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Dáil Éireann debate -
Tuesday, 1 May 1979

Vol. 313 No. 11

Finance Bill, 1979: Second Stage.

I move: "That the Bill be now read a Second Time."

The main purpose of this Bill is to give effect to certain taxation changes announced in the budget and to make some other provisions which I will deal with later.

The main thrust of budgetary policy in 1979 is towards growth in employment and output, so as to assist in achieving the Government's objectives for economic and social development. With the increased dynamism of the private sector arising from the success of the Government's policies to date——

Would Deputies leave the House quietly, please?

——the contribution to growth from the public sector can be scaled down, enabling the Exchequer borrowing requirement to be reduced to 10½ per cent of GNP. However, the public sector resources will continue to be applied so as to maximise their ability to induce growth. In this way, my budget was designed to be stimulatory, but not excessively so.

The stimulatory design of the budget is clearly evident from the reorientation of expenditure, with the main emphasis being placed on investment. The public capital programme is estimated to reach £974 million in 1979, a massive increase of 22 per cent over the 1978 outturn. This increase runs well ahead of the increase in expenditure on current services, which is expected to grow by about 15 per cent.

As the House is aware, the Taoiseach announced on 25 April details of a plan for a "National Understanding for Economic and Social Development" which would provide a framework for continued economic and social progress. The implementation of the terms of this understanding is conditional on acceptance of the provisions of the pay policy for 1979-80, which has been agreed between the employer organisations and the Irish Congress of Trade Unions, to follow on the expiry of the 1978 national wage agreement. I would hope that the terms of this understanding will be accepted by all concerned. Should the provisions be rejected or if, subsequent to acceptance, they should be widely disregarded, then the parties involved will not be obliged to honour the commitments made in this understanding.

Both in the budget and in the proposed national understanding the Government have shown their desire to continue their policy of reducing the disincentive effect of personal taxation. In the 1979 budget, reliefs were given costing an estimated £30 million in 1979 and £47 million in a full year, which removed some 40,000 taxpayers from the tax net. The combined effect of the 1979 increases in personal allowances and the large increases granted in 1978 means that we have increased the value of the single person's allowance by 68 per cent and the married person's allowance by 103 per cent, more than doubling it, in two years. The additional special allowance for PAYE taxpayers which the Government have proposed under the national understanding, subject to certain conditions, is further evidence of the Government's active concern in this area. I shall be introducing an enabling provision by way of a Committee Stage amendment to cater for this special allowance.

Combined with these tax reliefs, the pay increases proposed in the national understanding will ensure a significant rise in real incomes.

I now turn to the individual provisions of the Bill. Section 1 which is effective for 1979-80 and subsequent years, provides that the income limit for the purposes of the dependent relative tax allowance will in future automatically be equal to the personal rate of the social welfare contributory old age pension, payable to a person aged 80 years, or over, and living alone. The income limit for 1979-80 will be £1,129. The provision is designed to obviate the need for annual legislation to revise the limit by reference to budget increases in the pension.

Sections 2 and 3 give effect to the budget day proposals for increases in personal allowances and the amendment of the lower rate bands. The revised bands and allowances are set out in the respective tables incorporated in these sections. In addition, provision is made under section 3 for a reduction in the income tax child allowance which reduction is related to the increases given in the social welfare children's allowances.

Section 4 provides an additional personal allowance of £250 for a parent who is widowed, deserted, separated or unmarried and who has a dependent child or children resident with him or her.

Section 5 provides that no part of the new pay-related contributions applying as from 6 April 1979 under the Social Welfare Acts will qualify for income tax relief. However, there has been a compensatory reduction in the rate of contribution.

Section 6 provides relief in respect of the labour element of expenditure by householders on the improvement and maintenance of their residences, including gardens. The relief, which applies for the year 1979-80, is confined to the excess over £50 of the amount of such expenditure. The maximum amount of expenditure which will qualify for relief is £450. The scheme will apply, among other things, to insulation and it is hoped that it will contribute towards job creation and energy conservation.

Section 7 provides that, with effect from 1980-81, premiums and other contributions under permanent health insurance schemes designed to maintain earnings during illness will be allowed as deductions for income tax purposes. The section also secures that any benefits payable under such schemes will be charged to tax and will be within the scope of PAYE as from 6 April 1980. At present, benefits are not regarded as income for tax purposes unless and until they have been received for more than a year.

Sections 8 and 9 are concerned with income tax relief in respect of personal interest. Section 8 increases from £2,000 to £2,400 the maximum amount of personal interest which, ordinarily, will qualify for income tax relief.

Section 9 scales down the maximum qualifying amount of interest in cases where employees and company directors enjoy the benefit of loans made at preferential rates of interest. The ceiling of maximum relief allowable in such cases will be scaled down in the proportion which the preferential rate of interest bears to a specified rate, 12 per cent. The effect is that where a person's borrowings are all at a preferential rate of interest, he can enjoy full interest relief on borrowings up to a total of £20,000. Under section 8, the limit of £2,000 in respect of interest on borrowings by full-time employees of public companies to purchase shares in the companies in which they are employed is also being increased to £2,400.

In line with the increase in the income tax limit, the limit on the deduction of certain interest which is treated as a charge on income for corporation tax purposes is being increased in section 20 from £2,000 to £2,400 a year.

Section 10 provides for the taxation, as from 6 April 1980 of short-term social welfare benefits, as announced in the White Paper "Programme for National Development". Section 11 enables certification procedure relating to tax recovery to apply to cases where an assessment is being appealed.

Chapter 11, which comprises sections 12 to 15, deals with the taxation of farming profits. As announced in the budget, the threshold of liability is being brought down from £60 RV to £50 RV and the multiplier under the notional basis of assessment is being raised from 90 to 125. Provision for these changes is contained in sections 12 and 15. Section 12, in addition, provides for marginal relief in the case of individuals occupying farm land of £50 RV to £59 RV, that is, those becoming liable for tax for the first time.

As also announced in the budget, provision is made in section 14 to enable a farmer to opt out of the notional basis of assessment on certain conditions. This section also provides that the Revenue Commissioners will have the right to require accounts to be lodged for the preceding one or two years of notional assessment and to determine if the accounts indicate a higher liability than that charged on the notional basis.

Section 13 provides that farmers becoming liable to tax for the first time may opt to be taxed on the basis of their current year's accounts, as such farmers may not have been keeping accounts already.

The present Bill does not, of course, provide for the revised system of taxation for farmers which has been devised by the Government and of which details have already been publicly announced. The revised system will be implemented as from 1980-81, subject to enactment of necessary legislation in due course.

Chapter III contains four sections dealing with losses which are designed, first, to rectify an anomaly by which, in certain circumstances, a trader could claim relief for the same loss for tax purposes more than once and, secondly, to allow a trader to set a trading loss incurred in the year preceding the year of assessment against other income charged for the year of assessment. This latter provision represents a liberalising change. The present position is that losses incurred in the carrying on of a trade, if not set against other income in the year in which the loss is incurred, can be set only against future profits of the same trade. These provisions are contained in sections 17 and 16 respectively. Sections 18 and 19 are consequential technical changes.

Chapter IV contains only one section, that is section 20, to which I have already adverted in the context of deduction for interest.

Chapter V contains various income tax and corporation tax provisions. As announced in the budget, stock relief is being extended for a further year. As the inflationary conditions which gave rise to the introduction and continuance of stock relief have considerably abated, relief under this Bill will be restricted to three-quarters of the amount which would be allowable if the relief were simply continued without any modification. Section 21 contains the relevant provision.

The next three sections are concerned with capital allowances. Section 22 extends to the end of 1980 the operation of the 20 per cent investment allowance applicable to capital expenditure on new machinery and plant in the designated areas. Section 23 corrects a drafting flaw in the provision in last year's Finance Act, which introduced "free depreciation" for industrial buildings and hotels. In section 24 I am extending for a period of five years the initial allowance of 100 per cent for capital expenditure on new machinery or plant and secondhand ships, and the 50 per cent initial allowance and 4 per cent annual allowance for capital expenditure incurred on industrial buildings. This is a further indication of the Government's determination that every opportunity be given to entrepreneurs to expand their activities with a view to increasing employment.

The next section is also concerned with employment. Section 25 provides for the exemption from tax of payments made to employers under the employment incentive scheme and the employment maintenance scheme.

Section 26 enables the Revenue Commissioners to approve for tax purposes a retirement annuity contract which contains an "open-market option", that is one which can be transferred from one assurance company to another.

Chapter VI is concerned with anti-avoidance.

Section 27 prevents the abuse of a tax relief intended for persons with very small incomes. Deputies may recall that in a press release issued on 18 September 1978 I gave notice of my intention to introduce a provision of this nature.

Section 28 is intended to counteract abuse of the tax relief available in respect of certain covenants. The practice has grown of the higher income classes transferring slices of their income, under convenant, to their children over 21 years with a view to avoiding tax. From 6 April 1979 transfers in excess of 5 per cent of the disponer's income will cease to benefit from this practice. However, I am providing that the position will remain unaltered where a child or grandchild who is permanently incapacitated, physically or mentally, is concerned.

Section 29 is a third anti-avoidance measure. It is concerned with dividend stripping, which is a device by which a tax advantage could be gained through buying shares of companies which have accumulated reserves and the taking of a dividend on those shares.

The last chapter of Part I contains two capital gains tax provisions, both of which are of a relieving nature. Section 30 introduces a relief from capital gains tax in the case of a disposal by an individual of a house occupied rent-free by a dependent relative. Section 31 allows a disposal by a mother to her illegitimate child to qualify for relief under section 27 of the Capital Gains Tax Act, 1975. Under the section mentioned, if certain conditions are fulfilled, relief is given on the disposal by an individual aged 55 years or over of business or farming assets to the individual's child.

Part II of the Bill deals with customs and excise matters. Sections 32 to 37 confirm the budget increases in excise duties on beer, spirits, tobacco products, wine, cider and perry. Section 37 also provides for relief from the new maximum rate of duty on cider and perry from stocks held by manufacturers on 7 February 1979 where these did not exceed 20,000 gallons. The rate of duty on these stocks will be the new intermediate rate. The concession takes account of the hardship which the immediate imposition of the new maximum rate could impose on these manufacturers having regard to the low flat-rate duty of 5p per gallon which had remained unchanged since 1940 until this year.

Section 38 provides for an increase in the penalty for unlicensed bookmaking from £100 to £500. The present penalty has remained unchanged since 1963.

Section 39 repeals an old customs provision contained in section 15 of the Finance Act, 1934, which has the effect of exempting from VAT importations of antiques by unregistered persons. This exemption discriminates against VAT-registered traders in antiques within the State, who are required to charge VAT at the 10 per cent rate on their sales.

Section 40 confirms a 1978 Order providing for the metrication of excise duty on hydrocarbon oils and replacement of the bushel in the law relating to excise duty on beer. The order was made by the Government under the Imposition of Duties Act, 1957. Details are set out in the Explanatory Memorandum.

Part III of the Bill contains two value-added tax provisions.

Section 41 amends subsection 18 (1) of the Value-Added Tax Act, 1972, which deals with the inspection of business records of persons liable for VAT, so as to ensure that inquiries may be made not only in respect of liability to tax but also in respect of claims for VAT repayment where no liability to tax arises.

Section 42 confirms the application of the standard 20 per cent VAT rate to radios and record players as announced in the budget.

Part IV of the Bill deals with stamp duties.

Section 43 will be of interest to charities, since it exempts from stamp duty transfers of lands and houses for charitable purposes in Ireland to bodies of persons or trusts established for charitable purposes. The introduction of this exemption brings the position in stamp duty into line with that obtaining in income, corporation and capital taxes where there is a special relief for charities. Sections 44 and 45 make certain changes of a technical nature in companies' capital duty, which is a stamp duty chargeable on the formation of a company or on an increase in its capital, while section 46 imposes an interest charge of 1.25 per cent per month where such duty has not been paid within the prescribed time.

Sections 47 to 49 are concerned with new stamp duty arrangements for transfers of stock and shares through the Stock Exchange. These arrangements became necessary as a result of a new computerised Stock Exchange transfer system which came into operation last month.

Part V of the Bill contains a few miscellaneous provisions which are on the usual lines and do not call for comment.

I commend the Bill to the House.

Normally, the Finance Bill should be one of the most important pieces of legislation to be put before the House. This year I do not think we can elevate it to that position. The Bill is designed to give legal status to the measures announced in the budget, but so much has happened so far this year in relation to the budget that this Bill has lost much of the relevance it would otherwise have. It is ironic that debate on the Bill should begin on this significant day, on the day when the farmers are meeting at the Spring Show, on the day on which there is a PAYE protest march and on the day which is the feastday of St. Joseph the Worker. This measure, therefore, has little relevance to the events taking place outside this House. This Second Stage is being introduced by a Government who have not done anything right during the past six months, a Government who by Irish standards have an unprecedented majority in this House.

It is inconceivable that any Cabinet could have made such a mess of the economy or, indeed, of the ordinary politics of the country such as that which we have been witnessing since October last. There are the problems on the industrial relations scene and the appalling situation of the Government not knowing what compensation was offered or when that compensation was due to be paid in respect of our entry to the EMS. There have been the efforts on the part of the Government to cloak some of the budgets we have had this year, as if these budgets were not important. For instance, there was the removal of the food subsidies a week before the budget of 7 February, though I would put the word "budget" in inverted commas because of its having been dismantled so much since then. In addition there have been the inadequate increases in social welfare payments and pay-related benefit and the reduction in the allowance for children in terms of the income tax code. During my speech on the budget I referred to its as being antifamily and anti-farming.

There has been the extraordinary pantomime of the 2 per cent or the now-you-see-it, now-you-do-not levy announced on 7 February and which we were told was designed to bring the farming community into line with the remainder of the taxpayers. But within a few weeks the Government had decided under severe pressure that they would not introduce the levy on condition that an acceptable rate of tax was agreed to by the farmers before 1 May. I shall not go further than to refer to what the farmers have been saying as agitation on their part, though some of the remarks made yesterday by leaders of the farming community would not appear to me to be suitable terms to use in a democracy. That agitation on the part of the farmers provoked the huge march of PAYE people six weeks ago. One can understand the sense of resentment on their part when the PAYE sector know that people in the area of capital gains can have these gains indexed while the ordinary person on a salary cannot avail of such indexation. That march would have been much smaller were it not for the intemperate and ill-advised remarks of the Minister for Finance in Brussels on the previous day.

To which remarks is the Deputy referring?

The remark that the people who would be marching the following day could not hope for anything. It was not so much the words that were used as the tone in which they appeared to have been uttered.

Does the Deputy know what I said and in response to what it was said?

I read the newspaper reports of what the Minister said.

Is the Deputy still satisfied that my words were intemperate?

Is it the opinion of the Deputy that I should have said there would be an immediate response? Which side is he on?

I was not the only one who was of the opinion that the Minister was telling the PAYE people that he had no sympathy with their position. About 250,000 people obviously read the Minister's words as I read them because that was the number who marched in protest the following day.

The Deputy knows that the Minister's words were misinterpreted.

Deputy Barry, on the Bill.

I am sure that the Deputy may contribute after I have finished. I suspect that those intemperate remarks of the Minister resulted in the people concerned being more determined to ensure that they be treated fairly in terms of the tax systems.

The Minister referred to the national understanding. It is unfortunate that already one of the main unions have decided not to recommend acceptance of this national understanding to their members. A wage agreement or some form of understanding is needed in respect of the level to which wages may increase between now and next year. The most important platform that we have for growth is our exports. Consequently, our exports must continue to be competitive. One of the cost elements in respect of exports is the level of wages. It is important that that cost proportion does not increase faster than the comparable costs of our competitors in other countries.

Unfortunately, the figures released this morning sound a warning about exports and imports based on figures for the past 12 months. The document issued by the GIS on behalf of the Central Statistics Office, dated 20 April 1979 shows that for the year ended March 1978 our import excess over exports was £516 million, whereas for the 12 months ended March 1979 it was £911 million, a growth of 80 per cent. That is a warning not only for the Government but for all Members of this House, for those engaged in industry and for our trade union leaders. We cannot provide employment for all our people unless we continue to show a strong growth in exports. If we are to increase our exports we must ensure that our costs are competitive. We must be able to compete at home and abroad with goods manufactured elsewhere. For that reason I hope that agreement is reached between the employers and the trade unions in regard to incomes. The Government have a role to play in that they can influence take-home pay by reducing the tax burden.

There were two elements in the budget which many people considered sneaky. The Government appear to be taking back with the left hand what the Minister announced he was giving with the right hand, that is, the increase in the allowance for single and married people. I refer to the abolition of the 20 per cent band at the lower level. This meant that all taxpayers came into a higher tax band. The other element is the reduction in the children's allowance from £240 to £218.

The second paragraph on page 6 of the document "National Understanding for Economic and Social Development" reads:

As a contribution to promoting the present National Understanding the Government will provide a special allowance for PAYE taxpayers at a cost of approximately £39 million in 1979. This allowance will operate in December, provided (1) that the budgetary position is reasonably in line with expectations, and (2) that any funds needed for employment creation, which is a first priority, have been made available.

The end of page 2 reads:

The Employer and Industry Organisations will contribute 50 per cent of the necessary finance for this programme to yield up to £10 million collected by means of a ½ per cent surcharge on the employer's social security contribution.

I am not sure whether the paragraph in page 6 relates to the paragraph at the bottom of page 2. The Minister should make an unequivocal promise. In his speech he said that he intended to introduce an amendment to the Finance Bill to take account of the £39 million referred to in page 6. The Minister should say clearly that the two conditions attached to the national understanding have been removed and that the £39 million will be made available whether or not the budgetary position is in line with expectations. The budgetary position is the responsibility of the Government. Neither the employers nor the unions had any say in the matter.

I am not so sure that the employer organisations will agree with either condition because the famous employment targets were not devised by them. These targets are the Fianna Fáil Party's targets. We now find that half of the cost of fulfilling Fianna Fáil's promises must be met by the employer organisations. The more successful the private sector in increasing employment the more they will pay for the shortfall that may occur during 1979. If those two conditions were removed, the national understanding would receive a warm acceptance from both sides of industry, although some people will argue that the 15 per cent wage increase is too high and is more than the country can afford. I presume the Government are hoping that what we might lose in industrial relations through a lower agreement we may gain in industrial peace through a higher wage agreement.

All this has been negotiated with the EMS in the background. It is possible to trace the start of the Government's lack of confidence in dealing with the economy from the first time the EMS was mentioned last October. I am sure that no one will forget the contradictions between the Taoiseach and his Ministers in relation to the EMS. Early this year we were still not clear where the money was coming from or if it was coming at all. I am glad that the position has been clarified and that the £45 million will be made available. In last week's newspapers the Minister was reported as saying that there was nothing in the negotiations to prohibit the money being used in this way. During the debates on the subject in this House we were given the impression that the money was being made available to help us overcome the problems of entering the EMS.

At this stage the Chair is satisfied that we are discussing something that does not arise on the Bill before the House.

I think it does.

We cannot have a debate on the EMS. I have allowed the Deputy to mention it in passing.

The national understanding has been negotiated against a totally different background to any other wage agreement because we are now inside the EMS in which, according to the Minister and the Government, different standards are demanded of us. I am trying to determine whether the national understanding measures up to what is required of us inside that system. We were told, for instance, that we would have lower inflation rates. One of the things which prompts people to look for wage increases or fringe benefits is the amount they have to pay for mortgages. We were told when joining the EMS that interest rates would be lower.

We were not told that. I can tell the Deputy now what was said on numerous occasions, namely, that the EMS would create the circumstances in which, if we took advantage of them, we could have lower interest rates. We were at great pains to stress that we would not automatically have lower interest rates.

The Chair has ruled on this. The EMS may be mentioned in passing, but it may not be debated on a taxation Bill. This is purely a taxation Bill.

I myself made the point that the EMS would be of no benefit unless we were willing to do something ourselves.

That is right.

It would be very hard to argue that this Government have done anything to better our position inside the EMS. Everything appears to be far worse now than before we joined, including the rate of inflation. Earlier the Minister tried to tie me down to exactly what he said in Brussels and, as I have said before, this Government are extremely good at using words. The actual legal interpretation of what the Minister said in Brussels would, no doubt, confirm exactly what he says he said.

Surely on that issue the Deputy is propagating something he knows to be untrue. It is not a question of legality but a question of——

The Chair at this stage must ask the Deputy to stay with the Bill before the House. What was said in Brussels or anywhere else has nothing to do with a taxation measure.

At the beginning of the Minister's speech he referred to the national understanding.

Yes, very briefly and I will allow every other Deputy to deal with it briefly, but we will not have a debate on it.

If something is introduced for discussion in this House and the Chair accepts it, the Chair cannot then dictate the length of time during which other Deputies may discuss the matter. If the Minister chooses to refer briefly to the national understanding, must I do the same?

Under the heading of the national understanding, the Deputy could debate everything under the sun. The Bill before us is a taxation measure. The national understanding as it affects taxation measures may be referred to in passing.

On a point of order, does the ruling now being made by the Chair follow precedent? My recollection of precedent is that one could cover on the Finance Bill as many items as in the budget debate because it is the same matter.

It is not the same matter and there is not the same latitude on the Finance Bill as on the budget debate, which took days. We cannot have a second budget debate. The Deputy knows that and this has been ruled several times in the House. This is a taxation measure. We are discussing taxation arising out of the budget and other taxation measures in this Bill.

During his speech the Minister stated as follows:

As the House is aware, the Taoiseach announced on 25 April details of a plan for a "National Understanding for Economic and Social Development" which would provide a framework for continued economic and social progress. The implementation of the terms of this Understanding is conditional on acceptance of the provisions of the pay policy for 1979-80, which has been agreed between the employer organisations and the Irish Congress of Trade Unions, to follow on the expiry of the 1978 National Wage Agreement.

He went on to refer to tax reliefs. Once the Chair allows the reference to "a framework for continued economic and social progress", the Chair may not rule that we may use only the same number of words or spend the same amount of time discussing this matter as did the Minister.

I have not said that. The Deputy has spent the past ten or fifteen minutes discussing it.

Yes, I have.

The Minister dealt with it as it concerned personal taxation and the effects of personal taxation.

I will be doing that, too. There is more affecting personal taxation than the rate at which it is collected, though that is obviously the most important part. I could not accept that the Chair would confine me to using the same number of words or the same length of time as the Minister. That would be most unfair.

I have no intention of doing that.

Frequently during the debates in December and during the budget debate there was reference to a 5 per cent inflation rate at the end of the year. This figure was used again and again, particularly by the Minister for Economic Planning and Development, but also by the Taoiseach and the Minister for Finance. Evidently that meant that it was 1.25 multiplied by four, if that was the figure between mid-August and mid-November, giving an annualised rate of 5 per cent. The impression taken—I am not sure whether it was meant to be given—was that the annual rate of inflation for 1979 would be 5 per cent. This figure was used frequently during wage negotiations as an incentive to people to moderate wage demands. The Minister for Finance used the figure several times during his budget speech and referred to the necessity for wage moderation, saying that the increases of last year could not be repeated this year. There had been a wages drift from the original figure of 5 per cent, which had been arrived at after great soul-searching and investigation by very competent people who decided this was the appropriate figure for the Irish economy in 1978. Within days it had risen to 8 per cent and when the budget was introduced the Minister prefaced his remarks on pay policy by saying that the end-of-year inflation for 1979 would be 5 per cent. He then said that last year the increase in wages had been 16 per cent and that obviously this was an inappropriate figure for 1979 and would not be justified again in current circumstances.

Certainly the impression was given that the end-of-year inflation rate of 5 per cent, which would be less than the 7.6 per cent rate for the 12 months ending November 1978, would indicate that a proportionate decrease in the level of incomes for 1979 was required by the economy. Only by some probing in the early part of this year was it discovered that this 5 per cent inflation rate at the end of the year was arrived at by multiplying by four what is prophesied to be the increase in inflation between mid-August 1979 and mid-November 1979. When that was established, people became suspicious of every figure produced by the Government.

In the Government's own interest it would be far better for them not to indulge in playing with words which appear to give the impression that they mean one thing and are tied to it, and that when they said the inflation rate would be 5 per cent that was what they meant. When it was discovered that the rate would not be 5 per cent, the demand for more wages increased. People are now looking to the Government for more than was offered in the tax reductions announced by the Minister in the budget. Again to-day, the Minister referred to increasing the tax allowance for married couples by 102 per cent, or 104 per cent, or whatever the figure is. He did not refer to the fact that everybody has moved into a higher tax band. He did not refer to the fact that people with children will have a smaller allowance for income tax purposes. He did not refer to the fact that the portions of social welfare contributions which were allowable for tax purposes are not allowable now.

Some people have got correct tax assessments, but many more have not got correct assessments because of the postal strike. One group of people told me that they are better off by 1p a week. In those circumstances, people feel they are being conned, or codded, or fooled, and that the Government are endeavouring to paint a picture with words which bears no relation to the reality of life as they know it. That also applies to many other actions by the Government.

We had a perfect example of that here today when the Minister for Industry, Commerce and Energy was answering questions about the oil crisis. He is the hero on the white charger who took on the dragon of the oil companies in Holy Week, the villains who were robbing the Irish people of their rightful share of world oil. He was a very much quieter boy here today. He had to admit that it was his own laziness for three months which caused the crisis. There was also his insulting behaviour in referring to the people of this country as criminals. The Minister of State at the Department of Industry, Commerce and Energy, Deputy R. Burke, appeared on a television programme 48 hours before the Minister said the oil companies were doing the people——

We are not dealing with oil. This is a taxation measure. We cannot deal with the oil shortage or anything about oil on this Bill.

I have not been in this House for as long as the Leas-Cheann Comhairle or Deputy Tully but, like Deputy Tully, my understanding is that on the Finance Bill Deputies can speak on the whole range of Government activities.

I am sorry to disabuse the Deputy. The budget debate allows that but the Finance Bill does not. This is a taxation measure and nothing else.

The effect it will have on what people will have to spend must be discussed.

The Chair must rule according to the rulings given down through the years.

Not in my time.

This is a taxation measure and I will give Deputies plenty of latitude to deal with it, but they cannot deal with the oil crisis on the Finance Bill.

People are concerned about their take-home pay.


They are concerned about how much money they have left in their pockets. Whether the Government or the oil companies or the shopkeepers take money out of their pockets, it is what they have left that they are concerned with. If they end up with less in their pockets, of course they will be sore, and of course they will protest. The Minister for Industry, Commerce and Energy abused the public first and then the oil companies, and then it turned out that he was the one who should have been taking the abuse because he was too lazy to do anything. There was a programme on RTE on Good Friday morning dealing with food prices. The commentator had done a survey on prices between Easter 1978 and Easter 1979. She said that the price of meat had gone up by 35 per cent in that time.

The Chair cannot allow that to continue. We will have a three-hour debate tonight and tomorrow night on prices. That does not arise on a taxation measure.

I am making the point——

The Chair must rule that the Deputy is not dealing with the Bill before the House. The Chair has to call the Deputy's attention to that.

People are concerned about what they have left in their pockets when they have paid their bills. This woman said the price of meat went up by 35 per cent and the price of vegetables by 100 per cent. Obviously people who find themselves so much out of pocket because of these huge price increases will look for relief in other directions. They want more relief under the tax code. That is a normal reaction. If the Minister is allowed to refer to that when he is replying he will say those figures were not arrived at in a scientific way. I do not know how they were arrived at.

The reality is that people know they are worse off this year than they were last year and that is why they are looking for relief under the PAYE system. That is the point I was making about the national understanding. It will not be good enough for the Minister to say if certain conditions are met now he will give relief at the end of the year under the PAYE system. He must say quite clearly that people are entitled to these reliefs and he will give them come hell or high water next December. That would be a major step towards having the national understanding accepted. A Leas-Cheann Comhairle, I would be glad if you did not try to rule me out of order on this. One of the most important parts of the budget was the 2 per cent levy on farmers but we cannot discuss it because——

The Deputy may discuss farmer taxation.

The 2 per cent levy is the controversial part of farmer taxation but I cannot discuss it because the Minister has introduced it in a rather sneaky way. In fact, I do not know whether or not it has been introduced. It was supposed to be introduced today by ministerial order but it is not on today's Order Paper. Could the Minister tell me whether he has yet signed the order?

The order has been made.

The order has been made today?


It is not on today's Order Paper.

It would not appear on the Order Paper.

Perhaps the Leas-Cheann Comhairle could give me some guidance on this. Does not any order signed by a Minister have to appear on the Order Paper?

The Chair could not rule on that. It does not concern the Chair.

I think it does.

The Chair has no power in relation to that. It depends completely on the provisions in the particular statute.

Such orders must be laid before the Houses of the Oireachtas and should appear on the Order Paper. Is that not correct? My understanding is that it should appear on the Order Paper but it does not so appear. The Minister tells me that he has now signed this controversial 2 per cent levy. This is something that should be included in the Finance Bill. Certainly, it will mean revenue collecting. It was dragged into a piece of legislation referring to oil, petrol and so on, where it had no relevance. The only explanation I can come up with why it should be introduced by ministerial order and not in the Finance Bill we are now discussing is because, if it had to be voted on in this House, Deputy Gibbons, the Minister for Agriculture, would not have voted for it. That must be the only explanation for it, and the Government had to see under what legislation they could drag in the 2 per cent levy. That would save them the embarrassment of the Minister for Agriculture not going through the lobbies in favour of a tax on farmers. Obviously, I cannot say whether that is correct or not, but it is reasonable to speculate that this is the reason why it was introduced by ministerial order and not by way of the Finance Bill.

The farmers were given to 1 May to agree a system of taxation or accept the levy, which we are now told is being introduced today. There is no doubt that the system of taxation announced last week by the Taoiseach and the national understanding referred to today by the Minister, due to be introduced perhaps in next year's budget or later on this year, contain provisions that will not be acceptable to at least some section of the farmers. I shall just refer to one of them, because Fianna Fáil made such a fuss in Opposition and, indeed, since they came into Government about the wealth tax. However, they propose now to introduce under the changed name of a resource tax a wealth tax for just one section of the community, the farmers. The farmers, having protested so vehemently for so long about the wealth tax being introduced by the previous Government, would be very foolish now to accept a wealth tax under another name from this Government, in fact, the basket of taxes announced last week and which the Minister said could be introduced some time later in the year. Indeed, the first rumblings have come from the farming community on these taxes. The Government, having bought off the farming community at the expense of PAYE workers, then buy off the PAYE payers by announcing, on the same day as the national understanding, a list of taxes on farmers that will certainly appear to the farming community to be extremely severe.

At the end of the year are we going to see this Government again turning tail because of the farming community and backing down from these tax proposals? Is this something that the Government are hoping will help them to get the national understanding accepted by the unions and employers but which they have no intention of implementing? Time will tell. We shall not know whether that is so until the discussions start with the farming organisations. I am certain that, if the Government think they can cod the farming organisations by bringing in a wealth tax and calling it a resource tax, they will get a very rude awakening throughout the summer.

When the Bill is on Committee Stage I shall have a number of amendments to propose. On section 2, I shall be proposing, as I proposed last year and as the Minister turned down because he said it was not practical, to introduce an amendment to index the tax band on the table at the top of page seven. The Minister said last year that he could not accept this, that that would not be fair. Certainly, the Minister voted down that amendment. Yet, later on in the same year, last October or November, he introduced amendments to the Capital Gains Tax Bill in this House. One of the amendments the Minister introduced was indexation for people who make capital gains; in other words, that there would only be tax on real gains and not on the illusory gains brought about by inflation. These gains by the ordinary taxpayer are exactly the same but they are of benefit to the Minister for Finance inasmuch as every year, when people get wage increases, they come into a different tax band and the Minister gets increased taxation. Therefore, he does not have to come into this House and increase the level of taxation. I want to stop that now, and the Minister knows and agrees that this is the correct thing to do. When in Opposition the Minister introduced in Private Members' Time a motion to index the tax bands and allowances for all income tax payers. However, since he went into Government he has refused to accept this; but he does accept indexation of people under capital gains tax. I want the Minister to do exactly the same for one form of gain, salary gain, as he does for another form of gain, capital gain.

I shall certainly be looking to amend section 3 which reduces for 1979-80 the child allowance from £240 to £218. The Minister justifies this on the basis that he gave increased children's allowances. As I pointed out on the day of the budget, these children's allowances are very small and of very little benefit to people with large families. One should not claim to give a relief in one case, take it off a few paragraphs further down and then say that one is doing something for families. The Minister did not refer to the fact that he did not give child allowance increases last year.

I certainly welcome section 4. I shall be seeking to amend section 5. I do not think it would be that difficult to apportion the amount of the pay related benefit in relation to health pensions and old age pensioners. It has always been operated so that these people got £64 or £68 against their tax. This is something which should be restored. The Minister should also review the position where people in the private sector who are not under the Social Welfare Act pay for a pension. They go to an insurance company and buy themselves a pension for age 65. The premium they pay is allowable against tax. Why should somebody who pays the same thing, a premium to the State, not be allowed the payment of that premium for tax relief as in the case of a person who buys it from a private company? I would like to see that restored.

I welcome section 7 of the Bill. The provisions of this section are due to come in next year and the people receiving this money will have to be receiving a payment from an insurance company, health board or some other source and will be taxed on what they receive. I would like the Minister to keep an eye on this section and to introduce an amendment to this section 7 or in next year's Finance Bill so that the people who are in receipt of an allowance at the time the Bill comes into operation—that is to say persons who become ill next January and are sick for six months overlapping the period in which the Bill comes into operation—would not go from a state of not being charged tax at the end of March next year to being charged tax during April of next year.

I would like to say a word or two about section 9. This refers to taxing people who have preferential loans from banks, insurance companies and so on. I will say some day that this was a just thing to do. At the same time it was very untimely for the Minister to announce it in the middle of wage negotiations when bank employees are looking for increases for dealing with the complexity of the EMS. I am not going to discuss this again, a Leas-Cheann Comhairle, I am merely saying that the bank staffs are looking for an increase. It is difficult to decide how people look on these things. Do they accept that they should be paid less because they have this perk? Do the Government say that this is a perk that is available to nobody else, it is really a benefit in kind and therefore should be taxed as if it were part of their salary? On that argument, very many people have perks of that nature. Will the Minister next year drag somebody else into that category? Soldiers and gardaí get uniforms. CIE employees and Aer Lingus employees have free travel. To take it to the absolutely ridiculous, even Members of this House get subsidised meals. Is the Minister going to drag all these people in and say, "You all have some benefits in kind and we are going to tax them"? Will we have the absurd position whereby the meals we enjoy here are going to be considered a benefit in kind and will be taxed? It was unwise to introduce that this year. The people who enjoy benefits of this kind consider that if they are deprived of the benefits they are thereby accepting a lower salary for their services because part of what they are paid is involved in this preferential loan that they get.

That is all I want to say on the details of the Bill. I will have a number of amendments to introduce later on. I welcome the amendment contained in section 31 which allows the passing on to an illegitimate child. It says:

"(d) For the purposes of paragraph (a), an illegitimate child who has not, on or before the date of the disposal, been legitimated or adopted in the manner described in section 36 (a) (ii) of the Finance Act, 1977, shall, if the disposal is made to him by his mother on or after the 6th day of April, 1979, be the child of his mother.".

I would like the Minister to see if there is any danger of some illegitimate child being disadvantaged if his father wanted to make a gift to him in this regard. Perhaps this is covered under the Finance Act, 1977 or perhaps some regulation states in relation to these matters that "mother" means "parent", whether male or female. I ask the Minister to look into that before Committee Stage.

I am sorry the Minister is not here. I want to pay a compliment to him for the courtesy he extended to me on the few occasions that I approached him since he took office and the speed with which he dealt with some small matters which I asked him to look after which were important to the people of this country. I give credit where credit is due, particularly as I propose to be very critical about the Bill and later this evening about the activities of the Government. He is approachable, something that I appreciate very much, having attempted to live up to that standard myself when I was a Minister.

And succeeded.

It is a pity that others do not follow the same pattern. It is said that those who sow the wind will reap the whirlwind and if ever this proved to be true it is now under the present Fianna Fáil Government. When in Opposition they did not exactly say that there was no necessity at all to have tax but they went as far as they could in that direction. They criticised any and every tax imposed by the previous Government. They went so far as to suggest that it was simply a matter of talking away taxes and that they could very well be done without. This was the pattern they followed and the wind which they sowed.

Coming into this House on so many occasions and, as Deputy Barry mentioned, putting down motions in Private Member's Time to say what should or could be done and then refusing to do that when they took office is an example of the dishonest way in which the country has been run for the last two years. The desperate unrest in the country at present has been brought on as a result of this activity of the present Government before they took office. While there have been comments about the motives of those who marched in the PAYE march some time ago, it was a fine day and a lot of people went out for a daunder. It was a good-humoured march. Nobody would say that about today's march. It was raining hard, and anybody who likes to go outside the gates of this House even now can take a look to see how people who are paying PAYE feel about the way in which they are being treated by the Government.

It is not so much the fact that tax is being put on to them but that it is unfair and accepted by so many people as unfair. If the Government were to make up their minds, as all Government in the past had to do, to bring in a budget, decide on taxation and stick to their guns, that would be acceptable. Before the budget was introduced at all this Government proceeded to introduce minor budgets—Deputy Barry referred to this matter also—taking away something from people, putting on a little bit of extra taxation here and there and then introducing a budget which took nearly a record time to read out in this House. Then within hours they backed down from that budget but not before the Minister for Finance and some of his colleagues, including the Taoiseach, had stated categorically that there was no way they would back down from it.

They had hardly made those definite statements when they proceeded to back down very quickly. We all look at the annual conferences of other parties on television, because we wish to see how the others are doing. It was very interesting to note the proposed change in the 2 per cent levy which it was intended to introduce, the reception it got and the guarantee given by the Minister that that was the end of it and that there would be no change. Then without any apology to anyone, it was found necessary to offer to change it. This is where I find the Biggest fault with the present Government. I am amazed at the way they say they will do something and then change their minds. While that may have been all right from some of the bright boys in the Cabinet before 1972, because they were known as kite fliers, it is not good enough from politicians who have been four years in opposition and are again back in Government, and who consider themselves to be senior politicians. They should not suggest that certain taxation may be imposed and then back down as soon as somebody starts to talk.

I lived in rural Ireland all my life, and I know how rural people operate. I would not like to see a war between urban and rural peoples. If ever a Government, through taxation, attempted to cause such a war, it is this Government. I have had a unique experience in that I was on the workers' side and a party to a number of the first national wage agreements negotiated. On the Government side I was a party to agreements up to two years ago. I can claim to have slight knowledge of the way in which these agreements are worked out and of the interpretation of them. In the interests of the country I, like the previous speaker, hope that there will be a national agreement which will allow the people to live in peace and harmony and which will allow workers to have something with which to pay their shopping bills after taxation. The Minister said in his speech:

The additional special allowance for PAYE taxpayers which the Government have proposed under the national understanding, subject to certain conditions, is further evidence of the Government's active concern in this area.

That phrase more than anything else will contribute to the rejection of the present proposal. That says "live horse and you will get grass". The workers have been taken in too often by Fianna Fáil to accept the suggestion that if everything turns out all right they will get some money back. That relates to even external matters which the workers cannot control. It is obvious that the people who negotiated this agreement took an awful lot on trust. From the workers' point of view, I, in my time as a trade union negotiator, would have found it extremely difficult to accept that, but as a member of the Government I would have been happy if I had got away with it. It leaves the whole thing wide open.

In this Finance Bill provisions are made to ensure that the people already carrying the main burden of tax will continue to carry it, but they are given the impression that they are getting something off, whereas the abolition of a tax band means that in many cases people are in a worse position than they were before. The suggestion that this will help the taxpayer is illusory. There will be substantial wage increases this year. That is accepted by everybody. Immediately upon that the people who were taken out of the tax net will be brought back in at a higher rate. There is no point in saying that 200,000 people are being taken from the tax net. That is all cod, because they will all be back again at a higher level of taxation. The whole thing is a bit of a farce.

I and most farmers agree, that farmers should pay the same amount of tax as everybody else. There is no reason why one section of the community should have to pay tax at a different level. Down through the years many farmers, particularly small farmers, were unable to pay tax. Many of these farmers are doing well at the moment and nobody begrudges them their wealth. But they must now accept that they must pay their fair share of taxation. Perhaps the Government should introduce a system whereby farmers' incomes can be assessed in the same way as PAYE earners' incomes are assessed. The earnings of self-employed people ought also to be assessed in the same way. Very often by keeping quite they can get out of paying tax. If that were done there might be a general reduction in the rate of taxation. Recently we tried to make up how much actual spending money a PAYE earner would have after taxation and everything else. Even for the supposedly well off PAYE earner the amount of disposable income was pitiably small.

This debate relates to the Finance Bill but practically everything people buy is affected by tax. Nobody need tell me that I can go into a shop and buy something that is tax free. The cost of bringing the goods to the shop from the place of manufacture is affected by the cost of fuel and the cost of production is also affected by it. Right down along the line taxes upon taxes are added and the eventual buyer of a product pays the cumulative amount of tax.

Comments were made about whether we would be able to continue to complete abroad if wages were too high. Being aware of the rate of pay in most of the countries with which we complete, and being able to compare the cost of production in general, I see no reason why the situation here should not be very much better. While the Chair rules that the EMS is not a subject for discussion here, surely the cost of production here, as affected by the EMS, must come under this Bill. Surely the fact that Irish exporters are selling at a lower price and importers are importing at a higher price, is a matter that is covered in a general way by our taxation code. The profits made by manufacturing companies are affected to a great extent by that item. There are many companies who did not stamp insurance cards when that had to be done, they are not paying VAT and they owe the State many thousands of pounds. Is any effort being made to deal with these people? Recently I met three gentlemen and they were very critical of the way unemployed workers were getting what they called charity from the State. I was very annoyed at their attitude as these three men had got substantial grants from the State because they were able to make a case that they needed them. In two instances they were not able to make such a case. In case the Chair should rule that that is out of order, I would point out that it is included in the provision of the money——

Dealing with tax avoidance is completely in order but discussing grants and so on is not in order.

Money is made available to the IDA as a result of legislation passed here. The Finance Bill provides certain moneys and I submit that as they have to be provided here in the first instance and are included in the Finance Bill they should be discussed.

Actually it comes under the Appropriation Bill. The Deputy is quite entitled to deal with tax avoidance.

In certain cases where employees tried to obtain social welfare benefits it was discovered that the insurance cards were not stamped. When I made some further inquiries it transpired that VAT had not been paid either. It would surprise many people to learn the amount of VAT that comes to the State eventually when refunds are taken into account. Perhaps the Minister for Finance would be able to cut down on much of the paper work.

With regard to the amount of money available to local authorities for road grants, according to the political views held by people they were prepared to claim that the situation showed a big improvement on the previous year, that slightly more was provided than in the previous year or that less was provided than in the previous year. It was only when we succeeded in checking on the VAT that had been deducted from the road grants at local level to be resubmitted to the Minister for Finance that the amount of money was reduced substantially in every case. We have the situation where, due to taxation and VAT being introduced for the first time, not only the county roads but also the national and primary roads are a disgrace and a danger.

Recently in this House there was discussion regarding the licensing of radio stations. I heard on the local Drogheda station an SOS to know if anyone knew the whereabouts of a green van that was last seen in a pothole in a road outside the town.

It is not in order to discuss roads on a taxation measure.

The Chair must allow me——

That would allow a tremendous amount of latitude and I am afraid the Chair could not permit that.

Is the Chair aware that VAT is now charged on road material and on road machinery? This substantially reduces the amount of money that can be spent on the making and repair of roads, hence the potholes. If we are going to talk about taxation we must be allowed to comment on what I consider to be very unfair taxation. I do not think that money should be collected from local authorities by the State. Where they are given it it should be left to them.

Just before Easter I raised the matter of petrol and oil supplies. The Chair made a ruling on that but I think I will be allowed to make this comment. I asked the Ceann Comhairle for permission to raise the matter but he said it was not urgent and he was entitled to make that ruling. I raised the question on the Adjournment and the Minister of State said it was not urgent. Subsequently I was asked to go on a radio programme and I made the point that the Minister responsible should use his powers to ensure the flow of petrol and oil.

This does not arise on a taxation measure.

Will the Chair allow me to develop the point?

I already ruled it out when Deputy Barry was speaking. Every Deputy in the House will want to debate the question of an oil crisis and so on.

They should.

Not on this measure.

I have been a Member of this House for many years. This was discussed on the Finance Bill every year except one year when no taxes were imposed.

Can we discuss it on section 40?

My argument is that since that time the newspapers have shown that a tremendous amount of tax was paid on fuel oil.

That is a tax duty.

Section 40 refers to hydrocarbon oils.

We can discuss the tax duty on anything but we are not going to discuss the oil crisis.

I do not want to be awkward with the Chair. I acted as Acting Chairman for many years and I am aware of the difficulties. However, I ask that I be allowed to make the case I am trying to make, namely, that despite the fact that we were told there was plenty of oil and petrol, despite the fact that I said this could be wrung out of the oil companies by the Minister—which he did subsequently—the evidence in the newspapers since then is that very substantial increases in the amount of petrol and oil duties have been paid during that period. My case is the Government cannot just take their taxes while ignoring their responsibilities. Instead of getting a clap on the back, the Minister for Industry, Commerce and Energy should get the clap a little bit lower down.

He went off to China before the increased price of petrol was announced.

The Minister of State was not here at Question Time.

Deputy Tully is in possession, and on taxation. We will not discuss any Minister except the Minister for Finance.

Every Minister in the Government is responsible for expenditure, and the money comes from taxation. The Government are responsible for what happens but in this Dáil when Fianna Fáil Ministers are asked questions they hang their heads and will not answer. Taxes come from things that are sold and used throughout the country. The Government deliberately prevent such sales and therefore they are responsible for any shortfall in tax revenue. There is no point in their saying that the PAYE people or the farmers are not doing enough. How much tax do we get from tourism? Is it not true that tourism is falling flat this year, that there is not a hope of that industry being able to survive unless something is done quickly? The difficulty there has been caused because of the postal strike, because people cannot get through to the hotels to book their holidays.

We will certainly not discuss the postal strike. The Deputy has said he has sat in this Chair on numerous occasions, and he knows better than most of us what it is in order to discuss on this Bill. He knows the industrial relations and the postal strike may not be discussed. There is no use arguing with the Chair on a ruling. If the Chair rules that the Deputy will not discuss some matter there is no use going all around the world——

Why do you not make a ruling that nobody except a Member on the opposite side is entitled to make any comment at all?

That is completely unfair. I have been very kind to every Deputy, and Deputy Tully is being very unfair. His allegation is that the Chair treats one side of the House differently from the other.

I am not making that allegation.

It is an allegation that should not be made.

The Finance Bill seems to be grand from that side of the House. We say it is not, and you, Sir, are effectively preventing me from making a case.

That is not true. I am preventing the Deputy from dealing with matters that are not relevant on this Bill. I have told the Deputy that the postal strike may not be raised on the Bill—there will be plenty of other opportunities to raise matters of that kind.

Would you give me a ruling on this Sir? If the postal strike is to be settled, and it will cost money to settle it, will it not require taxation to raise that money, whether it is to come from postage charges or otherwise, and is not that something that would normally be discussed on this Bill?

Only taxation may be discussed on the Bill. The postal strike is not relevant.

I am not trying to debate the postal strike. Let me repeat that what I have said, and I am sure you will agree with me, is that tourism is falling flat because people cannot book their hotels.

The Deputy is doing everything in his power to get around the ruling of the Chair.

This is remarkable. In my experience here I have never found the Chair making a ruling like that now being made by the Leas-Cheann Comhairle. I cannot understand it.

The Deputy made such rulings himself in my presence in the House. It is not up to the Chair to say things like that, but whenever he was here the Deputy kept the House in order, which is what I am trying to do.

I am not attempting to make the House disorderly. I have never done it and I do not propose to begin now. I am trying to prove that there is no point in discussing the Finance Bill here if we are to be put in a situation like Rome burning while Nero fiddled. That is the situation we are facing. You have ruled both Deputy Barry and me out of order on the EMS and I am finding it very difficult to make certain points.

What does taxation amount to? I know a social welfare recipient who paints. Not only is he unable to pay tax but he cannot live because he cannot earn enough money. However, if he were a wealthy painter in this city, no matter where he had come from, he would not have to pay tax no matter how much money he earned because there seems to be one law for the rich and another for the poor.

We have to face up to the situation as we see it. People cannot afford to shop any more because of price increases granted by the NPC. Yet in face of that we have been told that workers should not look for too much of an increase in their pay, that they would upset the country. At the same time, the man with the expensive car, the big house and the expensive way of living has not anything extra to pay. It is about time we faced up to this. I was a trade union official for many years and I did not like strikes. They must be avoided if possible in the interests of the workers, but I would be the first to say that a worker must get enough to live on and he is perfectly entitled to take the advice given to him by his union.

The proposal in this Bill to tax short-term social welfare benefits is retrograde and should not be implemented. I am one Deputy who had the experience of finding himself unemployed and I know the degradation of having to try to live on unemployment benefit. It is all right for people who always had full and plenty to talk. They do not know the conditions in which the unemployed and the sick are living. I am not in favour of this proposal, although I appreciate that certain contributory old age pensioners have a lot more money coming in than many of us in the House and that if they got away with it they would be laughing. I realise that if some old age pensioners, for instance, are employed by a local authority, something should be taken from them, but we must remember that the amount they are getting is very much less than what they were getting when they were employed. It is unfair that we should try to force them to pay back more than they can afford. During their lifetime they pay taxes and it is not right that they should be forced to pay them when they are no longer able to earn a wage or salary.

Reference was also made by Deputy Barry to mortgage rates. It might be said that that is not a matter for the Finance Bill but in fact it is. I know from my period in office that the tax which building societies must pay to the State on the money which is loaned to them affects the mortgage rate. Some effort will have to be made to rectify the situation. The promises made by Fianna Fáil are not the answer to the problem. There must be some other way. How can the Government expect young people who are getting married and who have to pay £4,000 or £5,000 for a site and £15,000, £16,000 or £20,000 to have a house built, to pay a mortgage at the present rates of interest? The Government say that the EEC and the EMS and so on will eventually give us low mortgage rates, that we will be down to the 5 per cent or 3 per cent which they have in Germany and other places. This is simply not happening and that is because this Government are not doing their job. The Government might ask why we did not do it when we were in office. We came through the biggest recession seen in the last half century and succeeded in getting through it relatively unscathed. It is no answer for Fianna Fáil now in an attempt to get away with this to point the finger at us.

Another thing that I would be terribly afraid of is this phrase "subject to conditions which are laid down". It leaves the situation wide open for the present Government, if things are not going right when they are out of the present trouble—and it is trouble with two elections coming up—to introduce their supplementary budget and double up all around. With their majority they can sit tight for a couple of years and hope that things will blow over. What the Government are doing now on taxation is playing the two ends against the middle, attempting to get a solution—not a permanent solution, not even a short-term solution until the next year's budget—such that they will not have people complaining about the way they are being handled when it comes to 7 June. In fact what the Government would say is that everybody will be expecting a little and the reference in page 2 is the obvious reference to that. When the time comes they will say they are very sorry but because things did not turn out the way they hoped they will not be able to give anything. That is the attitude of the Government.

It is just too bad that we cannot get a straight answer when questions are asked. It is just too bad that on radio, television or anything else we do not have certain key ministers who should be able to give answers not giving them because those Ministers just cannot be found. They are missing. They will not even turn up at functions in their own constituencies in case they would be asked questions.

Taking one thing with the other it is quite obvious that this Finance Bill is hardly worth the paper it is written on. It is being introduced simply to give the Government a breathing space until they are able to do what they really intend to do. Anybody who wants the evidence as to whether or not that is correct has only to check back through the last six months, and more particularly the last three months, to see all the times that Fianna Fáil decided to do something and, when the chips were down, changed their minds and decided to do something else.

Deputy Barry asked why the question of the 2 per cent levy was not on the Order Paper today. The reason it is not on the Order Paper is because this is a device which allows the Government to avoid discussing it. It is the second time they have done that in the last two or three months. They have kept an important item off the Order Paper and the reason for keeping it off is so that it will not be discussed in the House. If it is on the Order Paper it can be discussed within 21 days; if it is not down it cannot be discussed here. It is a matter which is of vital importance not alone to the big farmer who will be kicking up murder about it but to the small farmer. It is of vital importance also to the old age pensioner who has a car and wants to sell it; before he gets anything the Minister for Finance must get his 2 per cent. They will all have to pay their 2 per cent if it is operated. We have so many people saying now that they will not collect, they will not participate, they will not agree. We have the meat factories talking about wholesale lay-offs and talking about the people they have already had to lay off. We have people talking about a shortage in cattle and others talking about sending them across the Border where there will be no levy because it is at the factory gates that the levy is collectable.

Where do we stand? Do the Government really know what they are doing in regard to taxation or are they, as I suggested a few moments ago, just paddling along hoping that something will turn up, hoping that 7 June will come more quickly than it is coming and that they will be able to stall any serious action until after that date and when that happens they can do what they originally intended to do anyway?

I am also informed by some of my colleagues in this House who got their pay cheques today that they got a rather rude shock when they looked at some of the deductions made. Perhaps this is another way of getting an extra few shillings; it is not an awful lot of money but cumulatively it amounts to quite a lot. I suggest that the Government should sit down and make a definite decision on the budget. They should decide what they want to do and remember a former leader of the Fianna Fáil Party for whom I have great respect talking here about whether or not there should be a yearly budget or a twice yearly budget or if it would be better to plan for five years ahead. Fianna Fáil have taken all the options. They have a yearly budget, and a twice yearly budget but they certainly are doing very little planning. They are looking at it from every side and they are looking for some way in which they can get out of the problem which they got themselves into.

The reason I did not bring in with me the Fianna Fáil manifesto, which I look at very ofter to tick off all the things that Fianna Fáil did not do——

I am glad the Deputy is interested in it.

——is because when I look at it I realise how many untruths were offered to the people in it. I did not bring it in because I felt sure that fairly quickly I would be ruled out of order. It is only right that anybody who tries to talk about the manifesto should be ruled out of order because it has become nearly an obscene document, containing so many things that are blatently untrue and unfair and there is no possibility of its objectives being carried out.

While on Committee Stage many comments will be made about this Bill not with much hope indeed of getting any changes made in it because we are always reminded of the majority that can put anything they like through—it is the duty of people like myself in this House to point out in a broad way what we consider is wrong with it. We can leave the fine print to Committee Stage when we will have an opportunity of dealing with the Bill section by section.

I notice that until now people paying social welfare contributions were entitled to a tax remission if they were stamping a card. They no longer stamp a card, they still pay social welfare contributions and they still have to pay tax on that as if it was an income. As was pointed out earlier by Deputy Barry, there is the danger that little by little attempts may be made to take away things from one section, passing it on to the next and so on. I remember the evening before the last general election talking to a large group of farmers who were rather anremember the solemn guarantees given by a couple of Fianna Fáil candidates present that, if they did not abolish it altogether, certainly they would not interfere with the multiplier or with the valuation limit. Two years is an awfully long time in politics. We have now this new round of taxation. The Government must make up their minds to deal with taxation in the way in which it should be dealt. Unless they decide what they want, surely nobody else can? There have been many interpretations by the few Ministers who appear in public and make statements. They state certain things and almost within 24 hours one of their colleagues will flatly contradict what was said. I believe the bad habit was picked up from the Taoiseach, the Minister for Finance and the Minister for Economic Planning and Development over the European Monetary System. Not alone did they not know what was happening but they still do not know what is known by those attempting to operate the system.

One other minor point—minor to most people—is the taxation proposed to be imposed on bank officials who are getting loans for certain reasons. Most people refer to bank officials as if they were the wealthy of the country; of course they are people doing a job. I should like to remind the Minister for Finance that, whatever about new loans, existing loans which are part of a trade union agreement and which have been written into such an agreement cannot legally be interefered with. I have fairly lengthy experience of this. While the Government may like to feel from time to time that they are the tough guys and may like to be tough with somebody when there are so many with whom they cannot be tough, certainly they laid it on the line there.

I wish we had industrial peace in this country. I hope there will not be a vendetta built up because of statements of representatives from one side or the other about whether there is mob rule or whatever obtaining—and people in glass houses should not throw stones. I hope there will be no future trouble between country and town inhabitants. This can be avoided only if it is seen by everybody that the Government are intent on giving everybody a fair deal. So long as there is the position in which the State from day to day cannot make up its mind what it is going to do, then so long also will the danger of these troubles remain with us. Our taxes would be more usefully employed if Ministers, Ministers of State and so on who are at present chasing around the world remained at home until such time as the country is going again. After all, that is what we were promised before the last election. Let us see some action from them now.

I welcome this Bill. I disagree with Deputy Tully, as he indicated I was likely to do. He has said that this Bill is not worth the paper on which it is written. I cannot agree with that sentiment in any respect. One of the major objectives of the Bill is an increase in employment, the creation of 25,000 additional jobs in the coming year. The Bill is geared also to an increase in output and towards a reduction in the burden on PAYE taxpayers, a matter which has been the subject of considerable discussion in recent times. In this budget the Government have gone a step further in reducing that burden. It is geared also to obtaining a fairer contribution from the farming and self-employed sectors. The details of these objectives are outlined in the Bill and in the national understanding associated with it.

Additionally, the Bill is related to the social policies of the Government as laid down in their White Paper. Their principal social policy is to eliminate unemployment, to tackle the inequalities in our society, to encourage community development as far as possible, and to review the efficiency and effectiveness of our, administration, ensuring real, positive gains in incomes, particularly for those in the social welfare groups.

The two previous speakers have been critical of the Minister for Finance in relation to this Bill and what he has done. Objectively it is true to say—and will be seen by anybody looking objectively at the facts—that the present Minister for Finance has done more for the PAYE contributor and for equity than has anybody else in the past. He has also achieved something extremely important in that connection: he has managed to keep inflation over the last year at the very reasonable level of just under 8 per cent.

The Minister has said that the main thrust of his budgetary policy in 1979 is growth in employment. If we do not accept this as being the main thrust of this Bill, then we will find ourselves at variance with its main provisions, because the Government have been consistent in adhering to the objectives of growth in employment and output. It is easy to see why the Government have committed themselves so clearly and positively to this goal. If we look at the numbers of children currently at school we will discover that almost one third of the population is in full-time education and that between 50,000 and 60,000 young people leave our educational establishments annually in search of employment. The Government recognise this as one of the major social evils and difficulties of our time while also constituting one of our greatest assets and opportunities. Consequently, this Bill is geared to the provision of employment needed by these young people.

The Minister is his statement made reference to the "National Understanding for Economic and Social Development" announced last week. Deputy P. Barry and Deputy Tully made appeals for the removal of the two conditions mentioned in connection with the £175 additional tax-free allowance to be paid in December next. Presumably, if they are to be paid in December the revised tax certificates will have to issue about October. The argument they make is that if people are to receive this extra £39 million they are entitled to it and it should be given to them now. Deputies Barry and Tully have missed the point of this measure as introduced.

When a Minister for Finance at the beginning of a year prepares his plans and targets it is clear that neither he, the trade union representatives nor the employers know exactly what the outturn of that year will be. My understanding is that although increases in wages over 15 months of the order of 15 per cent have been agreed, with additional measures, nevertheless the Government have said that if we achieve our targets this year they are prepared to give us a bonus or rebate at the end of the year. Many people in recent days decried this concept because it is related to performance but if we are not prepared to relate our activities to performance there is little hope for us and few can have confidence in us.

It is related to the Government's performance.

It is related to the general performance of the economy. I am prepared to accept a bonus on the basis of performance of a Deputy in the House. However, it would be difficult to measure the performance of a Deputy in the House. If the economy goes well in any year public servants do not receive a bonus. Admittedly, they will benefit by virtue of the fact that the base for the next year will be a better one as a result of the success of the economic plans during that year, but public servants do not benefit in bonus terms as those involved in industry do. We are all aware that if plans go well in an industry there is a fair chance that the workers will get an extra week's wages and, in some cases, an extra two weeks' wages at the end of the year. There is no such performance-related measure in the public service.

There is considerable merit in such a measure in which our general performance during the year can merit an additional bonus. It is an incentive, admittedly a small one, to public servants to assist exporters and industrialists to achieve their targets in employment, output and productivity.

I am aware that this concept is reasonably common and successful in countries like Japan, not necessarily in the form of tax rebates but in other forms. Are we afraid to attempt any new concepts after reaching an agreement? It has been stated that if this agreement works the Government will give £39 million in tax concessions. In a full year that will amount to £50 million. Are we not prepared to attempt such measures? Are we too conservative to see a possibility in such measures or, as Deputy Barry stated, do we feel that people are entitled to this rebate anyway and there should not be any relation to performance? In my view there should be a relation to performance if we are to provide the jobs for the children who will be coming on the employment market over the next 10 years. There must be a relation to performance if we are to succeed in the EMS.

I like the concept and its dependence on two conditions is the minimum requirement that could be asked for. One of those conditions is that the budgetary position in the last quarter of the year is reasonably in line with expectations. That is reasonable and it does not tie anything down to percentages or ask too much of anybody. It merely states that we are dependent on our performance together as trade unions, employers and Government. The buck stops here now because the punt is with us. We cannot say, as was stated so frequently in the past, that if the English pound is devalued or changes we have to follow. In the EMS we have been maintaining our own stability and progress is within our own ambit. The Government are saying that the budgetary position should be reasonably in line with expectation and have also told us that funds needed for employment creation, the first priority, will be made available.

I understand that the employers and the Government will contribute 50 per cent each of the funds suggested, to be deducted on a certain basis during the year. If the national understanding goes ahead those funds will be available automatically. I do not see what those who criticise the national understanding are talking about. They are trying to run away from reality, a reasonable option which has been offered. I was amazed to hear the two leading Opposition speakers saying that they would like to see the Minister remove the latter two conditions. They missed the novel concept of it. If we are interested in the economy, national development and in the jobs we have heard so much about we should be prepared to try this concept. I am sure all our people would be pleased to receive an additional bonus at the end of the year, given that the economy will perform broadly in line with expectations.

The national understanding also guarantees living standards in that workers will be automatically compensated for price rises above the 7 per cent which is provided in the package. That represents a major step forward. In addition to the 7 per cent there is provision for a 1 per cent rise for each 1 per cent increase in prices up to 11 per cent and ½ per cent for each 1 per cent after that.

Some of the media and the papers in particular pointed out that the national understanding was a well worked out document and that it is a very valuable supplement to the Finance Bill before us today. As the Minister said, this will be brought into force by an amendment on Committee Stage, particularly to cater for the special allowance of £175 being made. It is interesting to note that this allowance will also apply to a working wife. There will be two allowances in the case of a working husband and wife.

I disagree with the two previous speakers and find it very difficult to accept their arguments. The Minister has stressed that this Bill is geared towards growth in employment. As well as the measures in the Bill the Government have also, through the national understanding, undertaken to establish national hire and enterprise agencies to ensure that the employment targets are reached.

When we talk about people being entitled to certain things we have to think of where we stand in Europe. Deputy Barry said that the main interest of people is the money in their pockets, their take-home pay. I agree with him in relation to that, but people are also concerned with what that take-home pay will purchase. When we look at the gross domestic product per capita of people employed in Ireland and in England and compare that with West Germany and the Netherlands, we find that over the last five years we have been doing very well compared with the UK. We have been closing the gap considerably. Our increase has been 73 per cent over the period 1972-77, while the UK increase was 58 per cent. They are still left higher than us because they started at a higher point. If we take the mean of the UK and Ireland we find that the increase over that period was 3,700 dollars per person employed. The comparison with the UK is very good but when we look at our friends in Germany and the Netherlands we find that the increase there over the same period was 12,000 dollars. People just cannot say they are entitled to an increase. They are entitled to it if they work for it. We must be prepared to work.

West Germany and the Netherlands are currently growing in wealth at two and a half times the rate of the average of Ireland and the UK. We have linked ourselves with the EMS and have brought in a high degree of exchange rate stability. If we want to enjoy the levels of wealth and income on the Continent we must be prepared to raise our productivity and output in line with our possibilities. We have to see our national understanding not alone within our own context but in the much broader context of Europe.

Deputy Barry and Deputy Tully referred to the removal of the 20 per cent income tax band. Deputy Barry said that the outcome was that everybody now pays more. This is not true because the allowances were increased. He did not mention that the reliefs given in the budget have removed 40,000 taxpayers from the tax net, 21,000 married people and 19,000 single people. The single person's allowance was increased by 68 per cent and the married person's allowance was increased by 103 per cent, which was more than doubled in two years. One would think, when listening to the Opposition speakers, that the Minister had done very little in this connection.

I asked a question on 13 March last about the change in allowances which has taken place and was given the information that the allowance for a single person in 1973-74 was £299, in 1974-75, £500, 1975-76, £575, 1976-77, £620, 1977-78, £665, 1978-79, £865, and 1979-80, £1,115. It is quite clear from those figures that the annual rate of increase in 1975-76 was £75, in 1976-77, £45, 1977-78, £45, 1978-79, £200 and 1979-80, £250. During the first two years for which the present Minister for Finance was responsible the rate of allowance for a single person was increased by £450 whereas in the last two years of Coalition the increase was £90. The Minister for Finance has increased the tax-free allowance for a single person during his first two years in office by five times the rate the Coalition Minister increased it in their last two years in office. This does not include the extras that are raised in the national understanding.

With regard to allowances for a married couple during the same period they were in 1973-74, £494; 1974-75, £800; 1975-76, £920; 1976-77, £1,010; 1977-78, £1,100; 1978-79, £1,730 and 1979-80, £2,230. If we make the same comparison for the first two years the Minister for Finance has been responsible for, including the provisions made in the Finance Bill, we find the allowance for a married couple has increased by £1,130. For the previous two years for which the Coalition were responsible, there was an increase of £180, £90 each year.

The figures show that this Minister has done more than anyone else. I am not saying that we have achieved all that is desired or that there are not other ways in which the taxation system could or should be varied; but I am saying that the Minister has done more in his two years as Minister for Finance than anyone else did previously, especially if compared with the two previous years. The increases for married couples with two or three children are recorded in the answers given to parliamentary questions on Tuesday, 13 March 1979. The Minister has been making substantial progress in easing the burden on these people. That is his firm commitment and he is pursuing that objective in this Bill. Combining these tax allowances with the measures in the national understanding of a 15 per cent increase over the next 15 months, if inflation can be kept down to the levels given in the targets for 1979 there is every reason to expect that there will be real increases in income in the coming year.

There are various other measures in the Bill which I welcome. In section 1 the income limit for a dependent relative tax allowance will in future be automatically equal to the personal rate of social welfare contributory old age pension payable to a person aged 80 or over and living alone. The limit for 1979-80 will be £1,129. This measure is welcomed by everyone.

Sections 2 and 3 relate to increased personal allowances and the amendments of those allowances. The Minister has been making considerable progress in improving these allowances while at the same time keeping the value of the pound at a reasonable level through a low rate of inflation. Children's allowances have been a source of considerable comment, and rightly so, because they are extremely important. I, and many other Deputies, am aware of the importance and the effect of these allowances.

The Minister has provided a 28 per cent increase in expenditure on children's allowances, which is very welcome. The increase for the first child is 52 per cent, from £2.30 to £3.50 per month; for the second child it is 34 per cent; and for the third and subsequent children it is 14 per cent. For a family with five children this is equal to a 22 per cent increase. A mother of three children will receive an extra £3.25 per month, or a 29 per cent increase. I welcome these increases but in future I should like the Minister to introduce some differentiation, with higher rates of increases for children between 12 and 18 years of age, because at that stage these children are growing and consuming large amounts of food. Consequently, this is a very expensive period of their lives. Perhaps the Minister would take up this suggestion.

Section 4 provides for an additional personal allowance of £250 for a parent who is widowed, deserted, separated or unmarried, with a dependent child resident with him or her. This measure is welcomed by all Deputies and I should like to record my particular welcome for it.

Section 6 provides for relief in respect of the labour element of expenditure of householders on the improvement and maintenance of their residences. We should be looking more closely at such measures to see how they can be put into operation. The relief in 1979-80 is confined to expenditure in excess of £50 and the maximum amount which would qualify for relief is £450. I note from the Minister's speech that this scheme will apply to, among other things, insulation. I was particularly glad to see the introduction of this measure, which it is hoped will contribute towards job creation and energy conservation.

I was also interested to note in the Minister's speech something which I had not known previously, that is, that included in this scheme is not only the maintenance of residences but also the maintenance of gardens. This is a very interesting measure. I do not think anybody realises that this measure exists; I am not sure if it has been spelt out in detail previously. It offers the opportunity to improve landscaping and amenities throughout the country, particularly in city areas, and to improve gardens, residences and to provide employment at the same time. I hope this measure will be recognised and availed of. A figure of £450 is considerable and offers a great deal of scope for development in that area. This is an area in which we have not been outstanding, probably because we have always had it too easy. We have beautiful countryside and surroundings but we did not have to work very hard to preserve or develop them. Because of the expansion of our cities and towns people are realising that, if action is not taken quickly, a great deal of that beauty will be completely lost.

There is considerable scope for this sort of development, and I would welcome it. We tend to be a little on the mean side when it comes to the planting of large trees and shrubs. If one goes to other developed countries one finds that the transplanting of much larger trees and shrubs is a speedy way of improving the environment. Perhaps this measure could, if used properly, lead to much greater development in this area. We are very competent in production in this area and it could lead to considerable exports if it were developed.

Sections 8 and 9 deal with income tax relief in respect of personal interest. I am glad that figure on which full relief in respect of interest on borrowings can be claimed has been increased to the equivalent of a figure of £20,000, which represents a figure of £2,400, as the maximum amount of personal interest which can qualify for income tax relief. This is an important measure from the householders' point of view. It keeps pace with the changing costs of the normal semi-detached or reasonably priced dwelling. It is a development which will be welcomed by young people and newly-married people setting up homes.

I should like something to be done in relation to savings. The figure for savings last year of £65 million was a record. I should like to see where that figure came from. Most of it came from the farming sector, where the new income provided a flow of cash, a great deal of which would have gone into short-term savings for future development. It is true to say that 1978 was a record year for savings, but it cannot have been a record with the ordinary householder in the city area whose savings would be very small. There is still an allowance of £70 for the husband and £70 for the wife on interest earned on bank deposits or loans. People are reaching a stage where they will be prepared to save a proportion of their disposable income. I should like to see people encouraged to save in the bank and by way of national loans. Interesting saving certificates are available under the post office system. I should like to see an improvement in the allowances for savings. I do not know if there is any technical reason why this should not be done. There would be a greater increase in savings if we had such allowances and I mentioned this point during the budget debate.

When I was in Japan recently at a conference I inquired about savings policy there. I found that it is a major factor in the Japanese approach to investment. Major benefits are given for saving. I heard some commentators say recently that they regard this kind of interest as unearned income and consequently it should be taxed very heavily. I should like to see families encouraged to save £5,000 or £10,000 as security for themselves. We are nearing the time when that should be possible. It would also provide a great deal of money for investment in our economy. I welcome the step the Minister has taken and suggest that this aspect of savings should be considered in future Bills.

Chapter II deals with the question of taxation of farming profits. This is an area which caused a great deal of controversy recently and Deputy Barry had several comments to make on it. He did not say what he might have said and that is that, despite all that was said in between, the 2 per cent levy is still there. People seems to think it has vanished. If one reads carefully the Minister's and the Taoiseach's statements at the time of the budget, one realises that it was intended to be a short-term measure. It was a supplementary measure to the normal taxation. This is a point which did not come across to people. The Minister outlined all the additional taxation and said he wanted a better distribution of taxes and a larger share from the farming sector up to a certain percentage of income. He also said that he was proposing an additional and separate measure to bring in this money. In proposing that, the Minister said he was prepared to discuss an alternative package with the farming community, because it was an unusual supplementary measure. However, the Minister's principal requirement was to bring in the amount of money which would ensure a better distribution of taxation overall within our society.

Deputy Tully mentioned that the incomes in the agricultural sector have improved. Farmers have passed from a very difficult position five or six years ago to one of a reasonable standard of living and are now in a position to make a fair and reasonable contribution to the overall budgetary requirements. In the budget the Minister changed the threshold of liability from £60 rateable valuation to £40 and he changed the multiplier under the notional system from 19 to 125. He also made a number of other changes at that time. As we all know, the Minister has announced, as part of the national understanding, that a new package will apply from next year which will ensure that a fair and reasonable contribution will be made. The package will bring the threshold down to £40 poor law valuation and will mean that the notional system will be gone entirely. It will introduce a resource tax of £3.50 per £1 of poor law valuation over £70 poor law valuation, which is a very reasonable level at which to introduce it. It will mean that the taxes to be taken from the farming sector will be due from 1 September of the current year. In the meantime, until that package comes in, the 2 per cent levy will go ahead and, indeed, has gone ahead as from to-day.

The Minister has tried to be as fair, as reasonable and as patient as he could. He has been misunderstood, and perhaps some people set about to misunderstand what he is attempting to do. If one reads what was said, 1 May was the date by which these final agreements had to be made. It is clear that the 2 per cent was there and it is in operation as of now. Consequently, the Minister has maintained his responsible approach to the problem, which, we all must admit, is not an easy one. Nevertheless, the Government have said that we must face up to the question of a fairer spread of taxation and it can be clearly seen that that is what is being done.

Section 25 provides for the exemption from tax of payments made to employers under the Employment Incentive Scheme and Employment Maintenance Scheme. Again, this is totally consistent with the Governmen't approach throughout the budget and other measures that have been taken, whether the EMS or the Finance Bill here today. Anything that can reasonably be done to improve employment, given the very substantial employment targets that we have, will be done by the Government. That is a consistent aim which can be clearly seen and I welcome this measure in that it may give a further incentive to employers to participate in these schemes.

Chapter VI is concerned with anti-avoidance. We should all be quite clear about the fact that the Minister is committed to reducing avoidance and evasion of tax and ensuring that all sectors pay a fair share. This is again a difficult task, because when one comes to the self-employed or the business sectors there are different norms and different situations to be faced in assessing profit or real income. The steps taken recently by the Minister will go a long way towards ensuring that the various sectors make a reasonable and correct contribution and that avoidance and evasion are kept at the lowest possible level.

I was particularly interested in one statement made recently that the kinds of income in different sectors as recorded by the Revenue Commissioners would be made public, not mentioning the individuals concerned but giving an idea so that people can clearly see levels of income in different types of employment in different sectors. Here also the Minister, in a further effort to counter evasion where it occurs, is aiming at the highest reasonable level of transparency. This is necessary because there is at present a great deal of misunderstanding about who pays what and what they pay for. In fact, a number of self-employed people have come to me who claim—and I believe them—to be paying their full and fair share of tax and yet they are being berated by their neighbours. One man was quite upset. He believes it is essential to keep himself straight and right in connection with taxation, because if one goes wrong and is discovered, the Revenue Commissioners can go back for a number of years and cause one great trouble. Yet, in attempting to keep himself right, he recognised and mentioned to me the fact that the two neighbours who complained to him worked in semi-State organisations and regularly did "nixers" in the evenings in respect of which he is quite certain they are not paying income tax.

It is a pity that we should come down to this level of one neighbour fighting with the next about what they are paying or not paying. We need a fair, reasonable and transparent system, a system that can be seen to be fair and to work and which will give the best possible allowances depending on circumstances. The Minister has gone some of the way in this regard and I am confident that he is convinced that it is one of his major targets and will continue to be such. The much quoted manifesto makes the point that every effort will be made by the Fianna Fáil Government to improve take home pay, particularly through improved tax free allowances, so that when a person works it is more encouraging and valuable because of the amount of money he can take home.

Many other questions arise regarding taxation. Some people are quietly raising one question while others are afraid of it, and that is the question of how the money is spent and administered. We must be constantly concerned and vigilant to ensure that our administrative structures are such that those who administer the finance of the State have every opportunity to do so effectively and efficiently. The Committee on State Sponsored Bodies are currently examining the situation in regard to these bodies and this is something about which the Government and Members of the House are naturally concerned.

The Bill offers considerable progress in regard to the development of our financial and economic affairs. It contains numerous measures which are valuable and, taken together with the national understanding, I think it offers a very good package to both workers and employers for this year, and for the next 15 months in respect of the national understanding. If we could cease focusing on one another and concentrate on national economic development and progress, perhaps we could together make a bigger cake or—to change the metaphor—as has often been said, make more blades of grass grow where one grew before and generally stimulate our economy making the fullest possible use of our tremendous asset of young people, about whom this debate should really be. It is their future that we consider and discuss, their jobs that are in question when we talk of how much we are prepared to accept and whether we are entitled to something or not.

Overall, we must bear in mind that the Government kept inflation down below eight per cent last year and are committed to keeping it at that type of level for the current year. If they do that, these measures are all very valuable because the tax free allowances we get are meaningful. However large tax free allowances may be, if inflation is not kept under control and if economic development and real gain in national wealth are not progressing, we gain nothing. I am confident of the future because I know the Government are tackling comprehensively the development of the economy and it is within the framework of this comprehensive task that this Bill must be seen. I wish to record my own tribute to the employers and the members of the Irish Congress of Trade Unions who have been entirely consistent, in my view, throughout recent months of debate and criticism and upheaval. This shows clearly that those people who are sitting around the table are very conscious of the real task facing the Government and of the real determination of the part of the Government to pass on, to workers in particular, the benefits of our economic development. The responsible attitude being adopted by the Government is clear.

One of our major problems is that the same degree of understanding does not permeate much more widely through our society. Perhaps some of the blame lies with us as public representatives who so far have failed to convince the people generally of what the Government, the trade unions and the employers are attempting to do. The degree of responsibility shown by the ICTU has been high having regard to the noises that are being made. Perhaps we should be doing more to ensure that people further down the line and further away from the focal point have a better understanding of what is being attempted by those with whom rests the ultimate responsibility. There may be a real problem here. If there is not I fail to understand some of the statements that are being made currently such as the statements that we have had from Deputies Barry and Tully in relation to the national understanding and to the two clauses concerning the tax rebate of £175 at the end of the year. This rebate represents a very welcome and novel measure. If people realised what is the intention and also how easy it is to achieve the performance targets that we have set ourselves they would be more inclined to co-operate in this regard.

In principle the national understanding is a mechanism for further participation in the future on the part of all employees and taxpayers in the overall growth and development of our economy. We are all committed to and involved in this growth. All of us either contribute or take from it and I would prefer to see us contribute and in this way living and working together more happily. The economy is in good order. It is in good hands. I congratulate the Minister not only in regard to this Bill but in respect of the measures he has taken recently.

Today is significant, not only because it is May Day but because it is also the day of the second big protest by PAYE workers. Both are inter-related. Is it not significant, also, that today we should begin debating the Finance Bill?

I have listened carefully to Deputy Woods. To say the least I was amused to hear him say that the economy is in good shape. I suggest that in the hands of this 84-seat Government the country is almost on its knees. I almost had to beg for sufficient petrol today to enable me to reach Dublin to speak on this Bill. If some of those Deputies who are oozing with confidence regarding the economy were living in some of the more remote parts of the country such as Donegal, west Cork, Clare or Kerry, they would realise that the situation is very different from the picture painted by them.

The oil situation is causing havoc not only to car owners but to industrialists. We have neither a postal nor a telephone service. The tourist trade is in ribbons. In regard to sickness benefit, if anybody concerned is claiming his payments from Great Britain he will not have been able to receive any money for the past seven or eight weeks. Despite this situation there are Fianna Fáil backbenchers who have the audacity to talk about this great economy which is in the hands of this magical 84-seat Government. People who talk in these terms are being completely hypocritical.

It was not my intention to begin my speech on those lines but I had no option after listening to speakers from the Government side. This Bill is farcical because of the numbers of times that the budget to which it relates has been changed. One change relates to the 2 per cent levy in respect of farm produce sales. This proposal was changed before the Fianna Fáil Ard-Fheis. After that event we were told that it was decided not to go ahead with the levy and now it is to be implemented. Is this what government is all about? If the Government introduce measures they should abide by them regardless of whether they prove popular to Fianna Fáil backbenchers and to the grassroots of that party.

I have never known a budget to be changed before in so many respects. The changes have been major ones and have been made in an effort to satisfy some members of the community but instead of achieving their objective they have proved to be only a hornet's nest throughout the country. One of the hopes in respect of this Bill is the achievement of full employment. The Government must be criticised on their failure, particularly in the west, the south-west and the north-west of the country to create employment. Certainly there has not been any new industry set up in my area during the past two-and-a-half years. Perhaps 25,000 jobs have been created but what has happened to those tens of thousands who have been made redundant in the meantime? Our unemployment figure represents a 9.9 per cent national average but the situation is worst in my county where the figure is 16 per cent.

We all agree with the desire and the necessity to reduce unemployment, with the necessity to increase the net number of jobs, but this is not happening in most parts of the country. The postal strike has continued for much too long and I join with the many other Deputies who have appealed for a settlement of the dispute. This strike must be costing the country many millions of pounds. It is only now that it will begin to affect the Exchequer purse because, for instance, people cannot return their PAYE forms. Neither can VAT returns be forwarded to the Department. Grants are not being paid and the position is the same in respect of headage money.

We must not debate the postal strike now when what is before us is the Finance Bill which deals only with taxation. Other Deputies have been reminded of this several times already today.

At present, industrialists and other businessmen cannot post their VAT returns. I should like to know if the Minister for Finance has given any thought to gathering the large amount of VAT which must be outstanding at present.

I have heard many backbenchers talking about the great increases given to the PAYE sector. During the budget debate I mentioned that the 20 per cent rate had been replaced by a 25 per cent rate. Even allowing for the increases in tax allowances for single and married people, the PAYE sector did not get a net increase. The increases in food prices have not been taken into consideration in relation to taxation. Only a few weeks ago the increase in food prices of more than 16 per cent was given great publicity. The increase in tax allowances for single and married persons does not make up for the increased food prices.

Deputy Woods quoted large percentages when he talked about the increase in the children's allowances and in the income tax allowances. If he talks to the people at grassroot level, he will find that people are dissatisfied with our taxation system. We should consider the introduction of a fairer system of taxation. Those in State and semi-State employment have no way of avoiding the tax net although many people manage to avoid it. The Department of Finance should consider the question of tax evasion when they are introducing an increase in tax allowances for the PAYE sector. I believe that the PAYE sector will continue to march until they are treated fairly.

People on unemployment benefit have been given only a 12 per cent increase and pensioners have been given only a 16 per cent increase. These increases are small in relation to the inflation rate, which even the Minister for Economic Planning and Development now admits will run into double figures by the end of 1979. If inflation doubles, the pensioners and the unemployed will have to be considered.

In regard to the 2 per cent farm levy, it was interesting to hear the previous speaker talking about a resource tax on the farming community. So far, I have not heard Paddy Lane or any other member of the farming organisations talking about this resource tax. The previous speaker said that the 2 per cent levy would be operational only until next year's budget when it would be replaced by a resource tax of £3.50 on every £1 land valuation over £70. He also said that the threshold, which was reduced this year from £60 to £50, will be reduced next year from £50 to £40. Deputy Woods seems to have inside information on next year's budget. I suggest that the figure of £70 is only the start and that it will be reduced to £40. This means that those with land valuations of £40 and upwards will have to keep books and will have to pay income tax on anything in excess of £40 plus a tax of £3.50 on every £1 increase in valuation. To date we have not heard too much from the farming organisations in regard to the resource tax. I have always said that the farmers should pay their fair share of tax.

In my county the Government are considered to be a disaster. The tourist trade is poor this year; petrol is scarce; the fishermen cannot get diesel fuel for their boats. The Department of Finance should ensure that counties like Clare, Galway, Kerry and Donegal are not left without petrol and oil.

Debate adjourned.