Vol. 313 No. 1
asked the Taoiseach, in light of recent demonstrations of public disenchantment with the PAYE system and the letter delivered to his Department by trade union leaders demanding reforms, when it is proposed to hold talks between the Government and trade unions on the reform of the PAYE tax system.
2.
asked the Taoiseach if he would elaborate on his recent statement that the Government would hope to see trade unions and employers in the same kind of constructive discussion as that held recently with farm leaders.
3.
asked the Taoiseach whether he proposes to make any statement on the future taxation policy of the Government in the aftermath of recent developments.
4.
asked the Taoiseach whether he considers that the national interest in the aftermath of recent large protest demonstrations requires a public statement from him.
5.
asked the Taoiseach whether he considers any further public statement from him is required on general Government policy in the wake of recent demonstrations.
6.
asked the Taoiseach if he will make a statement on the events in the aftermath of the budget and the serious implications of mass organised protests.
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.
Is the Taoiseach prepared to stand over the statement made by the Tánaiste that the Government are not prepared to yield on the PAYE issue?
That is a separate question.
It is only right that the matter should be put in context to see what exactly the Tánaiste was asked and what answer he gave. The question to which the Tánaiste was replying was asked by a journalist in Brussels. The question was whether he had any last minute concessions to make to PAYE workers. The Tánaiste's reply clearly indicated that no one seriously expected last minute concessions. The implication of the question was obviously that some concessions should be made on the eve of the march and it was in this context that the Tánaiste answered. Incidentally, at no stage did the Tánaiste say that the marchers were wasting their time though a report in the Irish Independent, which was not quoting the Tánaiste directly, left one with the impression that he did say that.
Would the Taoiseach consider the setting up of a taxation review committee now?
We are involved now. Yesterday the Minister for Economic Planning and Development with his officials had a meeting with representatives of the Executive Council of the Irish Congress of Trade Unions. Separate committees are being set up to discuss the various suggestions and proposals made in the congress document which was adopted by delegates of congress a couple of weeks ago and taxation is simply one of the subjects which will be discussed.
Would the Taoiseach agree that there is justice in the PAYE wage and salary earners case that they pay a disproportionate share to the Exchequer? Would he agree that there is need to focus on the immediate demands of PAYE wage and salary earners in the same manner as there has been a response to the demands of farmers for a revision of the tax code in relation to them?
All these are matters that ought to be discussed with the interests concerned and in recent speeches long before the march was contemplated I referred to that very point. In a speech on 2 March I said that consultation and discussion are necessary to help reduce the area of misunderstanding and to support a common programme of action. I said that there was widespread agreement that this should be the procedure for tackling controversial or disputed issues—an attitude which was reflected, for example, in the movement towards industrial democracy, that if that trend towards greater participation in decision making is to be successful it must embrace and reflect the interest of all major groups in the community and not become the prerogative of any one section, however privileged or powerful. That is exactly what we are doing. In current discussions we are embracing as wide a context and perspective of people as is possible.
Would the Taoiseach agree that some of the policies pursued by the Government in the past 20 months, including the abolition of wealth tax and the removal of food subsidies, have heightened the sense of injustice on the part of PAYE taxpayers? Have the Government any intention of reversing those anti-social policies?
The Deputy is relating to a matter which is widening the subject and which is not covered by any of the six questions.
May I repeat——
We may not have a debate as wide as this.
Would the Taoiseach agree that in the interest of the relevancy of this institution there is need for a constructive response on the part of the Government to the widespread demands for a review of the present taxation code as it bears on wage and salary workers? Is it not incumbent on the Taoiseach as head of Government to respond constructively as speedily as possible, that is, if the relevancy of the Government and of our democratic way of life are to be preserved?
The response from us could not have been more speedy and constructive. May I repeat that within days of the delegate conference of the unions who are affiliated to the ICTU at which the congress proposals were endorsed, we acceded immediately to their request to meet them. We met them within days and I proposed at that meeting—that was on Thursday last—that we set about the task of setting up immediately a steering working party committee. We agreed to meet again yesterday. That meeting took place and there will be another meeting tomorrow. As I have indicated also, we are meeting the employers confederation this afternoon. Therefore, the Deputy could hardly expect a more speedy or constructive response than that.
Would the Taoiseach agree that the policies pursued by the Government in the past 20 months have increased the sense of injustice on the part of PAYE people? Is it the Government's intention to reverse those policies?
These matters ought to be put in their proper perspective. The decision on wealth tax—and I think this has been successful—was for the main purpose of generating employment by ensuring that sufficient capital would be kept in the country to generate increased employment opportunities. The food subsidies were introduced at a time when inflation was running at a level of from 20 to 25 per cent. These subsidies were introduced following a suggestion from this party who were then in Opposition. But these conditions no longer obtain. Inflation has been reduced to less than half the level which obtained then.
Would the Taoiseach agree that we would not be in a position where the Government were practically moving from response to response, staggering from blow to blow, if they had not made the blunders which had such a divisive effect on our society? In relation to the Taoiseach's reference to increased allowances as announced in the budget, would he agree in retrospect that the process of abolishing the lowest band and clawing back the social security contributions was the kind of trick that the people resent and that it is that kind of action, together with the type of anti-social policies referred to by Deputy Mitchell that have led to this massive resistance to the Government's policies?
There is no question whatever of a trick. The Government are elected by the people to determine policies and put them into effect as fairly as possible between one section and another. That has been our purpose. I might say, in respect of members of the Government and of this Dáil generally, that we, too, are liable for income tax under the PAYE system. I make the point as a result of hearing a commentator—not an RTE commentator—say on radio this morning that we do not pay income tax. Those of us who are in Government pay income tax on our salaries as Members of the Dáil as well as on our salaries as Ministers. That ought to be said because some people seem to forget it. To the extent that there might be any suggestion of alienation from other PAYE payers, we are all in the same boat.
I do not think that the Taoiseach should rush for cover under the skirts of the other parties.
Would the Taoiseach agree that the reasons advanced by him for the abolition of food subsidies and the dismantling of the capital taxation structure have now been demonstrably rejected by these public demonstrations?
We may not engage in a debate at this stage on all aspects of the budget.
The point is relevant to Question No. 3.
That is not so.
The Taoiseach has said that food subsidies were introduced at a time when inflation was at a level of between 20 and 25 per cent but in view of the latest figures published which show that the food element in the consumer index shows approximately an 18 per cent increase, would the Government consider an immediate reintroduction of food subsidies?
There is nothing in any of the six questions about food subsidies.
The Taoiseach raised the matter.
The Chair is concerned that the discussion be relevant to what is on the Order Paper.
But the Taoiseach referred to the question of food subsidies.
That does not give a licence to every Deputy to pursue the subject.
In reply to Deputy Mitchell the Taoiseach said that the reason for abolishing the wealth tax was to encourage employment and that that policy had been successful. In what sector of the economy is it demonstrable or even probable that the abolition of wealth tax increased employment?
Right across the economy. Of all the EEC countries, unemployment has been reduced only in Ireland, in Germany and in one other. Surely the abolition of wealth tax was a contributory factor in this regard.
Is there not a sense of fantasy inherent in that suggestion and in the suggestion that the abolition of a resource tax increases output but that the introduction of other resource taxes would also increase output? Would the Taoiseach agree that the immediately precipitating factor in the present crisis was the statement by the Minister for Agriculture after the meeting with the farmer organisations that he was pleased that the farmer organisations had expressed a willingness to work out an income tax system that would be equitable? Was it not the reaction of the rest of the community against the suggestion that one sector would work out their own income tax system that precipitated the problem? Should not the tax system be worked out by the Government equitably as between the different groups?
This was after the Minister had threatened to resign.
I heard Deputy FitzGerald make that comment in a radio interview this afternoon. He made many other comments also during that interview but he did not refer to the fact that the PAYE system was in existence also during his period in office and that there was no attempt then to change it. The official statement that was issued after the meeting that the Minister for Finance, the Minister for Agriculture and I had with farmer organisations was that the Government would consult immediately with the representatives of the farmer organisations attending the meeting and would devise an income tax system for the farmers that would bring a yield in line with that of other sectors of the community. It is stated clearly there and I said this subsequently, that the Government would devise a system. If the farmers do not agree to the system, certain other actions will follow.
Would the Taoiseach agree that it was the statement of the Minister for Agriculture which had a different effect and which precipitated the problem? Would the Taoiseach agree also that the policies we pursued in relation to taxation did not result in bringing onto the streets 200,000 people?
This is argumentative.
Would he not agree that the reason this did not happen was because of the measures we took to achieve social justice by removing VAT from food and clothing, by bringing down the income tax rates, by reforming capital taxes, by introducing farm taxation and by introducing food subsidies?
This is argument and debate.
How does the Taoiseach reconcile the statement he has just made that the removal of the wealth tax had led to a successful operation of job creation by the private sector with the Government's cutback of expectation of employment in the private sector by 10,000 over three years?
We are getting into the realm of argument.
We are entitled to answers to questions.
They are not irreconcilable at all. That is the answer.
Since the country is facing a crisis—not alone this Government—I would ask the Taoiseach whether in the context——
Order.
Some Deputies will lose as a result of the marches yesterday.
There will be some economy in the back benches. In the context of the present talks with the unions on which so much depends in regard to wage settlements, does the Taoiseach see any prospect of relief for PAYE wage and salary earners as a result of the talks? Could the Taoiseach hold out that prospect since we are facing a crisis?
It might be that the Deputy would like to see a crisis created. I do not see any such crisis because of the series of consultations on which we have embarked. I repeat that they were embarked upon before this march took place or was envisaged. I encouraged that kind of consultation in speeches I made as far back as January, from which I have quoted in reply to supplementaries. I will not anticipate the outcome of talks with the ICTU Executive Council. I do not think the Deputy would expect any member of congress to anticipate the outcome either.
Question No. 7.
Would the Taoiseach not be concerned——
(Cavan-Monaghan): The Deputy was called by the Chair.
Would the Taoiseach not be concerned that the policies which have been pursued by the Government have been perceived as anti-worker and this culminated in the demonstrations yesterday?
That is argument.
Would he not consider——
That is argument.
Would the Taoiseach not consider a reversal of those policies in order to introduce some element of fair play?
