With the permission of the Ceann Comhairle, I propose to take Questions Nos. 1 to 6 together.
Yesterday's demonstration which was carried out peacefully and with little rancour was the culmination of many years of the dissatisfaction felt by the PAYE sector at the imbalance of the income tax system. The Government are already fully aware of this and in two successive budgets since taking office have increased allowances in order to reduce this burden.
Speaking in the budget debate here on 8 February this year, I indicated that taxation in this country does not take an excessive proportion of national output, in the aggregate, by EEC standards. I said, however, that when the incidence of taxation is examined a different picture emerges. Those liable to tax on incomes pay on a comparatively low level of income a comparatively high level of tax, in comparison with other EEC countries. I said that this discrepancy was due in part to the high incidence of tax on one section of the population and a correspondingly low incidence on others. I indicated that agriculture accounts for approximately 18 per cent of national output but the proportion of income tax and rates paid by those engaged in agriculture lies somewhere around the figure of 2 per cent or 3 per cent. I said that the Government had no desire to levy an unfair proportion of tax on any section in the population but that the present imbalance obviously creates a situation which could not be allowed to continue.
I also referred in the same debate to the Government's determination that the self-employed and other persons outside the PAYE system should pay their fair share of taxes and that the campaign to tackle tax evasion should be prosecuted vigorously. While the Government are doing this, it is only fair to point out that sufficient trained personnel cannot be recruited at once.
On 27 February, the Tánaiste, the Minister for Agriculture and I met representatives of the main farming organisations. It was agreed at that meeting that following further consultation with those organisations, the Government would devise an income tax system for farmers that would bring in a yield from them in line with that of other sectors of the community. The Government will go ahead with action to achieve this result. As for the 2 per cent levy, the yield to the Exchequer will be the same whether or not the levy is operated this year, because if it is not operated farmers will pay, through the VAT system, the same amount as the levy would have yielded.
On 15 March, the Tánaiste, Minister for Labour, Minister for Economic Planning and Development and I met representatives of the Irish Congress of Trade Unions to discuss a wide range of issues, dealt with in their policy proposals for a national development plan, including health services, employment and taxation. A joint working party has been established to consider the various issues in greater depth.
Discussions are also being held with the Irish Employers Confederation. The first meeting with this organisation is to be held today.
The object of all of these discussions, as I indicated on a number of occasions recently, is to achieve a common understanding on issues which affect the well-being of the worker and the community. These include the relationship between earnings, taxation, welfare, employment and inflation. Over the years, earnings have increased considerably, in most cases bringing more and more wage and salary earners into the tax net. By and large productivity has not matched wage increases and this has contributed to the rise in inflation which even more than tax erodes the value of the weekly pay packet. The Government here have been tackling inflation fairly successfully since assuming office less than two years ago and are determined to win this fight. However, some excessive wage demands are being made which if granted could produce only the opposite of reductions in income tax and inflation. The discussions which we have been having with representative organisations are over such issues as these and the necessity for balance as between the competing objectives of achieving a fairer system of taxation, increasing expenditure on health, welfare and other services and sustaining economic growth. These are complex issues and their resolution will take time.