asked the Minister for Finance if, in view of the variable effect of inflation on living costs, he will introduce an index-linked system for tax allowances.
Ceisteanna—Questions. Oral Answers. - Index-Linked Tax Allowances.
14.
This matter will be considered in the normal way when I am preparing my next budget. I would draw the Deputy's attention to the fact that in the two budgets introduced by me since the present Government took office the single, widowed and married allowances have been increased by amounts significantly in excess of the increase in the consumer price index during the corresponding period.
While what the Minister has said in those instances is quite true, would he not ensure by this device that the good work he may have already done is continued and extended to all other taxpayers in whatever category they may be?
That seems to be the question the Minister answered.
The Deputy seems not to appreciate that it would follow, if one were to do this, that one would have to apply the same kind of reasoning and indexation to indirect taxes. The Deputy will find, if he looks at a debate which took place here in that connection, that the consequences would be horrifying. I do not think he would want to see this.
Why horrifying?
I know that Deputy FitzGerald advocated this just after the Fine Gael Ard Fheis but obviously he had not realised what the consequences of what he was saying would be.
Surely the Minister is not suggesting that what he says he did in a few isolated instances would be a horrifying prospect if it were spread over the board? If it is bad in an overall context it must be bad in a few instances. I do not agree that it is bad in any case. I do not see why we cannot have some fair system of taxation in regard to relief to those who are paying tax which will ensure that inflation and other causes do not erode what has been given.
To save the time of the House I could assist the Deputy by referring to details of what I am talking about. These matters were referred to in the Finance Bill, 1979 in the Second Stage debate on 8 May, on the Capital Gains Tax Bill, 1978, on 12 October 1978, during the Committee Stage debate on the 1978 Finance Bill, on 13 June 1978, on 15 April 1975 and on 16 April 1975. The Deputy will find that I gave details of what would have happened had we applied indexation both to income tax and to indirect taxes. He will find that the increase in the allowances for income tax would be substantially less than that provided for in the last two budgets but he will find also that the increase in indirect taxes would have been such as, I think, to make the cost of a number of items virtually prohibitive. I realise that Deputy FitzGerald did not appreciate this when putting the point forward.
Is the Minister referring to the very sharp reduction in the real level of tax on drink and tobacco, of which he is in favour?
I am glad to hear that the Deputy is unrepentant because some of his colleagues were rather embarrassed in the debate concerned when I drew attention to what would be the consequences of what the Deputy was urging. I take pleasure in drawing the attention of Deputy FitzGerald and of the public to the consequences of what the Deputy is standing over.
The Minister, then, is in favour of reducing the real burden in respect of drink and tobacco?
Question No. 15.
I shall spell out what the Deputy means.
The simple question I asked the Minister has been made so complex by both himself and the Leader of the Opposition that they could argue about it for a week but neither of them would know at the end of the day what the other was talking about. What I asked is that the Minister relate his whole outlook to the simple matter of tax-free allowances in terms of the ordinary individual but he has sought to bring in the question of indirect taxes and so on.
It is not possible to take one in isolation from the other.
The Minister has suggested that he has already done more.
That is correct and the reason I have been able to do more is because I am not indexing.