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Dáil Éireann debate -
Wednesday, 7 Jun 1978

Vol. 307 No. 4

Finance Bill, 1978: Committee Stage (Resumed) .

SECTION 2.

: I move amendment No. 3:

In page 7, line 15, after "amended" to insert ", as respects the year 1978-79 and subsequent years of assessment".

The purpose of this amendment is to make it clear that the provisions of section 2 relating to personal reliefs on option for separate assessment will operate as and from the year of assessment 1978-79. Otherwise a wife who had claimed separate assessment for an earlier year might claim that the provisions of the present section applied and that her tax bill for that earlier year should be reduced with a corresponding increase in her husband's tax bill.

: The Minister is proposing that the section will apply in 1978-79. I wish to refer to the proposals put by the Minister. Probably there are other parts of the Bill that interest people——

: We must dispose of the amendment first. There are two amendments to the section that must be disposed of and we may then discuss the section.

: I presume I may refer to the effect on the section of the amendment before the House?

: The Deputy is entitled to do that so long as he stays on the amendment.

: The Minister has asked that this provision should apply in 1978-79. I am speaking about the effect of this amendment on the Minister's proposals. There is no part of the Bill that has caused as much controversy as the question of taxation of married women and their general position in relation to the proposals of the Minister. This question was referred to as far back as 1972 in the report to the Minister by the Commission on the Status of Women. Chapter 6 of that report dealt with the question of taxation of married couples. They stated that this matter was referred to most often in submissions received by the Commission and they said that this area was one where there was a widespread sense of discrimination and grievance. After that there was a survey carried out by the Economic and Social Research Institute. That survey reported that 84 per cent of working married women considered that the most helpful policy to assist married women who were interested in working would be a change in the existing taxation laws.

The effect of this amendment would be that the present position where a husband is liable for payment of his wife's income tax would continue on the total joint income of the spouses. That theory of law based on the common law entitlement of a husband to his wife's assets continues unchanged in this Bill. It does not apply in relation to property rights. The Married Women's Status Act, 1957, made wide changes in the law ensuring that a married woman's property remains her own throughout the marriage and that it can be disposed of as she pleases. Nevertheless in the area of taxation we adhere still to the concept that a married woman's income is deemed to be the income of the husband. He is legally bound to show her income tax on his income tax returns and he is liable for payment of tax on their joint incomes.

Earlier this year that led us to the rather strange circumstances where married women public servants who had been awaiting tax remission repayments were surprised to find that the rebates were made out to their husbands. There is at least one case to my knowledge where in the case of a separated wife the cheque was made out to her estranged husband. That case has been referred to in the Press. It stems from the concept that the husband is the person in law who is responsible. We know that either spouse has the right to refer to the Revenue Commissioners to be separately assessed but the end result is that the married couple pay the same amount of income tax as if they had been taxed jointly. The only difference is that the allowances are apportioned differently between husband and wife.

The present system operates unfairly against a working woman because the two salaries are combined and are assessed on the basis of that combined income. Therefore, they enter a higher tax bracket much earlier than if the two salaries were individually assessed. There has been some controversy about this. The Minister has made the point that he does not wish to discriminate against the married woman working at home as distinct from the married woman working in outside industry. The solution here must be taxation assessed on an individual basis for married couples but the married woman at home should receive an allowance as in France——

: It would be much better if the Deputy waited and debated this matter on the section. The amendment is a very limited amendment. It is that the provisions of the section will apply in 1978-79. We can dispose of the amendment and then the Deputy may make his case on the section.

: I am speaking of the effect of this mode of collection applying in the year 1978-79 and I am speaking of these anomalies, anomalies referred to as far back as the Commission on the Status of Women, and the inequities arising from them. These inequities remain unchanged with this amendment and this section. The Commission on the Status of Women said that the present difference in income tax treatment between the various conjugal categories discriminate against married women who have the right to expect that the same rate of personal allowance will be extended to them as to single persons. They accordingly recommended that a standard rate of personal allowance be introduced to apply equally to all irrespective of status. They also made the point that earned income relief for a husband should be allowed only against income earned by him. There is a bit of controversy about the relative costs involved.

The Minister has already been in the wars in regard to the matter covered by this amendment and it would be helpful if he would clear the air early in the discussion, so to speak, with regard to his intentions in bringing in equity in the mode of taxtion covering this whole section because the section, even with the addition of this amendment, does not alter the situation to which I have referred. There is still inequity. Even comparing it with the British system, which is largely similar, the fact is the British system operates more equitably in the taxing of married women. All these submissions are in the possession of the Minister and one would expect that in dealing with this amendment he would indicate his general view as to what should be done in this area. So far he does not appear to be responding to the submissions made over many years in regard to reform in this area.

: All we are on at the moment is amendment No. 3.

: I shall deal with the section when we come to it.

: Do I understand the purpose of the amendment is to ensure that nobody from a previous year of assessment will be able to claim benefits under this section as now drafted. Is that correct?

: That is correct.

: It is a cut-off point and everything forward will benefit people after that.

: That is correct.

Amendment agreed to.

: I move amendment No. 4:

In page 7, after line 52 to insert the following subsection:

"(2) Notwithstanding section 5 of the Finance Act, 1977, the rates specified in the following Table shall, for the year 1978-79 and any subsequent year of assessment apply to married persons.

Table

Part of Taxable Income

Rate of Tax

Description of Rate

(1)

(2)

(3)

The first £625

20 per cent.

the initial rate

The next £1,250

25

,,

,,

,,

reduced rate

The next £3,750

35

,,

,,

,,

standard rate

The next £1,875

45

,,

,,

,,

higher rates.

The remainder

50

,,

,,

The purpose of this amendment is quite clear. As Deputy M. O'Leary said, the Minister has been in the wars in recent months about the amount of tax paid by married couples. What I am trying to do here is to start off on the road to reform. I know the Minister will argue that he has substantially raised the allowance for married people in the budget. In fact, as one moves up the scale from one rate of tax to another the gap between what a single person pays and what a married couple pay grows wider all the time. As they move up the scale the gap becomes very much larger than the difference in their incomes. A single person with £900 a year—I am not taking account of any other allowances for the sake of simplicity—will now pay £7 in tax while a married couple with £1,800 a year will pay £14 in tax. It appears reasonable that the tax on £1,800 should be twice that on £900 but when one comes to the single person with £2,500 a year and the married couple with £5,000—these are not enormous salaries—the single person will pay £397 and the married couple will pay £1,005 a year. That is almost 30 per cent more. If one goes higher to the married couple with £10,000, whether composed of one or two salaries, that married couple will pay £3,257 while the single person with £5,000 will pay £1,270. The married couple will pay three times as much tax as the single person.

This is a cause of grievance and what I propose is that each rate of tax should be increased this year by 25 per cent, next year by 25 per cent and so on so that married couples with one or two salaries will not be paying a disproportionate amount of tax as compared with the single person. If my amendment is accepted a single person earning £2,500 a year will pay £377 as against £397 under the Minister's proposal, a reduction of £20, and the married couple who at present are paying £1,005 will pay only £925, a reduction of £80 in their tax bill. If the Minister does as I suggest he will get a great deal of credit from people who for various reasons have to go out to work. They are not all in the well-heeled bracket by any means. Every Member has had experience of numbers of married women coming to their clinics, telling them they are doing quite ordinary jobs simply because they have to work. Husbands are not earning enough to keep the home together. These women are discriminated against because a far greater proportion of their salaries goes in tax as compared with the single person earning the same amount. Deputy O'Leary touched on this and the case has certainly been very well made that in justice we must move towards giving married people, with two salaries coming in, a fairer crack of the whip where tax is concerned.

At the moment the top rate of tax is 60 per cent. I am proposing that that rate should be reduced to 50 per cent. When we came into office in 1973 the top rate was 80 per cent. Over a certain figure, of everything a person earned 80 per cent went back to the State. This was clearly a disincentive. We had very strong representations when we were in Government from all sorts of bodies to have this penal rate of tax abolished and in the 1977 Budget we reduced it from 80 per cent to 60 per cent and took other measures to assist industry and encourage incentive as well as measures to encourage people to be inventive and create more jobs. This is one of the things we did in that budget which was beneficial in that regard.

I am now proposing that incentives should be further extended by making the top rate of tax 50 per cent instead of 60 per cent. Many people who are not earning great salaries are paying tax at the rate of 60 per cent. This interferes with the amount of effort and work they are willing to put into their jobs. I propose that the £500 rate of tax should be £625, the other rate should be increased by 25 per cent, and the top rate of tax should be 50 per cent. Section 2, as drafted, does nothing to ease the tax burden on married couples. What I suggest will be the first step on the road to bringing more equity into the amount of tax paid by single persons and by married couples where one or both are earning.

: Deputy Barry said he proposed this amendment as a first step on the road to reform. The fact is that the first step on the road to reform has been taken in this Bill. I hope to deal with that in more detail on the section. At the moment we are dealing with Deputy Barry's amendment, which would have the effect of increasing the rate bands and reducing the top rate of income tax for all married taxpayers. The cost would be about £35 million in a full year.

The fact is that the increases in the income tax allowances provided for in this Bill are costing almost £100 million in a full year, £97.6 million in fact. The addition to that of another £35 million is simply not possible. It should be realised that the increases being granted and the bulk of them are going to all married couples—are very substantial. In fact, the increase of £630 in the married allowance provided for in this Bill is seven times bigger than the largest increase ever given in the past and that was last year. The increase of £200 in the single allowance is about four-and-a-half times the increase in that category last year. The married allowance is now double the single allowance for the first time since 1955-56. At that time the allowances were £150 and £300 respectively.

It is also relevant to take into account the fact that the increase in the personal allowances, combined with a pay increase of 8 per cent, will give an increase in weekly after tax income of £7.88 or 13.2 per cent to a married man with two children who has average industrial earnings of about £70 a week. As I say, I do not want to get into a discussion on the matters which arise on the section on this amendment. Having regard to the fact that the increases in the allowances provided in this Bill are so very substantial and so vastly bigger than anything ever given before, and benefit every married couple, it is a little unrealistic to suggest they ought to be substantially increased. In particular having regard to the extent of the increases being given a proposal which would cost an additional £35 million in a full year is not acceptable and I do not think Deputy Barry really expects me to accept it.

: The Minister says it would cost £35 million in a full year to implement my proposal. Did the Minister not also say outside this House a proposal to treat married people as two single people would cost £60 million a year? There was some confusion about what he actually said at the time.

: There was not really any confusion for anybody who was listening.

: There was some confusion about the interpretation of what the Minister said.

: Not everybody was fortunate enough to be at that place.

: Or to be listening in or to be looking in?

: Deputy Barry is in possession.

: The Minister was speaking to a privileged audience.

: Is £60 million the correct figure?

: That would be the cost of income splitting if we did not have this Bill. With the provisions of this Bill it would be reduced to £40 million.

: That is what the Minister said. If we are moving towards that position, how would it cost £35 million to implement what I am suggesting?

: Among other things, the Deputy is proposing a reduction in the top rate of taxation. Furthermore, he is proposing increases in the bands. What the Deputy is proposing would apply to all married couples and not merely to those where there are two incomes.

: What would be the cost of changing the 60 per cent rate?

: Sixty per cent to 50 per cent?

: I have not got that figure offhand.

: It would be the smallest part of it.

: I would think it would be. Probably in the region of £3 million to £4 million.

: Is the amendment withdrawn?

: No. We want to get into the position—and I think the Minister accepts this; it is the timing which is in question—whereby a married couple both of whom are working, and for argument's sake let us say they are earning the same salary, do not pay a greater proportion of their joint salaries in tax than they would if they were two single persons. Obviously if what the Minister said about the cost is correct, it would not be possible or feasible to do it all in one jump. Therefore, we must move towards that position over a number of years. The Minister says what I propose would cost £35 million in the current year. If we wait until next year to start on this road——

: We are starting this year.

: By increasing the allowances. As the Minister knows, this is not where it bites hardest. It bites hardest when they move from one tax band to another and where at a certain stage they have to pay over 45 per cent of the second income. If married couples fell within the 20 per cent rate the problem would not nearly be so severe, nor would there be such an outcry about it. There are about 70,000 homes with two incomes going into them. The second income is liable to be taxed at 35 per cent, 45 per cent and sometimes 60 per cent. It would be more equitable in the treatment of this second income to do as I propose in this amendment.

I am not asking the Minister to take the whole lot in the one jump. I am asking him to do it gradually over a period of years. I would like to hear him say that the increase of 25 per cent is too much in any one year but that he would consider half of that, a 12.5 per cent increase in the rate this year and another one next year. I would be happy to withdraw my amendment if I could get an indication from the Minister that he would consider for this year an amendment less costly than the one I have put forward.

: Deputy Barry may be overlooking the fact that the Bill as it stands goes a considerable distance along the road to achieving what will not be a fully satisfactory position but will certainly be more satisfactory than we have had. It achieves this at a cost of £20 million in rough terms on the basis of the figures I have mentioned earlier to the Deputy. Any proposal to go beyond that has to be viewed in the context that it is a proposal to go beyond that. Deputy Barry accepts that we cannot do it all in one year. We have made a very substantial stride this year. As far as the Government are concerned, that is what we promised to do in our election manifesto and that is what we are doing in regard to this allowance. I certainly cannot contemplate going any further along that road this year.

: Is the Minister definitely committed to going the whole road?

: I will be dealing with that on the section.

: I appreciate the fact that the allowance for married couples has been increased this year, but that is at the very bottom rate and it is the people at the upper rates who have the greatest cause for complaint. Where both partners in a marriage are working the vast bulk of the second salary would be taxed at the 35 per cent rate. The provision in the section for splitting the allowances does not affect the total tax position. A lot of these second salaries are taxed probably at 45, 50 and 60 per cent. Even though the marriage allowance has been increased in the Finance Bill of this year, the people affected most by this are not getting as much benefit out of it as would a single person or a married couple who are on the minimum scale of wages.

: What Deputy Barry says is probably true, but is not this the right approach? Are not the people most seriously affected those who are on the lower incomes? They are more seriously affected by the extent to which tax is deducted from their incomes. If one is taking steps on this road is that not the right place to take the first step? That is where we have done it.

: That is true, but I would like the Minister to consider a married couple with an income of £5,000. The Minister will agree that in 1978 this is not a huge income; it is £100 a week, but that couple are going to have to give £20 of that in tax, whereas two single persons each earning £2,500 a year will be paying only £16 a week in tax. A married couple are £4 minimum worse off than two single persons earning the same amount of money.

: I cannot put the matter any further, on the amendment anyway.

Amendment, by leave, withdrawn.
Question proposed: "That section 2, as amended, stand part of the Bill."

: In respect of what Deputy O'Leary said, I indicated that I intended to say something on the section in regard to the matter. Firstly, to reinforce what I have just said in response to Deputy Barry, in our election manifesto we set out precisely what we proposed to do in regard to these various allowances in taxation. There is the question of discrimination in so far as it exists in the tax system and steps will have to be taken on this. In what we have done we have taken steps along what in rough terms could be measured as being about one-third of the way in dealing with the discrimination which exists. That discrimination is not against women, married or otherwise, but in so far as there is a discrimination it is against married couples.

The definition of discrimination in the tax system very often seems to depend on a person's circumstances. Many single people may regard the additional allowance given to widows as discrimination against themselves. Widows on the other hand may regard the much more substantial allowance given to married couples as discrimination against them, the widows. Married women who have an income of their own, and particularly if they earn it outside the home, may regard the system we operate as discriminating against them. On the other hand, when a division is made between the allowances of the husband and wife it is possible that some husbands will regard what we are doing in this section as discrimination against them because it will reduce the amount of their tax-free allowances while increasing those of the wives. Therefore, a great deal depends on where you sit as to what is or is not discrimination in the system.

I stress that the tax-free allowance for a married couple contained in this Bill and promised in our election manifesto affects all married couples. As we said in the manifesto, reducing taxation on married couples not alone helps to maintain the living standards of families; it is also a major step towards ending discrimination in the tax treatment of married women. That is the first step. We are taking two other steps this year. There has always been a provision whereby a spouse could apply for a separate assessment, but heretofore if that happened the allowances were divided between the husband and wife in proportion to their respective incomes.

This section provides that an application for separate assessment may be made by either the husband or the wife without the consent of the other. In such a case where the application is made the basic personal allowances, instead of being divided in proportion to the incomes, will be divided equally between the spouses and the benefit of the balance of taxable income will also be divided equally between the spouses. Expenditure-related allowances, such as relief in respect of life assurance premiums, will continue to be granted to the spouse incurring the expenditure, or where that expenditure is shared between the spouses it will be divided in proportion to each one's share of the expenditure. In any case in which the income of a spouse is less than the allowance allocated to that spouse then the balance of the allowances would be transferred to the other spouse.

: At the beginning of the year or at the end?

: Does the Deputy mean under PAYE?

: The question will only arise under PAYE. In so far as it can be assessed at the beginning of the year it will be done at the beginning of that year.

: One will not know what one will earn in that year.

: That is a problem that is common to every taxpayer under PAYE at the beginning of the year. On the basis on which it operates, and the assumption that the income of each spouse will be X and Y respectively, then the adjustment can be made at that time. I would like it to be noted that either spouse may claim the separate assessment and that the consent of the other spouse is not necessary. Secondly, it is important to point out that opting for separate assessment does not alter the total amount of tax borne by the couple. It apportions the tax between the spouse and makes the individual spouse accountable for the amount of tax apportioned him or her separately.

A claim for separate assessment for any year must be made within six months, before 6 July in that year of assessment. It must be made between 6 January and 6 July. For the current year an application would have to be made before 6 July 1978. In the case of persons marrying during the course of the year of assessment if they make an application for separate assessment in that year they can make it at any time before 6 July in the following year. Once the application is made it remains in force for future years until it is withdrawn.

The total number of married women in receipt of income in their own right is estimated to be about 100,000 and of these approximately 70,000 pay tax under PAYE. There are about 250 cases of separate assessment outside of PAYE. We do not have accurate information as to the number of separate assessments within PAYE but it is tentatively estimated that the overall number of separate assessments in this case is about 1,500. Therefore, the first step this year is the substantial increase in the married allowance which is benefiting all married couples. The second step is the provision in this section enabling either a husband or a wife to apply for separate assessment with the consequences I mentioned. The third one is an administrative one. I have made arrangements whereby notices are being or, as has happened in many cases, have been sent out to married women where the Revenue Commissioners are aware of the fact that they have an income. That notice explains the provisions of this section and the consequences of making an application. A simple application form is provided for people to apply if they want to have separate assessment.

For a long time I have believed that although the law provided for separate assessment many people probably did not know this. It is also true that many people will know about it as a result of these notices but may not apply because the circumstances in each case will be best judged by the couples themselves. I want to make certain that anybody who may wish to do this will be aware of the fact that they can do it. On this whole question which has been controversial for a considerable time I should like to make a few other points. I do not claim to know the full answer to the problem that arises in this regard. I have invited suggestions from people as to the best way to deal with this matter. I have outlined a system of income splitting but I do not say, and never have said, that that provides the full answer. It goes a considerable distance in so far as it would ensure equal treatment between husband and wife and at the same time it would not discriminate against the one-income family and in particular against the wife who is working at home without pay. It would overcome that difficulty but a number of others still arise.

I have never claimed that I have the answer to that because I have not. One suggestion that has been made on occasions—it was made today by Deputy Michael O'Leary—is that in order to overcome this problem we should treat the husband and wife who are out working and earning an income in exactly the same way as we would treat two single people. It has been suggested that we should deal with the wife who stays at home by paying her a cash allowance.

: That is as I understand the submissions made by the women's organisations to the Minister.

: It is not an answer to the problem. There are a number of snags to it and I will not delay the House by going into detail about them but I should like to outline some obvious difficulties. Leaving aside the most obvious difficulty of finding the money, the first difficulty is : at what level do we set the cash allowance? Another is : what criteria do we use to set it? Should we pay the same cash allowance to all women working at home, irrespective of their family circumstances? If we do, whatever else it is, it is no substitute for an income tax allowance which is related to the earnings. Those obvious difficulties make me say that that is not an answer to the problem.

I believe that most important progress can be made if we aim at a system of income splitting which in the past I gave some details about publicly. We have taken a substantial step in respect of this in the Bill. Deputy Bruton asked whether we were committed to income splitting. I regard this as an aim we should have. We are working towards it and it is our intention to continue to work towards it. I must stress that we cannot give and have not given a commitment as to when the very end of that road will be reached. It is our aim to move along that road on which we started this year. I noted in some public comments that some people think that I first referred to income splitting after and as a result of the issuing of certain legal proceedings. I have no desire to comment on those legal proceedings. All I want to say is that I was unaware that they had been issued when they were issued—not for some time after was I aware of it. When I first made a reference to income splitting at the Fianna Fáil Ard-Fheis the proceedings had not been issued. Any suggestion that my reference to income splitting was brought about by the issuing of such proceedings is unfounded. Deputy P. Barry referred to well-heeled women.

: I did not invent the phrase.

: It is not unknown that I have referred to well-heeled articulate women. I referred to well-heeled articulate women who were pressing for a solution to their own problems which would discriminate against one-income families. Is it a criticism of people to say they are well-heeled? In official Labour Party circles it might be, but I do not think it is.

: In fairness, it was that the Minister considered it a rarity among that sex to be articulate.

: We all know quite a number of well-heeled women. Is it a criticism of them to say they are articulate? If anything, I would think it is a compliment. What is a criticism is to say that they are pressing for a solution to their own problems which will discriminate against one-income families. Is it not very strange how all these articulate people tried to convey that I was criticising articulate women or well-heeled articulate women and covered up the real criticism? The whole point of what I said was that you could expect well-heeled articulate women to be fighting for their less well-off sisters. However, they were fighting for themselves and to hell with their less well-off sisters. That was the whole point of what I was saying.

I do not accept, I have not accepted and I will not accept that it is a solution to this problem to discriminate against women who work at home. That is why what we have done here and what we will do in the future will be for the benefit of all married couples, not merely those with two incomes. It was also interesting to note that, when some of the people who have been so vociferous in this regard finally took aim at what I had been talking about in regard to income splitting, they did not say, "Well that is in the direction we want to go; hurry up". They said, "We made you say it". Of course I had said it before they criticised me and they did not know what I had said. It is very interesting to see the reaction and the cover up.

The fact is that anybody who makes the case that I was criticising must explain why. That applies in this House as well as outside it. They should explain why we should treat a married couple with two incomes better than a married couple with the same income which comes from one of the spouses. It cannot be justified. I would be interested to hear arguments justifying it. I have heard one or two honest people trying to argue it and I was not convinced by their arguments. Most of the people I have heard on this topic have not attempted to justify that proposition. Until it is justified the only line to take is the one we have been taking and intend to continue taking.

What we have provided in this section does not alter the amount of tax payable by a married couple. What we have provided in the Bill does alter it by reducing substantially the amount of tax payable by a married couple. In this section all we are doing is to provide for what happens when there is an application for a separate assessment. Normally it would be by the wife but not always. In such a case the basic personal allowances would be divided equally. If there was any to spare on either side it would be transferred to the other spouse. That is a departure from what has been done heretofore when the division was made in proportion to the respective incomes. Combining that with the substantial increase benefiting all married couples with the arrangements made for the notices to be issued to all married women with an income of their own of whom we are aware so that they know what is happening and what the consequences will be, we have taken a substantial step in trying to solve this extremely difficult problem. I do not claim to have all the answers and I would welcome suggestions from any quarter, inside or outside this House, that would help to provide a full solution to the problem. I can say it requires a good deal of thought even to recognise some of the problems that will arise, but even a great deal more thought has not so far yielded a solution to all of those problems. In so far as we can see a solution, this section, in the context in which I have mentioned it, represents a substantial move forward.

: The Minister's own notorious remarks evoked the heat they did because the impression was conveyed to women that he was, for financial reasons, seeing additional difficulties. The Minister makes the point that it is not a solution to give the married woman working at home an allowance; that there are difficulties there. I readily concede there are difficulties but they are not insuperable. The matter could be made the subject of more detailed investigation so long as the principle was acceptable. It is correct to say that the right to a separate assessment has existed up to now. I agree with the Minister that it has not been utilised in the past because women have not been generally aware that the right existed, or the right has not been sufficiently publicised. The figures the Minister gives would indicate that there is not general awareness of that right.

The basic injustice on which all the women's organisations have agreed is the aggregation of the husband's and wife's salaries for income tax purposes and that is not affected by anything we have here. Therefore, the constant submissions which have been made by the Commission on the Status of Women onwards, by the more recent representations of the women's representative committee, still retain their validity.

Under the present law a married woman's income is deemed to be that of her husband and he is the one who is liable to the payment of income tax on their joint income. In the most recent switch over to PAYE in sections of the public service—teachers and so on—the rebates went to the husband because that was the legal position. That is the kind of absurdity obtaining in our present system. There is no doubt that it is felt as a deeply resented injustice—and this movement will grow —by married women, that when they go out to work they, as they see it, are penalised by our system, their work is given a lower value than that of other people. Obviously that kind of situation must be rectified.

In our period in Government we took the first statutory steps to roll back the inequalities under which women laboured, as citizens at work, and so on. Therefore, we had the Equal Pay Act and the Equality in Employment Act; we now have a permanent watchdog over this whole area in employment, the Employment Equality Agency. Of course, the reforms of last year will not satisfy the demands of this year. This Government must move into the new area of equality on the question of taxation, difficult and complex though that area may be.

The income-splitting approach of the Minister does not face up to the major issue, as I have explained it already. Indeed, if we were to look at income-splitting systems in other countries, if we were to take the near example of the British one, one could only say that that system appears to operate in a more equitable manner in regard to the taxation of married women.

: They do not go in for income splitting, except to a limited extent, not in the way the Deputy is describing.

: It appears to operate in a more equitable manner under the variant adopted in Britain. Under the British system a married couple may opt for joint or separate assessment, the total tax payable by a couple taxed jointly is less, except at the higher levels of income, than it would be if the husband and wife opted to be taxed separately.

Before the Minister comes up with an equitable system I agree that quite a lot of work will need to be done. The critics of the system may be eloquent in terms of their criticism of its present shortcomings. The Minister may say : where are your proposals for operation in this area? We would have less controversy, misunderstanding, a great deal less heat in this area if the Minister was ready —either by commission or otherwise—to indicate his agreement to the principle of separate tax assessment for people who are married. It would certainly end the situation so often referred to that, at certain income levels, two people living together without benefit of clergy, are in fact better off than the conventionally married couple. But natural justice is offended throughout this system. Let us take the case of the articulate woman, a well-qualified woman whose work is assessed on a different basis from that of her husband. If the Minister could indicate his agreement to the ending of that inequitable situation, if this could be gone into by this commission, to void the question, as he sees it, of introducing further discrimination into this area as between the woman at home and the woman out at work, some progress could be made. The woman at home undoubtedly works also. Perhaps for a society that has been so eloquent on the importance of matrimony and the family we have done too little to give the mother in the home, acknowledged as she may be in the rhetoric of the Constitution, too little by way of cash reward and benefit. Clearly one of the elements in the final settlement of this matter should be consideration of an allowance for the married woman working at home to avoid what the Minister fears, the institution of further discrimination between that woman and her working sister outside in industry or the professions.

If the Minister was willing to indicate broad agreement to an approach along those lines—having at its centre the question of giving absolute equality under the taxation code, to the married woman at work and all other people at work, a good deal of progress would be made. But the fact that the Minister is seen to stop short of this commitment, that he does not acknowledge the natural justice of the points made by women's organisations accounts for a great deal of the misunderstandings created by his remarks in this area.

: Is section 2 agreed?

: I just want to say briefly—I thought I said it before but I may not have made it clear judging by something Deputy O'Leary said— the position is, as Deputy O'Leary stated it, in relation to a husband being liable for his wife's tax and so on. The important point to understand is that where separate assessment is claimed, then the husband is liable for his tax, the wife for hers and, in the case of any refunds due to the wife, they will go to the wife, or to the husband, they will go to the husband.

: But the aggregation is total, is that not the point?

: For the purpose of assessing the tax, yes, and any other step is one that raises all the hares we have been talking about. But it is particularly important that married women who are earning and who feel —and I understand why they would feel—a sense of injustice in this area understand that that whole problem can be avoided by applying for separate assessment. That is one of the reasons I have instructed the Revenue Commissioners to send out a notice to all such women, of which we are aware, in order to bring it to their attention that they can obviate this fairly major difficulty—according to Deputy O'Leary; and I think he is right—by applying for separate assessment.

: There are two points in regard to that. Suppose one of them defaults on payment, is the other liable? We should get it clear at this stage exactly what is meant by income splitting. The Minister seems to have one idea and Deputy O'Leary another. What I understand by income splitting is that the total amount of money coming into a house is divided equally, is halved between the two earners and they are both assessed as single people. Is that the Minister's understanding?

: Not quite, but I will try and spell it out in a little more detail later.

: At present a married couple earning say, £5,000 a year— which is not an enormous amount of money—whether it be one salary or two salaries are paying at the 35 per cent rate; £1,770 of their income is liable at the 35 per cent rate whereas in the case of two single persons in the same category earning, say, £2,500 each, only about £270 of their income would be assessable at the 35 per cent rate. This is what gives rise to a sense of grievance all the time where both partners are working, that so much of the second salary going into a house is taxed at the top rate. This is what causes the sense of grievance and resentment. Of course, as the Minister says, there is more discrimination against married couples rather than against married women as such. Perhaps it is because of the atmosphere in which we were reared that we accept that people make sacrifices when they marry, that they do not have the same amount of money available to them as they would if they were single. But the wife who then goes out to work and sees perhaps 45 per cent, 50 per cent or even 60 per cent of her salary, of what she considers she is earning every week, being taken away from her feels a sense of resentment. This is where all the resentment is felt.

The reform to which the Minister refers in section 2 which allows for separate assessment is fair enough. I wish the Minister better luck with it than we had when we introduced the modest reform whereby a house could not be sold without the permission of both spouses. I thought this was a small step along the road to reform until I was abused one night at a party by a man who had no less than three houses but resented bitterly the fact that he had to tell his wife before he sold the house in which they were living. He thought we were losing the run of ourselves in allowing liberated females into the male preserve of disposing of property without recourse to what should be the normal relationship between man and wife. The Minister is right that this is good, but we must not think that it will mean any less tax being paid by married couples. Separate assessment will be available for either spouse and in most cases the woman will be availing of this section to obtain a separate assessment.

: My first point is on the informational aspect of the problem. When he began his remarks on the section the Minister pointed out that the number of married women who were assessable paying tax under PAYE or otherwise was 100,000. This is the same answer which he gave me in reply to a parliamentary question on Tuesday, 14 February 1978. In that question I also asked the Minister to state the amount of tax paid by married women assessed under PAYE or otherwise in each of the last three financial periods. The Minister had to tell me that that information is not available. We would like to know whether this information can be made available in the future and whether he will instruct the Revenue Commissioners to so organise their statistical service that this kind of information, which is absolutely essential for the formulation of public policy in this area, is available.

There is a very widespread suspicion among women in general, and married women in particular, that they are contributing a disproportionately large slice of the total income tax take to the Exchequer. They are not able to put a finger on it because they are only so many individuals. The Minister and the Revenue Commissioners have the information somewhere in the files. If it can be obtained or if the information-gathering system can be organised in such a way that this information will be available in the future, we will be able to plan for the development of taxation and fiscal policy on a much more genuine basis.

Deputy Barry and the Minister have made the point, which needs to be stressed, that this is not a concession in cash terms to married couples. After the Minister's speech in Dún Laoghaire on 11 March last there was a very widespread public belief that the changes which he would introduce in this Finance Bill, apart from those already announced in the budget, would involve cash savings for married couples and, in particular, for married women. The practical results of this section can be easily spelt out. The example I would give is not in the least bit well heeled. I refer to a husband and wife who each earn around £3,500, which is as close as makes no difference to the average industrial wage. On the assumption that each of these people qualifies only for the ordinary personal allowances—I make that assumption because the other allowances, such as allowances for dependants and so on, can be claimed by people who are either married or single—their tax liability can be calculated roughly as follows : a single person earning £3,500 will pay £746 in tax; a married man whose wife is not working will pay £444.50; a married man whose wife is working will pay £364 if they opt for separate assessment; a married woman, if they do not opt for separate assessments, will pay £1,279. In the case of a married man with a wife who is working, the liability is £821.50 each, if they do not opt for separate assessment. In this example, which is not at a very high income level, the married man and his wife each pay more tax than single people or than their colleagues whose spouses do not work outside the home.

The result of this section is that all the Minister has done is to lessen the tax burden for the working wife but it does not remove discrimination against her and it increases the tax burden for the husband with a working wife, especially if the wife opts for separate assessment. The result is that husbands and wives who are both working are equally discriminated against, not equally privileged. The net point— and this is what the discussion is about—is why a man whose wife is working should have a smaller take-home pay than all his other colleagues. The same is true for a married woman. We would hold that tax discrimination is a discrimination against working wives since the contribution which they can make to the family income if they happen to be married to another wage earner is less than that which can be made by any other person in the household, such as a son, a daughter or a lodger.

There is another point which I do not know if the Minister has cleared up adequately, and this relates to liability for unpaid tax. I have read the section with some care but to the best of my knowledge it does not seem to remove or to alter section 192 of the 1967 Act, which provides that a woman's income chargeable for tax shall in the case of a married woman living with her husband be deemed for income tax purposes to be his income. The Minister in his initial remarks said that this section makes the individual spouse accountable for the amount of tax apportioned to him or her separately. It is possible that I am not reading the section with sufficient assiduity but I do not see anything in this section which romoves or alters that aspect of section 192 of the 1967 Income Tax Act.

I spoke earlier on, and the Minister has spoken at some length, of income splitting as the goal towards which we should be moving. It is true that when I spoke on the Second Stage of this Finance Bill I was under the impression, as were many other people, that this piece of window-dressing was income splitting. The Minister corrected me at the time and I have since found out that he was right. Even if we are to accept that the Minister is heading towards income splitting, we still have to ask ourselves whether this is the right way of going about it. The Minister was critical of the proposal from this side of the House that we should proceed towards a position of equality and attempt to equalise or to remove the anomaly that would thereby be created in relation to one-income families by introducing a family allowance. He mentioned two difficulties in relation to such family allowance: the problem of deciding the level at which we should set that allowance and the problem of deciding the criteria to be adopted in deciding who should get it.

With due respect, it seems that the problems the Minister has mentioned —no doubt he could mention others as well—although reasonably substantial are not as substantial as the rolling tiers of anomaly that one creates by aiming at any situation which does not achieve simple equality. The answer to the basic problem that he outlined, that perceived discrimination depends on where you stand, is ultimately that of treating people as equals and of making special allowances to people in special circumstances and notably to persons with families.

In The Sunday Press of 26 March shortly after the Minister's Dún Laoghaire speech, some of the problems about the Minister's solution were raised in an article by William O'Dea, lecturer on law and taxation. Mr. O'Dea incidentally was also under the impression that income splitting was about to be introduced in the Finance Bill. He argued, if I may quote, that:

... the Minister's proposals will, if implemented, discriminate further against unmarried income earners——

this is another of the anomalies I have talked about

—The fact that the unmarried earner is already discriminated against under our income tax laws does not provide its own justification and this proposal to increase the discrimination against unmarried income earners surely calls for some explanation.

If it is felt that married workers, for example, should be paid substantially more than unmarried workers who do precisely the same job, then this should be done simply by introducing substantially different salaries for the same work according as to whether it is done by a married person or a single person.

If this were proposed openly,—— so he says and I think he is right

—I am sure that it would run into a great deal of difficulty and would be extremely hard to justify. Yet it is being done, in substance, through the back door.

Finally, it may be asked how the Minister's plan is going to be financed. If it is to be financed through increased taxation then part of the benefit to married people will be claimed back and the single income earner will be further punished.

If it is to be financed by increasing tax on the self-employed then these will presumably have to be taxed at higher rates than others. This is discriminatory and anyway would be in direct contravention of the stated intention of the government to rely on and encourage private enterprise as the main vehicle of economic growth.

These are serious and reasoned criticisms of the direction the Minister is taking aimed at reaching a situation in which some kind of income-splitting arrangement were to be created, an income-splitting arrangement—and this might be emphasised—which still does not concede any right to a married person to be taxed on his or her own income. I should like the Minister to comment, first, on the informational side of the thing; secondly on the specific fact that this is merely window dressing but a little bit more than that in a negative sense which I hope to mention in a moment; and, thirdly, on the very reasonable criticisms of his plan made by this lecturer. I wonder what kind of response the Revenue Commissioners' circular will have in 99,000 Irish households—I presume all of them will get it. It is putting up, in this scheme as it is being presented to us here, to a married couple the option of a situation in which the wife will be given more money in her pocket and the husband will be given less in his.

If the Minister were really serious about this, instead of making it an option, he would make it mandatory. As it stands, and if he made it mandatory, he would achieve this internal income transfer in the family or between married couples who may or may not have a family—that is a separate problem—if he believes it to be important and a step towards equality without causing any bad blood in the family. As it is, if it remains an option, the Minister is creating a situation in which this may very well damage some marriage relationships. I believe this is something the Minister has failed to take into account. There is even the possibility that husbands whose wives opt for separate assessment under these circumstances and who find themselves with a lower take-home pay as a result may take such steps as are open to them to persuade their working wives to cease working and stay at home so that in certain circumstances their former personal take home pay might be restored. This might be true in situations in which the husband's income greatly exceeds that of his wife. It is an odd way of solving our unemployment problem and certainly it does nothing for family relationships.

: I think the Chair will be forgiven for expressing a wish to get away from section 2. We are getting back to a Second Stage debate. We had this almost agreed about an hour ago. Deputy Bruton wishes to come in now.

: I should like to ask a short question about paragraphs (a) and (b), from line 22 onwards. I gather that the reliefs under sections 143, 145, 151 and 152 of the Income Tax Act, 1967, are not to be included among the reliefs that can be divided in half on application. I gather that these relate almost entirely to insurance contributions of one kind or another. I should like to know the rationale for allowing a division in half of the other allowances but not of these in relation to insurance.

I have not an answer to the problem the Minister posed. Perhaps I have not given it as much thought as most Members of the House would have given it, looking at it from their own point of view, perhaps; but would an answer to the problem be found in the area of introducing what might be described as a non-working spouse allowance? At present we have a married allowance which is one allowance and is unified. There is a good deal in what the Minister and others have said, that you do not want to create a situation where by remedying one injustice you create another—in this case an injustice against married women working at home. We do not want to create a situation where they would lose out.

It has been suggested that they be paid an allowance. I take it that that allowance would be under the social welfare code, that it would be a direct cash payment to them unrelated to the tax code. That is one solution, but it seems very clumsy to remedy what appears to be an injustice in the tax code through the social welfare code or some sort of income transfer system. It is getting into the area of circular transfers. There might be a solution in having a single allowance for every worker and a separate allowance for any person supporting a spouse at home.

: In effect that is what happens at the moment.

: I cannot contradict the Minister.

: Does the Minister mean that the difference between the single and the married person's allowance would be the spouse allowance?

: Yes, in effect that is what it is now. The married allowance is double the single allowance.

: Justice would be seen to be done if a non-working spouse category was created. The existence of the unified married allowance leaves an area where direct comparisons are not as easy as they might otherwise be. The basic value system which we are trying to put into this Bill is not exactly clear. If the tax code is based on the principle of non-discrimination, on the basis of equal pay for equal work, it should not discriminate between different people. If discrimination is out, we cannot discriminate on the basis of need. However, if we are to gear the tax code to the needs of individual householders, it is necessary to discriminate. One might argue that if we are to talk about meeting needs, that is a matter for social welfare and not the tax code; but it is very harsh to say that. If the tax code is based simply on a mechanical non-discrimination approach, that is taking a very big step from what has been the traditionally perceived role of the tax code in relation to the various allowances. If we go simply on the basis of non-discrimination, we would in a sense be questioning the rationale of these allowances. Is there any extra cost to the Revenue in the provisions of section 2?

: It is not a concession——

: It is a different division of the allowance.

: Would the Minister define what he means by income splitting, and will he explain what is involved in subsection (8)? I see a slight problem here. If there was a wife with a predictable income and a self-employed husband who could earn a lot or nothing in a given year and if they had to apportion their allowance between them at the beginning of the year, they could make a wrong decision either if the husband earns a lot more than anticipated on the basis of past performances or alternatively if he made nothing. If people make a wrong decision here in good faith what provision is there for remedying that subsequently?

: One thing clear from this discussion is that the problems involved in this area are manifold and that none of us has a complete solution to them. If we can recognise that and if people outside can recognise it, it might be helpful. If anybody thinks they can come up with a satisfactory solution to all these problems I will be very glad to hear from them.

Deputy Barry asked what I meant by income splitting. In a speech recently I said that under an income-splitting system each spouse would be regarded as entitled to and chargeable on half of the couple's total income and would receive a single person's tax allowances and reliefs and that under income splitting the benefit of the lower rates would be transferable from wife to husband or vice versa. Incidentally, as a result of this transferability of reliefs, in many cases where couples are both earning, income splitting would produce a better result than would treatment as single persons, which some people have been seeking.

: What is the difference between that and what I said? I said the same and the Minister said it was not what he had in mind.

: As it came across to me it seemed to be different. If this is the same thing I am sorry. What the Deputy was saying was what I had in mind by income splitting. A question was raised by Deputy Horgan about whether it was true that if there was an application for separate assessment in such circumstances each spouse would be responsible for his or her tax and entitled to his or her refunds if there were any. I refer the Deputy to section 197 (1) of the Income Tax Act, 1967. It reads:

If an application is made for the purpose in such manner and form as may be prescribed by the Revenue Commissioners, either by a husband or wife, within six months before the 6th day of July in any year of assessment, income tax for that year shall be assessed, charged and recovered on the income of the husband and on the income of the wife as if they were not married, and all the provisions of this Act in respect of the assessment, charge, and recovery of tax shall, save as otherwise provided by this Act, apply as if they were not married.

A suggestion was made that the problems involved in this matter could be solved simply by making a cash allowance to the wife at home and treating husbands and wives who are working as single individuals.

: I understand that was mentioned by the commission.

: I have mentioned some of the difficulties attached to the cash allowance. I shall have another word to say about that in a moment. I should like to make it clear that simply treating a married couple as two single people would not resolve the problem. If they are treated as two single people they will not be able to get the benefit of the transfer of allowances that is provided for here. In most cases the transfer of allowances would arise and they would lose that benefit. They would be worse off if that were done.

: It would not cost the Minister so much money.

: The question of what it might cost the Minister is very far back in the minds of most people who discuss this problem, other than the Minister himself. I said earlier that leaving aside the very important question of money, I was trying to arrive at what would seem to be the most equitable solution and that having arrived at that stage the problem would be to find the money. We have not arrived at that stage yet. The line of approach I have indicated towards income splitting does not solve all the problems but it solves more of the problems than any of the other suggestions.

: Is the financial obstacle the main one in relation to separate assessment?

: No. One cannot measure the financial problem if one does not know what one is trying to do. We know where we are going with income splitting and we can measure it. On the question of a cash allowance and treating the working husband or wife as single individuals, I cannot measure that because we do not know exactly where we are going.

: Does that not indicate that this seems to be a proper area for investigation by an impartial commission with submissions from women's organisations?

: I know the Deputy suggested that and I am not ruling it out. However, I am saying that one would want to think a little further before it is transferred to a commission who will run into the same problem unless there is some possible line of approach. I have mentioned one of the problems that arises when considering treating husbands and wives as individuals.

With regard to the cash allowance, I referred to some of the problems that arise in this area. If the level of the cash allowance to the wife who is working at home without pay is fixed at a certain level, in some cases that would be worth more than her existing share of the married allowance and in other cases it would be worth less. One would find that the problem was not solved. The alternative is to have a cash allowance, the amount of which is related in some way to the husband's income, somewhat in the same way as the existing income tax allowance is related to his income. Even if that were done, in the vast majority of cases the wife's actual practical share of her husband's income is very much larger than the amount of the income tax allowance. That may not be the position in some cases but it is so in the vast majority of cases and there would be a tendency on the part of many husbands, if there was an actual cash allowance of that kind being paid by the State, to say, "That is your income, this is my income and we go on from here". I do not think that people have really thought out the implications.

: I understand that there is a form of home allowance paid in France but I cannot claim to have examined it in detail. From submissions made to me by women's organisations I understand that is the situation in France but I do not know the criteria. Have the Department made an examination of how that scheme works in France?

: My Department have details of the way in which the tax allowance for married people is dealt with in France but I do not have those details with me. I know that very substantial cash allowances for children are paid in France but I am not aware of the scheme the Deputy has mentioned.

: Are they in the tax code?

: I am not aware of the cash allowance referred to by Deputy O'Leary. We have examined the tax treatment of married couples in various countries including France and I must say that aspect did not emerge. However, I shall inquire further.

: I understand that in Sweden there is a separate tax assessment and presumably the practical problems we are facing have been met there. Probably we could look with profit on what they have done.

: We have studied various systems and the best one that has emerged so far is income splitting. The question was asked by Deputy Bruton why we are proposing to split equally the basic personal allowances and not other allowances such as relief on insurance premiums, mortgage interest and so on. The reason is that the personal allowances that are being split equally are general and apply to all married couples whereas the other allowances apply only in particular circumstances. The intention is to have this of general application in relation to the allowances that are of general application.

Deputy Bruton posed the question —he was not claiming he had the answer—if we had a separate tax allowance for the spouse working at home and I said I thought we had. That is so. I want to point out where the basic problem arises when the matter is approached in this way. If there is an allowance that is half the present married allowance in respect of the wife working at home without pay, how can she get the benefit if she has no income? As she does not come into the income tax code she cannot be given any benefit by way of an allowance. Effectively the only way is to give the benefit to the husband who is within the income tax code. That is one of the basic problems we are facing and that is why people came up with the solution of paying cash. I have outlined some of the problems that arise.

: I can see the problem. The other problem is where you get the circular payment if you do it the other way.

: That is one of the difficulties involved. Deputy Horgan thought that the issue of this circular, leaving it as an option to people to choose whether to be separately assessed, might lead to trouble in a number of homes and he said I probably had not adverted to this. I did advert to it. I am conscious of the problems that could arise.

: Is the Minister taking the problem on his own shoulders?

: No. Some people may want separate assessment and others may not. It is important that people should understand the position. Take the case of a married man getting all the allowances except that his wife, who is also working, is just getting the working wife's allowance of £230. As a result his take-home pay is bigger than that of the man working beside him doing the same work and only getting a single person's allowance. On the other hand, his wife is in the position that, if she is working beside a single woman who is also getting the single person's allowance, her take-home pay is very much less because there is so much tax deducted from her. In that case under this section the consequence of a separate assessment will be that the wife's pay will go up and the husband's take-home pay will go down. It has to be a decision for the couple but, failing agreement between them, it has to be a decision for the individuals as to what way they want to do it. It is not a decision for the Revenue Commissioners or for the Minister. I am very conscious of the fact that this could have the effect referred to and we have endeavoured to point this out in the letter that was issued but it is the right—this is the whole point—of a married woman to be treated equally with her husband if she so wishes and I am anxious to let her know her entitlement. If she demands equality of treatment she and her husband will have to accept the consequences that flow from that. That is inevitable. In some cases it may be unfortunate but we cannot have this kind of equality without the consequences that flow from it.

Deputy Bruton asked what the reason is for subsection (8). It provides for the passing on from the husband to the wife or vice versa of the excess of their allowances. If their income is not big enough to use up all their allowances the balance will be transferred to the other.

: Would the Minister confirm something for me? One effect of this section is to allocate to each partner in a marriage in which both partners are working half an income band. That is effectively the situation. Assuming there is no transfer of allowance each partner will get half the income band.

: So a husband will get only 50 per cent of what he might otherwise have as his right. Another anomaly is the fact that the section actually creates a situation in which the working husband or wife is now entitled to claim half the married woman's allowance.

: That was always so but, in practice, it was administered differently.

: This is just a difference in terminology.

: It is a matter of administration more than of law.

: It is written into the law now. It was a courtesy extended before with permission granted from one spouse to the other.

: No. It was a courtesy extended by the Revenue Commissioners. It was given in practice by the Revenue Commissioners to the working wife. Now, if people opt to operate this section, that will be divided also.

: In relation to liability for tax the Minister has cleared up what happens when people opt for separate assessment. The present arrangement involves no change. Each separately will be liable for the amount of tax but, where people do not opt, the problem is not solved because the husband will still be liable for his wife's tax.

: That is correct.

: If people are to be effectively liable for tax on their own income surely what is sauce for the couple who opted should also be sauce for those who have not opted. I raise this because of a particular case brought to my attention the other day. A married woman consituent teaches part-time in the local school and her total income in the last tax year amounted to less than her tax-free allowance and she naturally assumed, and logically she would not have to pay any tax. She is paid twice a year and after the beginning of the new financial year a cheque reached her and from her income of £260 or £270 a total of £104 had been deducted because her married allowance had been divided by 12 and she was allowed to offset only one-twelfth of the allowance against the tax for the previous year. She is entitled to a refund. Now that money has not been lawfully deducted and, in order to get her refund, she has to leave her employment, to fill out only the Lord knows how many forms and get her husband to sign them and, in the heel of the hunt, the refund, if and when it becomes payable to her, without benefit of any interest, will be paid to her husband, if he so requires. That seems to me to be a procedural inequality and, if the Minister believes that people who opt for separate assessment would also like to be separately taxed he should ensure that there is no room for inequality. I would like him to consider this very seriously.

The Minister described some of the anomalies that will arise and he advanced solutions or half solutions to the problems we are discussing. He pointed out that there is a particular problem in relation to married couples where the wife is not working because she has no income against which allowances could be transferred and income splitting or separate assessment cannot be used to give her more cash into her hand. She has no cash to start with and, therefore, any one of a number of different solutions will not give her any more cash because they are based on the presumption that she is being taxed and is losing money and the belief that she should lose less than she is actually losing.

This section has introduced the idea of circular transfers within the family between two married people who are working. I would be very interested to hear the Minister's comment on the suggestion that, if he is in favour of income transfers within the family, between two people who are working, there is no reason in principle why he should not be interested in income transfers between two people within the family one of whom is working and one of whom is not. The allowances for dependants have a cash value to the husband who is the sole income earner in a family. If the Minister is to follow the logic of this section through, he should have no objection to a system in which the cash value of those allowances to the husband is converted to a cash payment to the wife.

: The whole or half of it?

: Either. If the Minister is interested in the principle, if he accepts the principle which he is introducing in the section——

: I am trying to be clear on which principle the Deputy is enunciating. Who is entitled to the cash value of these allowances?

: I am not talking about the entitlement strictly speaking, per se. In this section the Minister is giving statutory force to a principle which lays down that, in relation to the present situation which we are now changing, there can be a transfer of cash income within the household between a husband and a wife. This principle is based, apparently, on the fact that they are both working. Could a case not be made for a similar cash transfer, of what magnitude or proportion I am not sure, between a working partner and a non-working partner? I would have reservations about this. We on these benches believe that the problems of family income and family income maintenance are more radically solved in the long term by direct subvention to families in need. Does the Minister accept that, having introduced this principle here, he could extend it to other areas?

: It would appear that, although we now have the statutory right to separate assessments, the end result is that the married couple will pay the same amount of tax as if they were taxed jointly. The only difference is that the usual allowances are apportioned on a different basis. All we have said seems to strengthen the case for seeking the advice and help of a commission who would make an examination of this entire area. At least one of the women's organisations asked for such an independent examination of the subject. Undoubtedly it is a very complex area and one in which theories abound. At the end it is very difficult to come up with practical proposals for implementation.

I do not think the Minister can be right when he says he believes the joint assessment procedure he now proposes to adopt is the best of those he looked at. I do not think that statement can be accepted fully. In other countries there are other methods of doing it. Those methods should be examined and the best working model adopted here. In the United States and Canada, individuals are taxed separately according to his or her income, and there is an obligation to make a separate return of income. In the US a married couple can make a joint return of income, in which cases they are treated as one taxpayer, but their aggregate income attracts tax at a lower rate than if they were taxed separately.

In Australia, the husband and wife must lodge separate returns and they are assessed separately on their respective incomes including their respective share of joint income. In Sweden, the tax arrangements for married couples were radically reformed in 1971. Joint taxation was abolished and individual taxation for both spouses was introduced. All these systems could be examined with profit.

If the Minister would promulgate his belief that the area should be examined by an authoritative body, and his willingness in principle to consider the idea of an allowance being paid to the woman working in the home, this would obviate any danger of building up new walls of discrimination between women at work in outside industry, in offices, or in teaching, and women working in the home. It is only by such means that advances can be made in this whole area.

There is also the silly situation at present that highly qualified women at work in industry, and doing very valuable work, are treated disgracefully in terms of the taxation levels which affect their salaries.

: Not if they get separate assessments.

: Their aggregate position is still unchanged.

: That does not make any difference. They still pay the same amount of money.

: Between the couple, the same as their next-door neighbours with the same income and paying the same tax.

: The separate assessment is of no financial benefit. That is the net point.

: To the couple, but for the people Deputy O'Leary is talking about, it could be of considerable importance to them in increasing their take-home pay.

: The women's organisations want women's work to be assessed separately. They want it assessed in the same way as it is assessed in industry, in offices, in teaching and so on.

: Does the Deputy mean women's work in the home or outside it?

: On the question of a woman's work in the home, perhaps the procedure should be that an allowance should be paid to her, the allowance to be decided on criteria which would have to be examined by the commission. It would be unfair, in a sense, to consider such an allowance to be related to the husband's earnings. This is not the last word on this matter. It must be examined. The women's organisations have made this point in their submissions.

The labour of women teaching, women in medicine, women in the factory, women in the shop—and this is a growing number of women in the workforce—should not be penalised as it is at present. Less reward should not be theirs, and that is the case at present. That is the injustice. Male Deputies may congratulate each other on how reasonable we all are in discussing this matter, but the fact is that women will no longer accept the kind of second-best treatment they have been receiving. Sooner or later the Minister must meet this just demand of theirs.

In our period in office we introduced legislation to roll back the prejudices and discrimination which existed. We put two substantial Acts on the Statute Book. Under the Employment Equality Act it was possible to set in motion an employment equality agency, an independent agency to see that equality of employment and equality of opportunity are given to women. It would be illogical for this Oireachtas to enact legislation to bring about equality of opportunity in industry for women under the Equality of Employment Act and still adhere to an antediluvian approach to the idea of women at work and how they are taxed. That is the problem we must address ourselves to. We cannot get the final answer to that here this afternoon, but we can decide that a commission be set up to examine this area. This would mean that we would get answers to certain questions that present themselves regarding what is done in France, how they operate in Sweden, how the system works in Australia and in the US. It is not as if the Minister and the Deputies in this House had an insoluble problem on their hands. It is not that this is so complicated a problem that mere mortals could not come up with a solution. There is a solution. It costs money, of course.

: What is the solution?

: The burden of my remarks has been that for the implementation——

: Does it mean a cash allowance to the person at home?

: The idea of a payment to the woman in the home should be examined, and there should be consideration of separate assessments for the husband and wife. Anomalous situations created by the present system have been referred to very often. Advance in this area can be best brought forward by setting up a commission. The Minister has said that he does not rule out the idea of a commission in this area. He should announce here this afternoon his willingness to consider the idea of a commission to examine this area, to get at some of the facts eluding us at present on how this operates in other countries, and to dispel the great element of controversy that surrounds this matter. Then let us see what will be the relative costs at the end of the day. We are under no illusion; there are costs attached to this. But when the Minister was on this side of the House he, very properly, was not deterred from urging in less favourable times that we press ahead with reform in this area. We now say to him, in an economy which will reach 6 per cent growth this year, that the bill attached to reforms is no excuse now to delay them.

: We have had a discussion the general thrust of which has been to try to get a fairer tax system for married couples whether the wife is or is not working. I put forward one suggestion in amendment No. 2 which I thought would go part of the road towards that. The Minister says that this is not acceptable because of the cost. The Minister has never pretended that section 2, as drafted, is of any financial benefit to a married couple—we are all agreed on this. It may be of financial benefit to a working wife who is paying a disproportionate amount of her salary in tax. To the couple both of whom are working it is of no benefit.

Deputy O'Leary suggested that a commission should be set up to examine this area. I gather that in the examples he read out—Sweden, Australia and the US—married couples pay less tax than do two single persons. In the example I gave earlier a married couple in this country pay nearly three times as much tax as a single person earning half their income. That is obviously unjust. I am not sure that I am keen on Deputy O'Leary's suggestion of a commission because this Government since they came in have established more inquiries, commissions and review bodies than a mongrel dog has fleas.

: You must do the best you can with the personnel in the Government.

: If we can get commitment today from the Minister that he recognises the problem and that he will move towards some solution of what is now recognised as the iniquitous position of married people in the income tax code, that will be a good thing. He says that he did not first suggest income splitting at a meeting in Dún Laoghaire on 12 March.

: No, it was at the Fianna Fáil Ard-Fheis.

: I quote from The Irish Times of 13 March 1978.

: After Dún Laoghaire —A.D.

: It says:

Mr. Colley said that if women's organisations now claimed he had given in to pressure it was because they had not listened to what he had said in the past or had not understood what he said. He had referred to this system of income splitting in his Ard-Fheis speech but this aspect of his remarks was not reported. He could not recall now exactly what he had said then.

It is difficult for those of us who were not in attendance at the Ard-Fheis to know what the Minister said if he was not reported.

I would be attracted to the idea of income splitting. I ask the Minister, if the amendment I propose is unacceptable to him, to assure the House that by the time the next Finance Bill comes in—preferably a long time before—there will be proposals made by the present Government that will redress, maybe over a period of years but preferably in one year, the situation whereby married couples now pay more tax, in some cases 50 per cent more, than would two single people with the same joint income.

: The Minister, as reported in the Official Report of 24 May 1978, Volume 306, column 1744, told me just I was quite right in saying then on Second Stage that this would not make any change in the total tax paid by a couple. He has verified that here today. We now have to think about the dialogue which we all took part in for the last year-and-a-half. It was about an extra allowance for married working women. The women's associations and the women involved were not interested in what the Minister has given. They were interested in some further recognition of the fact that they went out in the morning to work, did their week's work beside somebody else who was single and did not get the same allowance.

The situation in regard to families is difficult. Our tax laws here are based on the income of the family. Thanks be to God, here in Ireland 90 per cent and more of families exist on an income that is never divided between husband and wife. There may be some arrangement whereby the wife tries to work on a certain household allowance, but when there is a problem it is the one income for the two people that counts. This has not been changed one whit. The dialogue was about an extra allowance for married women. Women did not want what the Minister gave. What he gave in respect of 90 per cent, or maybe 99 per cent of the families is nothing, because the income of the husband and wife, who may happen to have separate incomes, is pooled and used for the good of the family, the maintenance of the house and the furtherance of the children's education and everything that goes with it. The women wanted an extra allowance and that has not been given to them. The Fianna Fáil manifesto says, on page 6:

Reducing the taxation on married couples not alone helps to maintain the living standards of families; it is also a major step towards ending discrimination in the tax treatment of married women.

If my wife and I pool our resources completely, as 99 per cent of the families in this country do, not one whit of change has been effected.

: That is not true.

: It could not matter less if the husband comes home with slightly less and the wife with slightly more if the total income is unchanged. If there is an unhappy situation where the husband spends too much or has recourse to more money than the wife and does not give her enough to provide for the expenses that she has to bear, that is one of the 1 per cent of families whose income is not pooled. There is no change whatever and that is not what the married working women wanted. The ultimate paragraph to which I referred is another part of the confidence trick. Women understood that when income tax allowances for married couples were raised, as happened, they would get an extra allowance if they were working. They have not got that and to that extent the Government have duped them.

: I should like to dispose of the point raised by Deputy Donegan first. He said that in the case of the great majority of married couples absolutely nothing was being done for them that would make them any better off.

: That is what the Minister said.

: No. I said that this section would not reduce the liability for tax of a married couple. The Deputy was quoting from the Fianna Fáil manifesto which stated that what we proposed to do would be a substantial step on the road to removing discrimination. It is precisely that and for the kind of married couples Deputy Donegan was describing they have got an increase in their tax allowance of £630 which is seven times bigger than the greatest increase in married allowance ever granted before. That is what they got even though the Deputy said they got nothing.

: What about inflation?

: I said that the married working woman got absolutely nothing in this measure. I should like to quote some of what I said on Second Stage, as reported at column 1744 of the Official Report of 24 May 1978:

That is all very well, but how much extra money does it give the husband and the wife? What is the difference in the tax on the total income? My view is that it makes no difference whatever. I should like the Minister in his reply to tell us what difference that has made to a couple having a joint income of £5,000. I am suggesting that the answer is nil.

Mr. Colley: The Deputy would be right. I never suggested that these changes will change the total tax payable by a couple. They alter the imposition of tax on one as against the other, but I never suggested anying else.

Mr. Donegan: We can take this, then, as a well-heeled window-dressing?

: I want to thank the Deputy. That is what he said on the last occasion and it was correct in relation to section 2. I was referring to what the Deputy said today, that the great majority of the married couples here are not getting anything. He quoted from our election manifesto. I pointed out to him that what they are getting is seven times greater than what they ever got before. We are dealing with section 2 which does not increase the allowance for a married couple. Section 2 provides—this is important in regard to what Deputy Donegan and other Deputies said—that in the case of a working wife who chooses to do so under this section she can divide the very substantially increased allowances. For instance, she can get the benefit of half of the increase of £630 and more. It is not true to say that her position has not improved but it is true to say that to the extent that her position improved her husband's position will disimprove. Supposing her position improved and her husband's did not disimprove the consequence of that would be that they as a couple would be treated considerably better than their next door neighbours of whom only the husband was working but who had the same income as they have together. That is the proposition. If Deputy Donegan or Deputy O'Leary feel that that is right they should say so. I do not think it is right.

In my view in doing that we are discriminating against the one-income family. That is a wrong thing to do. That is where the whole problem arises. I am trying to reach a point where we get equality of treatment in the tax code between a husband and wife both of whom are working without discriminating against the one-income family. It is in that context that I said that the income splitting system seemed to offer the best line of approach and that is the way in which we have moved and the way we aim to move. Because of something Deputy O'Leary said I should like to make it clear, in case there is any misunderstanding, that I do not accept the principle of cash payments to the wife at home as a solution to this problem.

Deputy O'Leary mentioned this in passing and I got the impression from what he said that he thought I accepted this in principle. I do not because I cannot see how it would work and it is outside the tax code. It is an attractive approach and one I thought about. However, when one examines it one must come to the conclusion that it is simply an effort to find an easy way out of the dilemma with which we are faced. A cash allowance of that kind in its own right is one thing but as part of the tax code and the solution to the problem we are facing it is not on. I would not like it to be thought that I said or indicated acceptance, even in principle, of this as a solution.

Deputy O'Leary, like Deputy Donegan, seemed to be saying that the working wife is being discriminated against but if the allowances are split, as she is entitled to do under this section, she is not being discriminated against. She is being treated in the same way as her husband.

: They are both being discriminated against.

: Are they and if so why? Are they not getting the same allowance between them as their neighbour where there is one income? The only people who can claim that they are being discriminated against in this context are single people and they have a case. I should like to make it clear that any suggestion that working wives are being discriminated against, given this section and what they can do with the allowances in it, is unfounded. The working wife can apply for separate assessment without reference to her husband. She has no liability for her husband's tax and he has no liability for hers. If there is any refund due to her it goes to her and not to her husband. She divides the allowances equally with him but she has the advantage that if some of her allowances are unused they can transfer to her husband or vice versa.

Assuming she is using up all the allowances that are due to her under this system she is treated in precisely the same way as her husband. She is not being discriminated against in that sense. Her husband may feel discriminated against because his allowances will go down but if one thinks of that couple and the couple next door with only one income then to do anything else is to discriminate against the couple next door. I do not want to follow Deputy O'Leary outside the tax code into other matters relating to women's rights but I want to reiterate that within the tax code we have taken a substantial step in cash terms on the road to elimination of discrimination. That is provided for in this Bill in the enormously increased married allowance. In addition, the circular which is being sent out by the Revenue Commissioners to all married women with income informs them of their rights under this section and what the consequences will be if they exercise them.

Deputy P. Barry quoted from a report which said that my remarks on income splitting at the Fianna Fáil Ard-Fheis were not reported and, therefore, how could they or he know what was said? In so far as my remarks were not reported, what he says is true. Would he think for a moment about those who purported to attack me vociferously, some of them professional journalists, about what I said at the Fianna Fáil Ard-Fheis if they did not know what I said? If they did know what I said, what was the basis of the attack except to cover up the criticism I was making and pretend that it was something else?

: Their point was the same as mine: the Minister did not mention income splitting at the Ard-Fheis.

: Apart from those attending the Ard-Fheis, it was on television and there was a VHF broadcast at the time so there were numerous people outside the Fianna Fáil Ard-Fheis who heard what I said and could verify it, even assuming all the Fianna Fáil delegates at the Ard-Fheis could be suborned to pretend I said what I did not. If the people concerned like Deputy Barry, or journalists who wanted to write on the topic, did not hear it, that is all right, but they should not pretend I did not say it because they did not hear it if they were not listening. Are they to rely on some newspaper reports, the lengths of which are decided by sub-editors depending on the space available, as evidence of what I said and if it does not appear in those reports then it follows that I did not say it and they are entitled to attack me even though I did say that I referred to income splitting? I suggest it is not a defensible position.

: The Minister said he could not remember what he said.

: I said I did not have the precise words I used. I still have my notes and I can give you exactly what I said. I understand there is a recording of the speech in existence in case anybody wants to dispute it.

: Was it one of these perfidious journalists who made the recording?

: In case anybody wants to suggest that I did not say it or that I said something else, I give warning that a recording exists.

: Is the Minister going to play it in the House?

: Hopefully not. I want to reiterate that the clearest thing that emerges from this debate is that nobody has a solution to all the problems. There may be not be a solution for all the problems. We must look for the best solution. I am not ruling out the possibility of a commission, as suggested by Deputy M. O'Leary, but I do not honestly feel that a commission is the answer at present. The problems are clear enough. The solution is not one that can be worked out by a commission. The solution is one that requires political will and understanding by different people that, when they feel they are being discriminated against, they have an obligation to look at what is happening to other people. We know what the problems are but we do not have a solution. It seems unlikely that a commission would be able to solve them. Furthermore, the establishment of a commission at this stage would suggest that a solution to all the problems at the one time is possible. As of now, that does not appear to be so.

I should like to assure Deputy M. O'Leary that systems in operation in other countries are not being ignored. I am not aware that any country has found a solution to all of these problems. I believe the nearest solution that has been found is in relation to income splitting.

If anybody thinks they have the answer to all of these problems I would be glad to hear from them. I recognise that income splitting does not solve all the problems but I believe it goes further than any other solution that has been put forward. If anybody can produce a better solution, please let me know.

: I do not want to be accused of misunderstanding the Minister, but during the course of his reply to the suggestion that there should be a direct cash payment to the women working at home, he said he did not accept that in principle, that he did not see the tax code as a means of doing that.

: I said I did not see a payment in cash as being a solution within the tax code.

: Does the Minister see a cash payment outside the tax code to women working at home as a solution?

: Yes. I said I was not dismissing the possibility of that kind of payment outside the tax code but that I did not think it provided a solution to the problem within the tax code.

: So the Minister is contemplating a payment outside the tax code to women working at home.

: I said I did not rule out the possibility of such a payment outside the context of the tax code.

: That is not relevant to the section.

: It is very relevant. The Minister's thinking on this matter is difficult to reconcile with the fact that the only means we have at present of making direct payments by the State to women working at home is through children's allowances and there was no increase in the children's allowances. It is hard to reconcile the Minister's expression of concern for the woman working at home with his feeling that she should get a direct payment when the only means at present available were not availed of by the Minister in his budget.

: May we take it that Deputy Cluskey is advocating a cash allowance to the wife working at home as part of the solution to the problem we have been discussing?

: A cash payment to women working at home would be of substantial benefit to many families. The Minister should have increased the children's allowances, which are payable to the mother and which are the only way the State makes a direct contribution towards the welfare of the family.

: The leader of my Party has said he finds it difficult to reconcile what the Minister said in one area with what he said in another. I have the same difficulty in relation to the Minister's statement that he does not see a cash payment within the context of the tax code to the woman who does not work outside the home as providing a solution; whereas in this section—and I know the Minister will correct me if I am mistaken —what the Government propose should be done is that the cash value of a certain portion of allowances be transferred within the home as cash, or as cash minus some share of tax, to a wife or a husband, as the case may be, who works outside the home.

: The Deputy said something similar earlier. I thought I was misunderstanding him but, since he has said it again, I must be understanding him correctly and, in case he is under a misapprehension, I do not agree with his version of what this section does. It does not transfer any cash at all; it simply transfers tax allowances.

: The effect of the transfer of the tax allowance is an objective transfer of cash from one partner to the other which is based on the fact that there are x quantity of allowances and that both partners are working outside the home. Therefore I am taking that a stage further and pointing out to the Minister that all women work—some of them work outside the home and get remunerated for it; some of them work inside the home and do not get remunerated for it. What is the difficulty in following that line down the road and saying that the transfer of allowances, as cash, can take place equally to a woman who is working inside the home and is not otherwise remunerated for it? There does not seem to me to be any logical reason why the Minister is creating this situation in respect of one type of situation and that he should not, in principle at least, be open to the possibility of accepting it for the other type of situation.

: I have already made it clear to the Deputy that I do not agree with his interpretation of what the section is doing. I have pointed out to him also—and I should like to hear him on it if he has anything further to say—how he would propose to overcome the difficulties I outlined about the cash payment in the context of solving the problem of the tax code we have been discussing. In other words, how does one fix the amount? Can it vary with the husband's income?

: If we were to take a rough rule of thumb, in the case of the wife whose work in the home is not remunerated—this is the example I am putting up for the attention and comment of the Minister—if the Minister believes that allowances should be shared one might make a case, although I am not necessarily making it, that the cash transfer within the household to the woman who is not working outside the home and is not otherwise remunerated for it should be equal to half the cash value of that allowance to her husband. That is just by way of an example. I do not see why the Minister does not see the logic in proceeding from one situation to the other.

There are two other brief problems on which I should be grateful if the Minister would comment. I raised them specifically and he did not comment on them in his reply. I admit he referred to a lot of items in his reply, and that is possibly the reason. The first is the question of the liability for the payment of tax in relation to couples who have not opted for separate assessment. The Minister has argued very strongly that some couples may not wish to opt for separate assessment. Why should the liability to tax of the individuals in that married relationship be different from the liability to tax of people who have opted for separate assessment? The total tax liability of the couples is the same; they are both working and earning outside the home. Is it not logical that the overriding justice of assuming that tax liable on the income of one partner is collectible from that partner should apply equally to both cases regardless of whatever detailed arrangements are being made here?

I noted with interest that the Minister said when we talked about the nature of the decision—that it should be preferably a decision of the couple. But, in this section he is ruling out that option; he is making it the decision of either of the couple. If my understanding of it is correct, he is changing the statutory position in that previously the statutory position was that it had to be a decision by the couple. It is now an option available to one of them. If the Minister believes that the preferable option is that it should be decided by the couple, not by one partner in opposition to or in ignorance of the wishes of the other, why does he not maintain that position?

: I have listened to the debate for some time. I should like to ascertain how the Opposition would deal with the problem within the context of the Finance Bill. Are they not saying that the working wife should get an additional allowance and, if that is what they say, then there is an element of discrimination against the wife who stays at home? It was always separate assessment that applied before this section but that implied separate assessment in proportion to the total income of each couple. Section 2 gives the right to either of the spouses to opt to have the allowances divided in half, by whoever pays Voluntary Health Insurance, life assurance and so on. We must consider that in the context that the total married allowance has been increased from £1,100 to £1,730, which is an increase of 67 per cent.

As was pointed out earlier—I think it was Deputy Donegan who put his finger on this point—in most homes the total income of husband and wife is regarded as one and is drawn out of the same pool. Under this section the total tax payable will be exactly the same as heretofore but it must be looked at in the context of the increased allowances given in the budget.

I am at a loss to ascertain what the Opposition are saying. Are they saying they disagree with this section, that an extra allowance should be given to the woman working outside the home as against the woman working at home? Or are they saying that they do not agree with the section at all, that the old situation should obtain, that the allowances should be apportioned in relation to the total income of each individual spouse? Under this section the allowances will be divided in half. The unexhausted bands of income will be handed over to the other spouse, as the case may be. I consider that a very fair system. Certainly the highlighting in this debate of separate assessment will bring to the notice of more married couples that separate assessment exists and that they should apply for it if they wish.

There is also the factor that wives who are out working will have disposable income at their behest; the husband will have less, but at least they will know about it. The number of working wives who will fight for separate assessment are few and far between. In my experience it would be only women who had other income before they married, who are aware of this provision and who have sought advice on it. I am not too sure about this but I think separate assessment must be applied for before 5 July in any income tax year. If it could be brought to the notice of the ordinary working wife that she can apply for separate assessment, I am sure a lot of the grievances of working wives would be alleviated.

The section is a very good one and the Minister has done a great job in introducing the splitting of allowances. I should like to be clear what Members of the Opposition mean. Are they disagreeing with the section, or what are they saying?

: The question of increased allowances, generous or ungenerous, gets rid of discrimination as far as the tax treatment of married women is concerned. What I said, and I hold by it, is that no matter whether the allowances were generous or over-generous what has been done, in effect, has no advantage for the average family.

: Does the Deputy mean in section 2 or overall?

: If the Minister wants to say that his extra allowances were generous then he can say so. The manifesto states:

Reducing the taxation on married couples not alone helps to maintain the living standards of families; it is also a major step towards ending discrimination in the tax treatment of married women.

First of all, that is untrue. Many women's associations and married working women believed before the election that they would get an extra earned-income allowance when they worked outside the home. That is what they believed and that is where they were duped. Talk about whether the extra allowances were generous or ungenerous does not arise. The fact is that the married women's associations were convinced that an extra allowance would be given to married women who worked outside the home. The Government have not done that. They have created a situation which, in my view, will create more rows and more infuriated husbands than ever before. What nice, decent wife is going to take up a form like the one which my wife received the other morning and decide to fill in that form, with the result that her husband will get less money and she will get more?

: I agree with the Deputy about the infuriated husbands, but is he now saying that there should be an additional allowance for married working women as against the women who work in the home? If wives apply for separate assessment I agree that there will be infuriated husbands. Is the Deputy now saying that his party are advocating an additional allowance for wives working outside the home, thus discriminating against a single income family?

: I am saying that the Government, when on these benches, implied that there would be an extra allowance for working women. When the whole thing was over they described them as well-heeled something or other; I do not know what they were. All they did was create a situation which will cause rows and in which there will be infuriated husbands all over the country. I will say no more no matter how much anyone may try to twist my remarks.

: I thought the Deputy would not want to say more. I will not pursue him very far except to say that the statement in the Fianna Fáil election manifesto about this being a substantial step towards the removal of discrimination was, of course, correct. Whether Deputy Donegan accepts that or not, there is one thing he cannot deny. If he looks a little further up that page he will see set out precisely what we said we would do in regard to income tax allowances. It is what he will find in this Bill. He will not find anything about an inceased allowance for working wives.

: I got the last sentence.

: He will find that it says precisely what we are going to do and there is no way that even Deputy Donegan can pretend that that would increase the working wife's allowance. It did not say it and it did not do it and it did not mean it and nobody thought it meant it.

: It implied it.

: I will deal briefly with the point made by Deputy Horgan, that is, the question of the liability situation of those who do not exercise the option of separate assessment. The legal position is not being changed in regard to liability if there is a separate assessment. The position under this section is as it was before. In other words, before if one made the option then liability for the husband's income rested on the husband and for the wife on the wife. That is not being changed. If we were to do as I think Deputy Horgan is suggesting, that is, apply to every couple where both are working a separate assessment——

: Separate liability for tax payment, not separate assessment.

: One cannot impose the liability for tax payment separately without separate assessment. That is the difficulty. Therefore, this would have to be done on a mandatory basis, even though the majority of people would not want that. That is why people are given the option. I do not think there can be any real objection to the option. The only objection that has been put up is that it may lead to trouble in some cases, not in most cases but in some. If it does, it is simply because people will now have to face the reality that the husband has been getting allowances over and above his workmates who are single and as a compensation the wife has been getting fewer allowances than her fellow workers who are single. Now there is an evening up if they exercise this option. It may be no harm if people realise that this is the position and that they are paying between them the same tax as their next-door neighbours with the same income. I trust that it will not lead to too much difficulty in too many homes. I do not think it will but I acknowledge that it may lead to some difficulty in some homes. It is the right of the individual. I said that preferably the decision would be made by the couple. By that I meant that they would discuss it and agree and then the wife who is not separately assessed would apply. There is no change in the law on this position, as Deputy Horgan seemed to think. The position has not been up to now that it had to be a joint decision. It could be a separate one, as it can be under this Bill.

: What is the whole point of section 2 then?

: The change in law under section 2 relates to dividing the basic allowances in half instead of in proportion to the incomes.

: Prior to the introduction of section 2, the situation was that even if they had opted for separate assessment there was no cash transfer of the kind we are talking about between the wife and the husband.

: I have the difficulty that I do not accept the proposition the Deputy talks about of cash transfer. The only difference is that heretofore if there was separate assessment applied for the basic allowances were divided in proportion to the respective income. Under section 2 the basic allowances will be divided half and half.

Question put and agreed to.
SECTION 3.

: I move amendment No. 5:

In page 8, line 6, after "than" to insert "the sum of £2,200 and shall not be more than".

Progress reported; Committee to sit again.
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