improvement for the married couple. That is why I found it so amusing to hear Deputy Bruton refer so far back in his statistics. We all acknowledge that the married couple to be given double the single person's allowance constituted an enormous step forward and a very brave one on the part of the Minister for Finance who has to foot the bill ultimately and make such provision.

I should like to see attention given to the question of children's allowances and the possibility of increasing them. I appreciate it is not a simple matter. With the enormous benefits given by way of income tax reliefs this is not something that can be readily done right across the board. But I would ask the Minister to look very carefully at this problem and to review it to see how children's allowances might be improved in the medium term, particularly in the case of those who depend so much on them. I need not specify who they are. They are people whose incomes will not rise to the same extent as other incomes do. They are people who, because of the number of children they have, are dependent to a great extent on these allowances. We have all come from families and we know that children are very expensive these days. Clothes and footwear can be very expensive. Perhaps at some future date the Minister might be able to do something for these people who need special consideration.

I welcome the fact that the Minister recognises the right of married persons to opt to be assessed separately. That, of course, affects the total liability of a couple to tax. It has long been a feature of our tax code but it is not widely availed of, or perhaps known, and I welcome the fact that the Minister intends to ensure people are made fully aware of their rights in this respect.

Section 7 is designed to encourage business enterprise and investment. It modifies existing restrictions in regard to income tax relief for income purposes. This will remove disincentives to business. Here is yet another example of the Minister encouraging business enterprise by providing incentives. That emphasises the fact that there is a heavy onus on business and private enterprise to respond and plough back their profits into the creation of new jobs to help solve the problems that face us. I would like to see the banks adopting a more liberal approach towards encouraging enterprise, particularly in young people, and I would like to see them coming up with some response to the provisions of this Bill, which is designed to encourage enterprise, enterprise on which the banks themselves depend.

Section 3 removes the limitation on the amount of premiums paid for retirement annuities by self-employed persons. I am glad the Minister has given consideration to this aspect. He emphasises elsewhere that he is anxious to see a greater emphasis on small businesses. These have an important role to play in our economy. Very often these businesses are run by private individuals and their position is not always given sufficient consideration. There is a percentage limitation of 15 per cent on nett relevant earnings applicable to these premiums and this corresponds to a similar provision for superannuation payments by employees. The incomes of the self-employed can fluctuate from year to year. Quite a number of people in my constituency raised this problem with me. They are not guaranteed anything, not even a minimum wage per annum, and if things are not going well they may not have a very big income in a particular year. Hopefully, they may do better the next year. Suppose a self-employed person has an income of £7,000 and pays £1,000 to a superannuation scheme, that represents a figure of about 14 per cent and would come out of the 15 per cent net relevant earnings. If in the following year his income drops to £5,000 this £1,000 becomes 20 per cent of net relevant earnings. I would like some provision to ensure people would not be caught out in this way. I know cases where they have been caught out. I would not like to see people being put at a disadvantage, even accidentally, and I do not believe that is the intention. I suggest the Minister have another look at this to ensure the 15 per cent does not give rise to problems. It may mean some minimum being allowed.

I am glad the Minister has repealed the provisions of the 1976 Act in relation to the assessment of employees' motoring benefits in kind. The object of that particular provision was not very laudable. Occasionally someone might get substantial benefit from the use of a business car but the majority of those affected were salesmen operating throughout the country. The 1976 Act imposed a minimum charge of £300 or 15 per cent of the cost of the car irrespective of the amount of the employee's private use of the car. Quite a few people pointed out to me the difficulties they had and I am glad the provision is now repealed. Perhaps that is because I do not envy people if they get a little more for working hard or taking on particular tasks or responsibilities. We tend to underestimate the importance of salesmen.

Maybe we are too academically orientated. In practice the man who makes the sale makes the business, he makes the job. He has now to compete with people from Europe and outside. That means he has to travel all over the country. He is normally away from home for long periods, generally most of the week. In the majority of these cases these people are using their cars very extensively in their business and, as I said, they are away from home for long periods. What is more, they are doing something very creative in the economy which is far too seldom recognised. I am glad to see in this Bill that the role played by these people is recognised and I welcome this measure.

According to this Bill, in future we will revert to the system which existed previously and which will take full account of each employee's particular circumstances, including the amount of private use of his employer's car and the relationship it bears to working usage. I have worked in a number of different sectors and have had to face different tax situations. I was in the public service for quite some time. It was very snug in the sense that everything was very clear-cut and fairly straight-forward and simple from a tax point of view. I then went into the private sector and at one stage I had a company car. I found the tax inspectors were very strong in their pursuit of the private usage of a car and that they would set an arbitrary level and leave it to you to prove that it was not such a level. I found they were very vigilant about this. That is not to suggest I complained about it but it was my experience of the operation of the system. I subsequently went into the self-employed area and had more experience there. This system can give us the yield which is broadly comparable to what would be obtained otherwise. It is a fairer system particularly as it applies to salesmen. I welcome this move.

I also welcome section 6 which has the effect of exempting from income tax the income derived by thalidomide children from the investment of the tax-free compensation moneys received by them. We will very readily agree with this and I am very glad to see that, despite the pressures, urgencies and the time taken up with business and the economy, the Minister has made this provision in this Bill.

Chapter II deals with farmer taxation. As a person living in Dublin city, I find quite extraordinary the attitudes taken by Opposition Deputies at this stage when in my experience there was the classical farmer-bashing exercise during the years the Coalition were in power, particularly in relation to farmer taxation. The Minister is meeting the request made by farmers and at the same time meeting the promises made to the community as a whole, that is, that there would be a fair and equitable system of farmer taxation. He has achieved this in the measures he introduced. He is retaining the notional basis of assessment, and the farmers are pleased with this and he is providing for a single payment date at the end of the financial year.

Deputy Bruton mentioned that farmers had to cover interest charges but under the Coalition Administration they would have had to pay tax before the crop was harvested. This was a tremendous disadvantage for the farming community. The Minister has met their request on this matter. I am glad to see that while farmers will pay tax they will receive credit for rates and there will be no double tax. This is only as it should be. Rates which were a former means of taxing land will be reduced from the tax bill. When the farmer pays tax he will not have to pay this arbitrary charge at the same time.

These concessions are designed to ensure that agricultural developments will be fairly taxed. We have to face the fact that in recent years farm incomes in real terms according to the statistics supplied by An Foras Talúntais have doubled. This is only right. It was our intention when going into the EEC that farm incomes should increase. It was also evident that the input cost in farming increased over that period. The Minister has gone a long way to meet farmers' requirements in this respect and at the same time he has ensured that there will be a fair taxation system. He pointed out that an additional 7,000 farmers have been made liable for income tax by lowering the threshold from £75 to £65 rateable valuation.

The need for these measures was stressed by the Minister when he indicated that the yields in the previous year from farmer taxation were expected to be about £14 million and that under the measures outlined in this Bill they would increase to £24 million for the tax year 1978-79. Taking everything into consideration the Minister has delivered the kind of package he promised prior to the election.

I welcome the restoration of tax exemption for agricultural and fishery co-operatives proposed in section 17. These measures will operate from 1 April 1978. When the Minister is taking steps like this there is a need for response from the co-operatives both in agriculture and in fisheries. This response must come as an investment in our economy, as a diversification of the operations in which they are involved, as risk-taking in this diversification and in penetrating new markets. We can see a great deal of this going on at a fairly high level with our agricultural co-operatives and I hope this measure will provide a stimulus for these developments. We can of course add greatly to the development of our economy by emphasising our agricultural products and diversifying and developing them. This is given a stimulus by these measures.

In section 19 there is a provision that manufacturing companies will have only to meet the expansion target, that is an employment target of a 3 per cent increase each year, in order to qualify for the special 25 per cent rate of corporation tax. This is very valuable and I am glad to see it applying to manufacturing companies, but I would ask the Minister to look at the possibility of extending this to companies operating in the agricultural area. We must bear in mind that increased employment in agriculture is of tremendous value in the overall employment situation. During the five years prior to our entry to the EEC, the number leaving the land in net terms amounted to 12,000 per annum whereas in the five year period since our entry to the EEC the figure went down to 6,000 per annum on average. If we take the very recent years there was an increase, so that it came down a little lower soon after our entry. But, nevertheless, in the five years since we entered the EEC there was a substantial reduction on the five years before our entry. This reduction in the number of people moving from the land to seek jobs elsewhere is important. If we can stimulate employment on the land and in association with the land we will further reduce this flow and make it easier to meet the targets at the industrial and manufacturing level.

I am also glad to see that in the Bill the Minister has put some emphasis on small companies because of their employment potential, and that he says they merit special incentives to spur them along the path to growth. The Minister has provided quite a significant and a retrospective increase in the threshold at which the 35 per cent rate of corporation tax ceases to apply and in the threshold at which the normal 45 per cent rate of corporation tax begins to apply. I am glad to see any measures of a positive nature like this to assist small companies. Within our society there is a tremendous opportunity for the development of small companies, particularly in relation to the enterprise development programme. The expansion of this programme is something we have not done enough about in previous years and I am glad to see the financial policy being directed in this way.

Section 37 provides relief from capital acquisitons tax to gifts and inheritances of heritage houses and gardens subject to certain conditions being met. One of the principal conditions is that the heritage houses and gardens must be open for viewing to members of the public. This is very welcome. I know that representations have been made over the years by the people concerned emphasising the difficulties under which they were labouring. If they are prepared to cooperate with the State and the people, there should be reciprocal co-operation from the State in this respect. I hope we can see the expansion of the public viewing of many of these estates. I very much welcome the benefit which has been given here to the people who own these properties.

In section 49 the Minister for Finance is receiving certain powers in relation to the official development assistance programme. This will be discussed in great detail on the Foreign Affairs Estimate. However, as some of the funds come directly from the Department of Finance and as Ireland now makes a significant contribution to developing countries, both directly by way of our bilateral aid programme or indirectly through some of the international agencies and organisations, this measure is quite important.

The question of bilateral trade can be even more important than we realise. I understand from some of the people who have worked in these areas that those countries welcome bilateral arrangements so that they are not made to feel that they are getting something for nothing, so that they can say that they are giving something. The Japanese developed this to a fairly high level. They were possibly one of the earlier countries to recognise that, if somebody gives aid and assistance, it is preferred if something is given back. Even if in the short term the something given back is smaller it could be nevertheless something that would grow in time. Consequently the opportunities for bilateral trade in this respect should be pursued and developed in any way possible.

There are other measures in this Bill which warrant detailed consideration and discussion. It is a very comprehensive Bill which goes into many facets of our economy and our social life. I recognise that there are many measures in relation to the extension of the free depreciation for new plant and machinery, and various other allowances which are important to industry and for investment.

The Minister has pointed out that this Bill is framed in the context of the Government's medium-term plans. It is a well-designed Bill which will meet these medium-term plans. The evidence is there, in business, in industry, in agriculture and in our community, that there is acceptance of the Minister's measures. I welcome the Bill and look forward to the long-term plans which I understand the Minister is working on at present.

Because we in the Labour Party believe that our system of taxation should be seen to be fair and equitable, we are opposed to many measures in this Bill. Because we believe that people on similar incomes with similar family responsibilities should pay the same income tax irrespective of their profession or occupation, we oppose certain measures here, especially the suggestion that wealth tax should be abolished. It is still the position that our tax system is grossly inequitable, and where the labourer on his meagre wage pays tax and the employer pays none is patently unjust if not immoral. The Government which condones the continuation of that system deserves the condemnation and rejection of the people.

The decision to abolish wealth tax is firmly in line with the Fianna Fáil policy of placing almost exclusive reliance on the private sector and the wealthiest groups in our society to generate growth and employment. Experience suggests that this strategy is doomed to failure. It is important to note that already many spokesmen for private industry are now disclaiming their ability to reach the targets set them by the present Government. There is no empirical evidence to suggest that wealth tax is a disincentive to industry or employment creation. In fact, there is quite an amount of evidence to suggest that such a tax has a valuable economic effect in shifting resources to more productive uses. This, together with grounds of social equity, is its main justification.

In opposition and in his budget speech the Minister argued that this tax discriminated against native industries in favour of foreign enterprise. There is some validity in this but the real point is that in doing so it reflects the discrimination in favour of foreign enterprise throughout our industrial tax system as a whole. In opposition and again in his budget speech the Minister said that the wealth tax would act as a disincentive to foreign investment. I contend that there is no evidence of this. As proof of that, I should like to quote from a statement by the United States Department of Commerce contained in The Irish Times of 18 October 1977:

Ireland is the most profitable and fastest growing location in the world for American direct overseas manufacturing investment, according to data contained in an analysis of world-wide trends in 1975 and 1976 recently published by the US Department of Commerce in its monthly "Survey of current business".

It also emerges from the figures that Ireland has the highest level of American manufacturing investment per capita in Europe and that the US oil and petroleum companies by the end of 1976 had invested a total of $114 million (£66.9 million) at the end of 1976 exchange rates in Ireland, an increase of 90 per cent on the 1975 level.

There is an indication that the wealth tax had no effect on investment from abroad. That seems to contradict the Minister's view that the wealth tax discriminates in favour of foreign investment; one cannot have it both ways.

It is also worth noting that the following countries have a wealth tax and it does not seem to have had any effect on their economies such as the Minister says it had; Denmark, Germany, Luxembourg, The Netherlands, Austria, Finland, Iceland, India, Norway and Sweden. For these and other reasons one is driven to the conclusion that the real reasons for abolishing wealth tax are not economic but essentially political. It is interesting to note the response of accountants, the Confederation of Irish Industry and the Construction Industry Federation to the wealth tax proposal of 1974-75 when first mentioned. Their often spurious arguments reflect a determined and emotive lobby rather than reasoned argument and it is clear that Fianna Fáil are now meeting their demands for purely political purposes. The abolition of the wealth tax therefore is unlikely to create one extra job. It will, however, add to Fianna Fáil finances as the grateful recipients reward that party for once again reflecting the interests of the wealthier section of our society.

It is also interesting to see that the accountants, who so vociferously opposed the wealth tax in the first place made a great deal of money in helping clients to avoid its payment. Perhaps they are now sorry to see it go if only for that reason. By abolishing wealth tax and easing capital gains tax Fianna Fáil have given £2,000 per annum to the wealthiest 5,000 people in our society in contrast with the budget situation providing old age pensioners with some £50 additional income in 1978 and nothing at all was found to provide increases in children's allowances.

The Finance Bill also deals with the capital acquisitions tax and I should like to refer briefly to the history of these taxes. Prior to the 1973 general election the farming community in particular sought the removal of estate duties which were then hitting mediumsized farms. The value of agricultural land had increased subsantially but the exemption limits for farms had not kept pace with the increase in value. Hence, minimum-sized farms were caught in the estate duties net. The National Coalition Government promised to remove estate duties as part of their 14-point plan. This promise was honoured in the 1973 budget. Estate duties were replaced by three capital taxes of which the wealth tax was one. It consisted of an annual levy of 1 per cent on estates but exempted private housing and household goods. It was abolished in this year's budget by Fianna Fáil at a cost of about £8.5 million. So, the Exchequer has now lost the revenue from both estate duties and their replacement in the form of wealth tax.

With death duties and wealth tax abolished, it is clear that alternative taxation must be found and that would be spread over the community. I fear that, as heretofore, the burden will lie heaviest on the backs of the working classes, all those caught up in the PAYE tax net. It cannot be argued that the wealth tax inhibited development generally or farming development as it was a tax aimed generally at the very wealthy. The yield of £8½ million would have been more than sufficient to pay for many of the essential things society requires. It would have paid for the free milk scheme which was suggested here recently but was rejected by the Minister for Health and it would have done much to provide cheap loans for farmers anxious to buy land to enlarge their holdings. We must remember that land is at a prohibitive price at present. It would have helped to provide cheap loans for those anxious to buy their own home. We all know that the price of houses is spiralling. It would also have assisted the Minister of State sitting in here to return the sheep subsidies to the mountain farmers which he withdrew earlier this year and which I raised this week here in respect of my constituents who live on Slievenamon. It might have avoided the necessity of withdrawing school transport from many schools, especially in Clonmel.

All that cheeseparing might not have been necessary if that money had been allowed to remain available to the Exchequer. We must remember that yesterday the Taoiseach indicated clearly that our economy can no longer afford the rate of borrowing being followed. The Taoiseach is indicating that the brakes are to be applied in all facets of our society and in particular in respect of Departments of State and State-sponsored bodies. That statement must have horrified supporters of Fianna Fáil, especially when one considers the sunny, glowing promises made just 12 months ago. There was no question then of a shortage of money. Money was no problem. Money would be provided for all kinds of goodies, for all kinds of everything. But, lo and behold, having taken office and set aside the gimmickry attached to the general election, having set aside the pandering to the material instincts of our people, they broke their promises. The people were told that there was no economic problem to cope with, that there had been no world recession and that the problem could be solved by Fianna Fáil. But they must now realise that this was a gigantic lie, a confidence trick imposed upon the Irish people, and one which they, unfortunately, fell for. Our people must now pay dearly for this over the next four years.

We must remember that this is the best conceivable budget the Government can introduce in this economic climate and for the foreseeable future. This Bill gives effect to the proposals in the infamous manifesto. These are the goodies, but now they have cried stop. Our people will learn to their grief that they cannot get concessions from any Government without paying for them by way of additional taxation. One does not get anything for nothing. Therefore, the £8½ million has been thrown back to the millionaire classes by the Minister in a fit of pique, even though it could have been used to put many of our young people to work. It would have helped to increase children's allowances and many other things, but it is no longer available for the Government to utilise it.

This was the second of the three capital taxation measures introduced by the National Coalition under the then Minister for Finance, Deputy Richie Ryan, designed to tax incomes derived from the sale of assets which up to then had been free of tax. Generally it was directed against the speculators who traded on the Stock Exchange and in land for building.

This tax will not in future apply to the transfer of a farm from a father to a son provided a farmer is over 55 years of age and has had possession of the farm for more than ten years. The son must be a genuine farmer. I understand from the Minister that he will be introducing a Bill amending a provision in the legislation introduced by the National Coalition dealing with capital gains tax. It is a measure we shall support so as to encourage the early transfer of land from farmers to sons. It is party policy to assist in the early transfer of land from father to son and we would support all reasonable measures towards that end. I was conscious of the sentiments expressed by Deputy Bruton, who is well-known in farming circles, that much of the legislation in respect of farmer taxation contained in this Bill is a disincentive to the transfer of land from father to son or relation. That is a tragedy at a time when the price of land has rocketed so high that small farmers cannot buy it. They cannot avail of land offered by the Land Commission because the repayments are so excessively high. They cannot avail of loans from the ACC because of the high interest rates charged.

It is clear that the incentives being introduced by the Government to assist in the transfer of land from elderly farmers, where there is an obvious tendency to hold on to land, by way of pensions and so on have not proved effective. This Bill will set back all our endeavours to do what we all desire—to accelerate the transfer of land. The farming community, when they analyse in depth the implications of this Bill, will have good reason to regret the kind of massive opposition they showed to the previous Government when that Government sought to impose a fair taxation system on them. They will find to their sorrow that this Bill is repressive legislation of a far more reprehensible kind than ever Deputy Richie Ryan as Minister for Finance contemplated imposing upon them.

The third of the capital taxes introduced by the National Coalition, the capital acquisitions tax, taxes property passing from one person to another. It is dealt with in this Bill. That which passes from one person to another by way of a free gift, as an inheritance following the death of an owner, is sometimes subject to what is called an inheritance tax. If a farm is given to a child who could genuinely be defined as a farmer, then the first £150,000 is completely free of tax. Subsequent tax rates are hard in respect of agricultural land. In general it can be said that a farm worth up to £250,000 can be transferred from father to son without taxation.

We in the Labour Party support genuine transfers of land of this kind and we support all types of legislation to ensure that these transfers are made from elderly farmers to their sons or other relations. We are in favour of as many young people as possible going into farming. As regards inheritance tax, half rates apply to a child inheriting a farm and so it can be clearly seen that the capital acquisitions tax is not directed against the transfer of either a gift or an inheritance of farming land from a father to a son or daughter who wishes to continue on in farming.

I have dealt to some extent with taxation measures as they affect a particular section of our society. I have already said we favour an equitable system of income tax based on the ability of people to pay. When this tax was first levied on the farming community it applied to farms with £100 poor law valuation, or more. Farmers were given the option either to submit accounts or to be taxed on a notional income which was estimated by multiplying the poor law valuation by a multiplier originally set at 40.

Thus, a farmer with a poor law valuation of £100 was taxed on a notional income of £4,000 only. In the 1977 budget, the poor law valuation limit was lowered to £75 and the multiplier was increased to 65. It was estimated that this device would yield some £35 million per annum in income tax from the farming community. The concessions later given by the then Minister, permitting farmers to pay their income tax in two moieties, resulted in farmer taxation in 1977 yielding £15 million only. That was the extent to which the farming community were taxed by the previous Government last year.

Taking that with what is paid by all those caught in the PAYE net, there is no comparison. Some 87 per cent of all income tax, as we now know, comes from those on PAYE. This again demonstrates the inequity of the system which leans so heavily on all those at work in industry, commerce, the civil service, the local authorities, the health boards. All those who work by hand or by brain and are caught up in the net of PAYE contribute 87 per cent of all the tax garnered in by the Revenue Commissioners. The balance is paid by a very affluent section of our community in business, in the professions and on the farms.

Under the Coalition Government's proposals only one farmer in 11 would have been liable for income tax. The Minister has now lowered the poor law valuation threshold to £60 and increased the multiplier to 90. This must be carefully noted. I assert that by doing this the Minister and his party have gone back on promises made by them to the farming community in the last general election. All the indications, all the kow-towing, all the pandering by Fianna Fáil to the farming community prior to general election and before that were on the basis that they would undo in their entirety the tax measures imposed by the Coalition Government.

The evidence is, as I have pointed out in respect of capital acquisitions tax and income tax, that the situation of the farmer has been worsened out of all proportion. I do not know whether that has been brought home to them, or has dawned on them as yet, but they will get the message in due course when they get the bill. Farmers are now allowed to offset rates as a credit against income tax. They can also claim for employees' wages and contracting fees. One can see the implications for people in rural Ireland who are engaged in doing small jobs, the self-employed, handymen, contractors. They will now be caught up in the tax net because farmers will be obliged to name them and include their accounts when making claims for credits against tax assessments in the future.

That has serious repercussions for all those who did not pay tax heretofore. I am not defending those who should pay tax and have not been paying tax. As I have said, the Finance Bill gives effect to the taxation measures announced in the budget. The budget is the main vehicle through which the Government can and will, I hope, fulfil their proposals in the manifesto. June 17 will be the anniversary of Fianna Fáil's return to power. This will afford us, and especially the electorate, an opportunity to sit back and reflect on what has happened since the return of Fianna Fáil to Government and on what has hit them. The euphoria of the victory has now died down. The honeymoon is surely over. All of us are in a better position to assess the implications of this Bill, of the budget, and of the manifesto.

I have asserted that the Finance Bill favours the wealthy sections of our community. In the whole area of taxation the wealthy classes are favoured all along the line, culminating in the abolition of the wealth tax under section 36. This return of £8.5 million to the millionaire class at a time when there is such social misery in our midst is inexcusable, irresponsible and immoral. By abolishing the wealth tax and easing the capital gains tax the Minister is giving £2,000 per annum to our wealthiest 5,000 people in contrast to the budget when he gave paltry sums to the old-age pensioners, to widows and to orphans. The Minister gave no allowances to the children. He is giving £8.5 million to the millionaire class to extend their vacations in the sun while poverty, insecurity and mass unemployment stalk the land.

The Minister said he plans to tackle the serious problem of unemployment by pursuing a policy of rapid and sustainable economic growth. We believe that the job-creation targets of this Government are not based on any solid premise whatsoever. There is no economic plan on this occasion. The Government's plan is based on political gimmickry and nothing more. Perhaps they thought that the gimmick would not come off, but they are stuck with it now. We believe that the targets are unrealistic and unattainable in respect of the provision of jobs for the unemployed, especially the young people for whom they professed such concern 12 months ago. Once again, they are depending on private enterprise to do the job. As we know, private enterprise has consistently failed to provide the jobs required for our people. Since the inception of the State, private enterprise has failed to provide work for our people and there is no justification for assuming that it will do so now.

We have good reason to remember Fianna Fáil's economic plans of the past and it is only fair that we should make comparisons. I believe that history is about to repeat itself. I remember Fianna Fáil's first economic plan which they implemented from 1957 to 1962. We know that that plan and other plans of Fianna Fáil did not work.

It exceeded all targets.

It was an abject failure and I propose to prove it. Fianna Fáil's economic plans never worked.

The first plan, which was launched in Clerys by the then Taoiseach, Seán Lemass, promised to provide 100,000 jobs.

We are not discussing economic plans. We are discussing the Finance Bill and it is a taxation measure.

We are dealing——

It is not a debate on the economy and Deputy Treacy knows that better than I do.

I am not going to elaborate on these matters but surely I am entitled to make a brief comparison.

Not with economic plans of the past. The Deputy can deal with unemployment because the Minister dealt with it, but we are not going back on the economy.

I am well aware of the rules governing this debate and I do not wish to transgress those rules nor do I intend to, but I am entitled to make a comment in respect of previous plans.

The first plan was to provide 100,000 jobs. In the course of those five years 270,000 people were forced to emigrate. The jobs were found but they were found in London, Birmingham and Coventry. We had a similar slogan in respect of the present plan. The campaign for the last election appealed to young people by way of a pop song—"This Is Your Country". These young people are now beginning to realise that it is not their country and never was. It belongs to the rich element in Fianna Fáil, or, more appropriately after the Taoiseach's speech of last night, it belongs to the moneylenders of Europe. If any of those young people are still around at the end of this Government's term of office they will realise that it was not their country, it is not their country, because, like their fathers before them, they will find themselves seeking jobs abroad. The evidence is that emigration is again rearing its ugly head and that is the only solution the Minister has to provide jobs for our people.

The second plan failed to reach its targets and the third plan never got off the ground. The same fate will befall this plan because it is based on the same false premise of relying on private enterprise and pandering to the wealthy. As I said, the signs are that history is repeating itself. The mass of the unemployed, especially the school leavers, are sadly disillusioned. They realise that, like so many sections of the community, they have been the victims of yet another gigantic confidence trick. Their hopes have been dashed, their futures blighted and the emigrant ship looms once again as the only way out for them. These emigrants and the thousands of unemployed who are still in residence here will have reason to remember the pop song "This Is Your Country" in a few years' time. This song had a short life and a sudden death. It is a disc that is highly qualified for Mike Murphy's programme "The Rotten Record Programme", because it now stinks in the nostrils of many thousands of our people, though I doubt if the same gentleman would have the temerity to play that record. We shall see. The Finance Bill reeks with what can only be termed as hand-outs to the financiers of Fianna Fáil. The £8.5 million being returned to the wealthiest section of the community is merely the tip of the iceberg.

Consider the spiralling cost of housing. Land and house prices have rocketed in the past three years and especially in the last nine months. The £1,000 new house grant referred to in this Bill has not proved to be the bonanza it was purported to be in the last general election. It is not the blessing it was supposed to be; it has proved to be a curse. It is a millstone around the necks of thousands of young couples who thought they were doing the right thing. The media passed on in banner headlines the message that this was a £1,000 handout with no problems about it and it was a gift from Fianna Fáil. Many people fell for that, to their regret now. They find that the £1,000 has been completely dissipated and the cost of their house has risen by a minimum of £4,000. The Government have a lot to answer for in respect of such gimmickry. They have dragged down into the economic mire thousands of young couples who aspired to homes of their own and thought they had at last a genuine Government seeking to help them to find that. They have been dragged down with a millstone around their necks from which they can never extricate themselves. Because of rising costs which the Government allow to continue unbridled——

Deputy Treacy, we are not discussing housing and the housing programme on this Bill. It is a taxation measure and nothing else, and only discussion on taxation is relevant.

Section 45 refers specifically to the £1,000 new house grant.

It is a mere reference to the administration of it. We cannot discuss housing as a result of that section.

It is contained in the Bill, Sir.

Deputy Treacy knows as well as the Chair what is in order on this Bill.

Indeed I do. I have contended that that pretence of a £1,000 grant has brought financial ruin to many people, more progressively so as time passes. This has come about by reason of this Government giving carte blanche to the building speculators and land speculators to do as they like in pushing up prices, and that was always the position under Fianna Fáil.

The Minister tells us about generous increases in income tax allowances. He will have to improve on the increases which he now proposes. When PAYE was first introduced we on the Labour benches in this House supported it in the hope and belief at the time that it would prove to be a painless extraction of taxation. It is no longer painless extraction. It hurts and wounds deeply. It affects primarily the 87 per cent of our population to whom I have already referred. It has been used by Fianna Fáil to exploit those people, having caught them in its net. Fianna Fáil over their period in office have given very little by way of increased allowances to income tax payers in the PAYE net and the burden of taxation on the working classes has become intolerable. All the evidence is that the PAYE taxpayers are carrying this country on their backs, and the proof is that 87 per cent of all income tax returns come from that class to which I refer. The most affluent in our society, the professional men and women, business people and farmers contribute a mere 13 per cent. This disgraceful inequality must stop. In any event, now that the facts are known about who is paying what, the workers will no longer tolerate this treatment. During their last period in office Fianna Fáil increased tax-free allowances only once. They made a point of milking the PAYE taxpayer dry, and they obviously funked taking on certain sections of our society, namely, the affluent sections who could and should pay a fair share of the tax. This was done always for political motives.

We are told that this Bill, together with the budget, is the corner-stone of the economic activity which the Government desire in order to implement the proposals in their manifesto. It also gives effect to the taxation measures in the budget, and all are designed to implement this plan. The plan is certainly doomed to failure because it is ill-conceived, ill thought out and designed only to secure political power at any cost, by wild, extravagant promises and gimmickry and what can only be described as Tammany Hall tactics. This plan as contained in this Finance Bill has been described as a gamble by the Minister for Economic Planning and Development, Deputy O'Donoghue, who has been called the architect of the plan. That is the word used, a gamble; nothing serious, nothing positive, nothing confident of completion, nothing seriously thought out. This plan as implemented in this Bill is a gamble. The stakes are very high; they are also against us and all the indications are that the game is up and the Government's bluff is called.

There is a growing fear among all sections that the projections for new jobs and the reliance on private enterprise to provide those jobs is unrealistic. The Minister for Economic Planning and Development will be forced to provide the work he talks about by the means to which he referred a short time ago, that was, that he would put men to work if only to dig holes and fill them up again.

That was an interesting notion to come from an economist but an economist whose plan is not designed either to increase our GNP or to bring us new wealth. His plan resulted in the abolition of car tax on cars up to 16 horse power but very shortly afterwards the insurance companies were allowed increase premiums for car insurance by 40 per cent. Workers' wages were confined to increases of 8 per cent while the building institutions earned more than £43 million in the same year. At the same time interest charges were allowed to increase and further increases are contemplated. The Government's plan is one which allows house and land prices to spiral while purporting to curtail inflation when all the evidence is that this is not possible, that prices and inflation are determined largely by external factors over which no Government can have control.

When this Government had the opportunity of controlling prices, for instance, in State or semi-State bodies such as CIE, they made no effort to act; CIE were allowed increase fares by 20 per cent. Many of the plans being talked about are to be implemented on the strength of borrowed money. The Taoiseach has said that the brakes must be applied, that the economy can no longer afford to borrow at the present scale. This is a far cry from what Fianna Fáil have been saying for some years past. Therefore, it is possible that the economy could grind to a halt or could be maintained only by way of massive increases in taxation—income tax, VAT and so on. It will be seen, then, that the honeymoon is over for the Government. All those who placed their confidence in Fianna Fáil on the basis of their manifesto are in for a rude awakening. The future looks grim. We are all told to tighten our belts but the people get the Government they deserve. However, we are witnessing an experience that the people are never likely to forget and I am confident, having regard to the frightening prospect of this Government being in office for another four years, that the people will not be conned a second time.

I would have expected income tax allowances to have been increased substantially this year in order to deal with the situation of inequality that I have outlined. There should have been increases in every aspect of social welfare payments, too—in the dependent relative allowance, in the working wife allowance, in children's allowances and in the allowances for income tax purposes for the caretaking of children. A previous speaker referred to the housekeeper allowances as being totally inadequate. This allowance has been fixed for some time at £165. I know a widower who has a large family and this man has proved to me that he is paying more than £700 a year for help in having his children cared for, by way of payment to a lady who helps with the housekeeping and also by way of payment to a relative who helps care for the children. Obviously, then, the £165 allowance is totally inadequate. The Minister should look at this situation with a view to fixing a more realistic level.

I note that concessions are being given by way of allowances for the use of a car. This concession will benefit salesmen in particular. One does not grudge them that concession but year after year my colleagues and I have been appealing here for a genuine allowance in respect of the use of a car by people who must use a car in order to travel to their places of employment. There should be an end to this discriminatory situation and allowance made for the use of one's car in respect of income tax. It is totally unfair that one section of the community can avail of such an allowance while the other has no such concession. I am pleading in particular for the working man, the man who provides the real wealth in the economy but who must have a car in order to reach his place of employment. These working people should be allowed claim in respect of the wear and tear on their vehicles and in respect of the general expenses involved in running a car. It is not seriously suggested that the exemption of car tax, which was purely a gimmick and something for which nobody had asked, would compensate for the cost involved in motoring today. I appeal to the Minister to eliminate the injustice that results from giving a concession in one area and not in another. I recall Deputy Tully year after year on Finance Bills pleading for this concession for the working people.

I wish to refer, too, to the methods employed by the Revenue Commissioners in relation to the collection of income tax.

The Deputy is well aware that the methods of collection of tax would not be relevant for discussion on the Bill.

In section 45 there is reference to "disclosure to the Revenue Commissioners".

There are plenty of precedents for disallowing the methods of collection to be discussed.

(Cavan-Monaghan): But section 45 is not only revolutionary but draconian.

I shall confine my remarks, then, to what is contained in the Bill.

Debate adjourned.