Dáil Éireann debate -
Thursday, 8 Jun 1978

Vol. 307 No. 5

Finance Bill, 1978: Committee Stage (Resumed) .

Debate resumed on amendment No. 5:

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

—(Deputy M. O'Leary.)

Mr. M. O'Leary

: Section 3 removes the limit of £2,000 which a self-employed person or a non-superannuated employee might deduct from his taxable earnings if he makes a payment to a qualified retirement annuity scheme. In common with other features of the Bill it appears to us that people in the higher income bracket will be the chief beneficiaries. It benefits mainly those individuals with earnings in excess of £13,333. The section also abolishes the present cash limit of £650 which can be deducted in respect of qualifying premiums under contracts for a spouse or dependant.

It is a fact that retirement annuities are one of the most favoured tax avoidance measures among people in the £14,000 and upward income bracket. The annuities can be deducted against taxable income and they provide an income and a lump sum on retirement. The over-taxed majority of people have to pay for this extra bonus by way of tax remission for those in the higher income bracket. That is the intent of the section. The intent of our amendment is to ensure that there will be a ceiling to such deductions.

Under the section a self-employed person with a spouse earning £40,000 per annum could purchase a retirement annuity of 20 per cent or £8,000 per annum and for this investment he gets the benefit of the annuity in the form of a guaranteed income plus a lump sum on retirement and he can reduce his taxable income by £8,000 by virtue of this investment. Up to now the maximum reduction to which he would be entitled in taxable income was £2,000 but if this section goes through without amendment he will receive an extra allowance of something in the order of £6,000 per annum.

If this section goes through without amendment it means that once again we have taken a step in the reversal of the efforts of the previous administration to make our tax system fairer and to make it less prone to evasion by those with the financial muscle to seek evasion. The section removes the loophole which the previous administration had closed.

It is not that we are killioys or that we wish to nail down all kinds of investment. We are conscious that there is only a limited number of taxpayers and that there are no loopholes for the vast majority of PAYE earners. There are no investment formulae that will yield them a bonus of £6,000 per annum. The PAYE earners—the majority of the people—are entitled to expect from the Government of the day that tax bonanzas such as this for those whose annual income exceeds £14,000 per annum should not be available when it is simply the hard road for the PAYE workers, with strict deductions from their earnings and no possibility for evasion. The administration to which I belonged attempted to make the tax system more fair. We know that taxation is not popular with anyone. Paying taxes is not a pleasant exercise. However, if we are to get from the State the kind of services in education, health and social welfare required in a modern State, then obviously the revenue for those services must be raised here. But it must be raised in a fair fashion. There must be no culs-de sac by which the rich can obtain reliefs, reliefs which the rest of us must pay for in income tax.

This section is, of course, of a piece with other elements of Government thinking in areas of taxation. Relief to the tune of £8 million a year can be given to the wealthy. This kind of extravaganza might be overlooked in a country with vast resources but in a small State, struggling to keep its head above water and bring its standards up to those of its European neighbours, this kind of discriminatory treatment in the name of restoring confidence to the business sector is not good enough. It is not good enough that hidden gifts should be given to those earning in excess of £14,000 a year.

Our amendment seeks to maintain the position adopted by the previous Government. It is a fair amendment and I would ask the Minister to reconsider the intent of the section. In this section the Government are actually restoring inequality rather than removing it and this restoration must inevitably fuel demand and increase inflationary trends in the economy. If, later this year, we see a fresh bout of domestically caused inflation, that will be as a result of measures like this Finance Bill. This Bill is a signal to the better off that it is their day and this is their Bill protecting their interests and ignoring equity in regard to the general body of taxpayers. I would ask the Minister to consider between now and Report Stage whether he can adopt our amendment. In the interests of equity he should do so. If he does not accept this amendment the result will be a favouring of those who are in an excellent position to look after themselves.

Minister for Finance (Mr. Colley)

: Is it proposed to take this amendment on its own or are we discussing amendments Nos. 5 and 6 together?

Mr. M. O'Leary

: I understood we are discussing this amendment on its own.

An Leas-Cheann Comhairle

: We are discussing the amendment on its own but, if the House agrees to discuss both amendments together, the Chair has no objection.

Mr. Colley

: They seem to me to be similar.

Mr. M. O'Leary

: We will discuss them together.

Mr. Colley

: I am somewhat mystified by Deputy O'Leary's flights of oratory on this amendment. Listening to him, it would appear that the section as drafted is providing an enormous loophole for tax evasion. The advice I have is that the cost of what is involved here would be less than £50,000 a year, so clearly we are not talking about enormous tax evasion. To go a little further, the attitude of Deputy O'Leary and his colleagues in the Labour Party who tabled this amendment requires some explanation because it should be noted that what they are proposing is that the income tax reliefs available in respect of premiums or contributions to retirement benefits should be strictly limited in the case of the self-employed but should not be limited in the case of any employee other than by way of a percentage limitation.

What the section proposes to do is to apply the same limitation—that is, a percentage limitation—to contributions to retirement benefits by either employees or the self-employed. It would appear that the Labour Party objects to treating both in the same way. Some explanation is called for. When we talk about employees we are talking about people who can include directors of companies, chief executives of State companies, or people with extremely high salaries, much higher than any chief executive has. The Labour Party has no objection at all to applying merely a percentage limitation to them. It is only when it comes to the self-employed that the Labour Party feels apparently that it is unjust to allow only a percentage limitation and they propose to apply a cash limitation as well, the effect of which would be, I am advised, to limit the amount of such contributions to a salary not exceeding £14,700 per annum. I think Deputy O'Leary said £14,000 in round figures. Anyway, it is in that region.

One has to consider here the situation of the self-employed. In their case any provision they make for retirement must come out of their earnings. In the case of employees per se the normal provision is that, even where they make a contribution to their superannuation, that does not form any part of their take home pay. Indeed, negotiations in respect of their pay in practice, if not in theory, relate to their net pay after their contribution to superannuation. In the case of the self-employed that is not the position. The contribution has to come out of their earnings. If they have a bad year they will have to struggle to make the payments.

The next question is why should one say that the limitations applied on a percentage basis to employees are not sufficient when applied to the self-employed. It does not matter how much someone is earning if he is employed as a director or something else. There need be no limitation in his case other than the percentage limitation. But, if he is self-employed, that is not good enough. Then you must apply the percentage limitation plus a cash limit of about £14,700 per annum. I cannot see any logic in this. I cannot see any justification for it. Indeed, there is obviously no justification for the suggestion that this will lead to a widespread bonanza for the self-employed. On the figures available to me of the cost being almost certainly less than £50,000 per annum, there is no bonanza involved in that. Why this singling out of the self-employed by the Labour Party as people who are not to be treated in the same way as those who are employed? I do not go along with that proposition. I do not know whether the Fine Gael Party go along with it, but certainly this party do not go along with it. Unless the Labour Party can produce a very convincing reason as to why this ought to be done, I do not propose to accept either of these amendments.

Mr. Horgan

: The Minister has done two things in his reply to this amendment. In the first case he has identified a possible drafting weakness in the amendment which can be reconsidered between now and Report Stage. He has not met the fundamental thrust of the amendment which is designed to ensure quite simply that provisions for providing pensions, annuities and so on, for people in the upper income brackets should not be used as the basis for widespread tax avoidance. I prefer to use the word "avoidance" rather than "evasion" in this context, because what is involved is legal avoidance of tax liability rather than illegal avoidance.

On these benches we have no problem in accepting the basic thesis that self-employed people have as much right fundamentally to try to provide for their retirement as anybody else. In this amendment we are trying to ensure that persons with inflated incomes from whatever source do not benefit unduly from tax concessions related to the capacity they may have to offset these premiums against tax liability. The position of the self-employed in general is rather anomalous. Whereas there are many pension schemes in existence for people in paid employment, few of those pension schemes exact very large contributions from the employee proportionate to the contribution normally paid by the employer.

The Minister will be aware that our own pension scheme in this House, which is something of a special case, exacts only something like 6 per cent of our actual salary from us. This would be common throughout the public service. Over a period of fairly rapid inflation, the amount employers, whether semi-State companies, the public service or private companies, have had to put into pension funds in order to guarantee the indexation, more or less, of the prospective pensions for their employees, has probably risen very sharply over the past few years. The total contribution made in terms of a percentage of a given employee's salary can be quite high on occasion. The self-employed, particularly at the lower end of the self-employed spectrum, have not got this kind of possibility.

If this amendment is not acceptable to the Minister I would be interested to know whether he would be more amenable to an amendment which would actually put the percentage of earnings which may be claimed by the self-employed person in respect of a premium paid for an annuity on a sliding scale, so that the lower his income the greater the proportion he would be able to claim against income tax if he is paid it in respect of an annuity. That would provide something of the kind of equity which this amendment was originally designed, perhaps imperfectly, to try to achieve.

The Minister mentioned that the cost would be less than £50,000. In relation to the insurance premiums we talked about yesterday, for example, is this a static cost every year or is it a rolling cost? Is it £50,000 this year, £100,000, £150,000, and so on, in successive years? This is an important distinction to make. I tried to make the positive point this amendment was designed to meet. The negative point made by Deputy O'Leary is equally important. The principle which is being removed by the section we are seeking to amend is that there should be a reasonable cash upper limit on the amount any person might invest in his own future pension and thereby avoid tax liability.

We believe this limit was accepted after it was introduced. There may have been problems about the level at which it was set. As I said on Second Stage. I remember on one occasion when it was raised by the then National Coalition Government numbers of self-employed persons expressed their appreciation to me of what the Government had done. They felt the raise was overdue but at least it was made.

If we are simply to clear the upper limit we are opening the door to a situation in which either the self-employed or employees of private companies—the Minister mentioned the chairman, the managing director and other such persons—may be making private arrangements with the source of their salaries, especially in the case of employees, whereby their pension entitlements will be further aggrandised, at considerable cost to the taxpayer, by simply increasing their salaries on the understanding that a substantial proportion of that increase will be going into a pension fund.

If this is the case we are being asked to endorse a situation, and a philosophy which is endemic on the Government benches and written into this Bill in large measure, that is, that inequality is the necessary price of progress. On these benches we do not accept that inequality is the price of progress.

Mr. Colley

: Deputy Horgan mentioned something about a possible defect in the drafting. I do not quite follow what he has in mind.

Mr. Horgan

: The Minister argued that the effect of the way in which this amendment is drafted is to create invidious distinctions between the self-employed and the salary earners. That is the aspect of it we will have to look at again.

Mr. M. O'Leary

: I think the Minister's point was that those on PAYE in general had pension arrangements and this did not hold in the case of the self-employed.

Mr. Colley

: And that there was no cash limit in the case of the employed, and only the same percentage limits as apply in this section.

Mr. M. O'Leary

: The Minister is removing the cash limit, is he not?

Mr. Colley

: Yes, which applies only in the case of the self-employed.

In response to Deputy Horgan's question, the figure I mentioned of less than £50,000 a year would be a continuing cost and not a rolling cost. Deputy Horgan finished by saying that he was seeking equity and that this section is creating inequity. As things stand it seems there is a much stronger case for saying that the section is seeking equity and the amendment is seeking inequity, in so far as the section is treating the employed and the self-employed in precisely the same way, whereas the amendment would impose a cash limit on the self-employed and no cash limit on the employed. If I understood Deputy Horgan correctly, at the end he seemed to suggest that he and his colleagues in the Labour Party would consider the imposition of a cash limit on both the employed and the self-employed. I do not know whether he is putting that proposition forward at the moment, but I think the treatment of both categories in the same way is fully justified. There are valid arguments, which I will not put forward unless I have to, as to why the self-employed ought to be treated more generously. They ought to be treated in the same way. If the Labour Party wish to impose a cash limitation on both the employed and the self-employed then it is open to them to put forward such an amendment on Report Stage, but on the amendment before the House for the reasons I have indicated I could not accept it.

Mr. Horgan

: I am glad the Minister has given me the opportunity to clarify. He said that he was not sure whether he could read into what I said that we were insisting on the cash limit all round. That is not our position. All I was saying is that the Minister has put his finger on the problem in relation to the drafting of the amendment, which we will have to look at again between now and Report Stage. The fundamental point that Deputy O'Leary was making and which I was trying to reinforce was that if there are to be tax reliefs in relation to the payment of premiums in respect of retirement annuities, whether for the self-employed or the employed, those reliefs should in the interests of equity be proportionately greater, if anything, at the lower end of the income scale than at the upper end. Even comparatively small percentage concessions at the upper end of the income scale add up to considerable cash sums in terms of net disposable income, whereas you need comparatively greater percentages at the lower end of the income scale in order to provide anything like realistic net disposable income results at the end of the day.

The Minister recently gave me some information, which I did not bring here with me, about the range of people in the self-employed tax brackets and the number of those people who are in particular income bands. If my memory serves me correctly, a very substantial majority of the self-employed are earning incomes in the bands below £5,000 a year. These are the people who have very little or nothing to gain from the section. I do not want to preempt the debate on the section, but it is in the interests of people like that that we are attempting to introduce greater equity into the general set of arrangements which this amendment seeks to change.

Mr. M. O'Leary

: We are concerned about the possibility of set-off for tax purposes. From our reading of the situation it would appear that it is at the very much higher reaches of annual income that the greater advantage would be gained. Whether the person is wage-earning or self-employed it all comes to the same thing in terms of annual increments. There is a possibility of greater set-off for those in the higher income brackets. If the general principle is true, that the possibility of set-off for tax purposes is the more limited the further down the income scale you come, then for whatever small number may be concerned it should not be possible for any category to get, by way of set-off for tax purposes, benefits which are beyond the reach of the majority of PAYE earners. That is the intent of this amendment. We bear in mind the polemic put forward here by the Minister that it introduces further inequality. Trying to introduce equity into an unequal situation always raises the problem of which direction to take. The Minister will say that he is going in the direction of greater equity. It would be our contention that the net result of the direction that he is taking is that those in the higher income groups—and we are talking about the very high income groups, those earning in excess of £14,000 a year—would have greater opportunity on this section going through than they would without it. That would be the sense of our amendment. We will look at that between now and Report Stage, but I do not think we will be departing from the essence of the position that we are taking here, that there should be this upper limit to prevent this kind of set-off for tax purposes.

Mr. Colley

: Does the Deputy mean the same income limit for the employed and the self-employed?

Mr. M. O'Leary

: We will have to consider that.

Mr. Callanan

: I am against too much going to the upper income group. I cannot understand this amendment, and I would like an explanation of it. The Minister has explained that the amendment discriminates between two sections. The proposers say they do not. There are self-employed people on very low incomes and it can be said in their favour that they are not as sure of their incomes as is the person who is earning a salary. Is it intended to apply the same rule to the employed and the self-employed? If it is and if there is a limit applied this could be a good amendment. As the amendment is worded it is discriminating against self-employed people.

Mr. P. Barry

: Only against those earning more than £14,500.

Mr. Colley

: Why not apply the same thing to the employed as to the self-employed?

Mr. P. Barry

: Deputy Callanan said that a lot of the self-employed were not sure of their incomes.

Mr. Colley

: I am doing it here.

Mr. M. O'Leary

: We are concerned about the question of those with earnings in excess of £14,000 per annum.

Mr. Colley

: Who are self-employed.

Mr. M. O'Leary

: As the amendment stands, yes. We are prepared to look at its overall implication.

Mr. Colley

: The House will have noticed that the Labour Party representatives are not prepared—understandably at this stage—to commit themselves to applying the same limitations to the employed as to the self-employed. They want to think about it.

Mr. M. O'Leary

: The Labour Party maintain that the self-employed in our community have as valuable a contribution to make as have any other category. Without division into self-employed, salaried or manual worker, we are concerned about the implications of the section, but those with annual returns of something in excess of £14,000 per annum would appear on the basis of this section to be enabled to make greater set-offs against their taxation. That is not a fair system.

An Ceann Comhairle

: Deputy Callanan is in possession.

Mr. Callanan

: I am waiting until the conversation is finished. I will not hold up the House very long, but I agree with Deputy Barry when he talks of people with over £14,000 per year. If you are talking about people with over £14,000, talk about the two classes together. Do not be talking about one section. I want a commitment from the Labour Party, as socialists, that they are against percentage increases that give too much to the upper income group and less to the lower income group. It appears that the same principle applies in the amendment before the House. One section would be watched but not the other. I want the two sections treated equally and that is the only reason I interfered in this debate. I do not stand up solely to back up Ministers if I think they are wrong, but the Minister's point on this issue is valid. Do the Labour Party want the same position for the self-employed and those in the lower income group?

Mr. Horgan

: If we were to put down another amendment for Report Stage which would apply the same limits— I am not saying it is our intention to do so—would Deputy Callanan vote for it?

Mr. Colley

: He would want to see the amendment first.

Mr. Callanan

: I have to vote according to my party, but every Member knows my views.

Mr. Colley

: Deputy Callanan should not be asked to commit himself to something which the Labour Party have not yet committed themselves on.

Mr. P. Barry

: Will Deputy Callanan put down an amendment if Deputy Horgan prepares it for him?

Mr. Callanan

: I have expressed my views on many occasions about percentage increases but I did not get much support from any side of the House.

Mr. P. Barry

: The point made by Deputy Callanan is a fair one. Percentage increases help those with the highest salary. I can see the objections to the amendment as drafted because it differentiates in favour of employees whose salary is more than £14,000 per year. There are some employees earning £20,000 and £30,000 per year and there are self-employed people earning considerably less than that but they would not benefit even if the amendment was carried. If an amendment comes through on Report Stage that appears to be equitable in cash terms to employed and self-employed we will certainly look at it with an open and probably favourable mind.

Amendment, by leave, withdrawn.

Mr. M. O'Leary

: I move amendment No. 6:

6. In page 8, line 16, after "than" to insert "the sum of £700 and shall not be more than".

The same position will apply in relation to this amendment. We will be introducing an amendment along these lines on Report Stage.

Amendment, by leave, withdrawn.

An Leas-Cheann Comhairle

: The next two amendments may be discussed together because amendment No. 8 is consequential on amendment No. 7.

Mr. Colley

: I move amendment No. 7:

7. In page 8, lines 18 and 19, to delete paragraph (b) and to insert the following paragraph:

"(b) by the substitution in paragraph (b) of subsection (2) of `(1B)' for `(1B) (b)',

and the said paragraph (b), as so amended, is set out in the Table to this section.".

I should like to apologise to the House in advance because my explanation is very complex. These are simply drafting amendments. Amendment No. 7, by substituting a new paragraph (b) in subsection (1) of section 3 of the Bill, merely pinpoints the reference to (1B) (b) as being in paragraph (b) of subsection (2) of section 236 of the Income Tax Act, 1967. The existing paragraph (b) of subsection (1) of section 3 of the Bill refers to (1B) (b) as being in subsection (2) of section 236, but its position can be more precisely pinpointed in paragraph (b) of that subsection.

Mr. P. Barry

: That is most amusing. Would the Minister tell us what all that meant?

Mr. Colley

: It is a drafting amendment which pinpoints more precisely the position of paragraph (b) subsection (2).

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): It would be more convenient if the Minister told us what the sections are about rather than telling us what is being pinpointed.

Mr. Colley

: They are consequential on the removal of the cash limit in the section.

Mr. Bruton

: Is it purely for clarity of presentation without any substantial change?

Mr. Colley

: Yes.

Mr. T. J. Fitzpatrick

(Cavan-Monaghan): Substantial change in what?

Mr. P. Barry

: It deals with assurance companies and pension annuities.

Mr. Colley

: That is correct.

Amendment agreed to.

Mr. Colley

: I move amendment No. 8:

In page 8, after line 21, to insert the following:

"Table

(b) the operation of subsection (1B) (as respects a qualifying premium paid under a contract approved under section 235A),".

Amendment agreed to.

Question proposed: "That section 3, as amended, stand part of the Bill."

Mr. Horgan

: I deliberately curtailed what I had to say on my amendment because it was more properly a matter for the section. I should like to ask the Minister to clarify the phrase "net relevant earnings" in relation to the sum which is used as a basis for assessing the 15 per cent of an individual's income that he may set off against tax. I should like to ask the Minister whether the removal of the cash limit does not, as I suggested earlier, open up a possibility for persons whether self-employed or employed. We must remember that in respect of employed persons who are directors of companies and who are employed by those companies they effectively have control over the level of their own remuneration. Is there not a possibility that the removal of the cash limit would open up a situation in which there could be effective collusion between the employer and employee in the case of a large private company to substantially increase either his net salary or his pension entitlement at a cost to the Exchequer in terms of tax revenue by juggling with the 15 per cent and the removal of the upper income limit? If this removal of the upper income limit is to mean anything it means something for the people who have considerably enhanced incomes. It must surely give them a greater opportunity to make the taxpayer pay either for immediate benefits in terms of net salary or for long-term benefits in terms of annuity.

Mr. Bruton

: What is the justification for having 5 per cent for one and 15 per cent for the other type of contribution? Why that discrimination? How long has this provision been in existence and what was the original justification for it in economic or social philosophy?

Mr. Colley

: In response to Deputy Bruton's question I should like to state that I understand the relief was introduced in 1958. I do not have information on this but I assume that the principal reason for doing so was because the provision of pensions and annuities is regarded as a very important social advance. It also has the spin-off effect that the premium contributions are, in the main, used for development purposes, very often in the form of investment in State loans and so on.

Mr. Bruton

: Could the contributions be paid to a non-Irish company?

Mr. Colley

: They could be. As we indicated yesterday, the non-Irish companies are now contributing over 90 per cent, in the same region as the Irish companies, to the Irish economy.

Mr. Bruton

: Does the Minister think that the considerations that applied in 1958 still apply?

Mr. Colley

: I believe there is a stronger case for it today than there was in 1958, particularly having regard to superannuation developments in the public service. I doubt if anybody would question the wisdom of this kind of tax allowance whatever about questioning the extent to which the allowance should be given or on what level of income.

Deputy Bruton also asked why there is a distinction between the 15 per cent and 5 per cent. The 15 per cent limitation applies to premiums which are paid to secure a life annuity on retirement. The 5 per cent limitation applies in the case of contributions made to secure a life annuity for any one or more of the taxpayer's dependants, including a husband and wife, payable in the event of the taxpayer's death.

Mr. Bruton

: Why not have a 15 per cent limit for both? Surely social considerations apply just as strongly to making a pension available for a husband or wife, as the case may be. Surely the economic benefits apply equally in the case of such contributions.

Mr. McCreevy

: The 15 per cent is the overall limit and must include the 5 per cent. The 15 per cent is the net relevant earnings of the overall limit and within that sum the 5 per cent is allowed.

Mr. Bruton

: Why should there be a 5 per cent limit?

Mr. P. Barry

: Is what Deputy McCreevy says correct?

Mr. Colley

: I believe it is. The reason for it is this. The cost of a pension for a person is higher than the additional cost of the pension, including provision for the wife on the husband's death. The additional cost is considerably less and that is why there is a smaller percentage limitation on it.

In regard to the point raised by Deputy Horgan about the possibility of considerable tax avoidance as a result of the removal of the cash limit, such avoidance is not anticipated because any scheme of annuity or superannuation in order to qualify for the reliefs under this section has to be approved by the Revenue Commissioners first under section 235 of the Income Tax Act, 1967. In approving of such a scheme the Revenue Commissioners must be satisfied that the contract is made by the individual with a person lawfully carrying on in the State the business of granting annuities on human life and that it does not (a) provide for the payment by that person during the life of the individual of any sum except sums payable by way of annuity to the individual; (b) provide for the annuity payable to the individual to commence before he attains the age of 60 or after he attains the age of 70; (c) provide for the payment by that person of any other sums except sums payable by way of annuity to the individual's widow or widower and any sums which, in the event of no annuity becoming payable either to the individual or to a widow or widower or payable to the individual's personal representatives by way of return of premiums, by way of reasonable interest on premiums or by way of bonuses out of profits; (d) provide for the annuity, if any, payable to a widow or widower of the individual to be of a greater annual amount than that paid or payable to the individual; (e) provide for the payment of any annuity other than for the life of the annuitant.

There are more details in this section but the Deputy will see from that that there are strict limitations on the kind of scheme which will qualify and get the Revenue Commissioners' approval before any relief can be given under this section. So the danger of any abuse of the scheme for the purpose of tax avoidance is minimal.

Deputy Horgan also asked what was the meaning of the phrase "net relevant earnings". In order to tell him that I must first tell him what relevant earnings are. Relevant earnings are the sum of the following amounts before the deduction of losses and capital allowances: (a) remuneration from an office or employment of profit which is non-pensionable; (b) income from a trade or profession charged under Schedule D; (c) income from patent rights where the patent was granted for an invention devised by the individual. Remuneration from an investment company of which an individual is a proprietary director or a proprietary employee is specifically excluded from the definition of relevant earnings. Net relevant earnings are relevant earnings less losses on capital allowances and deductions in respect of annual payments made by the individuals.

Mr. Horgan

: I thank the Minister for clarification of the latter point. I put it to him that the discussion on this section has clarified one basic point, that is, that the removal of the cash limits has done absolutely nothing for the majority of the self-employed whose incomes are not large enough to enable them to benefit by the removal. I would ask the Minister to give us an estimation of the number of self-employed whose incomes are above the £14,000 level as a percentage of the total number of self-employed.

The removal of the cash limits seems to be part of the Government policy of incentives. It could be argued that it is giving incentives to people who need them least and that those of the self-employed who need incentives most are those whose incomes are comparatively restricted. I would ask the Minister if he could relate Government policy in relation to the removal of the cash limits to the Government's apparent intention to introduce a national pension scheme. Will all this be irrelevant in a year's time? Will we have our national pension scheme and will the self-employed, whether they are earning over or under £14,000, not be involved in this kind of complex financial machinations because the Government will have introduced a pension scheme? We know that the bones of one was left behind for them. If it is introduced will this make all this kind of thing irrelevant?

Mr. Colley

: As regards the national pension scheme, since the details of such a scheme have not been finalised it is impossible for me to say what effect, if any, it would have on these provisions. That will have to be decided when the scheme has been finalised.

Mr. P. Barry

: Except that payment to the scheme will be compulsory. Will the payment by a self-employed person to the scheme come within the limits of this section?

Mr. Colley

: Obviously the scheme will have to be finalised before I can answer any questions of that kind. There are some basic decisions still to be made in regard to such a scheme —the role of private pension schemes and so on, how they will fit into the national scheme. Therefore I do not think anybody can say at this stage what effect, if any, such a scheme will have on this section and its provisions. Obviously that can be considered when we have the final national pension scheme.

In regard to the question of what I might call the less-well-off and nothing being done in this section for them, that is true, because this section deals with tax relief for contributions to superannuation schemes. One could increase the percentage limitation in regard to people at the lower end of the scale and pretend one was doing something for them. The fact is that one would not be; people on relatively modest incomes cannot afford to pay any more for superannuation. Indeed many of them may not be going to the full extent to which they could go under this section. To increase the percentage in their case would be simply window-dressing. Of course we are not increasing the percentage in any case. The primary purpose of what is being done in this section is simply to ensure the same treatment as between the employed and the self-employed. It is as simple and straightforward as that.

Mr. Bruton

: I just want to ask two questions. First, would the Minister be prepared to remove the 5 per cent in subsection (1B) altogether? I cannot see the justification for having that further limitation. If there is a 15 per cent overall limit it should be a matter for the person concerned whether he wants to use it to buy a pension for himself or a pension for his wife on his death. I do not see why the State should enter in and say the relief is for one only and not for the other.

The second point reverts to my original query about the economic justification of this thing. It appears, as the Minister has indicated, that this could involve the purchase of a pension scheme from a non-Irish company if that company was resident here. I take it that this relief would not apply to anybody—if they could do so and, I am not sure that it is legally possible to do so—buying a pension from a company which was not only resident here but was an English company in England?

Mr. Colley

: No, they would have to be resident here in the sense that the Deputy means.

Mr. McCreevy

: I welcome the removal of the cash limitation regarding retirement annuities because heretofore the 15 per cent limit applied, plus the financial limits. What happens in cases such as these is that people in self-employed trades or professions do not do anything about providing for their future until they are perhaps in excess of age 45, when they have a few years only in which to make such provision. Their earnings might be high at that stage but because of the cash limitation there was they were unable to provide properly for their pension. I am in agreement with the section, as proposed by the Minister, which removes the financial limit. Indeed it must be remembered that all pension schemes have to be approved by the Revenue Commissioners before tax relief is given so there is no question of people being able to abuse this section. I should not like to see the reintroduction of the financial limit at any future date either.

Mr. Horgan

: Did I understand the Minister to say that the effect of this section was to introduce parity of treatment as between the self-employed and employed which did not exist before under previous governments?

Mr. Colley

: Yes.

Mr. Horgan

: On a point of order, could I ask whether or not it is in order to discuss Part I of the First Schedule under this section?

An Leas-Cheann Comhairle

: No, we cannot discuss the Schedules until we come to them. If there is any point relevant to this section, then the Deputy may raise a question on it. If there is anything in the Schedules that would be relevant to this section the Deputy could ask a question on that.

Mr. Horgan

: The reason I ask is that subsection (2) reads:

Part I of the First Schedule shall have effect for the purpose of supplementing this section.

I was asking for the Chair's guidance on whether now is the appropriate time to ask questions about Part I of the First Schedule or should we wait until we get there?

An Leas-Cheann Comhairle

: I think it would be wiser to wait because we have enough difficulties and technicalities.

Is section 3, as amended, agreed?

Mr. Bruton

: I asked the Minister a question about the 5 per cent.

Mr. Colley

: I have received no representations that I can recall to increase the 5 per cent limit. It is part of the effort to ensure that this provision is not abused for the purpose of avoiding liability to income tax that this kind of limitation and the kind of conditions which must be satisfied are imposed, to which I referred earlier, in the approval of a scheme. There is the possibility of somebody having a large pension, say, for his wife and none for himself, but that raises immediately the suspicion that there is more involved than simply providing a pension for his wife.

Mr. Bruton

: Why?

Mr. Colley

: Let me put it this way; would the Deputy do that?

Mr. Bruton

: Well, I would not be in a position to do it anyway.

An Leas-Cheann Comhairle

: Let us say, not at present. We want to try and finish off this section.

Mr. Bruton

: There does not seem to be a logical justification for this if, as Deputy McCreevy has said, pension schemes have to be approved by the Revenue Commissioners anyway. If the 5 per cent went and people tried to get into a fiddle as a result could that not be stopped by the fact that the scheme would have to be approved? I would merely ask the Minister to consider the possibility of doing something about this between now and Report Stage.

Mr. Colley

: I will have a look at it though I had overlooked the fact, and I should mention to the Deputy, that the 5 per cent was introduced in 1974, I think, in conjunction with a provision for pension for widows which had not been in before that.

Question put and agreed to.

SECTION 4.

An Leas-Cheann Comhairle

: Amendment No. 9 in the names of Deputies M. O'Leary and others.

Mr. M. O'Leary

: We are not moving that amendment but considering it again on Report Stage.

Amendment No. 9 not moved.

Question proposed: "That section 4 stand part of the Bill."

Mr. Horgan

: This deceptively brief section has the effect of repealing the legislation brought in by the previous Government on benefits in kind for cars. The situation prior to that— which is being restored by this section—was, as far as I understand, that the Revenue Commissioners considered the use of the car provided by an employer to an employee was taxable in certain circumstances, and that the amount which they charged to tax varied from individual case to individual case depending on the outcome of negotiations between the employer and employee. The previous Government legislation suggested that there should be a minimum benefit in kind and that this should be 15 per cent of the cost of the car provided.

It is no secret, and I think it has been agreed on all sides of the House, that the method of assessment which was brought in by the National Coalition's legislation was less than fair. Some people, commercial travellers in particular, were upset at the thought that they were actually being charged more tax by virtue of this new legislation than they should have been, and certainly they have made fairly strenuous representations about it. We do not believe, however, that the appropriate answer to the problem which has arisen as a result of the experience of the implementation of the National Coalition legislation is simply to restore the old position, because that has defects to which I will return in a moment.

The amendment which was originally put forward in our names and which is now being reconsidered for Report Stage is a third way of looking at the situation and, while it would not be appropriate for me to discuss in any detail the withdrawn amendment, I must stress our belief that if the system brought in by the National Coalition was not ultimately fair then there are substantial problems as well in relation to the original position. Very many people have the use of cars for company purposes. I would be interested if the Minister could give us an estimate of the number of cars provided in this way. Leaving aside the fairly large group of people—commercial travellers are a classic example—who actually need cars to do their work, the remaining cars are almost exclusively distributed among the higher income earners in semi-State and private companies, and in many individual instances I am sure that such cars form a kind of concealed salary supplement. The irony may be that commercial travellers and other persons who are restricted to the terms of the national wage agreements may see people who are already better paid getting concealed salary supplements in the form of company vehicles.

The situation we are asked to bring about if we pass this section is the old one under which individual negotiations take place between the taxpayers and the Revenue Commissioners about the amount of benefit in kind to be charged to tax in respect of the use of a company car. Here, too, the discrepancy continues because we all know that when the commercial traveller will be arguing with the Revenue Commissioners in respect of benefit in kind for his car, he will be arguing face to face with an inspector, but the company director will not be arguing face to face with the inspector. He will have a very expensive accountant, in all probability paid for as well by the company to make the best case for him to the Revenue Commissioners. I am not saying that the Revenue Commissioners will give undue weight to the representations made by highly qualified accountants simply because they are highly qualified accountants, but it is certainly likely that highly qualified accountants are able to make a much better case than people who are ignorant of tax laws. By and large most of us are ignorant of tax laws, although the Minister is making a valiant effort to educate us. I would ask him to consider seriously whether the simple reintroduction of the old scheme will not give rise to further abuses which will benefit the better off substantially more than the people he is intending to benefit under this legislation.

Mr. Colley

: With regard to Deputy Horgan's query as to the numbers involved, it is estimated that about 25,000 taxpayers are subject to a benefit-in-kind charge and that a car is the benefit involved in over 95 per cent of the cases. I do not think I can recall easily a provision which gave rise to a greater sense of burning injustice than the provision in regard to benefit in kind introduced by the previous Government. Deputy Horgan has adverted not in quite such terms to this. Obviously he and a number of his colleagues felt the heat of this indignation that was engendered. It was not merely a question of people objecting to being made pay more tax; it was a question of people being totally convinced that it was unfair and unjust.

We have not been told the reason for the withdrawal of the proposed amendment by the Labour Party on this matter, but it may be that the reasons include the fact that that amendment is based on the British system. The British system has an arbitrary classification system built in at every level of car value. It is precisely this arbitrary and artificial element in the Coalition legislation that led to all the difficulty. I acknowledge, of course, that the previous system and the one which we are introducing now are not perfect. I do not suppose any system is perfect. Of one thing I am certain, and it is that not alone does the reversion to the previous system remove this sense of burning injustice which was engendered by what had been done in 1976 but, contrary to the case made in 1976, I am certain that it will reduce a great deal of the administrative difficulty that was supposed to have been avoided in 1976 but was, in fact, created by what happened. The fact that the amendment proposed to this was withdrawn would suggest at the very least that it is not all that easy to find a better system. I know it is not easy to find a better system, but I am certain that the system introduced in 1976 was not better than the system we are now restoring.

I should like to make it clear that the Revenue Commissioners in preparing certificates of tax-free allowance this year were obliged, because they had to operate in anticipation of announcements in the budget and in this Finance Bill, to put in the minimum charge of £300 which applies under the legislation we are now changing. They included this figure in all cases where a benefit in kind had been charged. Of course, no minimum of £300 will apply on the passage of this Bill, but I should like to make it clear that people who have received certificates of tax-free allowance which include this charge of £300 should also have received subsequently a questionnaire from the Revenue Commissioners designed to elicit information on the use they make of the car and on completion of that they should be able to get the forms adjusted because, under the law as it will be on the passage of this section, the position reverts to what it was pre-1976. There will be no minimum charge of £300 and the charge will depend on the actual use made of the car. The figure of £300 appearing in certificates already issued is not, in fact, a real figure. I would hope that this would be made as clear as possible to all those concerned. The figure put in is not of relevance under this section, and we are abolishing the legislation that was introduced in 1976 and reverting to the practice which obtained in the assessment of a benefit in kind in relation to cars prior to 1976.

Mr. Horgan

: I am puzzled by one point in the Minister's reply. We are in agreement that the 1976 scheme was open to criticism. The Minister maintains that the system he is now reintroducing is better than the 1976 scheme. Even if we were to accept that, we could still argue that it is not beyond human ingenuity to devise a still better system than the pre-1976 one. That is what we shall attempt to do between now and the Report Stage. The statement I cannot understand is that the introduction of the 1976 scheme gave rise to a considerable degree of administrative difficulty. It seems to me that if you have a hard and fast table of benefits so to speak, certainly minimum benefits as laid down in the 1976 scheme, rather less administrative difficulty is involved than in the complicated process of perhaps 25,000 individual sets of negotiations with taxpayers. Surely the system the Minister is reintroducing will create more administrative problems in the sense that more employees' time will be taken up with it.

Mr. Colley

: I do not know for certain but I would guess that the great majority of people affected by the 1976 legislation complained and argued with the inspector of taxes in many cases by calling on him and in other cases by correspondence whereas prior to that a system operated in a number of areas where agreement had been reached once and was continuing and there was no need for any negotiations; or agreement was reached in the case of a certain class of persons and it then applied to all of them without the need for further argument. Therefore, while the 1976 scheme was intended to avoid a great deal of administrative difficulty I believe it created more difficulty than it resolved.

Mr. Horgan

: Could the Minister say in regard to the classes or categories of persons to whom he referred and in respect of whom, by and large, broad agreement had been reached with the Revenue Commissioners prior to 1976, whether these classes can now assume that their pre-1976 arrangement with the Revenue Commissioners will be reintroduced basically as if no change had occurred? Or, will the questionnaire which the Revenue Commissioners are now sending out have the effect of throwing everything back into the melting pot so that relativities are being disturbed, to put it that way?

Mr. Colley

: I cannot say what will happen in that kind of case. Here we are restoring the law as it was pre-1976. That does not necessarily mean that we are restoring the practical situation in relation to which it affected taxpayers as it was pre-1976. I cannot say that. Obviously, the Revenue Commissioners will have to examine the position arising. There may be changes in some people's cases and no changes in others. All we can do here is settle the law under which the Revenue Commissioners will operate. This section restores the legal position to what it was pre-1976.

Question put and agreed to.

SECTION 5.

An Leas-Cheann Comhairle

: Amendment No. 10 is in the name of Deputy M. O'Leary and others. Amendment No. 11, in the name of Deputy Barry, is an alternative. We may therefore discuss Nos. 10 and 11 together.

Mr. M. O'Leary

: I move amendment No 10:

In page 8, to insert in the Table to subsection (1) after the references to section 138 of the Income Tax Act, 1967, the following:

"

Section 141
First child	240	340
Second Child	240	400
Third and subsequent children	240	480

"

The aim of the amendment is so to arrange matters that there will be an increase in personal reliefs for children. Under the section as it stands the position is that a married man with no children, or a married man whose children are working gets exactly the same tax relief as a married man with five or more children. In other words, the family is not catered for. This is all the more reprehensible, that there is not this personal allowance based on the number of children, when taken in the context that the social welfare provisions of the budget did not give any increases in children's allowances. We seek to ensure that personal allowances are given for children. We ask for a personal allowance of £340 for the first child, £400 for the second child and for the third and subsequent children an allowance of £480.

We believe that when tax concessions are to be given and benefits are to be distributed such concessions should in the first place be given to families, particularly large families, because we know that in our society it is in the larger families that we have the highest incidence of poverty and deprivation. That finding has been substantiated by any surveys that have taken place. The income tax concessions in the budget and Finance Bill would cost the Exchequer £63 million this year and £98 million in a full year. We argue that we should structure our income tax concessions to favour that kind of family and the children in our society and that should be the social priority motivating benefits under our tax system. Instead, under this section we find it is those with the highest incomes and smallest families who are most favoured.

Without exaggeration, I do not think this can be referred to as anything other than an anti-social aspect of the budget and it is to correct it that we have put forward this amendment. The intention of the amendment is to write into the Bill provision for personal reliefs based on the number of children at the rate set out. We consider the amendment all the more urgent because of the lack of action on the social welfare front: we saw no children's allowances given out in the recent budget. In the context of this Bill we say we should accept the provision for personal allowances for children.

Mr. P. Barry

: Should I wait for the Minister to reply?

An Leas-Cheann Comhairle

: The Deputy would be wise to come in on his amendment at this stage. We are discussing the two together.

Mr. P. Barry

: I will explain where I got the figure of £363 in my amendment. The Minister announced that in the Capital Gains Tax Bill the gains for the purposes of it will be indexed from 7 April 1974 and from that date the CPI increase has been 81 per cent. It related to the child allowance at that stage which was £200 and so I came up to the £363.

Since this Government took office they have been in grave danger of creating great divisions in society. I cannot understand how they got themselves into this position. There is certainly a feeling abroad that they will bend on the one hand to the greed of sections of the community and that on the other hand they will fuel the envy of other sections. A Government's job is to deal evenly with the whole community. This is impossible to be seen to be done because one section will always consider that another section is being dealt with more favourably. In introducing in a period of 12 months so many measures that appear to the less well-off sections to be giving benefits of various kinds to the well-off the Government are creating unnecessary divisions. By international standards this is an extremely small country which is relatively well-off and there are little or no class distinctions. There are income distinctions because some people work harder or inherited some money and manage their affairs better than others and are therefore entitled to have more money. Probably about 95 per cent of the people are by international standards on relatively lower salary scales than their counterparts in other countries. That applies to people on social welfare benefits and to people who are working, although there are exceptions. The Government could attempt to achieve a balance by tipping the scales in favour of, for instance, a married man living in a mortgaged house, owning a car, on an income of somewhere around £100 per week, by the amount of tax they do not take from him.

The 1977 budget and previous budgets clearly demonstrated the relationship between the levels of taxation and the wage agreement which in consequence has a bearing on our unit wage costs, on our competitiveness abroad and on inflation. If one of the links in this chain is sundered the whole chain falls apart. This is accepted by those in employment and it must be accepted by the Government. They should be sensitive to and very careful of disturbing that sometimes very fragile connection. In one budget and in three months with the introduction of other measures the Government have announced that they are giving no increase in children's allowances, that they will be giving what had become accepted for the last few years, a second increase in social welfare benefits in the autumn, and they did not tip the balance slightly in favour of the family man through the tax allowance. By these actions the Government are fuelling the forces of envy and are bending to the greed of the smaller sections. This can only be a recipe for divisions that were never here before.

The level of the married allowance has been increased but it would have been more appropriate to increase the children's allowance. It is evident that people with families have less disposable income than people without families who are on the same salary. If the Government are under the impression that the ordinary workers have been duped that the increase in the married allowance had a bearing on the wage negotiations, they are gravely mistaken. The income tax system although not absolutely clear is a great deal clearer than it was up to three or fours years ago, and now everybody can do their sums. The man with £70, £80, £90, or £100 per week can make deductions in relation to the married allowance and can see where deductions cannot be made because there was no increase in the children's allowance. This creates an atmosphere of envy by one section or another and fuels the greed of one section at the expense of another, and we should try to avoid this. I would urge the Minister in his own interests and in the interests of stability to accept either my amendment which is related to indexation and can be justified on that grounds, or to accept the Labour Party amendment.

Mr. Bruton

: I am strongly in favour of these two amendments and I will not discriminate between them. I can see merit in the Fine Gael amendment in that it is more precisely linked to indexation, and I can see merit in the Labour amendment which gives greater benefit to those with larger families. This suggestion is justified on the grounds of the incidence of larger families amongst the poorer sections, as Deputy O'Leary said. I question, as do others, the social philosophy of the budget in so far as it affects families with children. One can best illustrate the present position as a result of the budget, between the married allowance and the children's allowance taking a base year of 1966 to 1967 when, as far as I can see, the children's allowance was first granted. In 1966-1967 the children's allowance was £125 for a child under 11 years and £150 for a child over 11 years. In this year's budget the allowance is only £240. It is just doubled but there is no doubt that inflation has gone up much more than that. I have not the relevant figures to hand but I should imagine that inflation has gone up by three times whereas the allowance has only been doubled.

Let us compare that with the married allowance. In 1966-67 that allowance was £394 but in this budget the relevant figure is £1,730. In other words, we have more than quadrupled the married allowance but have only doubled the child allowance. In fact, in the case of a child over 11 years it is significantly less.

I question the social philosophy that states that we should take from the larger families by giving a small increase in the children's allowance while granting a larger increase to a married couple with no children. That is the effect of what has been happening during the years. I concede the argument that Fianna Fáil were not in power for the entire period, although they were there for most of the time, but it seems to me that the progression since 1966-67 of quadrupling the married allowance while keeping the children's allowance to a much smaller figure represents the wrong priority. It should be the reverse in my opinion. If there cannot be an exact indexation, the weight should be put on the other side of the scale. There should be a larger increase in the children's allowance, not in the married allowance, if one felt one should discriminate in the matter.

The Minister has failed to initiate any increase this year even though before the budget there was already a built-in discrimination against children by comparison with the tax allowance increases for married couples. I hope the Minister's failure to increase the children's allowance this year does not indicate the priority he has and will have in the future in relation to tax allowance for children. That would be the wrong priority for numerous reasons that are not necessary for me to state. I support the amendment strongly.

Mr. Colley

: Listening to the case made on these two amendments one would never suspect that all taxpayers have benefited under this Bill in an unprecedented way. Although I said it yesterday, I think it is necessary for me to repeat that under this Bill the married allowance which applies to all married people, with or without children, was increased by seven times more than the largest single previous increase. The single allowance was four-and-a-half times the previous increase. The first point to bear in mind is that all taxpayers will benefit substantially under this Bill.

Secondly, the question of how the money that could be made available for tax concessions should be distributed is obviously one about which one could argue for quite a bit but the fact is that the distribution of the money, as set out in the Bill, was put before the people in the Fianna Fáil election manifesto and it is being precisely implemented. The context in which the decision was made as to the distribution of the money as proposed in the manifesto was, on the one hand, within the limitations that would have to apply in what could be done and, on the other hand, the necessity to bring about tax concessions that would be effective in securing a national pay agreement that would operate to contribute to the major priority, economic and social, and that is the creation of jobs. It is not much use increasing the children's allowance for the father of a large family if he does not have a job. The principal priority at the moment must be the creation of jobs, and it was in that context that the decision was made.

Mr. Bruton

: How does the Minister make out that increasing the married allowance as against the children's allowance contributes to jobs to a greater extent?

Mr. Colley

: The people who are affected by national pay agreements are not all married people with large families. They all have their say. They are all concerned and they have to do the sums as to how their pay packet will be affected.

Mr. Bruton

: That does not create jobs.

Mr. Colley

: Do I have to start at A and go on to Z? Surely the Deputy knows what I am talking about?

Mr. Bruton

: I know what the Minister is talking about so far as the national pay agreement is concerned.

Mr. Colley

: If the Deputy knows, then I shall not have to spell out the rest.

An Leas-Cheann Comhairle

: The House should listen to the Minister. If any Deputy wants to speak he may do so afterwards.

Mr. Colley

: Despite the fact that we have not increased the child allowance in this Bill all taxpayers, with and without children, have benefited very substantially. Despite what was said about the social welfare allowances and that no provision was made for a second increase this year, in real terms those allowances this year are increasing considerably more than they have done in the last few years having regard to the level of inflation. Therefore to suggest, as has been done, that the Government's stance as exemplified in the tax concessions proposed and in the treatment of social welfare payments is one of encouraging the greed of small groups, as was said by Deputy Barry, is unfounded. In real terms people affected by tax allowances and by the level of social welfare payments are benefiting more this year than in any previous year. At the same time, the objective of trying to ensure a moderate pay agreement which, in turn, vitally affects the prospects for our economy and particularly for jobs, is being attained in the context of what we are doing.

To come specifically to the two amendments before us, it was not quite clear to me from what Deputy O'Leary said whether he was suggesting that the total cost of the income tax reliefs in a full year—he said £97 million, or thereabouts—should be restructured and divided up so as to do the kind of things suggested in the amendment or whether he intended that this amendment should be added to the cost of the other ones—in other words, added to the £97 million. He used the word "restructure". If he intended that the cost of these amendments should be accommodated within that sum of £97 million, then I have to ask him to be more specific on how he would propose to do this and which concessions should be taken away.

Mr. Bruton

: Has the Minister an estimate of the cost?

Mr. Colley

: I am coming to that. I would ask Deputy O'Leary, if that is what he had in mind, to indicate which concessions he would propose to take away in order to accommodate this. On the other hand, if that is not what he intended, and if he thinks the cost of this amendment should be paid for over and above the £97 million, then I should tell him that the cost of his amendment in conjunction with his colleagues in the Labour Party is estimated to be about £38 million in a full year. Deputy Barry's amendment is estimated to cost £24 million in a full year. If it is intended that this should be imposed on top of the almost £100 million full year cost of concessions already contained in the Bill, then Deputies should say that is what they intend and give some indication as to whether they feel that is a justifiable approach in the overall context of absolutely unprecedented tax reliefs this year.

It is true, of course, that an increase in child allowance would apply to all taxpayers with children and, as the child allowance is granted on the claimant's marginal rate, it is also true that people with large incomes would benefit more than those with lower incomes and, of course, persons who would be below the tax liability threshold would not benefit at all. Having said that, I have to concede fully that that is true of the existing child allowance and of any previous increases made in it. Nevertheless, it is a factor to be borne in mind when we are talking about looking after the lower paid. The fact is that an increase in the child allowance, with no other step taken, benefits the better-off more than the less well-off, and those who may be on a moderate wage with a large family would find themselves below the tax threshold and would not benefit at all.

Another factor to be borne in mind is that social welfare children's allowances are exempt from tax. The case has been made that these tax allowances should be on a selective basis and should not be given to well-off people who do not need them. There is a strong case to be made for that, but that is an argument for another day. Certainly, if one wanted to do it from the point of view of moving towards greater selectivity in these allowances, the approach is not to increase income tax child allowances so that the benefit from the social welfare allowance is recovered to some extent from the incomes of those liable to tax and particularly from those liable to tax at the highest rates. Purely in terms of equity within the tax system and equity as between the better-off and the less well-off, there is a case to be made for not increasing these allowances simpliciter, as proposed in these two amendments, and I would suggest that the real case that has to be dealt with on these amendments is in the context of what has been done, in the context of the unprecedented tax concession involved in this Bill, in the context of the cost involved, the best part of £100 million in a full year. In that context is it realistic to suggest, as is suggested in these amendments, adding to that cost £38 million in a full year under the Labour Party amendment and £24 million in a full year under the Fine Gael amendment? I do not think it is realistic and I doubt if Deputies opposite would really suggest that it is.

Mr. Horgan

: If it had been the intention of the Labour Party to make an internal distribution of the £98 million or £100 million in order to make way for the cost of the concessions contained in our amendment, then the amendment would be so drafted. It was not so drafted. The Minister has made play with the compartive expense of each of these amendments. People should not be dazzled by figures with a great many noughts after them. It is not my business to suggest in detail where the Government can or should seek the necessary revenue to pay for benefits considered appropriate, but one can at least point to revenue that has been foregone and that could have been used, at least in part, to finance the proposed benefits. Logically, the revenue from the wealth tax alone would have paid for half Deputy Barry's amendment and one-third of ours.

The Minister made a number of statements which, while true, very cleverly conceal the social effect of his financial legislation. The first was that all taxpayers are benefiting from the fiscal provisions of this Bill. Of course that is true. It is inescapable. I would remind the Minister of the words in Animal Farm: “All animals are equal, but some animals are more equal than others.” The point is not that all taxpayers benefit. The point is that some taxpayers benefit more than others. Deputy O'Leary pointed out in some detail which taxpayers will benefit more and which taxpayers will benefit less.

The Minister also argued that families are benefiting more in this year than in any previous year. We will argue about that in detail when we get to the end of the year and when we look at the price rises and inflation, and when we look at the remaining real value of benefits. Here again we have to realise there are different families, and some families benefit more than others. The families who benefit under the Government's fiscal legislation are the smaller families and the more well-off families, as Deputy O'Leary has argued.

In fact, the more I look at the situation we are attempting to remedy by our amendment, and which Deputy Barry in his amendment is also attempting to remedy, the more it seems to me that what we have here is a kind of fiscal family planning operation. I sometimes wonder whether the Minister, in desperation, is introducing this kind of system in order to make up for the inordinate delay of his colleague the Minister for Health and Social Welfare in introducing the necessary legislation in the social as well as the criminal field.

Mr. Cluskey

: I doubt that he is helping him out.

Mr. Horgan

: The situation we are attempting to change by this amendment is a positive disincentive to families who have no children to have children, and to families who have children to have more children. The skewing up of tax concessions in the way in which it has been done, the refusal to give any additional benefit for children in terms of the income tax codes, has this inevitable effect.

I would argue further that the Minister's fairly spirited attack in another field on proposals by women's organisations in relation to separate taxation of married working couples as being a discrimination against one-income families might have held more water had we not had this situation which discriminates against families with children, and the more children they have the more it discriminates against them.

Deputy O'Leary has pointed out that it is a socially inescapable fact that larger families tend to be concentrated in the lower socio-economic groups. It is also a fact that inflation inevitably hits families with children harder than families without children. Even if inflation is down to 7 per cent or 8 per cent, the fact is that families with children will suffer if only for the simple reason that the ratio of wage earner's total income to his family members is smaller the larger the family gets and the money has to be made to go further.

One of the other main reasons why we put down this amendment is in relation to the pattern of family expenditure. Families need more money, and families spend more money on things which are much more likely to provide the jobs the Minister talks about than high income non-parent family members. It is inescapable that the larger your family, the more money you will spend on food. Agriculture is our basic industry. We have always maintained that this is an area of industry which is most in need of active and forceful development. Here is where some of the greatest slack, if you like, in the job situation exists.

Under our amendment, if families are given more disposable income there is a much greater likelihood that more of this income will be spent on food and other home produced products—thereby creating more jobs in Ireland—than on expensive imported consumer durables. The evidence of our imports bill is always there. People are already spending in anticipation and they are not necessarily spending on Irish products and helping to create Irish jobs. The Minister for Economic Planning and Development the other day referred— and the newspaper word was "quipped"—to the extent to which certain measures taken by this Government had aided the Japanese car industry. I do not think that is a joking matter, and I am astonished that the Minister should.

The effect of our amendment, I submit, would be not only inevitably to increase the amount of disposable income in the community spent on Irish goods and producing Irish jobs, but also to take all poor families and many not quite so poor families out of the tax net completely. We are all familiar with the growth of the PAYE system over the years. It is said with some justice that, at the beginning of the sixties, one person in four paid PAYE. At the end of the sixties one person in four did not. The tax drift, if you like, on the basis of which the Fianna Fáil Governments of the day financed many of their social programmes, has had the effect of progressively lowering the income level at which somebody gets caught for tax The effect of our amendment would be at least to stop that drift in respect of the lower income families and, in the case of some of them, perhaps, to reverse it.

It is quite true, as the Minister said. that if our amendment were accepted some relatively poor families would not be able to benefit in cash terms from all their allowances. With respect to the Minister, that situation probably exists at the moment in respect of some poor families.

Mr. P. Barry

: By definition taxpayers are better off than non-tax-payers.

Mr. Horgan

: By definition they are, yes. Therefore, no precedent is being established. In its economic effects, our amendment is more likely to achieve the stated aim of providing jobs in Ireland by people producing Irish products than the casual, lazy way in which the present tax concessions have been drafted. We believe, that while there is a marginal difference between our amendment and the Fine Gael amendment which more strictly is indexed—on balance, of course, we prefer our own amendment which favours the larger families— the section we are trying to amend discriminates against larger and poorer families. It is part of our social duty to try to rectify that.

Mr. McCreevy

: I am glad the matter of indexation has been raised in regard to tax allowances. It is not possible to discuss these amendments in relation to child allowances without looking at the new tax free allowances. Various Opposition spokesmen said this is anti-social and so on, because there has not been an increase in children's allowances. It is the tax-payer who gets the allowances. He gets the allowance for being married and he gets the allowance for having children. For tax purposes the child allowance is not the same as the social welfare allowance. No money is handed over to the taxpayer because he has more children. He gets more allowances because he has more children.

We must look at what the new tax-free allowances are going to be as a result of this budget and what they were when the Opposition parties were in power. Taking the tax year 1974-75 as a base, a married man with three children then had total tax-free allowances of £1,400. For the tax year 1977-78, when the Coalition went out of power, a married man with three children would have had £1,820 which was an increase of 30 per cent in the period 1974-75 to 1977-78. I do not want to go too deeply into the inflation rate in that period but it was considerably in excess of 30 per cent. When the general election was approaching a figure of 100 per cent was mentioned. Consequently the tax free allowances for a married man with three children did not increase in line with inflation in that period. As a result of our budget, in the tax year 1978-79 the new tax-free allowances for the same married man with three children will be £2,450 which in one year means an increase of 35 per cent over 1977-78. Given that in this year of 1978 inflation is expected to be at a rate of only 8 per cent, the Minister is doing a wonderful job in improving family circumstances. As a result of this budget the tax-free allowances of the family are greater than ever before. Perhaps some of the Opposition spokesmen are confused about these allowances. They think they may be merely a transfer of money. There is nothing anti-social in the measure, but there was considerable anti-socialness in an overall increase of only 30 per cent in four years from 1974-75 to 1977-78 with inflation at 100 per cent in the same period.

The previous Minister for Finance will be remembered for a lot of things regarding taxation, most of them not in his favour, but one thing everybody is grateful for is that he standardised the child allowances. Prior to 1974-75 there was a difference between the allowances for children under 11 and for those between 11 and 16. There were sometimes deductions from these allowances which depended on whether the child was entitled to social welfare. The previous Minister got rid of that system and introduced an allowance of £200 per child. The Labour Party's amendment goes back to the old system. The first child is to get £340, the second £400, the third £480. I calculate that on the Labour Party's amendment the married man with three children would get a tax-free allowance of £1,220 which is a 70 per cent increase of what it is now. I am amazed that when the Coalition were in Government they could not find their way to increasing it at all.

The increase in the single person's allowance in the years 1974-75 to 1977-78 was 15 per cent, 8 per cent and 7 per cent; similarly for the married allowance. Overall for that period the single person's allowance increased by 33 per cent and the married allowance by 37 per cent, and we must remember the inflation rate at that time. In this budget we have increased the marriage allowance by 57 per cent. Again taking the example of the married man with three children, there is a 35 per cent overall increase this year over last year as against an increase of 30 per cent over four years from 1974-75 to 1977-78 under the Coalition Government. The arguments put forward by the Opposition do not stand up. To say that the budget is anti-social and so forth is ridiculous.

I would like to refer to the cost of these increases. If they are to be granted, where does the Labour Party propose that we get the money?

Mr. Quinn

: It was no problem last June.

Mr. McCreevy

: We said before the election that we would increase tax-free allowances, and that is what we have done. We said exactly what our borrowing requirement was and we have stood by it.

Mr. Bruton

: Will they continue to do so?

Mr. McCreevy

: We have been criticised by the Opposition for borrowing too much. Where are we going to get the extra money? Are we to borrow more? Is that what the Opposition are now saying; having said in the budget debate that we are over-borrowing?

Mr. Quinn

: We are not saying anything.

Mr. McCreevy

: We cannot have it both ways. Maybe there is confusion in the minds of some members of the Opposition regarding the child allowance. The child allowance is given to the tax-payer with the other allowances and therefore you must look at the total allowances which the tax-payer would have as a result of the budget compared with what he had before the budget. I hope I have elucidated something on the matter.

Mr. Bruton

: I am questioning the way in which the Minister has distributed the money which is available for tax concessions. He has not distributed it in the right way. I will give an illustration of the injustice of the way in which things have been done. This year as against last year the tax-free allowances of a married couple with no children have been increased by 57 per cent. This year as against last year the tax free allowances of a married person with six children have been increased by only 25 per cent and the tax-free allowances of a widowed person with six children have been increased by only 9 per cent. That is not the proper sort of priority, yet it is the priority reflected in the allowances granted in this budget.

The Minister put forward a number of arguments against the case being made from this side of the House. First he said that this was the distribution of the allowances promised in the manifesto. That is true and one cannot controvert that as an argument if one accepts the manifesto as being a proper approach to the nation's problems which we do not. Many people who did accept the manifesto last June saw in due course the fallacy of the choice they made and the inequity of the priorities that were reflected in the manifesto. From the Minister's point of view it was a good argument because presumably he accepts the manifesto.

Mr. Quinn

: Perhaps the Cabinet do not.

Mr. Bruton

: They are getting to the small print now. The next point the Minister made was that this distribution of allowances, namely giving a much bigger increase to a married couple with no children than to a married couple with six children or a widowed person with six children, would help to get a national wage agreement. He implied that married people with no children had more votes in their unions in favour of a wage agreement than married people with six children. This presumably is the logical extension of the argument the Minister used. That does not make sense either. There is no indication that that is the case. Amongst trade union members you will find as many with substantial numbers of children as you will find childless couples. The justification of getting a national wage agreement being made more easy by this distribution of tax concession resources does not hold water.

Regarding the cost of implementing the provision of this amendment, I believe I have met that point by pointing out that it is a question of priorities and that the priorities are wrong.

The last point the Minister made was that everybody gets children's allowances, that these are not given on a non-means tested basis and that by cutting the child allowance on income tax—or by not increasing it—you were somehow or other making up for the fact that a lot of people getting children's allowances on social welfare do not need them because of their means. That does not make sense. Very many of the people who might benefit from a substantially increased tax allowance, particularly in larger families, could be hovering at the edge of the tax net and it would be doubtful whether they were or were not liable for income tax.

They would not lose their social welfare children's allowances anyway no matter what sort of means test was introduced and yet they are the ones with the large families who will suffer most in this budget. As Deputy O'Leary pointed out there is a greater incidence of larger families amongst the lower income groups. For the Minister to suggest that somehow or other he is making up for what he apparently regards as an inequity in children's allowances in social welfare by an across-the-board failure to increase child allowances in tax is not the right approach. It is not one which will achieve the objective he apparently has, even if one accepts that it is a valid objective.

I should like to ask the Minister, seeing that he raised the issue himself about child allowances in social welfare, if it is his intention to introduce a means test for children's allowances. Is that one of the matters being considered now in the context of the Green Paper? I did not raise that argument and I did not introduce it into the debate. The Minister for Health and Social Welfare, who is present, may be in a position to discuss this and be able to indicate the intentions of the Government in this matter. We should be told what they have in mind. If there is an intention to curtail in some way the children's allowances under social welfare, as the Tánaiste seems to imply, that would make even more reprehensible the failure of the Government to introduce any increase in children's allowances in the budget for income tax purposes.

In this budget there seems to be a discrimination against large families and over the years—various Governments must take responsibility for this —there has been a discrimination against children's allowances in the income tax code in that the married allowances since 1966-67 have gone up by more than four times while the children's allowances have gone up by less than double. That represents wrong priorities which are reinforced and increased by this budget.

Mr. Colley

: Deputy Bruton's anxiety to know what is in the Green Paper before it is published may be quaint but it is not going to be satisfied. He will have to wait until he sees it.

Mr. Cluskey

: Does the Minister know what is in it?

Mr. Colley

: Wait for it.

Mr. Bruton

: They are having it reprinted; they are cutting out pages and pasting them down.

Mr. Colley

: It is impressive to note the efforts by Fine Gael and Labour to increase the child tax allowances. The concern they have shown has certainly done them credit but if we look at what they did when they had a chance to do something about it their arguments begin to lack credibility. The arguments they are putting forward are in a context in which by far the greatest increases ever given have been given in the marriage and single allowances. We must then look at what they did about the child allowances under the income tax code when they were in office. We find that in 1973-74, their first year in office, they did not give any increase but they increased the clawback. In the following year there was an effective decrease while in 1975-76 there was an increase of £30. In 1976-77 there was an increase of £10 and no increase for 1977-78.

Mr. Bruton

: How much of an increase was there between 1966 and 1973?

Mr. Colley

: I know the Deputy would like to divert attention from what Fine Gael and Labour, who have tabled these amendments, did when they were in a position to do something about this. Does the Deputy wish me to repeat what I stated?

Mr. Bruton

: Fianna Fáil increased the allowances from £120 to £155 between 1966-73. The Minister should not talk about records because our's is much better than that of his party in this matter.

An Ceann Comhairle

: Order. When the Minister is replying he should be allowed to do so without interruption.

Mr. Colley

: I have given the entire record of the Fine Gael and Labour Coalition in relation to the income tax child allowances when they were in office. If one measures their arguments now against their performance their credibility begins to slip. It slips in particular when one considers that the arguments they are now putting forward are in a context of married allowances being seven times greater than the largest ever granted and single allowances being more than four times bigger than the previous one. What credibility can there be in the arguments they are putting forward with such apparent sincerity in relation to these two amendments? The record speaks for itself.

Mr. Bruton

: As the Minister has sought to compare records with records I should like to compare the record of the National Coalition with that of Fianna Fáil. Fianna Fáil increased the children's allowances for children under 11 from 1966-67 from £120 to £155 in 1972-73, an increase of a princely sum of £35.

Mr. Colley

: They were the years when we had very little inflation.

Mr. Bruton

: It was the Minister who started to talk about records.

Mr. P. Barry

: There was 12 per cent inflation in 1972, the worst in the world at that stage.

Mr. Colley

: It was when the Coalition took over that we had the worst inflation in the world.

Mr. P. Barry

: No, Fianna Fáil have that record.

An Ceann Comhairle

: Order. We must discuss the amendments.

Mr. Bruton

: It was the Minister who started an argument about records and I want to show him what Fianna Fáil did when in office.

Mr. Colley

: The record at stake on these amendments is that of those putting forward the amendments.

Mr. Bruton

: I want to tell the Minister about Fianna Fáil's record. They increased the children's allowance from £120 to £155 between 1966 and 1973, a period of six years. We were in office for four years and we increased it from £155 to £240, a much greater increase.

Mr. Colley

: Does the Deputy know what the increase in 1974-75 was about, from £155 to £200. That was a decrease although the Deputy is adding it in as an increase. In that year the Government abolished the earned income relief. They should have increased the allowance by more but did not.

Mr. Bruton

: We are talking about children's allowances.

Mr. Colley

: That is it. The children's allowances should have been increased from £155 plus one-third of that figure but it was not. The Deputy does not know what he is talking about.

An Ceann Comhairle

: Deputy Bruton on the amendments.

Mr. Bruton

: As far as the children over 11 years of age are concerned Fianna Fáil increased the allowance in respect of them from £150 in 1966-67 to £170 in 1972-73, an increase of £20. When one contemplates the actual record of Fianna Fáil in Government in those six years I do not think it puts the Minister in a position to be critical at all of the Coalition's record in regard to children's allowances in economic circumstances which, everybody will agree, were far more difficult than those which obtained during the six-year period in which Fianna Fáil's record in relation to children's allowance increases was so dismal.

Mr. Colley

: Deputy Bruton's concern is understandable, but the record still speaks for itself in relation to these two amendments.

Question put: "That the amendment be made."

The Committee divided: Tá, 39; Níl, 65.

Tá.

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Bermingham, Joseph.
• Boland, John.
• Bruton, John.
• Burke, Joan.
• Clinton, Mark.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Corish, Brendan.
• Cosgrave, Liam.
• Cosgrave, Michael J.
• Creed, Donal.
• Crotty, Kieran.
• D'Arcy, Michael J.
• Desmond, Barry.
• Desmond, Eileen.
• Enright, Thomas W.
• Fitzpatrick, Tom. (Cavan-Monaghan).
• Gilhawley, Eugene.
• Griffin, Brendan.
• Horgan, John.
• Keating, Michael.
• Kerrigan, Pat.
• McMahon, Larry.
• Mitchell, Jim.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Brien, William.
• O'Donnell, Tom.
• O'Keeffe, Jim.
• O'Leary, Michael.
• O'Toole, Paddy.
• Quinn, Ruairí.
• Ryan, John J.
• Timmins, Godfrey.
• White, James.

Níl

• Ahern, Bertie.
• Ahern, Kit.
• Allen, Lorcan.
• Andrews, David.
• Andrews, Niall.
• Aylward, Liam.
• Barrett, Sylvester.
• Brady, Gerard.
• Briscoe, Ben.
• Browne, Seán.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Cogan, Barry.
• Colley, George.
• Conaghan, Hugh.
• Cowen, Bernard.
• Cronin, Jerry.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Síle.
• Doherty, Seán.
• Fahey, Jackie.
• Faulkner, Pádraig.
• Filgate, Eddie.
• Fitzgerald, Gene.
• Fitzpatrick, Tom. (Dublin South-Central).
• Flynn, Pádraig.
• Fox, Christopher J.
• French, Seán.
• Gallagher, Dennis.
• Geoghegan-Quinn, Máire.
• Gibbons, Jim.
• Haughey, Charles J.
• Hussey, Thomas.
• Keegan, Seán.
• Kenneally, William.
• Killen, Tim.
• Killilea, Mark.
• Lawlor, Liam.
• Lemass, Eileen.
• Lenihan, Brian.
• Leonard, Jimmy.
• Leonard, Tom.
• Leyden, Terry.
• Loughnane, William.
• Lynch, Jack.
• McCreevy, Charlie.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Molloy, Robert.
• Moore, Seán.
• Morley, P. J.
• Murphy, Ciarán P.
• Noonan, Michael.
• O'Connor, Timothy C.
• O'Donoghue, Martin.
• O'Hanlon, Rory.
• O'Leary, John.
• Reynolds, Albert.
• Smith, Michael.
• Tunney, Jim.
• Walsh, Joe.
• Woods, Michael J.
• Wyse, Pearse.

Tellers: Tá. Deputies B. Desmond and Creed; Níl, Deputies Briscoe and Kenneally.

Amendment declared lost.

Mr. P. Barry

: I move amendment No. 11:

In page 8. to insert in the Table to subsection (1) after the references to section 138 of the Income Tax Act, 1967, the following:

"

Section 141 (child)

240

363

"

Amendment put.

The Committee divided: Tá, 39; Níl, 65.

Tá.

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Bermingham, Joseph.
• Boland, John.
• Bruton, John.
• Burke, Joan.
• Clinton, Mark.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Corish, Brendan.
• Cosgrave, Liam.
• Cosgrave, Michael J.
• Creed, Donal.
• Crotty, Kieran.
• D'Arcy, Michael J.
• Desmond, Barry.
• Desmond, Eileen.
• Enright, Thomas W.
• Fitzpatrick, Tom. (Cavan-Monaghan).
• Gilhawley, Eugene.
• Griffin, Brendan.
• Horgan, John.
• Keating, Michael.
• Kerrigan, Pat.
• McMahon, Larry.
• Mitchell, Jim.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Brien, William.
• O'Donnell, Tom.
• O'Keeffe, Jim.
• O'Leary, Michael.
• O'Toole, Paddy.
• Quinn, Ruairí.
• Ryan, John J.
• Timmins, Godfrey.
• White, James.

Níl.

• Ahern, Bertie.
• Ahern, Kit.
• Allen, Lorcan.
• Andrews, David.
• Andrews, Niall.
• Aylward, Liam.
• Barrett, Sylvester.
• Brady, Gerard.
• Briscoe, Ben.
• Browne, Seán.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Cogan, Barry.
• Colley, George.
• Conaghan, Hugh.
• Cowen, Bernard.
• Cronin, Jerry.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Síle.
• Doherty, Seán.
• Fahey, Jackie.
• Faulkner, Pádraig.
• Filgate, Eddie.
• Fitzgerald, Gene.
• Fitzpatrick, Tom. (Dublin South-Central).
• Flynn, Pádraig.
• French, Seán.
• Fox, Christopher J.
• Gallagher, Dennis.
• Geoghegan-Quinn, Máire.
• Gibbons, Jim.
• Haughey, Charles J.
• Hussey, Thomas.
• Keegan, Seán.
• Kenneally, William.
• Killeen, Tim.
• Killilea, Mark.
• Lawlor, Liam.
• Lemass, Eileen.
• Lenihan, Brian.
• Leonard, Jimmy.
• Leonard, Tom.
• Leyden, Terry.
• Loughnane, William.
• Lynch, Jack.
• McCreevy, Charlie.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Molloy, Robert.
• Moore, Seán.
• Morley, P.J.
• Murphy, Ciarán P.
• Noonan, Michael.
• O'Connor, Timothy C.
• O'Donoghue, Martin.
• O'Hanlon, Rory.
• O'Leary, John.
• Reynolds, Albert.
• Smith, Michael.
• Tunney, Jim.
• Walsh, Joe.
• Woods, Michael J.
• Wyse, Pearse.

Tellers: Tá, Deputies Creed and B. Desmond; Níl, Deputies Briscoe and Kenneally.

Amendment declared lost.

Mr. Bruton

: I move amendment No. 12:

In page 8, subsection (1), to add to the Table as follows:—

"

Finance Act, 1975:
Section 11
(housekeeper allowance)	165	600
(employed person tak- ing care of incapaci- tated person)	165	600
(blind person)	165	600
Finance Act, 1977:
Section 1 (dependent relative allowance)	95	300

"

This amendment proposes to increase the housekeeper allowance, the allowance to an employed person taking care of an incapacitated person, the blind person allowance and the dependent relative allowance. The housekeeper allowance was introduced in 1949-1950 and originally was an allowance of £100 against tax. It is now £165. There has been an increase of only 65 per cent in that allowance since it was introduced in 1949—a long time ago.

The increase to £600 which I am now proposing for that allowance would more or less reflect the rate of inflation since 1949-50 when it was introduced. One can see how unfairly the housekeeper allowance category have been treated by comparison with married people who have no problem of this sort and do not have to get a housekeeper in. The married person's allowance since 1961 has increased by 339 per cent whereas the housekeeper allowance since 1949-50 has increased by only 65 per cent, a much smaller increase over a much longer period.

The housekeeper allowance basically is granted in respect of a resident female relative or, if no relative is available, a female employee taking charge of a widower, widow, married man living apart from his wife or a separated wife or as of 1971-72 a a single woman in full time employment or business or, alternatively, a resident female relative taking charge of a brother or sister of an unmarried person. The type of person who would avail of the housekeeper allowance is probably somebody who, if he did not go out to work and take in a housekeeper would either not work at all and have to be supported entirely by social welfare benefits or, if he continued working, the children or the old person or whoever the housekeeper was being employed to look after would have to be committed to an institution and cared for entirely at the expense of the Exchequer. In both cases the failure of the person to adopt the course which allows him to claim the housekeeper allowance would involve a much increased burden on the Exchequer either in terms of social welfare or institution costs if the children or other people being looked after by the housekeeper had to be sent to an institution. Yet the tax allowance for such persons going out to work has been increased by only 65 per cent since 1949-50.

Since 1969-70 there is an allowance for an employed person taking care of an incapacitated individual which is claimable if the taxpayer or his wife is totally incapacitated throughout the year of assessment and employs a person to take care of himself or his wife. That was introduced at £100 in 1969-70 and increased in 1975-76 to £165, a 65 per cent increase over a much shorter period. Basically, I would argue that that allowance is only an extension of the housekeeper allowance and the fact that the housekeeper allowance has not been increased by more than 65 per cent since 1949-50 is the basic point that requires to be made.

The amendment also seeks to increase the blind person's allowance which was introduced in 1971-72. It was increased by 65 per cent in 1975-76 and has not been increased since. That is not in existence as long as the housekeeper allowance and my argument is much stronger in the case of the housekeeper than in the case of the other two. Perhaps the Minister could give me a separate estimate of the cost of giving the increase I suggest in the housekeeper allowance to the employed person to take care of the incapacitated person and the blind person's allowance. The case is stronger for the housekeeper allowance and if the Minister cannot accept the entire amendment he might accept an amendment to increase the housekeeper allowance only. I should be glad to get some figures in regard to this matter.

The other increase proposed is in the dependent relative allowance introduced in 1956-57 at £60. In 1977-78 it stood at £95, an increase of 58 per cent. As I have pointed out other allowance have increased by much more than 58 per cent since 1956-57. The married allowance has increased since 1961 by 339 per cent while this allowance over a longer period has increased by only 58 per cent. Again, this seems not to be keeping pace with inflation for a minority group with dependent relatives. This allowance is granted for each relative incapacitated by old age or infirmity or for a widowed mother or mother-in-law if maintained by the claimant and for a son or daughter resident with and maintained by the claimant whose services the claimant is compelled to depend on because of his own old age or infirmity.

Again, the type of person who would apply for this allowance would be the person who if he did not put himself in a position to do this, the cost to the Exchequer of his not doing so would be far greater than the cost of his availing of this minimal allowance. If, instead of keeping an incapacitated old relative at home he were to request that the relative be admitted to the county home the cost to the Exchequer would be far greater than the cost of granting this allowance. Equally, in the case of the tax-payer himself being incapacitated, if he were not to stay at home but were to seek admission to the county home, although I presume a substantial part of his income would be used by the county home to maintain him while there, assuming he had an income, there would be significant additional cost to the Exchequer, I think, in his going to the county home over and above the very small cost of the £95 granted if he has to have a son or daughter resident and maintained by him and on whose services he is compelled to depend because of his own old age or infirmity. When one considers the situation of such a person and the son or daughter who has to live with him and look after him, we realise that that son or daughter—I think we all know of such cases in our constituencies—if not staying at home to look after the claimant who has the income on which to claim, could be out earning perhaps £2,000 or £3,000 a year, a very large sum compared with the allowance of £95 against the tax of the person they are looking after. Instead, in a spirit of self-sacrifice and loyalty to their own family they decide not to work but to stay at home and look after the incapacitated parent.

All that the tax code can offer them in terms of a concession on their parents' income, if the parent is maintaining them or paying them something so that they can be free to look after them, is a meagre tax allowance of £95. It is not the right sort of priority and I would have preferred to see these sort of allowances getting the attention.

I realise that the Minister has a problem if he is, as he was in the manifesto, trying to get as many votes as possible. Obviously there are a lot more married and single people interested in their own tax-free allowances than there are dependent relatives and so on and they have many more votes than the minority who are in a position to claim the widow's allowance, the dependent relative allowance, the housekeeper allowance and so on. If the Minister had said in the election manifesto that there would only be a small increase in the married allowance but that there would be big increases in the other allowances mentioned here, I suppose the number of votes he would get might not be as many, because the number of people who would benefit might not be as great, and from an electoral point of view the results would not be all that the Minister would wish. That is the reality of the political situation. It is not a question of blaming the Minister or anybody else.

We are talking here in this amendment about a small minority but the fact that they are a minority that have been neglected is clearly borne out by the percentages I quoted. The married person's allowance increased by 339 per cent since 1961 alone, whereas the housekeeper allowance has only increased by 65 per cent since 1949 and the dependent relative allowance by only 58 per cent since 1956-1957. All parties see much more attraction in making an appeal to the big battalions of voters who are in the married person or single person category, and there is no electoral incentive to give concessions to the people I have mentioned. Their need is obviously far greater. They are doing something which is socially beneficial by maintaining a relative at home or by keeping a family without recourse to the State by going out to work. It is not because there is no need but because these people are not an organised group and do not have an equivalent impact on the political process as do the other groups I have mentioned. They are not either well-heeled or articulate.

I realise that the Minister has made his decision for this year in relation to the distribution of the tax allowances. I hope the Minister can indicate that he will do something about the failure to increase the housekeeper allowance. Even if that is not possible, I hope the Minister will give an indication that he will give favourable consideration between now and the next Finance Bill to the points I have made. The neglect of these categories is something which all of us ought to be ashamed of. I hope the Minister will see his way if not to do something about these allowances this year to do something about them next year.

Mr. Colley

: The estimated full year cost of this amendment would be about £11 million. I do not have a precise breakdown as requested by Deputy Bruton but a very rough division would be £9 million in respect of the increase in the dependent relative allowance and £2 million in respect of the housekeeper, the blind person's and the incapacitated person's allowance. Yesterday, in response to a question by Deputy Barry, I did not have a figure he requested but I gave a rough guess. I have since got some accurate information. The Deputy will recall that the requested the portion of the cost of £45 million attributed to an amendment he had to section 2, which included reducing the top rate of tax from 60 per cent to 50 per cent, and he asked what would be the cost of that reduction of the top rate of tax. As a guess I gave a figure of £3 million to £4 million. I now understand that the correct figure is £10 million for a full year and £6 million for the current year. I am saying that in the context of the figure just given to Deputy Bruton. It is perhaps a little more accurate than the figure I gave yesterday, but it is a very rough division.

Given that the cost of this amendment would be £11 million for a full year, and taken in conjunction with the generous reliefs in the budget which we know in a year would cost the best part of £100 million, and taking into account the fact that these reliefs will benefit all taxpayers, including the ones referred to in this amendment, it would not be possible for me to contemplate acceptance of this amendment. Deputy Bruton said, and I would not disagree, that the increases in these allowances under successive Governments have not been very impressive; but there is one aspect that I will elaborate on, because it could be misleading when one is looking at the figures and what happened over the years.

There was an apparent increase in the housekeeper allowance in 1974-1975 from £100 to £140 and in the case of the dependent relative allowance from £60 to £80. I say "apparent" because in that year the earned income relief was abolished and in order to maintain the value at what it was before it was necessary to increase the existing allowance in each case by one-third so that the apparent increase in the dependent relative allowance from £60 to £80 was in fact no increase: it simply maintained the existing position.

Mr. Bruton

: That makes my case even stronger.

Mr. Colley

: Yes. That applies to all of those kinds of allowances in that year. It was necessary to apply a one-third increase to the existing allowances merely to maintain the existing position. This is why I said, when the Deputy was quoting figures on the last amendment, that he was taking the figure from way back, how much the increase had been up to a certain date and that he was taking these increases at their face value.

Mr. Bruton

: The increases we introduced in the children's allowances were still bigger in absolute terms even making the allowance that the Minister has made.

Mr. Colley

: What was at issue there was the credibility of those proposing those amendments. I am making this point so that we will not be arguing about what are alleged to be facts and are not facts. If we want to argue, let us have the facts right. In order to get them right in this kind of comparison it is necessary for the year 1974-75, in the case of these allowances, to add one-third to what existed in order to maintain them. For the reasons I have given and in view of the cost in the context of the very generous allowances which affect all taxpayers, it is not possible for me to contemplate acceptance of this amendment.

Mr. Bruton

: I am sorry the Minister has not even given an indication of sympathy towards what is being sought by the amendment. I appreciate his problem. He has made his decision, the budget has been produced and I realise that it may be difficult for him to start changing individual allowances. In his speech he did two things. First, he strengthened the case I was making by saying that the increases in question were even less than I thought, that what was an apparent increase in 1974-75 was not an increase. Although I think he was trying to make a party point——

Mr. Colley

: I was simply trying to get the facts straight.

Mr. Bruton

: That is the Minister's interpretation.

Mr. Colley

: The Deputy will recall that I accepted the case he made that the increases in these allowances under successive Governments were not very impressive. I made my point in that context.

Mr. Bruton

: The Minister said that but he did not give any indication that he would consider doing anything towards making them more impressive. Given the case I made, I hoped he would be able to give some indication that he would look at the allowances between now and the next budget.

I thank the Minister for giving me figures regarding the cost. It seems to me that the cost of the dependent relative allowance increase is £9 million but the cost of the housekeeper allowance, of the allowance given to an employed person taking care of an incapacitated person and the allowance to a blind person is only £2 million combined. By extrapolation, I presume that the cost of increasing the housekeeper allowance from £165 to £600 as I am suggesting, would be about £1 million which is not a very large amount of money for a group in society who are most deserving. People with large families may have to go out to work and may have to employ somebody to look after their children but all the allowance they can get is £165 against their tax. That is not even a 65 per cent increase on what it was when it was introduced in 1949-50. It is about a 40 per cent increase and that is deplorable.

The Minister could do a great deal of good for very little money if he increased the housekeeper allowance. I intend, in conjunction with my colleagues, to submit an amendment on Report Stage on the specific point of the housekeeper allowance. For a small amount of money the Government could do something that would be socially most beneficial. I appreciate that doing something about the other matters I mentioned and which would cost £11 million would upset the balance of the budget but only a small amount of money is needed to increase the housekeeper allowance. I hope the Minister will be prepared to accept such an amendment on Report Stage and I hope also that between now and the next budget he will give favourable consideration to the position of these allowances in general.

Mr. P. Barry

: I was struck by the argument that Deputy Bruton made, particularly with regard to the housekeeper allowance. Indeed, an argument could be made for going further and allowing the full deduction for any home help on the grounds of employment. I know from my own area that there is a huge waiting list for nursing jobs in hospitals. If the full cost of a home help or a housekeeper could be deducted by widowed people and in situations where both parents are working it might be of some help in the employment context. Deputy Bruton is only asking the Minister to consider this matter sympathetically in next year's budget. I am not sure whether the figures the Minister gave were for the current year or for a full year——

Mr. Colley

: They were for a full year.

Mr. P. Barry

: I do not know what would be the division between the three categories.

Mr. Bruton

: It is £2 million for the top three.

Mr. P. Barry

: The cost would be less than £1 million. It would have beneficial effects on the economy generally and it would take the strain from many people who have no choice but to go out to work.

Mrs. Desmond

: I wish to support the very reasonable case made by Deputy Bruton and Deputy Barry with regard to the housekeeper allowance. This matter has particular relevance for a group who are the most needy, the single parents of families. It has been said today that there has been a failure by successive Governments to appreciate the problems of people who have no option but to go out to work and whose allowance will not cover the cost of the employer's portion of the social welfare stamp.

Single parent families have enormous expenses that are unknown in homes with two parents. It is obvious that no one person can do the job that is performed by two people in the average home. There has been no appreciation of the problems of single parents. One way in which they might be helped is to give them a reasonable housekeeper allowance. These people have been very badly treated in this budget because they have not even received an increase in the children's allowance. Deputy Bruton is just asking the Minister to give the matter serious consideration in the coming year and that is the least the Minister might do. I wish to add my voice to the appeals already made to the Minister to give serious thought to the problems of single parents.

Mr. Horgan

: I should like to ask the Minister if he agrees that there is a very high employment potential in the kind of policy being urged on him in this amendment. I am not aware of the exact total of single parent families but, where women have been deserted, the figure is something like 6,500 or 7,000. Many of these would go out to work if they could afford a housekeeper. In addition, there are widows and, not to be forgotten, widowers.

Mr. P. Barry

: The most incompetent people from a housekeeping point of view.

Mr. Horgan

: The Deputy said it. I would not yield to anybody in my housekeeping skills. There are deserted husbands who are, as it were, hard put to it. Deputy Desmond has pointed out that the present allowance which this amendment seeks to change does not even cover the cost of the social welfare stamp. When those who have to go out to work employ a housekeeper the one expenditure they may regard as optional is the cost of the stamp for the person they employ to look after the children. We are all aware of the gravity of an offence of that kind, but we must equally be aware of the intensity of the pressure on people who have literally no option but to go out to work in an attempt to make ends meet.

The amounts specified in the amendment are fairly substantial and would cost, in the Minister's estimate, a fair sum. As far as I know, the last Government removed the necessity for someone employing a housekeeper to stamp a card while maintaining he or she was in insurable employment. It would be possible to pass legislation providing that, while the housekeeper remains in insurable employment, neither the employer nor the employee would have to stamp a card. That would be a matter for the Minister for Social Welfare, but the situation could be met in the Finance Bill, if the Minister so desired, by increasing the housekeeper allowance to the point at which it would at least cover the full cost of the social welfare stamp plus the existing allowance. That would be the bare minimum, and it would have the effect of allowing the employer to have no qualms about stamping a card for his employee. On top of that he would be allowed to claim the existing relief. Relief is not relief if it does not match the cost of the stamp, and if we take the cost of the stamp out of the relief then we must increase the allowance to include the cost of the stamp plus at the very bare minimum the existing allowance.

I do not have the figures at hand— we may put down an amendment on Report Stage—but the cost of that kind of measure would be not only less to the Exchequer but could have a possibly dramatic effect on employment. I would not be surprised if it accounted for another 1,000 in work, and that is not a small number in this day and age.

If the Minister will not accept this amendment will he think in terms of increasing the allowance just to the point where it covers the existing social welfare stamp plus the existing allowance? It is an extraordinarily modest proposal.

Mr. Colley

: First of all, in relation to the rough breakdown I gave of the £11 million in reply to Deputy Bruton, I understand that the great bulk of the £2 million I mentioned would be in respect of the housekeeper allowance. Secondly, all allowances, including those mentioned in this amendment, will be reviewed in the context of next year's budget. The House can be assured of that. Of course, it does not follow that all allowances will be increased in a way that would be considered by everybody to be adequate, but they will certainly be reviewed.

With regard to the increased employment which might arise, I must confess I think the case made in that regard is somewhat exaggerated. If the Deputy thinks about his proposition— the existing allowance plus the cost of the stamp—he will realise that there are two problems attached to achieving that objective. First, the value of the allowance depends on the rate of tax the person is paying. Secondly, in many of the cases visualised—the deserted wife or the widower with a number of children—those concerned may be in the position where they do not pay any tax. Because their income is not very high and they have a number of children, the allowances cancel out the tax. In order to benefit from this proposal people would have to be paying tax. Now, if they are reasonably well off and paying the highest rate of tax they will benefit all the more. I do not think one could determine a figure that would achieve what Deputy Horgan suggests—that is the existing allowance plus the cost of the stamp—so that everybody would end up in exactly the same position.

Mr. Horgan

: The Minister could make a stab at it.

Mr. Colley

: The best one could do from the point of view of those who are paying tax would be to calculate it on the basis of the standard rate and fix the figure in that way but, as the Deputy said, that would only be making a stab at it. This allowance would not benefit those who need assistance most.

I recognise not only the potential importance of the housekeeper allowance but also the fact that under successive Governments there has been no substantial increase in this allowance from the point of view of inflation over the years. Consequently, in conjunction with other tax allowances, this allowance will be reviewed in the context of next year's budget. However, I cannot promise that any change will be made in the current tax year.

Mr. Horgan

: I take the Minister's point about the value of the allowances being related to the marginal tax rate at which people are paying tax and that the allowances are not of any value to people who are not paying tax. Of course that is true. I suspect there are many people in the categories we are describing who are not paying tax, and are probably not in paid employment, for the simple reason that the allowances are not of enough value to them. They are in a kind of poverty trap. Their children may be old enough to go to school. The youngest child may be four or five years of age. They may be quite keen to get out to work but they cannot.

Mr. Bruton

: They may be well qualified.

Mr. Horgan

: And well qualified too. They cannot get out to work because they cannot afford to on the basis of the present level of the housekeeper allowance. I maintain that, if the housekeeper allowance was increased to a decent figure, it would be much more attractive for these people to put themselves into a wage earning situation and employ another person.

The other benefit which should not be lost on the Minister is that they immediately cease to be a drain on social welfare funds. Because they are in a poverty trap, they are recipients of substantial—although we would not say generous—amounts of social welfare to keep them above the poverty line. If you juggled the allowances around, and so on, and especially by increasing the housekeeper allowance in such a way as to make it more attractive for them to go out to work, even if the worst came to the worst and the amount of income tax they would save at work by being able to offset the housekeeper allowance against it was the same, so that there was no net gain or loss to the State in that area, there would be a net gain to the State in the social welfare area. At the very least this money would be available for other social welfare purposes.

Mr. Bruton

: Looking at this on strictly economic grounds—and one should not do that, I suppose—there would be a net benefit to the Exchequer and to the country from a substantial increase in the housekeeper allowance for the reasons given by Deputy Horgan and also for another reason. Many single parents may be trained. Through AnCO, or through subsidisation of the cost of training nurses, or through the educational system many of them have skills or degrees to which the exchequer has contributed a substantial amount of money. They are qualified for certain types of jobs. That training to which the State has contributed cannot be used because they have to stay at home. It is not worth their while to go out to work because of the cost of employing a housekeeper.

Many people who have not got degrees and who may have very little education are looking for a job and would be very happy to get a job as a housekeeper. They may be on the dole and unable to get a job and they would be quite happy to take this sort of work. On the other hand, the State has expended money on the training of the single parents and that training is not being utilised. They may have skills for which there is quite a demand. Those skills are not being utilised in the interests of the economy. The case for a substantial increase in the housekeeper allowance is very strong.

Amendment, by leave, withdrawn.

Mr. P. Barry

: I move amendment No 13:

In page 8, before line 33, to insert the following proviso after the Table to subsection (1):

"Provided that where, for the year 1978-79 or any subsequent year of assessment, a widowed person to whom section 141 of the Income Tax Act, 1967, applies becomes entitled to relief under the foregoing provisions of this subsection, the amount of the deduction shall, in lieu of being the amount specified in column (3) of the Table to this subsection, be—

(a) for the first five years, an amount equal to the amount specified in respect of a married man in column (3) of the said Table, and

(b) for the next subsequent five years, an amount equal to 50 per cent. of the aggregate of the amounts specified in respect of a married man and a single person in the said column (3)."

Deputy Mrs. Desmond put forward many of the arguments I will be using on this amendment about the necessity to give some kind of recognition to the special circumstances of single parent families with dependent children. I know the amount for the widowed person has been raised from £735 to £935, an increase of £200. I want to speak in particular now about widows and widowers. The Minister referred to "widows and to a much lesser extent widowers." My mind works on somewhat the same lines. Why is it presumed that more men than women die? Perhaps the statistics bear that out.

Mr. Colley

: In the context in which I said that, I was thinking in terms of their earnings. I felt it was likely that widows would be on a lower level of earnings than widowers.

Mr. P. Barry

: I thought the Minister meant there are more widows than widowers. Maybe there are.

Mr. Horgan

: Women are stronger than men.

Mr. P. Barry

: In many cases widowers are most incompetent when left in charge of a young family. It costs far more to run a house if a man is running it. They probably send out lots of things to be cleaned which could be cleaned at home. Their buying would be far less efficient than a woman's buying. They probably have to keep on their jobs and they have to find the money to employ part-time or full-time help to run the house. Alternatively they have to depend on the assistance or the charity of a relative or friend.

A single parent with dependent children needs far more than the £80 advantage he or she has over a single person without children. If there are no children the case is not as strong that the widow or the widower should be given an increased allowance because the cost of living for both is probably the same. There is a dramatic difference in the cost where there are dependent children. I suggest that the cost per individual is far higher in the single parent family than the married parent family.

I was trying to devise an amendment which would give some extra allowances to them at the stage where they need them, that is, when their children are being reared. I do not know whether everybody will agree with the division I have made. I took an arbitrary figure of ten years after the person became a widow or a widower during which they would have some advantage in the tax system. I then said that for the first five years they should have the same tax free allowance as a married couple, and for the second five years they should have 50 per cent of the aggregate of the married and single allowances.

I know that would be unfair in many cases. We can all think of examples where it would be most unfair. A widow could have three children under the age of five years and their education would not be finished by the time the ten years were up. It would also be unfair in the other direction. A widow could have two children, one of 15 years and the other 16 years of age, and they would probably be married by the time the ten years were up. I put down the amendment in this form to give an indication of my ideas on some tapering system whereby, while the widow or widower were rearing and educating their family, they should have some special treatment inside the tax system; but once that family are out earning their own living that advantage should cease and they should be treated as single people. Apart from the rearing of families, certainly in the case of widowers and probably of widows, there are special, very real economic, social and psychological problems. I ask the Minister to examine something on the lines I have suggested and to bring in his own amendment on Report Stage. I hope he will agree that some special treatment is necessary which needs more depth and expert examination than I have given to the matter. I will be more than willing to withdraw my amendment and allow him to bring in something to which a great deal more professional research has gone than in my case, but I want to give an indication of what I have in mind. I hope that the House will agree with me that there are special conditions attached to single-parent families which should be recognised inside the income tax system.

Mr. Colley

: The present income tax system does recognise that there are special circumstances and expenses attached to the condition of widowhood. As with a number of the items we have discussed on this Bill so far, ignoring the financial implications altogether, it is very difficult to arrive at the fairest and most just approach. Deputies will be aware that the allowance at the moment for a widow is higher than for a single person but less than for a married person. The case continues to be made by single people who say that the special allowance to widows is unfair to them in the sense that they too have to maintain a home and a household. In so far as children are concerned there are special allowances to cater for them, and as an individual the single person should be treated in the some way as the widowed person. That is the argument made with perhaps increasing frequency. That argument has not been accepted, as is evidenced by the fact that the differential in favour of the widowed person as against the single person has been maintained. But it it only right that I should draw the attention of the House to the fact that this argument is made frequently.

It may also be of interest to the House to know that the question of an increased allowance for widowed persons was considered by a British Royal Commission who reported in 1954 and in their report they stated:

A permanent grant of a special relief for the maintenance of a household to a taxpayer, merely because he or she possesses widowed status seems to us meaningless.

The report recommended that such persons be taxed as single persons. The Irish Commission on Income Taxation also examined this question and their recommendation in March 1962 was that widowed allowances should be replaced by an allowance equal to the amount of the married allowance but available only for the four years after that in which widowhood commenced and that thereafter the widow or widower should be treated as a single person. The Government at that time rejected the recommendation on the grounds that it would be overgenerous in the initial stage and thereafter it would be an insufficient allowance. I mention this to indicate that there are conflicting views on this topic and that it is by no means easy to arrive at the right conclusion as to what is the correct and fairest way to deal with this problem, leaving aside for the moment the financial implications involved. One has an instinctive sympathy with the kind of approach mentioned by Deputy Barry in his amendment and recommended in the report of the Commission on Income Taxation.

Mr. P. Barry

: I was unaware of that recommendation.

Mr. Colley

: The idea is on the same lines. There is an implication in it that you acknowledge the difficulties involved in the early years of widowhood by a more generous income tax allowance, but if you do that it follows logically that at the termination of whatever period is decided upon, four or five years, you then have to give the widowed person an allowance equal to that of a single person. One would want to consider more carefully whether that is an acceptable approach. The approach that we have at the moment and have had for a number of years is to give a widowed person an allowance which is bigger than that of a single person but to give it on a permanent basis. In the long run this may well be the most satisfactory thing from a widowed person's point of view. Deputy Barry adverted to the fact that it is difficult to know, if you are going to differentiate, where you draw the line. After how many years? Obviously circumstances will differ in different cases. Having regard to these various problems it may be that one would come to the conclusion that, whatever the level of the allowance, the present line of approach may well be the right one. As far as the present level of the allowance is concerned, it is important to realise that all widowed persons, and all taxpayers, have benefited quite substantially under the budget this year. The increase in the widowed personal allowance is £200, and that is four times greater than that given in either of the two previous years. I am not saying that it is an over-generous allowance but that in the context of what has happened heretofore it has been quite a generous increase. Therefore a good deal of throught has to go into the theory of a widowed person's allowance first of all, and in applying that one must have regard to the financial situation. I am open to persuasion on this, but at the moment it seems to me that the theoretical approach adopted under the present system is probably the best.

Progress reported; Committee to sit again.

Mr. Bermingham

: I would like to raise on the adjournment the question of the facilities available at Athy Post Office and the conditions attending there.

An Ceann Comhairle

: I will communicate with the Deputy in the afternoon.