Finance Bill, 1978: Report Stage (Resumed) and Final Stage .

Debate resumed on amendment No. 11:
In page 17, line 16, after "C" to add "or (V × 90)—W—D.".
—(Deputy Bruton.)

: In dealing with amendment No. 11 I was pointing out the problems in relation to the notional system when one is urged to allow very many other items of expenditure than are specified in this Bill and that in effect what one is doing, if too many items are allowed, is abolishing the notional system. This side of the House undertook, unlike our predecessors who were phasing it out, to retain the notional system and for that reason and other reasons I find it impossible to accept this amendment. I think the Ceann Comhairle said amendment No. 11 but I think it should be——

: We are discussing amendments Nos. 11 and 12 together but amendment No. 11 is before the House at the moment.

: As Deputy Bruton has explained, the purpose of this amendment is to allow people who have opted for the notional system of valuation to be given permission to make certain deductions from their tax assessments. If they are allowed this it will be a very definite encouragement to people on the notional system to make further investments in agriculture, which is our primary industry. When one looks at the people engaged in agriculture and when one considers the history of agriculture one realises that the people engaged in it do not bring the same attitude of mind to bear towards investment in their industry as people in industry in general do. They hardly think of their farms as small industries. They regard them as a way of life and they regard farming as something which it is natural for them to do.

We must see to it that farmers are given an adequate return on the actual value of their holdings. They should be given sufficient incentives to make investments in their farms. I understood the Minister to say that he has committed his party for all time to the notional system. I can see a lot of value in the notional system. I might disagree slightly with my colleagues, Deputies Bruton and D'Arcy, in regard to this. I hope we will get every farmer in the country at some stage in the future to approach his business as the businessman has to approach his business, as an investment which must give adequate return to the owner of the assets which, of course, means accounting at some date in the future.

It should be the objective of every Minister for Finance and also of the House that we would get farmers to look at their investments in the same way as businessmen have to look at their factories or establishments as investments which must give a return. In the meantime there is the necessity to encourage farmers to invest as much as possible. As Deputy Bruton said, farmers do not as a rule invest their money. They have it lying in banks at very low rates of interest. If we can, through the tax system, encourage a far greater investment in agriculture, all farmers will benefit but the country as a whole will also benefit. I recommend that the House should accept amendments Nos. 11 and 12.

(Cavan-Monaghan): I wish to support the case made by Deputy Bruton and Deputy Barry. The Bill proposes to continue the notional system of taxation for farmers but lays it down that farmers who opt for the notional system shall only be entitled to claim certain things as expenses. This includes wages and contractors' fees. There is no provision made for claiming depreciation of buildings. The amendment we are now discussing proposes to confer on the taxpayer the right to claim for depreciation on buildings. There is a lot of merit in it.

It is very desirable that farmers should be encouraged to keep their buildings in good shape, to see that they do not become decayed. They should have the option at least either electing for wages paid to contractors or depreciation, where they have not contractors' fees. A farmer could be self-sufficient so far as machinery is concerned and he would not have to call on contractors at all to do his work.

Such a farmer is prejudiced by the proposal in the Bill. If he has his own machinery and does not have to engage contractors he will not be allowed any deduction. If he is that type of farmer it is likely that he will want to keep his buildings, fences, roadways and so on in good shape. It is only reasonable that he should be allowed to deduct such expenses from his income tax. The argument that this option should be given to the farmer is unanswerable.

We have heard much chat recently in the House about the Green Paper. Far be it from me to open up a discussion on the Green Paper at this stage.

: I am hopeful that the Deputy would not want to do so.

(Cavan-Monaghan): The Chair can relax as I only want to make a passing reference to it. The Green Paper has a proposal to encourage householders to keep their private dwellings in good order and repair. It holds out in the words of one of our better-known political writers the carrot that such expenses will be allowed as a deduction against his income tax. The basis for that proposal is that it will give employment and help to solve the unemployment problem. If that case can be made in regard to painting a front door or tidying a front garden, how much more forcefully can it be made in regard to farm buildings, some of which may have been in use for a long time and are subject to more wear and tear than private dwellings.

If the Minister and his colleagues, including the Minister for Economic Planning and Development, are serious in saying to the House through the Green Paper that jobs done on domestic buildings are a way of solving unemployment, they should accept this amendment and say to the farming community, whose buildings are more extensive than domestic buildings "Yes, we will give you the option of claiming as an expense depreciation on your buildings, fences, roadways, gates and farm buildings generally" and encourage the farmer to employ local tradesmen, whom the Green Paper admits are available, to do this work. We would then be killing two birds with the one stone by improving the national stock of farm buildings, which are a necessity and a valuable asset to the farming community, and by doing much to solve the unemployment problem which is of real concern to the Government, the Opposition and the people. It is hard to argue against that proposal.

It cannot be said that the amendment is unreasonable or that it seeks to give the farmer-taxpayer a right to claim too much against his notional income. It only seeks an alternative. It seeks to confer on the farmer the right to claim contractors' fees or depreciation. It is a well thought-out amendment, put forward in a reasonable manner and deserves reasonable consideration by the Minister. If he gives the amendment reasonable consideration I am satisfied that he will accept it.

: I am disappointed that the Minister has not seen fit to accept this amendment. His reasoning in opposing it was not very sound. He said his party were committed to the idea of retaining the notional system. When the suggestion for improving the notional system was put forward he said—and this seems to have become an ever-recurring refrain in the Minister's replies to discussions of this type—"Well, if you do not like the notional you can always go on accounts". He went so far as to say that the arguments for this proposal would be very compelling indeed. The Minister implied that he accepted the amendment and the arguments made for it as being very compelling. What prevented the Minister from accepting what he admitted to be a very compelling case?

: Very compelling if it did not already exist for farmers.

: In other words, if the farmer could not——

: By and large, what was involved in the amendment was available in the accounts system.

: At the same time, the Minister was trying to say that he wanted the notional system to be retained and that he believed in it. The only substantial argument he could put forward against an improvement in the notional system was "Well, you can get that by going on accounts". That does not imply genuine commitment on the Minister's part to the retention of the notional system. It makes me feel that, although he is speaking in favour of the notional system, his intention is to get rid of it by the back door. He is going to use this back door method by rejecting what he insists are very compelling arguments for improving it and by introducing a novel and unusual provision to the effect that, if you go on to the notional system, notwithstanding the fact that the Minister may quadruple or treble the multiplier next year, you may not leave it for three years. He is refusing to improve the notional system and making farmers who wish to opt for it buy a pig in a poke, accept on faith from the Minister that he will not increase the multiplier by an unreasonable amount. It seems that these two approaches of the Minister's are a strategy to discourage farmers from adopting the notional system of taxation, a system which in the course of this discussion he referred to as something he wished to see retained as a permanent feature of our taxation system. On another occasion he referred to it as a concession, as if he had it in mind that it would be withdrawn at some future date when it might no longer be necessary.

Farmers could be forgiven for being somewhat confused as to the true intention of the Minister in regard to the retention of the notional system. The notional system should be retained as a permanent feature of our taxation system. It should be improved in ways such as those envisaged in this amendment to make it more attractive to the intensive farmer and to encourage the maximum increase in agricultural output. That is precisely what this amendment does.

I wish to elaborate on a point made by Deputy D'Arcy. He pointed out that there was an element of discrimination in the Minister's acceptance of contractors' fees as a deductible expense under the notional system and his refusal to accept this amendment. If a farmer got a contractor to erect a farm building or, perhaps more relevantly, to do land reclamation work, and the contractor used his own machinery, in the charge made to the farmer which he would be able to set against his tax as an expense there would be an element of depreciation of that machinery. In other words, if a farmer gets a contractor to do the work, indirectly he is enabled to claim depreciation on the machinery used by the contractor. If he uses his own machinery to do the same work—and, indeed, it is desirable that farmers should have their own machinery in many cases—he will not be able to claim depreciation.

: If he is on the notional system.

: If he is on the notional system. To my mind, that is an inequitable distinction. This amendment would contribute very significantly to the creation and maintenance of employment in rural areas. The more farmers engage in the erection of farm buildings, fences, roadways, holding yards, drainage and land reclamation, the more employment will be given in rural areas. The people who will be doing this work will be local farmers or people living in rural areas and employed by a contractor.

The materials used in carrying out these works will all be produced at home. We are prepared and the Government are prepared to spend very large amounts of money on creating new industrial jobs, on public works programmes through the local authorities, and on environmental improvements which, perhaps, contribute no lasting productive enhancement to our economy. They are merely improve ments in the appearance, the character or the cleanliness of our country or the general well-being of our people. They do not contribute directly to our economic potential.

Improvements undertaken on farms not only create employment on an equivalent scale, in precisely the areas where the Government recognise they are necessary by introducing environmental grants schemes for local authorities, but also enhance our productive potential and create the prospect that further employment will be generated in future as a result of increased farm output which will result from better buildings and better drainage. In turn, this increased output will lead to increased employment. It will have to be processed here and employment will be given in the creameries, the meat factories, and so on.

Investment in farm buildings and land reclamation will extend the productive season of Irish agriculture. Animals can be finished all the year round, with the result that there will be less seasonality in the work of meat plants, because they will be able to get cattle in the winter as well as in the summer if buildings are provided for winter housing. Our meat factories will be more fully used and greater employment will be created in them.

Land reclamation will enable us to have a longer grazing season. In many of the wet areas—and I am thinking in particular of the Shannon basin around Athlone—cattle cannot be put out to grass until the middle of May and they have to be taken off some time early in September. With such a short grazing season, cattle can only be brought to the fat stage on those farms for two or three months of the year. If they are slaughtered locally, factories relying on cattle from those areas for their input can work to capacity for only two or three months of the year.

If those farms are drained, the grazing season can be greatly extended and so also can the period during which cattle can be finished on the land. Therefore, the full working capacity period of our meat plants and our creameries can be extended because the period of maximum milk production will be extended. This will contribute significantly to the economic viability of our creameries.

I saw figures quoted recently which showed that in Irish creameries there is a 14:1 ratio between peak production in the middle of the summer of milk going into our creameries and the nadir of production in the winter. The result is that the creamery plants are under-utilised during the winter months. The ratio in France is 2:1 and French creameries are much more intensively used and expensive capital put into creameries is much more intensively used than is the case in Irish creameries. The reason for this wide discrepancy between those ratios is that, over the years, the French invested extensively in land reclamation to extend their grazing season and in the erection of winter housing for their stock so that they can be at full production the whole year round, or for a significant part of the year, and so that the milk going into the creameries will be maintained at a steady level throughout the year, or at a much steadier level than has been possible for us. This contributes directly to the viability and the potential employment of the processing industries in France.

I am arguing that this amendment which extends the possibility of depreciation being given to farmers for land reclamation and farm buildings if they are on the notional system will contribute not just to the viability of a firm but also to employment, directly and indirectly, in rural areas amongst agricultural contractors and those engaged in agricultural processing. The Minister would lose nothing by accepting this amendment because it is a substitute for contractors' fees. If a farmer opts to accept the provisions of this amendment and claims depreciation on investments such as those listed he will not as a result be able to claim contractors' fees. We are not proposing to add to the total list of deductions which a farmer may be able to make. We are merely inserting an alternative which we believe will contribute directly to employment. Furthermore, we are not envisaging in our amendment that the farmer should be able to claim the entire depreciation involved all in one year, because this might involve a potential means of avoiding his proper burden of taxation. The amendment is so framed that the allowances in question may be claimed only at a rate of 20 per cent in each year and over a period of five years. Therefore, this area of tax avoidance is not created.

The arguments which I have put forward are valid. I had hoped that the Minister would be able to accept this amendment. It now seems that he will not be able to do so, but I assure him that we will be keeping a very close watch on this matter and it will be our intention in this party to do everything we can, either by improvement in the tax system or by other means, to encourage greater land reclamation. The Minister will be hearing the point we have made in this debate in next year's Finance Bill if he does not see fit on this occasion to make the changes we are seeking. It is by increasing the productive potential of Irish land that perhaps the greatest single contribution can be made towards the creation and maintenance of employment. We on all sides of the House are interested in the creation and maintenance of employment, but unfortunately it seems that the contribution of agriculture—and this is certainly a feature of the Green Paper which I will not dwell upon—is being under-estimated in so far as the employment situation is concerned. The philosophy which has led the Minister to reject this amendment is the same philosophy that has led the Government in their Green Paper to downgrade the potential contributions of agriculture to the solution of our employment problems. They have said that there is no prospect for increasing farm employment.

: Surely the Deputy is getting away from his own amendment now. That immense detail is surely not necessary. He is only taking up his own time and the time of the House in going absolutely outside his amendment.

: I bow to the ruling of the Chair in this. I have no wish to pursue a detailed discussion on the Green Paper as the Government are very anxious that we should have an opportunity to discuss it. However, I feel that the point I am making is one of general validity, that the philosophy of under-estimating the employment contribution of agriculture, directly or indirectly, that is reflected in the Green Paper is also reflected in the rejection of this amendment.

I think I have made the case very fully and I hope the Minister will reflect and consider accepting it.

Amendment put and declared lost.

: I move amendment No. 12:

In page 17, between lines 26 and 27 to insert the following:

"D is the total amount of capital allowances claimed and claimable by him in the year in question for farm buildings, fences, roadways, holding yards, drains and land reclamation. Such capital allowances may only be claimed at the rate of 20 per cent per year for five years".

Amendment put and declared lost.

: I move amendment No. 13:

In page 17, line 59, after "has" to insert "the".

This is purely a drafting amendment designed to correct a printing error. The words "has same meaning" should read "has the same meaning".

: It improves the English but the sense was clear enough.

Amendment agreed to,

: I move amendment No. 14:

In page 17, line 60, after "1967" to add:

"and shall include contributions towards a pension fund for the employees concerned".

This amendment is to allow contributions toward a pension fund of employees concerned to be deducted from the tax liability. This applies to virtually all other spheres of life where we encourage people to provide pensions for their employees on the basis that the standard of living outside the old age contributory pension schemes of those people when they come to retiring age would be very much increased. This is something we should not confine to sections outside agriculture but should include in agriculture also. As in previous amendments I make the point that historically agriculture has not seen itself in the same light as business sees itself. I would encourage individual farmers to see themselves as business people or industrialists engaged in the business of agriculture. The same allowance should be made to them in that regard as are made to business people. The same encouragement should be given to them to provide for their employees at retirement, through a pension fund, an adequate pension outside the old age contributory pension which they will earn through their contributions to the stamp. I move this amendment in the belief that it will bring the farming community into the same category as industrialists.

: The farmers nowadays are beginning to see themselves as businessmen, particularly farmers who have employees. I do not see why the Minister cannot see his way to giving them the same concessions as he gives to business people on this issue. The concession will cost the Minister nothing for some time because to my knowledge no farmer has his employees covered under a pension fund. The Minister might encourage a start and an interest might be taken in this by the farmer organisations. The Minister could be doing a very good turn for employees in agriculture by allowing this concession. When it is allowed across the board for all business people, no matter what line they are in, the same should apply to agriculture. I support this amendment.

: Such an expense is allowable to farmers who are treated on the same basis as other people; in other words those on the accounts system. This amendment strives to make available the same concessions or allowances to those on the notional system. Of course it cannot be argued that those on the notional system are on the same basis as people in other trades, occupations or businesses. In so far as farmers are on the same basis they get the same treatment, but here we are dealing with another attempt to extend deductions or allowances available on the notional system. The cost of this concession would not be very great but if this were agreed it would follow logically that a farmer on the notional system would be allowed the same treatment in respect of social welfare contributions paid by him in respect of his employees. The cost of this would be in the region of £¾ million which is a relatively significant sum in the context of the yield from the tax on farming profits.

I went into the whole basis of the notional system at some length on previous amendments so I will not dwell unduly long on it. The notional system was intended to be a simplified system of assessment with the minimum number of deductions. Since there is a restriction on the manner in which the income is calculated under the notional system there must of necessity be a restriction on the manner of calculation of expenses. For those farmers who wish to obtain deductions for a wide range of expenses the accounts basis is available on which they will get deductions for all trading expenses. If a farmer opts for the notional system he must do so on the understanding that a limited number of deductions will be allowed and that he cannot expect anything like the same treatment as regards deductions under the notional system as is available under the accounts system. Any undue extension of the deductions allowed under the notional system tends to erode the notional system which is something I do not want to see happening. Also, if further classes of deductions are claimed under the notional system the multiplier would have to be increased to account for whatever factor was involved and in this case to meet the cost of the deductions for social welfare contributions which would logically follow from this amendment the multiplier would have to be raised from 90 to 93. I doubt if that is what Deputies proposing this amendment would like to see happen.

: What would the increase have to be just to accept this amendment?

: It would be quite small, I do not have it here.

: Would it be 90.1?

: It would be fairly minimal but it would not be possible to accept this amendment and to exclude the social welfare contribution.

: There is already an Exchequer contribution to the social insurance fund anyway so that distinguishes it from a private insurance fund to which there would be no Exchequer contribution.

: The social welfare contributions are being allowed anyway under the accounts system, as indeed, are the kind of contributions envisaged in this amendment.

: Under the accounts system?

: The Minister is arguing that there is an exact equivalent between the Exchequer contribution to the social insurance fund and the private insurance fund to which there would be no Exchequer contribution.

: We are on Report Stage, Deputy.

: In the sense that they would each be a business expense it seems that it would be impossible to resist a claim of that kind. I would suspect that Deputy Bruton would be very voluble in his arguments in favour of allowing such a deduction in respect of social welfare if this were allowed.

: If I was to be, I would have put down an amendment.

: Maybe it did not strike the Deputy that the case existed. In any event, the two general principles involved are that deductions under the notional system must be kept to a minimum for the reasons outlined and that in so far as they are allowed they affect the level of the multiplier. I am not sure that on balance farmers on the notional system given the choice would opt for the increased multiplier rather than holding to the position as it is. Even if the situation about the increase in the multiplier did not arise, and it does, in principle we have to be extremely careful about additions to the deductions allowable under the notional system. I do not wish to waste time as the time available on Report Stage is limited, by going back over the arguments so I am asking Deputies opposite to take it that these arguments have been made again in relation to this amendment.

: The Minister said that if he were to accept this as a further improvement on the notional system it would lead to an increase in the multiplier. However, the Minister admitted that in the case of the small concession we are seeking the increase in the multiplier would be insignificant, that it would not even be an increase of from 90 to 91 but that it would probably be increased by no more than 90 to 90.1. That is not a significant argument against this amendment. The Minister also said that if, under the notional system we were to allow contributions towards a private pension fund paid by the employer for his employee so as to supplement the contributory old age pension under the social insurance Acts in order to be consistent we would have to give the same tax relief in respect of social insurance contributions and that if we did that the increase in the multiplier would be from 90 to 93. I do not accept the logical sequence put forward by the Minister in his argument. It is not necessary if one accepts this amendment in order to be consistent, to allow social insurance contributions as an expense, because, in effect, granting a tax relief is a form of negative Exchequer contribution or Exchequer encouragement to a certain activity. There is already Exchequer encouragement to farmers on the notional system in respect of the normal social insurance contributions, because the State already pays a share of the stamp anyway and undertakes the administration of costs of the social insurance scheme through the Department of Social Welfare. On the other hand, there is no such State contribution, by tax relief or otherwise, in the case of contributions to a private pension fund by a farmer under the notional system and one could quite legitimately distinguish between contributions to a private pension fund and contributions to the social insurance fund, because that State contribution is already being made to the latter and no State contribution is being made to the former. Therefore it is appropriate, in the case of a farmer on the notional system, that the State contribution should be made to the former in the form of tax relief. I believe this case should be accepted by the Minister.

There are other arguments in favour of this amendment—increasing numbers of farmers are employing workers who, by virtue of their skill and ability, are enabled to claim and command a relatively high wage during their working life. Having commanded that wage during their working life, having been employed by a farmer who is on the notional system, they come to retire and all they can get will be the ordinary contributory old age pension, when they will suffer quite a significant drop in their standard of living. Commitments they had entered into will not be maintained in their retirement as they had been during their working life. Because of this development in agriculture of more employment of skilled labour, this will become an increasing factor in agriculture, one which applies to the same extent in agriculture as applied in the past in industry and which has, in that context, justified the creation of private pension funds with tax relief. It is all right for the Minister to say: well, if the farmer wants to create a pension fund for his employee and wants to deduct it for income tax purposes he can always switch to the accounts system. This is becoming a refrain in all of the Minister's contributions to this debate. But, as far as the employee is concerned, he has no control over whether or not his employer goes or does not go on the accounts system. If his employer, for other reasons which may be perfectly good, has decided to go on the notional system, I do not believe that the employee will be in a very strong position to go along to him and say: Look, you are paying me so much. I want you to create a pension fund for me so that I will have a reasonable pension when I retire; in the normal way if I were approaching you and you were on the accounts system, or if I was working for somebody else, I could put it to him as an argument: if you do create a pension fund for me you can deduct that as an expense against tax but I know in your case, because you are on the notional system for reasons best known to yourself, unfortunately I cannot use this argument, and there is no possibility that you can set off your contribution towards the creation of my pension fund against your tax, but I am asking you to do it all the same. I do not think that an employee—and it is the employee's welfare that this amendment is designed primarily to meet—would be able to persuade farmers on the notional system very easily with that line of argument. It would not be one that would be accepted readily.

The Minister has said that the cost would be minimal. He has admitted implicitly that it is desirable that farmers, whether they be on the notional system or otherwise, should create pension rights for their employees where appropriate by contribution to private funds. He has admitted all of those things and I believe, therefore, he should accept the amendment.

: This amendment was discussed at an earlier stage. Nevertheless I regard it as a normal incentive to farm workers. I believe further that novel incentives in agricultural employment are absolutely essential in Ireland today. On previous occasions I recollect having questions down to different Ministers for Agriculture, and to the Parliamentary Secretary to the Taoiseach, in regard to the numbers of people employed in agriculture when very sad figures were produced each time. On average we have seen a drop in the number of people employed in agriculture of approximately 10,000 per annum. I believe this would include farm workers and sons and daughters of farmers leaving agriculture, but numbers of that magnitude leaving agricultural employment each year constitute a serious haemorrhage.

The Minister will agree also that it appears to be an accepted fact of life that it will be extremely difficult to stop this haemorrhage. The White Paper reluctantly faces the fact that there will be no growth in the numbers employed in agriculture.

This amendment will not stop the haemorrhage nor will it increase the numbers employed in agriculture. The Minister will be realistic enough to agree with that. Nevertheless the Minister has admitted frankly that such a scheme will cost a minimal amount in the early stages to administer. Nevertheless he is not accepting it. Our whole approach to agriculture would have us believe that we are not affording it the status, as an industry, it deserves. We have failed to grasp the nettle that this is a major industry and, for that reason, every possible incentive should and must be given it. Everybody in the House will agree that there are similar incentives for workers in industry, which is all the more reason for giving incentives of this nature to agriculture. An opportunity is afforded us here of doing so. Whatever extra employment it may give as an offshoot to people in regard to pension funds, whatever line of pension fund they may be in, whether it be through any form of institution or otherwise, it will be of benefit but, most important of all, it will give people in agriculture this extra incentive. The contributions a farm worker pays are quite sizeable. The employer, of course, pays the major portion of the stamp. When the employee retires, provided he has had sufficient stamps over the years, he gets a contributory old age pension. Agricultural employees do very skilled work and it is not right that they should not receive the same advantages when they retire as people do in other walks of life. There is a sort of attitude that employment in industry is somehow superior to agricultural employment. This is not a major amendment though it is a novel amendment and a novel incentive. I believe it would be wholeheartedly welcomed by everyone in the agricultural community. It should be accepted by the Minister and incorporated in this Bill.

: I think the arguments have been made very forcibly on this side of the House for this amendment and I am sorry the Minister will not accept it.

Amendment put.
The Dáil divided: Tá, 52; Nil, 63.

  • Barry, Peter.
  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Joan.
  • Clinton, Mark.
  • Cluskey, Frank.
  • Conlan, John F.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Cosgrave, Michael J.
  • Creed, Donal.
  • Crotty, Kieran.
  • D'Arcy, Michael J.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Donegan, Patrick S.
  • Enright, Thomas W.
  • FitzGerald, Garret.
  • O'Leary, Michael.
  • O'Toole, Paddy.
  • Pattison, Séamus.
  • Quinn, Ruairi.
  • Ryan, John J.
  • Fitzpatrick, Tom (Cavan-Monaghan).
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Griffin, Brendan.
  • Harte, Patrick D.
  • Hegarty, Paddy.
  • Horgan, John.
  • Keating, Michael.
  • Kelly, John.
  • Kenny, Enda.
  • Kerrigan, Pat.
  • L'Estrange, Gerry.
  • Lipper, Mick.
  • McMahon, Larry.
  • Mannion, John M.
  • Mitchell, Jim.
  • O'Brien, Fergus.
  • O'Brien, William.
  • O'Connell, John.
  • O'Donnell, Tom.
  • O'Keeffe, Jim.
  • Spring, Dan.
  • Taylor, Frank.
  • Timmins, Godfrey.
  • Tully, James.
  • White, James.

Níl

  • Ahern, Bertie.
  • Ahern, Kit.
  • Allen, Lorcan.
  • Aylward, Liam.
  • Barrett, Sylvester.
  • Brady, Gerard.
  • Brady, Vincent.
  • Briscoe, Ben.
  • Browne, Seán.
  • Callanan, John.
  • Calleary, Seán.
  • Colley, George.
  • Conaghan, Hugh.
  • Connolly, Gerard.
  • Cowen, Bernard.
  • Cronin, Jerry.
  • Daly, Brendan.
  • Davern, Noel.
  • Farrell, Joe.
  • Faulkner, Pádraig.
  • Filgate, Eddie.
  • Fitzpatrick, Tom (Dublin South-
  • Central).
  • Fitzsimons, James N.
  • Flynn, Pádraig.
  • Fox, Christopher J.
  • French, Seán.
  • Gallagher, Dennis.
  • Geoghegan-Quinn, Máire.
  • Haughey, Charles J.
  • Hussey, Thomas.
  • Keegan, Seán.
  • Kenneally, William.
  • Killeen, Tim.
  • Killilea, Mark.
  • Lalor, Patrick J.
  • Lawlor, Liam.
  • Lemass, Eileen.
  • Leonard, Jimmy.
  • Leonard, Tom.
  • Leyden, Terry.
  • Loughnane, William.
  • Lynch, Jack.
  • McCreevy, Charlie.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • 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.
  • O'Malley, Desmond.
  • Reynolds, Albert.
  • Smith, Michael.
  • Tunney, Jim.
  • Walsh, Joe.
  • Wilson, John P.
  • Woods, Michael J.
  • Wyse, Pearse.
Tellers: Tá: Deputies McMahon and B. Desmond; Nil: Deputies P. Lalor and Briscoe.
Amendment declared lost.
Amendment No. 15 not moved.

: Amendment No. 16 in the name of Deputy M. O'Leary and others will be moved by Deputy Horgan. Amendments Nos. 17 and 18 are related and will be discussed together.

: Could we take them separately? They are opposing amendments in a sense.

: We can have separate decisions.

: Can we have separate discussions?

: No, they are interrelated and overlapping. We could not sort them out and we will take the three amendments together. There is a correction in the first line of amendment No. 17. The year "1977-78" should read "1978-79".

: I move amendment No. 16:

In page 19, to delete lines 32 to 50.

This is a repetition of an amendment which was withdrawn by us, without being discussed, on Committee Stage because we wished to have another look at it. It relates to the following provision 21A in section 14 which reads:

Where, for the year 1978-79 or any subsequent year of assessment, an individual is chargeable to tax in respect of profits or gains from farming, the following provisions shall apply—

(a) the amount of tax chargeable for that year of assessment: shall be reduced by the rates payable for the local financial year preceding that year of assessment;

(b) in computing the said profits or gains for that year of assessment, no sum shall be deducted in respect of rates.

There are further clarifications and qualifications in the remainder of the section. These are covered by lines 32 to 50. This concession puts farmers of more than £60 rateable valuation in a peculiarly advantageous position in relation to their tax liabilities in comparison with businessmen who are not farmers. Business is fundamentally a farmer's activity. Acceptance of our amendment would not create a situation in which farmers would not be entitled to claim any relief for rates. It would simply restore a situation in which they would be entitled to claim relief for rates paid as a deduction from farming profits or gains before the assessment of their net taxable income.

We see no reason for the very specialist treatment which is being allocated to farmers who, by definition, are the larger land-holding groups of farmers and those who are most likely to be assessable for tax. Since the Committee Stage debate during which I spoke on this section and was reported in the Press, I have had letters from several rural areas and from provincial towns in which surprise was expressed at the degree of the concession being given in this section. The Minister may say that this concession was indicated in the manifesto, that it was understood by the farming community, but it is not yet so widely known among other sections of the community although it is becoming better known. Businessmen have a difficult enough job in claiming their exemptions but they would have a valid reason for querying this concession. In this Bill we are being asked to allow this concession although there is no hint from the Minister regarding the Government's future intentions for the concession. Is it merely a transitional provision designed to allow farmers a particular credit at a certain stage of the development of the country's agricultural industry or is it a concession which will be available in perpetuity to all farmers in the tax net? These are questions which ought to be answered. In the normal course of events it would be a perfectly equitable and adequate way of dealing with the situation to allow farmers to get money paid for rates against their gross profits before compilation for tax liability thus putting them in the same position as other businessmen.

: I wish to move amendments Nos. 17 and 18.

: The Deputy may discuss them and they can be moved afterwards. It is permissible only to have one amendment before the House formally at a time although a number of amendments may be discussed together.

: How many times may I speak on my amendments? As the mover, may I speak twice?

: The Deputy may speak once only on these amendments on Report Stage.

: Presumably Deputy Horgan will be allowed reply to the debate. That will mean he will speak twice on his amendment. It is purely accidental that his amendment appears before mine. I would have thought that if he were allowed to speak twice. I should be afforded the same facility.

: In all these cases the Ceann Comhairle decides how the amendments are taken, how they are related, how they overlap and so on. In this instance the three amendments are related and are overlapping. In accordance with the procedure of the House only one may be proposed at a time although the other two may be debated with that amendment and moved formally afterwards.

: I can appreciate the validity of what the Chair is saying but is it not unfair that I should not be allowed the same privilege in relation to my amendment as Deputy Horgan is allowed in relation to his amendment, that is, the opportunity of hearing the Minister's arguments and then replying to those arguments? It is no fault of mine that Deputy Horgan tabled an amendment that was related to my amendments.

: It is no fault of the Chair's either. The procedure I have outlined has been followed down through the years.

: How is it decided that some amendments are moved only after the debate?

: We are going on procedure.

: What procedure?

: The procedure that has been followed by the Chair down through the years. I only abide by the brief before me. The Ceann Comhairle decides on questions of procedure in the House.

: On a point of order, I have considerable sympathy with Deputy Bruton in the position in which he finds himself. The Chair has described correctly the procedure that has been followed down through the years but it may be correct to say that the grouping of amendments for discussion is by agreement in the House. Since, in this case Deputy Horgan is seeking to abolish the credit for rates, whereas Deputy Bruton is seeking to have it extended, it seems that Deputy Bruton has a problem.

: The difficulty for the Chair is that his brief indicates that the amendments are overlapping and are very much related. However, if there is full agreement in the House, No. 16 may be taken separately and the other two taken together afterwards.

: I would not object to that.

: There must not be repetition afterwards, though. Does any other Deputy wish to comment on amendment No. 16?

: The point I wish to make on this provision is that it should be borne in mind that the farmer whose valuation is more than £60 has suffered a dramatic increase in rates as a result of the misnamed Agricultural Rates (Relief) Act which in many cases has had the effect of doubling rates so that what appears to be a concession is far from that. The be a concession we are discussing here should be considered only against the background of the Agricultural Rates (Relief) Act, which has greatly increased the burden of rates paid by those farmers. If those increased rates were to be paid and were not allowed to be set off against income tax, as this Bill provides, a far greater injustice than is already being done by the arbitrarily increased rates, would be perpetrated. This must be borne in mind by the House in considering amendment No. 16.

: I do not think Deputy Bruton really helps the case by referring to the Agricultural Rates (Relief) Act, whether he thinks it is relief or not. It represents a very substantial contribution by the taxpayer to the reduction in the rates bill of farmers. If the amount of that contribution is reduced it still remains at approximately £30 million, perhaps more, so it is certainly a relief.

In regard to the general proposition involved in Deputy Horgan's amendment, the granting of rates as a credit against a farmer's liability for tax as distinct from allowing it as a deductible expense, was promised in the Fianna Fáil election manifesto. It is part of Government policy and its implementation was announced in the budget. It is provided for in this Bill and, being Government policy, put before the election and implemented in pursuance of the undertaking given then. I should not have to spell out why it would be impossible for me to accept a change in that.

The reason behind that undertaking was dealt with on occasions at some length prior to the last general election. I do not want to go into it in undue detail now except to say this about it. Deputy Horgan seeks to treat rates for the purposes of income tax in the same way as between farmers, on the one hand, and other businessmen, on the other. That may seem a reasonable and plausible approach, but if one reflects on this for a moment one will see that land for a farmer is in a very special category. It is the basis on which he produces his goods. It is not like the rates on an office for an ordinary business or a factory premises for manufacturers where it is part of their normal overheads.

The production of the goods does not arise primarily out of the premises in the case of factory premises. In their case the rates they pay are allowed as a deductible expense. Land in the case of a farmer is in a different category. It is in recognition of this difference that this provision is made. The rationale behind this is that a farmer who is liable for income tax should not be obliged to pay both rates and income tax. If he is not liable for income tax, this does not arise. He is liable for the rates. If he is above the threshold of liability for income tax then the question arises: should he be liable for both rates and income tax? Having regard to the special nature of land in relation to the produce of a farmer as distinct from the produce of any other trader or business, the decision was made to allow rates as a credit against the farmer's tax liability. As I said, this is Government policy put forward before the election and being implemented in this Bill. I could not contemplate making any change in that regard.

: I should like to reply very briefly to the Minister's assertion that the rationale for this is based on the fact that land is something special. While one could accept for the purposes of argument that agricultural land is different from industrial buildings, the special qualities he claims for it are not peculiar to agriculture. The special quality of agricultural land is that it is basically there; it is in earth. It does not produce without human intervention. One could argue on that analysis that it is more analogous to industrial machinery than industrial premises. Machinery does not produce unless there is human intervention. If we accept that analogy the fact is that the industrialist is allowed to claim machinery allowances against gross profits or gains before arriving at a net taxable income figure. If we were for the purposes of argument to accept the Minister's assertion that agricultural land is not the same for the purposes of productivity as industrial and commercial buildings we could make a very strong case that it resembles industrial and commercial machinery, for which the same kind of allowance is made. I am sorry the Minister does not accept the argument. I am also sorry that he has not given us any indication that this concession is designed by him and his Government to be a permanent part of our tax code. I suspect it is, so this may not be the last we will hear about it.

: Is the amendment being withdrawn?

: The Chair is putting amendment No. 16. The Chair has to do it in a particular way to save amendments Nos. 17 and 18. The question is: "That all words from and including the word `where' in line 32 down to and including the word `assessment' in line 39 stand."

Question put and declared carried.
Amendment declared lost.

: Is it proposed to take amendments Nos. 17 and 18, which are related amendments, together?

: Yes. I thank the Minister for agreeing to have amendment No. 16 taken separately from amendments Nos. 17 and 18, thereby enabling a discussion to take place on the net issue contained in amendments Nos. 17 and 18. I thank the House for agreeing to this procedure.

: The Deputy will move amendment No. 17. Amendment No. 18 can be formally moved afterwards. The two will be discussed together.

: I move amendment No. 17:

In page 19, line 39, after "assessment" to add:

"or for any previous financial year from 1977-78 onwards in which rates had been paid which had not been set-off against an income tax payment to the extent that they had not been so set-off."

We all know that farming is a fluctuating industry and that in some years profits are made and in other years there are losses. The variable returns from farming distinguish it from other businesses. The Agricultural Rates (Relief) Act gave fewer reliefs than in the past and withdrew many others. Farmers with valuations in excess of £60, who are now in the income-tax net, had their rates dramatically increased by the removal of allowances which could have been set against their rates. In many cases the rates of farmers with valuations in excess of £60 have been doubled as a result of the Agricultural Rates (Relief) Act. The quid pro quo for this significant increase in a year when rates on domestic dwellings were being abolished was that the Finance Bill would allow farmers to set their rates off against their income tax. The farmers who were losing the previous concessions were also in the income-tax net and the compensating factor for the loss of these allowances was the granting of a set-off against income tax.

The set-off against the income tax payment takes place in the following way. In 1978 a farmer pays his rates in two moieties, the first becomes payable in April and the second in July. He may set these rates off against an income tax payment which he will be making on 1 January 1980. He will pay the money in the middle of 1978 and the Exchequer will have the use of that money for 18 months. If his income tax payment on 1 January 1980 exceeds his payment of rates, he may subtract the amount of his rates from his income tax payment. There are two defects in regard to this procedure. The first defect is that the money, although it is not liable to be paid because of the tax concession, is paid and the State has the use of it for 18 months. The second and more important defect is that the farmer in question may well have no income during the tax year 1979-80. If that happened he would not have to make an income tax payment on 1 January 1980 and therefore would have no opportunity of claiming his rates against his income tax. In effect, this would be a form of regressive taxation because the farmer who made a loss would pay his full rates whereas the farmer who made a large profit would have sufficient income to enable him to deduct his rates.

Our proposal will not cost the Exchequer any money but will eliminate the injustice between farmers. If on 1 January 1978 it transpires that the farmer has not made sufficient profit, that his income tax exceeds his rates payment made 18 months previously, he should be able to postpone the use of the rates relief to the following year. The Exchequer will still have the money and the farmer will have to wait for a further period to get his money in the form of a reduction in income tax. This means that the Exchequer will have the use of his money for a further year or two, or three, until he makes sufficient profit.

This amendment will remove an injustice which means that relief is given to a farmer who has sufficient income to pay tax and no relief is given to a farmer who has no income.

Amendment No. 18 concerns the availability of the concession in relation to rates to farmers who have a sideline, another business. At present the only farmer who may qualify for this provision whereby he may offset his rates against his income tax payment 18 months later is the farmer who is either a full-time farmer or has permanent employment as well as being a farmer. A farmer who has a farm plus a trade or profession may not claim rates relief against his income tax.

I will accept—and I am sure the House will accept—that in so far as this provision in relation to a trade or profession is designed to prevent, for instance, a large builder, who also has a farm and whose building operation is perhaps four, five or six times as large in terms of profit as his farm, from availing of this concession, he should not get that concession. In that type of situation the person with a trade or profession should be excluded as he is in the Bill as it stands.

Amendment No. 18 is designed to achieve the granting of relief to a person with a trade or profession which is clearly subsidiary to the main farming operation. We are defining it as being subsidiary to the farming operation by requiring that the concession be granted only where the income from the trade or profession is less than half of the income from the farm. If the income from the trade or profession is two-thirds of or the same as the income from the farm he will not get the concession. He will have to pay his full rates, much increased rates as I have pointed out as a result of the provisions in the Agricultural Rates (Relief) Act, and he will not get them back against his income.

If the business is clearly a small subsidiary operation he may claim this concession. I will give examples of the type of subsidiary operations this amendment is intended to deal with. In certain rural areas a farmer, or his wife more likely, may have a small shop. The amount of profit made from the shop may be quite small. It is a sideline for her and it is also a useful social service in the area. Alternatively, a farmer may have bought machinery which he does not use on his own farm during the entire year. He may undertake to do work for his neighbours. In other words, as well as being a farmer, he becomes a small-time agricultural contractor. His income from the shop or the agricultural contracting operation is less than half his income from the farm. In that case, where it is clearly a subsidiary operation and, incidentally, in most cases a social and economic benefit in the area in question, he should be able to get that relief.

This is a reasonable amendment. I hope the Minister will see his way to accepting it. Not when the Agricultural Rates (Relief) Act was being discussed but only now do farmers really realise the extent of the increase in their rates because only in the past few weeks the rates demands actually issued to farmers. Now farmers can see the extent of the increase in the rates they will have to pay. They will now appreciate with greater force than hitherto the case for amendment No. 17 which would allow them, if they do not make sufficient profit next year to have an income tax payment against which to set their present rates payment, to retain the rates payment as a claim against income tax in subsequent years without any extra cost to the Exchequer. This would ensure that the intention of the Government in introducing this concession is fully realised.

: I just want to ask a question or two to which the Minister can reply when he is replying to the amendment moved by Deputy Bruton. The first question is related to the fact that, as I understand it, the general rates relief we are talking about here is applicable both to farmers who opt for the notional and accounts systems. If I am correct in saying that, apart from the manifesto which is one of the few things in history which can reconcile otherwise irrenconilable elements, how can the Minister reconcile that, which is an extension of a concession in the notional sector, with his continuously reiterated belief that any such extensions run the risk of phasing out the notional system completely?

Secondly, I would ask him to comment on the sections dealing with agriculture in the Green Paper and on two phrases in particular.

: In the Green Paper?

: Yes. On page 29 we read that rates on agricultural land act to some extent as a form of resource tax. Just before that we read that the principle of a resource tax is attractive. If both those statements are true, how can they be reconciled with the attitude of the Government in the matter we are discussing here?

: Perhaps I should say at the outset that I find myself unable to accept either of these amendments. Before going into the detailed reasons for this, there are one or two preliminary matters arising out of what was said by Deputy Bruton and the questions put by Deputy Horgan which I might dispose of. Deputy Bruton mentioned, in passing I agree, the abolition of rates on domestic dwellings. It is no harm to make clear for the record that that benefits farmers too. Rates on their farmhouses and outbuildings have been abolished.

: There never were rates on cutbuildings.

: I am afraid there were.

: To a very limited degree.

: There were two categories. One was liable and one was not. None is now liable. Deputy Bruton talked about the situation of a farmer who, for one reason or another, found he had either no income or a very reduced income and under the present arrangement he would still have to pay rates. That is true, but it was always so.

: The rates would not have been as large as they now are.

: We are talking about the principle involved. He would have had to pay rates. The only change being made was in the position of farmers who have become liable for income tax. The change there is a benefit which I dealt with on the last amendment whereby full credit is allowed against income tax in respect of the rates due. The idea that because of this change effectively the farmer should not have to pay rates at all— effectively that is what Deputy Bruton is proposing; that is what it amounts to, as I will develop later—is not a proposition we have accepted. It would imply the treatment of rates as tax. In so far as there can be any principle of that kind involved, we have not accepted that or suggested that we would accept it.

: That is what the farmers thought the Minister was trying to give them.

: I do not think so, and I will deal with that in a moment. With regard to what Deputy Horgan said, this and one or two other extensions are involved in the notional system which formed part of the Fianna Fáil election manifesto and are provided for in this Bill. It is precisely in the knowledge that there was this extension that I could not contemplate the kind of extensions that were being advocated in other amendments which we are not discussing now. With these extensions the further extension would have the effect of eroding the notional system. I do not propose to discuss the Green Paper at this stage. If I were to do so, I might draw down the wrath of the Chair and I do not wish to do that. As the Deputy knows, we will have shortly a much more suitable and full opportunity to discuss the Green Paper in this House.

Amendment No. 17 proposes a carry-forward of the excess of rates over whatever tax is payable. In so far as it proposes this carry-forward it would equate rates with income tax, and that is not a principle that we have accepted. If such a principle were accepted there would be certain consequences. First of all, traders and professional persons would be entitled to claim credit for rates against their income tax liability. Secondly, where the rates figure exceeded the income tax liability a refund of the excess would have to be made.

: There is no question of a refund.

: If the Deputy thinks about it he will see that this is precisely what would happen. If you accept the principle that rates are a form of tax to be equated with income tax—and that is what is involved in treating them as being capable of a carry-forward—it follows, as it would in any similar case arising under income tax, that where there is an excess a refund would be claimable. Perhaps I should remind the House of what we said in our election manifesto in this regard. I quote from page 18:

Fianna Fáil will retain the notional system of Farm Taxation and allow rates on agricultural land as an instalment of a farmer's tax bill. Taxes due under the notional system will be payable at the end of each year. Farmers will be free to opt for assessment by farm accounts.

I suggest it is clear that the farmers referred to here are the full-time far-mers. I will develop that further because it relates to amendment No. 18. On amendment No. 17, the allowance of rates as a credit against income tax per year means that farmers will not to that extent suffer the full amount of the double burden of rates and income tax. When the rates exceed a farmer's tax his maximum burden is the amount of the rates and when the income tax exceeds his rates—and this can arise only when he has made substantial profits—then the amount a farmer will have to pay will be only the excess of income tax over rates. If the proposal in amendment No. 17 for a carry-forward of uncredited rates were to be accepted it would be tantamount to abolishing liability for rates in the case of any farmer liable for income tax.

: That is not correct.

: The Deputy should think about the position. What would happen is that where a farmer is liable for sufficient income tax he will not be liable for any rates. Where his income tax bill is less than his rates and he is carrying forward that amount, in some year he will set that off against his income tax liability, so that he would never pay the rates.

: He would have paid them in the first place.

: If he did he is getting a credit for income tax. Effectively the result of this amendment would be that a farmer would either set off his rates completely against his income tax liability where the income tax was the bigger, or where the income tax liability was the smaller he would carry forward a credit against income tax liability for the amount of rates uncredited, and to the extent that at any time in the future, having carried it forward, this would set it off against his income tax liability, he would not be paying any rates.

: He would pay rates in the first year. He is paying rates every year.

: This is not Committee Stage.

: Deputies are playing with words. If what they are trying to say is that the farmer pays his rates, gets a credit and does not have to pay that amount in income tax and therefore he is paying the rates, that is not a good enough point. Deputies cannot deny that a farmer is liable for such an amount of income tax that he can set off all his rates. In the event of paying his rates and paying then the balance of income tax over his rates, effectively he has paid no rates. Would Deputies accept that?

: No, the council have used his money for seven or eight months.

: We are on the semantics now and not on the realities. The realities are that in those circumstances his total liability between rates and income tax is the amount of his income tax bill. That is the situation if his income tax bill is bigger than his rates. On the other hand, if his income tax bill is less than his rates then his total liability is the amount of the rates. That is not a disadvantageous position for anybody, be he ratepayer or taxpayer, but this amendment seeks to go further and to say that whatever happens the total liability between rates and income tax will never exceed the amount of his tax liability. In other words, he will never be liable for the amount of the rates because he will either set it off or he will carry it forward.

(Interruptions.)

: Deputies, please. The Minister is in possession.

: He is an expert on semantics.

: The semantics are there and Deputies know it. They are trying to ensure that farmers who have an uncredited amount of rates—uncredited in the sense of not having them set off against their income tax liability—can carry it forward from year to year until eventually they have set it off. In those circumstances they are not paying any rates.

: The Minister should tell that to the farmers.

: What they understood was happening was what is in this Bill, that they could set off the amount of their rates against their income tax liability so that in any year their liability would be either, if the income tax liability was big enough, the difference between that liability and the rates liability, or if the income tax liability were smaller than the rates, then the total amount of their liability would be the amount of the rates. That is what they understood and that is what is in the Bill.

In relation to amendment No. 18, having regard to the terms of the Government undertaking in their mani-festo it is quite obvious that the farmers referred to in that manifesto were full-time farmers since they were the only ones entitled to opt for assessment on the notional basis which we said we would retain for their benefit. Likewise, the credit for rates is a provision intended for full-time farmers to the exclusion of trader farmers— those who or whose spouses carry on another trade or profession. Section 16 of the Finance Act, 1974, applies to these trader farmers. Deputies will recall that that section was intended as an anti-evasion measure which was introduced in an effort to prevent business or professional people who had farms from escaping tax liability on their business profits or professional income by attributing to their farming activities large slices of the income derived from their trade or profession. The profits from farming would have been exempt from income tax because the rateable valuation of the farm was below the relevant threshold of liability or alternatively would be covered by the notional system of assessment so that the business profits attributed to farming would escape tax.

What happened was that in 1974 a £50 threshold of liability was fixed in respect of trader farmers instead of the £100 threshold which applied generally, and last year the threshold was removed altogether because of what was happening. Furthermore, these trader farmers were excluded from the scope of the section giving an option for assessment on the notional basis, and the principle adopted in the case of trader farmers was and is that all their trading activities should be treated as trading activities and assessed in accordance with the ordinary provisions governing such activities.

That same principle applied to the professional person who is also farming. This principle has been consistently applied, and trader farmers have been excluded from all of the special provisions relating to full-time farmers whether these were in easement or otherwise of full-time farmers, for example assessment on the notional basis, the general threshold of liability, payment for tax on farming profits on 1 January in the year of assessment, and the crediting of rates against income tax. The problem is that any departure from this principle opens the door to the manipulation of profits so as to reduce tax liability. The rates of full-time farmers would be credited against income tax on their farming profits but if no income tax is payable, for instance if profits were low or if a farmer has very high expenses or personal reliefs, the credit for the rates may be of no benefit to him or may be only partially absorbed if his tax bill is below the rates charged. This matter is being dealt with in the previous amendment.

If, however, a trader farmer in similar circumstances were entitled to a credit for rates it would be open to him to attribute business profits to his farming activities so as to derive the maximum benefit from the credit. Effectively, such a farmer would be getting a credit for rates against the tax on his business profits. If this were to be agreed, full-time farmers would argue that this reinforced a claim for a refund where their rates exceeded their tax liabilities which, as I mentioned earlier, would be a logical follow-on to equating rates with income tax.

I suggest that the inescapable conclusion, from all these considerations, is that contrary to what is urged in amendment No. 18, the trader farmer must continue to be treated in accordance with the provisions relating to traders generally and must be excluded from the special provisions governing full-time farmers. This means that in this matter the rates payments of trader farmers, whether on their farmland or on their business premises, will be allowed as a deduction in computing their profits and not as a credit against the tax payable on those profits, whether farming or business profits. I do not see how any other treatment is possible if one is to avoid fairly substantial manipulation of the system to avoid liability for income tax by the categories concerned. For all these reasons I am afraid that I cannot accept amendments Nos. 17 and 18.

: On this final stage, with the limited time available for discussing this matter, having listened closely to the Minister I feel it may be idle for me to go into it further but I would urge the Minister and the Government to consider a few points. The people being dealt with are full-time farmers. A full-time farmer with, for instance, a valuation of £59 is in no way affected by income tax and is getting the full benefit of rates remissions, the full benefits under the Health Acts and the full benefits under the higher education grants. A full-time farmer with a valuation of perhaps £61 is liable for income tax. After next year he will have to pay full rates and will not get any rates remission; if he is in poor health he gets no health allowance whatever and even if he has a most brilliant family he will get nothing from the State for the higher education of his family. Surely, even at this eleventh hour, the Minister will consider these points. If he does not a farmer with a £61 valuation will be faced with a substantial income tax liability.

: It would be very much reduced for a person with a £61 valuation.

: He will still be liable to income tax. Even with the rates remission level at £60 valuation next year, which is a separate point, he will be liable for his rates. In these instances surely a case can be made and accepted for allowing these deductions from rates.

The Minister in his statement to the House on 9 May last said that 21A provides for the granting of the preceding year's rates as a credit against the tax bills of full-time farmers. There the Minister was making the point that, if a farmer is liable to tax, he can deduct his rates therefrom. That is accepted. The Minister continued and said that if he is not liable to tax, then he has to pay his full rates. I take it what the Minister was saying then was that, if he was not liable for tax, we would ensure that he did not pay his rates at all.

I do not accept that that is what is contained in the amendment. Indeed, the amendment could be qualified somewhat more. It is not permissible for me to put in a further amendment at this stage. But, if it were limited to carrying forward the rates allowances against income tax for a precise period, it might suit everybody's purpose better. Rates are struck and have to be paid. They can be carried forward for 12 months or a maximum of perhaps two years. If within the two-year period a farmer is liable to income tax in excess of his rates, he should have to pay the income tax. His rates would have been paid anyway, but if he is liable for less income tax he is still liable for his full rates. I do not know whether I have made myself any clearer.

: Is the Deputy suggesting a two-year carry forward period and then drawing the line?

: I have not discussed it that closely with Deputy Bruton.

: I am afraid that is not the amendment that is before the House.

: I know, but I am just tossing it out.

: It is a bit late to be tossing things out now.

: With due respect, I think it has been tossed out the window long ago by the Minister. The amendment, recommending that rates be deducted from income tax and be carried forward, is a reasonable one.

In my view the provisions of amendment No. 18 are an accepted fact of life in rural Ireland. Deputy Bruton put it exceptionally well and I shall not dwell on it at any great length. There is the example to be found in many villages and towns of the farmer who also runs a small grocery shop. It is a family involvement. I believe that such a farmer should and must be entitled to a remission, as is specified in this amendment, if his income from the trade or profession is less than half that derived from farming. This does not apply merely to grocery shops but to many small businesses run in that manner.

The Minister should consider this commonplace situation obtaining in rural Ireland. The Minister said earlier that farmers were reaping the benefit of the allowances in regard to rates remission on their dwellings; that is the dwelling-house attached to their farm. The case put forward here by Deputy Bruton and Deputy Barry was in regard to a farmer who engaged also in a trade or profession. Let us take the example of the grocery shop, a pub or that of an auctioneer who carries on a small business in his house. None of those three people is getting rates remission on his dwelling. Therefore they must pay full rates.

: On their dwellings.

: Well, in the case of the pub, the business is carried on in the pub.

: Then they are getting it on their dwellings—maybe not on their business premises but they are getting it on their dwellings.

: The situation is that the pub is part and parcel of the premises.

: Yes, but it can be divided for rates purposes.

: On a percentage basis.

: You cannot have it both ways.

: The situation is that in a public house there are a number of rooms licensed and it would take some working out to subdivide them. In my opinion, the major part of the premises would be regarded as liable for rates. I am sure that would be the opinion of the Valuation Office if one were to question them. Therefore these people are liable to almost full rates on their premises because a business is carried on there. They are liable also to full rates on their land and are not being allowed to carry that forward. These people should be entitled to the remission about which we have spoken. If less than half their income is derived from this business it should be accepted and granted.

If the Minister does not accept this amendment it will mean that a considerable amount of revenue will be extracted from these people. It is a fair and reasonable amendment, which the Minister should consider. One point of interest is that it is the preceding year's rates that are specified. I would still be interested to know why it was not the current year's rates. We are speaking here about a sizeable figure and that is why I ask the Minister to give it full consideration. As I have already pointed out to the Minister, many people in this category were not liable for anything up to now and will henceforth be heavily penalised. It appears to me to be a great worry for the farming community that they will be left with a large responsibility for carrying local authorities. These two amendments are important because of the magnitude of the rates bill this year and the likelihood that rates will be very sizeable in the years to come. It worries me and I am sure it worries many in the farming community.

: The Minister's failure to accept amendment No. 17 means that he is in favour of regressive taxation. He is prepared to give relief to people with substantial incomes but people who in a particular year, for reasons of seasonality and nonavailability of agricultural content, will have no income but will have paid their rates, and have no income tax to set against the rates, will lose that relief for good. That is regressive because the burden falls more heavily on those without incomes than it does on those with incomes. The Minister should have accepted this amendment.

Amendment put and declared lost.
Amendments Nos. 18 to 23, inclusive, not moved.

: Amendments Nos. 24 to 42 are related and can be discussed together.

: It is a very big family.

: It is a sort of bingo line-up, but at this hour of the evening there could be no objection.

: I move amendment No. 24:

In page 27, line 59, to delete "paragraph (c)" and substitute "paragraphs (b) and (c) (i)".

We were concerned on Committee Stage that the amended sales test brought under this paragraph would permit a company to claim that the amount receivable in 1977 was not less than 119 per cent of the amount receivable in 1976 but the Minister did not agree with our point. He considered the kind of criteria suggested by us were not exactly helpful and he presumed to see further assistance to job creation in the section unamended. While we are not in dis-agreement with that approach, we believe there should be more statutory safeguards to ensure that other criteria are also taken into account and that is why we have the requirement that the employment content should be moved from 3 per cent to 5 per cent before those benefiting under the section qualify for the exemptions therein.

We accept that the primary objective of the section is to further incite those with capital to increase employment but we believe the target should be higher than that set out. The Minister argued that by moving it up over 3 per cent it might prove less attractive to the entrepreneur and discourage him with a resultant loss of employment. That is a valid enough viewpoint, but we are concerned to ensure that as much employment as possible is generated and that is why we put the target higher than the one suggested by the Minister. There is a strong case to be made for linking the kind of gains that will arise from this section to a higher job creation figure. The Minister on Committee Stage did not appear to see much benefit in these amendments but, because of our anxiety about creating employment, we suggest the amendments should be looked at again constructively.

: I would like to add my tuppence worth to that of Deputy O'Leary in support of the various amendments, Nos. 24 to 42. Amendment No. 24 seeks to delete the sales test for subsequent years as a gateway to corporation tax relief because, on the basis of the level of the thresholds as the Bill stands, and even on the basis of certain moderately favourable assumptions about inflation, inflation might eat up most of the thresholds and allow a company to claim exemption from the higher rate of tax without having done anything really to justify it.

We are not opposed in principle to the idea of incentives but we insist on the need for a sophisticated incentive scheme which will genuinely produce the kind of results we are looking for in return for the kind of incentives we are prepared to give. The incentives in the Bill could result in savings to companies—for example, under the employment provision, of the order of ten or 20 times the extra expenditure by the company in the employment field, depending on the relationship between the company's turnover and gross profits, on the one hand, and the employment potential and actual employment position on the other. This situation could easily be created. A company with extremely high profits per employee which would normally be liable to the higher rate of income tax could by hiring employees, whose work may not even be, strictly speaking, necessary to the success of the enterprise, have an immense saving in corporation profits tax. There is no proviso in the section to which these amendments refer that any of these very substantial savings should be further ploughed back into the creation of jobs. There is nothing to stop them being handed out to shareholders by way of increased dividends or to directors by way of increased remuneration.

Given the practice of companies over the last two years in terms of their disposition of profits, we have to conclude that there is a far greater likelihood that savings made by companies who meet these very low thresholds and so become eligible for the lower rates of corporation profit tax, are far more likely to be distributed in dividends and directors' fees than they are in reinvestment. The statistical evidence published by the Irish trade union movement in relation to the distribution of company profits among the top 50 private and public companies over the last two years, provides very compelling and depressing evidence about the failure of companies to reinvest in employment or even in some cases in re-equipment.

The only other point I want to make is in relation to the cost of this provision. According to a parliamentary reply given to me by the Minister a week or so ago, the total cost is about £10 million. That is a very substantial estimated investment in industry by the taxpayer who is foregoing an equivalent amount of relief elsewhere. We are entitled to insist before enterprises have access to relief of this order —and it amounts to some 12 per cent of the total figure of aid to industry via the IDA and Gaeltarra Éireann— that real teeth in relation to productivity and employment should be put into this Bill.

This is what this amendment attempts to do. Raising the thresholds in the way we have sought is comparatively modest and any company really interested in providing extra employment would have little or no difficulty in meeting the higher thresholds. But the problem is that many people in companies regard job creation, with the best will in the world, as a necessary evil and they will produce jobs if they can produce profits. We have also maintained that even though incentives of this rather crude and lax kind help to produce jobs, they are incapable by themselves of producing enough jobs and that is why we are and will remain critical of a Government's strategy which is based largely on incentives of this kind directed solely to the private sector.

: If we are dealing with all these amendments together and I can only speak once, I think I ought to hear from Deputy Barry who presumably will have a right to reply.

: Deputy M. O'Leary moved the first of the amendments and they are all related.

: Deputy M. O'Leary will have the right of reply.

: I thought some of Deputy Barry's amendments were included.

Mr. Barry

: No. I can speak later if I want to.

: The first of the amendments which it was agreed to take together was moved by Deputy O'Leary.

: Perhaps I should say at the outset that my attitude on this matter has not changed since we discussed it on Committee Stage. It is as well to recall the history of the incentive that is involved here. In my view, it is one of the not very many good things done by the Coalition Government. It required improvement and we are trying to improve it in this Bill. Basically it represented a very belated recognition by the previous Government of what they should have been doing in trying to encourage the creation of jobs rather than wasting so much of their time and energy seeing how much they could collect in the form of wealth tax and otherwise. The time to worry about that is when we have created the wealth and the jobs. The previous Government were right to try to introduce an incentive of this kind to create jobs.

As introduced it had two elements. First, a sales test, a test on the increase in sales, and second, a test on the increase of employment of 3 per cent in a year. We are proposing in this Bill to delete the sales test altogether and to leave the employment test at 3 per cent. The deletion of the sales test is for two reasons primarily. First, the real thing we have to concentrate on is the creation of jobs. There is not much to be gained by obscuring that issue by introducing the sales test as well. The second reason was advanced by Deputy P. Barry on Committee Stage when he rightly pointed out that it is extremely unlikely that a firm will be increasing their work force if they are not increasing their sales.

If one concentrates on the real purpose of this incentive, one will concentrate on the employment test. It is too early yet for anybody to be able to say whether the incentive, as introduced by the previous Government or as being amended now, is going to be effective. We do not know, but we have to try to arrive at an incentive which, on the one hand, will be sufficiently attractive to make people strive to meet the conditions under which this reduced corporation tax will be payable and, on the other, will be sufficiently realistic as to be attainable. On that basis the target of a 3 per cent increase in employment in a year seems to me, in the absence of clear evidence either way, to be a reasonable target. I do not think any case has been made by the Labour Party for the increasing of that target from 3 per cent to 5 per cent, as I said, in the absence of information on how the scheme has worked so far.

I wonder about the attitude to this matter displayed by the Labour Party, particularly as put forward by Deputy Horgan whose main concern seemed to be that as a result of this incentive shareholders might get increased dividends or directors might get increased fees. Suppose they do because they have increased the employment content, is that any harm? Is it not the object of the exercise to create jobs, not to be trying to ensure that directors and shareholders do not get any more money? The priority is wrong. This pre-occupation of trying to ensure that some people do not earn more than others, ignores the reality of the situation, which is to create jobs. This is what it is all about.

When it has been shown that this has operated successfully so that the Labour Deputies can come here with information to indicate the increase in the benefits accruing to shareholders and directors they will have a case to make, but in such circumstances they will have to meet the problem for them that it had worked and had created jobs because there will not be any profit to shareholders or directors unless there is an increase each year of at least 3 per cent in job creation. I should be very happy to find that the Labour Party were complaining that according to them directors and shareholders had benefited unduly because that would mean that the jobs had been created and we could then review the situation with a view to determining whether the target should be 3, 5 or 10 per cent, but in present circumstances the concentration ought to be on anything we can do to encourage job creation. It ought to be borne in mind also that the cost to companies and employers generally of creating jobs and employing additional people is more than the wages paid.

Deputy Horgan said that the major criticism he and his colleagues had of the Government's strategy in this connection was an undue reliance on the private sector and that the Labour Party were convinced that this would not create jobs. If they are so convinced why try to hobble one of the incentives for the private sector with the risk that it will produce even fewer jobs than those Deputy Horgan thinks will not be sufficient?

There is not a worth-while case for these amendments if one is really concerned with the creation of jobs. There have been indications in recent times by way of reaction to certain proposals that there may be a number of people who are not genuinely concerned with the creation of jobs or with tackling unemployment or who, if they are so concerned, have other priorities that are much higher, whether they involve a concern to leave the situation as it is or whether it be a higher priority being accorded to what they would conceive to be equity in taxation. Whatever the reason, so far as my colleagues in the Government and I are concerned, our first priority both economically and socially is the creation of jobs. It would not be appropriate for me on this amendment to develop that theme but it is necessary to stress it in the context of the amendment. The basic points are as put forward by Deputies O'Leary and Horgan and I have set out our attitude to these.

A series of Deputies tabled the amendments and they proposed also the confining of the provision to manufacturing. I am not sure that I am altogether accurate on that but it is hardly relevant. We have dealt with that argument before and I have no wish to detain the House unnecessarily. The points made in putting forward the amendments related only to the sales test and the employment test and for the reasons I have outlined we would be very foolish to reinstate the sales test in any form. We would be foolish also to increase the employment target in the absence of any concrete information as to how the incentive would work. To the extent that any complaint arises in future about an undue benefit being conferred by this reduction of corporation tax in certain circumstances, we may all rejoice and say that the incentive has worked and has created jobs in the way we had hoped for. The situation could be looked at again then in the light of the amount of profit created, the number of jobs created and the prospects for the creation of further jobs in the future.

Amendment, by leave, withdrawn.
Amendments Nos. 25 to 42, inclusive, not moved.

: Amendment No. 43 has been ruled out of order.

: I move amendment No. 44:

In page 32, to delete line 4, and to substitute "of the said Act:

Provided that where the expenditure is incurred for the purposes of the trade of hotel-keeping it shall not be regarded as qualifying expenditure unless it is incurred on the construction of premises which are registered in a register kept by Bord Fáilte Éireann under the Tourist Traffic Acts, 1939 to 1975.".

This amendment is designed to meet a point raised by Deputies on Committee Stage the object of which was to secure that the benefit of free depreciation would not be given in respect of premises used as a hotel unless they were registered with Bord Fáilte as a hotel. I expressed sympathy with the principle behind the amendment but the House will recall that I was concerned not to take away relief from the limited number of persons availing of the relief. I undertook to consider the matter before Report Stage. I think this amendment achieves what was required. It precludes claims for free depreciation in respect of premises used for the trade of hotel-keeping unless the premises are registered as a hotel under the Tourist Traffic Acts, 1939 to 1975, but it does not interfere with claims for initial or annual allowances under the existing law. Unless the House wishes otherwise. I shall not go into further detail.

: Is the Minister satisfied that in cases such as country houses and farm houses providing accommodation, there will be no disadvantage? I know it is difficult to find a balance, but will anybody who is not registered with Bord Fáilte continue to get the benefit so long as the accommodation is up to standard?

: The Deputy will appreciate that the benefit applies only to premises registered with Bord Fáilte as hotels, but no existing allowance is being taken away. What is involved is merely that the new free depreciation allowance is being confined to hotels registered with Bord Fáilte.

Amendment agreed to.
Amendments Nos. 45 to 47, inclusive, not moved.

: Recommittal is necessary in respect of amendment No. 48 since it involves new matter which was not effectively before the Committee on the Bill.

Bill recommitted in respect of amendment No. 48.

: Amend-ments Nos. 1 and 2 to amendment No. 48 and amendment No. 51a which is consequential may be discussed together.

: I move amendment No. 48:

In page 36, between lines 47 and 48, to insert the following:

"29.—(1) In this section `levy' means a levy or charge of any kind (not being a duty of customs or a duty of excise) which is imposed by an act adopted by an institution of the European Communities on the importation into the State or exportation from the State of any goods and—

(a) is for the purposes of the common agricultural policy of the European Communities, or

(b) is provided for under the specific arrangements applicable, pursuant to Article 235 of the Treaty establishing the European Economic Community, signed at Rome on the 25th day of March, 1957, in relation to certain goods obtained by processing agricultural products, or

(c) is designated by regulations made by the Minister for Finance as a levy for the purposes of this section.

and `import levy' and `export levy' shall be construed accordingly.

(2) The Customs Acts and any instruments made thereunder shall apply to a levy as if it were a duty of customs and the provisions of the said Acts and instruments which relate to the exportation of goods shall also apply to the goods referred to in subsection (5) of this section.

(3) The Minister for Finance may by regulations apply to goods that are subject to an export levy, with such modifications as are, in his opinion, necessary, any of the provisions of the Customs Acts and instruments made thereunder that apply to imported goods.

(4) A levy shall be under the care and management of the Revenue Commissioners.

(5) The exportation from the State of goods that are subject to an export levy shall be prohibited unless, before the exportation and subject to such conditions as the Revenue Commissioners may impose, the amount of the levy is paid to the Revenue Commissioners or security that is, in the opinion of the Revenue Commissioners, adequate for its payment is given to the Revenue Commissioners.

(6) Notwithstanding any provision of the Customs Acts, where an export levy is payable on any goods, the Revenue Commissioners may, subject to such conditions as they may see fit to impose (including conditions in relation to the giving of security for payment of the said levy), permit payment of the said levy to be deferred for such period as the Revenue Commissioners may determine.

(7) Notwithstanding any provision of the Customs Acts, where a duty of customs or an import levy is payable on goods imported into the State and entered for home use, including goods cleared from warehouse, the Revenue Commissioners may, subject to such conditions as they may see fit to impose (including conditions in relation to the giving of security for payment of the said duty or levy), permit payment of the said duty or levy, as the case may be, to be deferred for such period as the Revenue Commissioners may determine.

(8) Subject to such conditions and restrictions as the Revenue Commissioners may impose, section 12 of the Customs Consolidation Act, 1876, insofar as it relates to the warehousing, custody and delivery out of warehouse of goods,, shall apply to the warehousing of such goods (being goods to which, apart from the section, that section does not apply) as the Revenue Commissioners may allow to be warehoused for exportation or for use as stores.

(9) Regulations 4 and 7 of the European Communities (Customs) Regulations, 1972 (S.I. No. 334 of 1972), are hereby revoked.

(10) Regulations under this section shall be laid before Dáil Éireann as soon as may be after they are made and, if a resolution annulling the regulations is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the regulations are laid before it, the regulations shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder.

(11) This section shall come into operation on such day as the Minister for Finance may appoint by order.".

I move amendment No. 1 to amendment No. 48:

In subsection (2), before "The Customs Acts" to insert "For the purposes of this section".

These amendments, which do not affect the substance of the section, are designed to clarify that the application of the provision of the Customs Acts is restricted to purposes of collection and control of a levy as defined in the section. That is the purpose of the amendments which were circulated this afternoon. The purpose of the major amendment, that is, the inclusion of the new section 29, is to give to the Revenue Commissioners the charge, care and management under customs law of the collection of levies applied under customs law to EEC levies and charges on agricultural produce, whether they are payable at importation or exportation. It is necessary to have this provision in order to give effect to the transfer from the Department of Agriculture to the Revenue Commissioners of responsibility for the collection of EEC levies payable on agricultural produce at export. The Revenue Commissioners have hitherto been responsible for the collection of such levies payable at importation only, not at export level. They have been responsible in accordance with the provisions of regulation 7 of the European Communities Customs Regulations 1972.

This section makes a corresponding provision in relation to export levies. In the interests of legislative clarity the relevant provisions of the 1972 regulations are being revoked and reenacted in this section. I have a detailed note on the section which I will give the House if necessary. Unless it is necessary I do not wish to take up the limited time available. I should explain to the House that it was intended, when the Bill was originally being drafted, to include this section but a certain doubt was raised as to the validity of the provisions on the basis that the content of the section might conflict with the requirement of a Money Bill under Article 22.1 of the Constitution. However, following further inquiries, communications and legal opinions, the parties concerned are now satisfied that it is appropriate to include this section in the Bill. It is, therefore, being introduced now by way of amendment.

: This seems rather involved and we only got it this morning. I accept the points made by the Minister. Will this come before the Seanad?

: If there is any point in relation to it I will have it raised there.

Amendment No. 1 to amendment No. 48 agreed to.

: I move amendment No. 2 to amendment No. 48:

In subsection 3, before "The Minister for Finance" to insert "For the purposes of this section".

Amendment No. 2 to amendment No. 48 agreed to.
Amendment, as amended, agreed to.
Amendment, as amended, reported and agreed to.

: Have we agreed to amendment No. 51 now?

: Yes, they were all discussed together.

: Has amendment No. 51a not to be moved?

: Yes, when we come to it later on after amendment No. 51.

: I move amendment No. 49:

In page 41, to delete lines 1 to 17.

This is the same section which provoked the introduction of the guillotine on Committee Stage. This is the section of the Bill which deals with the abolition of the wealth tax. Before we reach the imposition of the guillotine at 6.45 p.m. I would like to reiterate the points that were referred to earlier on Committee Stage and also on Second Stage. I believe the Minister was not able to sustain the case stated by him on Committee Stage that the removal of the wealth tax ensured a greater number of jobs becoming available. He attempted to give an economic gloss to this exemption measure of the Government. It is incontestable that the money lost to the Exchequer, because of the abolition of the wealth tax, must be found elsewhere. Those moneys must be found from the PAYE taxpayers. They must make good the loss of the revenue which came from the wealth tax.

The Minister did not satisfy the House that the removal of this tax would improve the economic situation to the extent he was proposing. We have said there was no evidence of outflow of capital referred to by the Minister in the period in which the tax operated. We also said that we believed if inflationary expectations are to be kept down in our economy this year and the next year—the OECD report referred to the necessity for doing this —it must be clearly apparent to all who look at it that our taxation system is a fair one and that it attempts, however marginally, to redistribute in favour of the less well off.

That element in our taxation system was removed under section 36 on the basis that this would assist in the creation of more jobs. The case was not sustained. We said on Committee Stage that we were not convinced by the reasons put forward by the Minister. We said if hardship was reported to the House and if people suffered as a result of that measure then it was open to the Minister to come before the House, at a select committee or otherwise, to consider what changes it was necessary to make. We had, instead of that, out of the blue, this decision of the Government with their enormous majority, to abolish it. There decision is not even in the interests of the business community whom they have said it is designed to assist, whose entrepreneurial zeal was dampened by the imposition of the wealth tax by the Coalition Government and that its removal would make sure that investment flowed without interruption once more. We believe it is not in the interests of the business community that that tax be removed. I do not know what the ordinary members in the various cumainn who support the Government party throughout the country think of the kind of priorities the Government have.

: They will get some idea from what happened last night.

: We had a Green Paper last week, we will have an Adjournment Debate next week and we have a White Paper promised in the autumn. If one is to believe the vast leaks which are occurring, the kind of confidences which are being given to members of the Press, the defences being put forward by people like the Minister, Deputy O'Donoghue, there is no doubt that this is a Government who are prepared to batten down the spending hatches over the next two years. If that is the kind of fiscal system which will be managed by the Minister for Finance over the next two years, what is the sense of priority when they deprive the Exchequer of cash for the rather shallow reason put forward by them that it would assist in the creation of more jobs? What do the ordinary members of the Fianna Fáil Party throughout the country think, the people on whose work the 84 members of the Government party were returned here a year ago? What do the ordinary members of that party think of the kind of priority that is animating this Government?

: That the creation of jobs is the right priority.

: The Minister will agree that he did not sustain that case when he spoke on Committee Stage. He cannot point to one extra job that will be created by the abolition of this tax. The Labour Party are committed to do everything within our power to ensure that people invest more money in the country. If the Minister could convince us that extra jobs will follow a measure such as this, we would be the first to support him. But that proof has been lacking all along. We cannot decide on the reasons that led this administration to their surprising decision. They have always boasted that their membership comprised the broad mass of ordinary men and women. They are very proud to say that they include in their ranks more trade union members than any other party. What do these supporters think of a measure such as this?

: That the creation of jobs is the right priority.

: We all agree about the creation of jobs.

: It is one thing to say it, but it depends on what you do. We are prepared to be judged on what we are doing and the Deputy and his colleagues were judged on what they did.

: The Minister knows that the creation of jobs is a more difficult task than the abolition of a tax. There is no proven connection between the decision to abolish the tax and the creation of more jobs. One must search elsewhere for the reason for this surprising decision. Taca is no more but there may be a new group in its place. I know the Minister is on record for his opposition to such connections in the past. One does not know whether this kind of reasoning has led him to this surprising decision that inflames expectations that certainly fans the politics of envy with which they are so concerned. They certainly postponed the idea that the tax system is fair, because you cannot plead the necessity of saying that you cannot do anything about children's allowances in the same budget that gives this kind of bonus to another category in our community.

There are few resources available to the State in terms of revenue and each source must be used to the best possible advantage. The general direction of our taxation system, which we have been following under all Governments for some years to a lesser or greater extent, is redistribution and equity. Those two standards have been damaged by the decision of the Government. The poor defence put forward for the decision, that more jobs would follow from it, has not been sustained. The Government won the election on their claim that they would restore confidence to the business community.

: It being now 6.45 p.m. I am, in accordance with the order made by the Dáil yesterday, putting the question: "That any amendments set down by the Minister for Finance and not disposed of are hereby made to the Bill and the Fourth Stage is hereby completed and the Bill is hereby passed."

The Dáil divided; Tá, 63; Níl, 47.

  • Ahern, Bertie.
  • Ahern, Kit.
  • Allen, Lorcan.
  • Aylward, Liam.
  • Barrett, Sylvester.
  • Brady, Gerard.
  • Brady, Vincent.
  • Briscoe, Ben.
  • Browne, Seán.
  • Callanan, John.
  • Calleary, Seán.
  • Colley, George.
  • Conaghan, Hugh.
  • Connolly, Gerard.
  • Cowen, Bernard.
  • Cronin, Jerry.
  • Daly, Brendan.
  • Davern, Noel.
  • Farrell, Joe.
  • Faulkner, Pádraig.
  • Filgate, Eddie.
  • Fitzsimons, James N.
  • Flynn, Pádraig.
  • Fox, Christopher J.
  • French, Seán.
  • Gallagher, Dennis.
  • Geoghegan-Quinn, Máire.
  • Haughey, Charles J.
  • Hussey, Thomas.
  • Keegan, Seán.
  • Kenneally, William.
  • Killeen, Tim.
  • Killilea, Mark.
  • Lalor, Patrick J.
  • Lawlor, Liam.
  • Lemass, Eileen.
  • Leonard, Jimmy.
  • Leonard, Tom.
  • Leyden, Terry.
  • Loughnane, William.
  • Lynch, Jack.
  • McCreevy, Charlie.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Moore, Seán.
  • Morley, P.J.
  • Murphy, Ciarán P.
  • Noonan, Michael.
  • O'Connor, Timothy C.
  • O'Donoghue, Martin.
  • O'Hanlon, Rory.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Malley, Desmond.
  • Reynolds, Albert.
  • Smith, Michael.
  • Tunney, Jim.
  • Walsh, Joe.
  • Wilson, John P.
  • Woods, Michael J.
  • Wyse, Pearse.

Níl

  • Barry, Peter.
  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Joan.
  • Cluskey, Frank.
  • Conlan, John F.
  • Corish, Brendan.
  • Crotty, Kieran.
  • D'Arcy, Michael J.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Donegan, Patrick S.
  • Enright, Thomas W.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom (Cavan-Monaghan).
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Griffin, Brendan.
  • Harte, Patrick D.
  • Horgan, John.
  • Keating, Michael.
  • Kelly, John.
  • Kenny, Enda.
  • Kerrigan, Pat.
  • L'Estrange, Gerry.
  • Lipper, Mick.
  • McMahon, Larry.
  • Mannion, John M.
  • Mitchell, Jim.
  • O'Brien, Fergus.
  • O'Brien, William.
  • O'Connell, John.
  • O'Donnell, Tom.
  • O'Keeffe, Jim.
  • O'Leary, Michael.
  • O'Toole, Paddy.
  • Pattison, Séamus.
  • Quinn, Ruairí.
  • Ryan, John J.
  • Spring, Dan.
  • Taylor, Frank.
  • Timmins, Godfrey.
  • Tully, James.
  • White, James.
Tellers: Tá, Deputies P. Lalor and Briscoe; Níl, Deputies McMahon and B. Desmond.
Question declared carried.

: This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.