Dáil Éireann debate -
Thursday, 12 Jun 1980

Vol. 322 No. 3

Finance Bill, 1980: Report Stage (Resumed) and Fifth Stage.

Mr. P. Barry

I move amendment No. 44:

In page 62, to delete lines 29 to 53 and in page 63, to delete lines 1 to 50.

The purpose of this amendment is to remove the duty imposed on table waters in the budget. That duty expires after four months and if my amendment is accepted it will not be continued after 27 June. The Minister told us yesterday that he was not a killjoy—and I accept that because I know him personally— but people looking at what he has done in the budget to the price of an ordinary bottle of lemonade must feel that that description fits him. As a result of the budget provisions a pint of lemonade is dearer than a pint of stout or beer—an extraordinary situation. I do not know of any other place in the world where a child's bottle of lemonade is dearer than a father's bottle of stout. That shows a tremendous lack of sensitivity on the part of the Minister. The Department of Health are engaged in an extensive advertising campaign asking people to be careful about the amount of alcohol they consume and drawing attention to the association between drinking and driving, but the Minister for Finance is not helping people to give up drink when he puts the price of mineral waters to such a high level. The price of a pint of lemonade is almost £1 and that is not the act of a Minister who is interested in children or in home industry. This is probably one of the few industries that is 100 per cent Irish. Almost 100 per cent of the minerals consumed here are manufactured here. Why has the Minister chosen that industry to impose this increase? One hesitates to use the words "savage" and "penal" to describe that increase but in this case they are justified. The Minister should withdraw that duty before he does damage to the industry.

Mr. O'Kennedy

Since 1956, when the flat rate duty of 5p per gallon excise duty was introduced, there have been two increases in the duty on table waters. The first was in 1966, ten years later, when the rate was increased to 7.43p and in 1975 there was a further increase of 10p. In 1960 a scheme was introduced whereby manufacturers of table waters received a rebate of duty graded according to production levels. Obviously, this is of particular benefit to the smaller producers Deputy Barry has referred to. The rates of rebate have remained at that level until the present. There are approximately 41 home manufacturers of table waters of whom 12 produce less than 100,000 gallons of table waters annually,

The primary purpose of introducing this duty, as in the case of many others, was frankly, of fiscal necessity. The Government had to raise additional revenue from taxation and they had many difficult choices to make in doing so. Obviously, the budget strategy had to take into account the diverse demands of different sectors in striking a balance between expenditure and revenue and, in the end, the emphasis was placed on indirect taxation of discretionary expenditure in order to minimise the impact on the necessities of life. I think that the indirect tax package generally was considered to be the most equitable and preferable to the alternative forms of taxation or not proceeding with the allowances on direct taxation particularly in the income splitting area. One has to look at this or any other duty in the context of the extra spending power afforded through the very substantial income tax reliefs which are of particular benefit to families. In addition it is probably fair to say that table waters are subject to a lower VAT rate not withstanding that they are a highly discretionary item of expenditure.

I am conscious of the industry generally and the employment given by it and for that reason I have been examining what I can do to go some way towards meeting representations made. We decided to extend the deferment period for payment of duty by 15 days, to the end of the month following that in which the duty is charged. If any other relief were to be given over and above that significant relief it would open the doors for all other sectors to expect similar treatment as a result of other budget increases. If one were to do that the revenue loss would have to be made good by other sectors of the community and in present circumstances that would not be feasible. Also, it could possibly curtail fiscal policy in the future.

This is the general background. Deputy Barry was saying that this must be the only country where the child's lemonade is dearer than the husband's beer, as if we were the only one with duties on table waters of this kind. This kind of duty is also charged in Belgium, Germany, Denmark, France and the Netherlands and in all but one of those cases table waters attract a higher rate of VAT than in Ireland. They also impose an excise duty on sugar, which in some cases is not rebated when used in the manufacture of dutiable table waters. In France, Belgium and the Netherlands I think there is no rebate on sugar when used for that purpose.

I am prepared to acknowledge that in this particular year this might be seen to be a very significant increase—and it is—but, when you take account of the fact that this area has not been touched for several years and what applies elsewhere, it is not very significant and the commodity is discretionary. Incidentally, by comparison with the pint of beer, I am advised that the litre of lemonade in consequence of this provision costs 41.2p while the pint of beer, 20 ounces, is 58p.

Mr. Bruton

Litres are not pints.

Mr. O'Kennedy

They are not the same. The litre is 35 ounces and costs 41.2p.

Mr. Bruton

It is not sold by weight but by volume.

Mr. P. Barry

Surely the eight ounce bottle beer does not cost 58p?

Mr. O'Kennedy

No, a 20-ounce bottle costs 58p.

Mr. Bruton

Is this the weight of the liquid or the bottle?

Mr. O'Kennedy

The liquid, of course.

Mr. Bruton

One does not measure liquid by weight but by volume.

Mr. P. Barry

I did not say this was the only country in the world where table waters were dearer than beer. I said it must be the only country where the pint of lemonade is now dearer than the pint of beer.

Mr. O'Kennedy

But the Deputy is wrong. It is not dearer here and it is not the only country.

Mr. Bruton

The Minister did not demonstrate that. He talked about ounces of lemonade.

Mr. P. Barry

Ounces of lemonade and gallons of beer.

Mr. O'Kennedy

Ounces of either.

Mr. P. Barry

The Minister said that he would accede to representations so that payment of the duty could be deferred by 15 days. This is of no benefit to the person buying a bottle of lemonade. It is of benefit to the manufacturers because net amount of extra capital that was required to finance the execution of this provision was quite considerable. I think the Minister was right in making this concession but it is not of any benefit to the consumer. He will still have to pay the Minister's duty and all profits will be paid on the Minister's duty right up to the point of sale. The most demanding thing the Minister said against himself was that the real reason for this measure, which we all know, is that he had no money.

Mr. O'Kennedy

No, I did not say that.

Mr. P. Barry

He said he had many difficult choices to make and in the end it came down to deciding that he would get the money from the children and the farmers.

Mr. O'Kennedy

Incidentally, a litre is 1.75 pints. Therefore a litre of lemonade is more than a pint of beer in volume and it still costs less.

An Leas-Cheann Comhairle

Let us get away from mathematics and deal with the amendment. Is the amendment withdrawn?

Mr. P. Barry

No.

Question, "That the words proposed to be deleted stand", put and agreed to.

Amendment declared lost.

Mr. P. Barry

I move amendment No. 45:

In page 63, to delete lines 51 and 52, in page 64, to delete lines 1 to 55, and in page 65, to delete lines 1 to 42.

This is what is called "duty on other oils". This is the duty that is doing most damage to the economy. On a number of occasions since it was introduced I have pointed out to the Minister the amount of damage caused to the industry by it. When one talks of industry in that way people are inclined to think of fat cats driving around in cars, with cigars, but I mean the actual companies employing people.

We are talking about jobs for actual people, the number of people who will be employed and whether any item in the Finance Bill will be an encouragement to industry to expand and take on people or whether it will be a discouragement and whether because of items in the Finance Bill they will have to lay off people. That, I believe, will be the effect of this Bill going through without my amendment.

A few figures will indicate what I mean. I have already pointed this out to the Minister. About one month ago the chairman of one of the top companies in the country, when introducing his company's annual report, said that as a result of this provision, which takes up about four lines in the Bill, the amount of money which one of the subsidiary companies of this group would have to give to the Government would be equal to their total wage bill for 1980. The implications of that are that the manager of one of those companies could double the number of people he has employed if he did not have to pay this money. I realise that is not what will happen but it will certainly make it more difficult for that company to employ more people.

This money will be collected from industry but in actual fact it will be a charge on every manufacturer, retailer, distributor and householder in the country. Every person will have to contribute his or her share of this money. The amount of money which the Minister will collect from the ESB alone in relation to this measure is over £11 million in a full year. That will be reflected in higher charges for electricity. There is a double charge on some industries. If they use hydrocarbon oils in their manufacturing process or for heating and they also use the ESB they will have to pay a double charge. That will certainly be reflected in the cost of their goods.

We frequently speak here about the necessity to export and there is an exhortation at least once a week in the papers from some Minister that we either export or die, that we cannot absorb the amount of goods we are capable of producing. We must export if we are to reverse the unhealthy trend in our balance of payments for the last few years. We must create jobs here and the only market we can find for the goods produced by those people is outside the country. If we are to break into new markets we have to do so with goods which are attractive and competitive not just in relation to the goods manufactured in the country we export to but with the goods of other countries anxious to export to this country also. We are in competition with the whole world and it is an extremely competitive world as far as manufactured goods are concerned. Our goods must be attractive in price and quality or we will not sell.

Some of the costs of industry are outside the control of industrialists and the implication of those four lines is one instance of that. The Minister may argue that the amount this will add to any single item in the market place is relatively small. That is probably correct but every single industry is under pressure at the moment because of costs. This tax will have to be paid by very small industrialists as well as by extremely large ones. Very small industries have a number of other pressures on them. They are finding it almost impossible to survive because of the pressures on them. I referred to one pressure already on another amendment, the pressure they are experiencing in relation to credit. The credit growth this year will be allowed to be only 14 per cent and with inflation running at possibly over 20 per cent this is obviously a cut back in credit. At the same time, because inflation is running so high, the cost to small industries of raw materials is greater no matter where they buy them from. If they have to import their raw materials from Britain, because of the differential between the punt and sterling, this means an extra cost. Many small businesses now feel they would be better off to sell up and invest somewhere else. The Minister is now putting a further charge on those industrialists which is further damaging our competitive position.

The first thought in the Government's mind should be how they can maintain and increase employment. Everything should be looked at in the light of what it does to improve or damage our employment prospects. I would have thought, when the Minister considers the figures produced this week showing the increase in unemployment last month, that he would have recognised that industry needs every encouragement it can get to hold people in employment and he would have then indicated his acceptance of my amendment. I am not the only person concerned about this matter and it is not only in this House the Minister has heard about the effect of this tax on hydrocarbon oils. I am sure he has had representations from the different associations of business interests, the Confederation of Irish Industry and many other associations as well. He must also have had representations from individuals who are very hard pressed at the moment and who possibly felt they should go to him to tell him the damage that will be done to industry if this charge is put on.

The Minister will get £11 million from the ESB from this tax. He indicated in relation to a previous amendment how necessary it is that the Government should give rewards in this regard. We have had a lot of amendments to this Finance Bill, many of which we put down in order to change particular sections. I do not expect Deputy Bruton to agree with me but I would be prepared to scrap all my other amendments and accept the Minister's point of view in relation to them if he would accept my point of view in relation to this amendment. This is the most damaging part of this Finance Bill. It will have immediate short-term effects on industry from which many small industries will never recover. From the point of view of competitiveness in the future and of the confidence of business and employment prospects the long-term effects of this tax on hydrocarbon oils will be extremely damaging.

Business suspended at 1 p.m. and resumed at 1.45 p.m.

Mr. P. Barry

Before the sos I was making the point that this is probably the most damaging section of the Finance Bill, 1980 as it will do more harm to an already damaged Irish economy than any other provision in the Bill. I have said all I want to say about it. I feel very strongly about this extreme position in industry and I have quoted already the chairman of the company who said that the cost of this tax alone would be equal to the total wage bill for 1980.

Mr. Bruton

I support the amendment. The Minister and others may have heard a radio programme last Sunday on which people from different parts of the country were being interviewed about the fall off in jobs in industry in the various regions and the pattern was almost uniformly bleak. Following this assessment, the spokesman for the Confederation of Irish Industry was asked to identify the reasons for the situation and he identified three reasons. One was the high rate of inflation here, one the problem in determining wage levels vis-à-vis wages levels elsewhere and the third reason, the major reason given by the spokesman for the Confederation of Irish Industry for the fall-off in competitiveness and the gloomy prospects generally for the creation of jobs in industry, was this proposal that Deputy Barry is seeking to annul, to increase substantially the tax on fuel oils imposed on industry. That is an independent assessment by spokesmen of industry themselves as to the seriousness of this proposal. They are not a body who are given to exaggeration. The Minister should pay attention to what has been said by them and by Deputy Barry.

Minister for Finance (Mr. O'Kennedy)

Deputy Barry and Deputy Bruton have referred to the climate generally for industry here and the picture generally in employment. That is something of which I am conscious, but it is important in the first instance that one would see this in its proper context. I may be in a special position in that last week I attended a meeting of the Finance Ministers at the ECOFIN Council. One thing that has been absent from any comments that have been made by Deputy Barry and Deputy Bruton—they spoke briefly in any event—was any reference to the overall climate which exists right throughout the western world at this time. Even as we are talking, the likelihood of further increases from OPEC decisions in relation to oil prices is very real and these will have a major impact on all western economies and, in real terms, they are higher than anything we have experienced before this. Yet one can say that in terms of the basis of 1973 the proportion then was higher but the actual increases that we have experienced over the last 12 months and are facing still are inordinately high and are having very serious and damaging effects on employment generally in all of the Community countries and in the western world. The level of unemployment is unprecedentedly high for each of our partners in the EEC. That is the first thing that has to be recognised as demonstrating, the effect of the increase in oil prices and the OPEC surpluses that are building up. It is quite significant that, this very afternoon, the European Council will be devoting their attention particularly to the major issue of recycling the surpluses generated in the OPEC countries, to the considerable detriment of all the consumer nations. That is particularly true in our case, because of our level of dependency on imported oil, which is so high at 80 per cent, and also our level of dependency on exports which is higher than in any other country in the EEC. On the one hand it is a good thing that we are exporting to that extent—50 per cent of the total of our GNP depends on exports—which is considerably higher than that of any of our partners.

When the international economy is in recession, as it is at the moment, the impact on exporting countries such as ours—we are an open economy at both ends; we have to import raw materials and export the products of our industry—is particularly severe. It is well that this should be stated as an unwelcome fact. There is no short-term solution for any Government, particularly for a Government in a small economy such as ours. There are measures that can be taken to ensure maximum productivity from industry. As I mentioned this morning, in terms of tax relief for industry, last year the manufacturing industry contributed £17 million of the total of £130 million in corporation tax.

That is not something to complain about. It is a measure of the Government's commitment to the importance of this area. It cannot be presented as a measure of our blindness to the problems that exist for them or for any other element in our economy. I want to stress that particularly. At a time when we are under severe constraints, because of our balance of payments, we are still maintaining reliefs. Next year we will be introducing additional relief on the 10 per cent which will be a further concession—£15 million is the estimate for next year.

There is no point in picking out one aspect of a total package and saying it is a crushing burden when the whole picture is one of Government commitment to and concern for continuing employment through our industrial programmes. That has to be stated as a fact. The 10 per cent relief will be particularly important in that it is not now being confined to exports but to manufacturing industry, irrespective of whether or not it is exporting. That means that small industries who would not have been exporting to a considerable extent will now, for the first time, benefit from this major relief under the new scheme.

This amendment cannot be taken in isolation. It is not possible to say: "You have gone further than anybody else in every other direction, but we want you to go further than anybody else in this direction too." There is a limit to what one can be asked to do. To achieve all this, you must raise revenue elsewhere, you must borrow it and put a further burden on taxation, thereby upsetting the whole balance of the economic management programme. One is not prepared to do that at a difficult time in the economy.

The projected levels of employment in the EEC at the moment are higher than those projected for a considerable length of time. These are the realities I heard from my colleagues in the European Community when I attended a meeting last week. We have to do all we can to come through successfully, as we can and must and will do. We cannot do it by asking the taxpayers generally, in a difficult time, to pay more and more to give reliefs in areas where certain new duties are being applied. It is important that we should see that.

There are ways in which we can take action. One of these ways in which all of us as a community can take action is to support the products of our own industries. I regret that that message has not yet got across to so many of our people who seem to be under the impression that it does not matter in terms of their welfare, never mind the national welfare, how our balance of payments is affected. I regret particularly that some of the major distributing outlets in Dublin do not seem to be aware of this or concerned about it. Their customers in the higher bracket do not seem to be aware of it either.

There are actions we can all take to get over this problem, action which have been taken by other countries with a sense of commitment and a sense of what one might call bluntly patriotism. One of the most prosperous economies where they have been able to overcome the impact of their dependence on imported energy is Japan.

Mr. Bruton

How many jobs were to be saved by the "Buy Irish Campaign"?

Mr. O'Kennedy

Deputy Bruton can be cynical if he wishes.

Mr. P. Barry

The cynicism was three years ago in the manifesto.

Mr. O'Kennedy

The reality is that there is a great deal within our own control in this area as in other areas. It all comes down eventually to balance of payments problems. As I said more than once since my budget statement, there is no self-correcting mechanism. Even though our industrial exports have increased and our agricultural exports are picking up, the deficit gap is not closing because of the increasing cost of oil. That is a fact. We will have to——

Mr. Bruton

Add to it.

Mr. O'Kennedy

——take action in every area under our control. We could also have a more national and patriotic response in the area of tourism. It is extraordinary that in a year when our industries are undergoing difficulties——

Mr. Bruton

Is this relevant to the amendment?

Mr. O'Kennedy

The debate ranged widely. It is extraordinary that so many people add to our balance of payments problem by spending their holidays elsewhere instead of helping out at home.

Mr. Bruton

We are on limited time. We have a number of amendments we want to move.

An Leas-Cheann Comhairle

The debate ranged over a number of matters.

Mr. O'Kennedy

I will come back to industry. Other elements have to be mentioned. Even the level of social security contribution made by employers here is less than it is in any of the other countries we are talking about. In almost every area of tax concessions, for a small economy we are making every effort to demonstrate how important we recognise the industrial arm to be. At a time of extreme problems for our balance of payments, due to increased oil consumption, when one introduces a duty of this nature, perhaps understandably, the Opposition will focus on that in isolation and say that this is a crippling burden and that this is the thing that can drive people to the wall. I am not saying that it does not add to the costs but the impact of this in terms of the increased cost for manufacturing industry generally is less than 1 per cent. But even at less than 1 per cent one cannot look at it in isolation. If one does that one is not facing the problem as any responsible Government should do in drawing up their budget programme. If one ignores all the other concessions, aids and reliefs and focuses and this one, one is ignoring the realities. This tax is the only one of the indirect taxes in the recent budget which is not discretionary. All of the others related to discretionary spending. This tax represents an essential cost increase of less than 1 per cent. There may be some few who, because of the processes in which they are involved, would have a higher rate of consumption of these oils than others. But we are talking about the whole range of all of them. The Government are determined to get across to industry and the workers in industry these general facts of life.

Our competitiveness can be maintained only if the level of income is kept somewhere in line with what is applied in the countries to which we export. Those who insist on ignoring the realities and say that because they got a certain percentage last year they are therefore entitled to receive at least that much this year will block employment opportunities for the young people, and 50 per cent of our population are under 25 years of age. The next highest percentage in Europe is about 38 per cent under 25. The average in Europe for the demographic breakdown is about 37 per cent under 25. We are in a situation where 50 per cent of our population are under 25 and we must find jobs for them. It is a real problem and we are going to be constrained in finding jobs for those people if those currently in employment ignore the impact of their actions on those who are coming into employment.

These are some of the realities one has to look at when one gets a proposal of this nature and is asked to respond to it in isolation as if this were the only element in our attitude towards industry generally. I am conscious of the fact that industry would prefer if that did not arise. But if one looks at the whole favourable package—and the IDA advertise widely throughout the world because it is so favourable to industry—surely it is not reasonable to take one element and concentrate on that.

There is also the question of conservation. This is not entirely a matter of discretion for industry but there are measures that can be taken even in industry. These must be looked at and this is something which the Tánaiste is particularly involved in at present. This problem is not going to be solved overnight. People at every level have a role to play, the employers and employees, particularly the consumer and, of course, the Government. I want to assure the House that while I cannot accept the amendment because there is a revenue implication involved here too, I have gone as far as one can go in relation to the incentives for industry.

Mr. Bruton

What would be the revenue implications?

Mr. O'Kennedy

The figure here is £46 million.

Mr. P. Barry

That is a very substantial figure.

Mr. O'Kennedy

It is a substantial figure; I am not suggesting that it is not. But it is spread fairly widely. I know that it is not particularly welcome from the point of view of industry. But it should be put in context; it represents less than 1 per cent of the overall cost. That is the kind of measure that one can and one must absorb, and other increases will represent much more than that. Let me say that one of the disturbing features I remember when we were negotiating our entry into the EMS was that one of the reasons why the EMS subsidies were agreed was because it was then perceived that the £ sterling would decline against the EMS currencies and that would leave us at a competitive disadvantage in the British market and that would be particularly difficult for our industry. What has happened is that in the meantime the £ sterling has appreciated considerably against EMS currencies and, within the EMS currency, we are performing particularly well. But we have no control over what happens to the £ outside of it. It gives us a competitive advantage in the British market. That is a real advantage. Surely that is something to be exploited even though, because of the recession which is biting in Britain as well as in other countries and because of the policy being pursued there redundancy rates are increasing very considerably and consumption is being dampened. But that would not be such as to——

Mr. Bruton

There are a few amendments left.

Mr. O'Kennedy

I will leave it at that. I cannot accept this amendment on that basis. I do not want anyone to think that I am not concerned, because I am, and I do not want to have it said that this is the only area we are talking about.

Mr. M. O'Leary

The Minister makes the general defence that his refusal to acknowledge the importance of this amendment must be seen in the context of the Government's overall approach to assistance to industry and their concern about employment. Of course, the amendment takes particular effect when one looks at the number of lay-offs which have occurred in many old established industries in the early months of this year, particularly in the building industry, and there is no sign as yet to suggest that the rest of this year will not be marked by a similar scene in Irish industry. It is in that context that the amendment has great relevance.

It is in that context that it is necessary that the Government should reconsider their views, their package of measures to assist industry. I have no doubt that this year, supposedly the year of industrial peace, has become the year of lay-offs, the year of redundancies, the year of close-downs, the year of increasing unemployment. From all we can see for industry at this point, this winter will see an unemployment figure in excess of 100,000. So it is in that context that one must deplore the failure of the Minister to meet an amendment of this kind with some undertaking of review, because the position is that we do not really know at this point what new policies are under consideration to deal with what is a very serious economic situation for industry.

I am not one to express concern about a fall in company profits, but I am concerned that the fall in company profits will be followed very quickly by increases in lay-offs. That is the connection that concerns me. While we have redundancy payments provisions, those people who find themselves redundant later this year will have great difficulty in finding alternative employment. The Minister talked in his reply about the overall necessity for making ourselves cost-competitive. He referred to the kind of competition we are facing and spoke of the need to buy Irish and so on, but he should appreciate that there is growing dismay among the people in that this changed administration are failing in their task of holding back inflation, that they are losing the battle against inflation. It can be predicted at this point that the May-to-May figure for the CPI which will be published next week will show a figure in excess of 20 per cent. This will not help Irish industry in keeping costs down. Indeed, the general climate in which Irish industry must compete throughout this year and next year is one of increasing inflation.

Mr. O'Kennedy

Irish industry does not depend on beer, spirits and cigarettes.

Mr. M. O'Leary

The strategy applied in the budget was to increase the indirect taxation area, the general defence for this being that the expenditure in this regard would be discretionary. However, it is not very discretionary when one has regard to many of the items in respect of which the increased taxation applied. The prospect for the Minister is that very shortly he will be faced at the negotiating table by people whose agreement is essential and for moderate settlements if incomes are to be a component in holding down inflation. The Minister will be meeting people who will be pointing out that the strategy of his budget was wrong if the Government were intent on keeping down inflation. If the practice of Government consisted of a series of Panorama programmes, this would be the best Government and the one with the most intelligent Taoiseach that the country has ever known but the practice of Government consisted of more serious matters.

An Leas-Cheann Comhairle

The Deputy is getting away from the amendment.

Mr. O'Kennedy

I was under the impression that there were complaints of there being too few appearances on television.

An Leas-Cheann Comhairle

All speakers tend to ramble from the subject matter before the House but there are limits to which this may be allowed.

Mr. M. O'Leary

We are talking about the attitude of this Government to industry. I would remind both the present holder of the ministry of Finance and the Taoiseach also that they are in office because of their assumed competence to turn the economy around. But they are failing in that task and the consequences of such failure can be very serious. The Minister has only to look at the planed and whitened political bones of his predecessors in that office to realise how serious are the consequences of failure.

An Leas-Cheann Comhairle

We are not discussing these posts. The scope of the amendment before the House is broad enough without the Deputy endeavouring to ramble all over the place.

Mr. M. O'Leary

In these very relevant ramblings——

An Leas-Cheann Comhairle

It is not the opinion of the Chair that the Deputy is being relevant.

Mr. M. O'Leary

By way of his general defence in not accepting this amendment, the Minister says that the Government are in favour of industry and wishes to meet squarely the job situation but he would realise that according to the latest figures available we are probably in the worst unemployment situation since 1977. Before December of this year I predict that the unemployment level will be in excess of 100,000 and that by late winter the figure will be approaching the 112,000 mark. That is the kind of situation that the Minister for Finance is dealing with and I am saying simply that the basic reason for his holding his present position and the reason for the change in the Cabinet was the assumed competence of the new Ministers to turn the economy around. We have not received any information yet from this Government as to how they propose dealing with the worsening economic situation. I would remind the Minister that the people are not measuring the competence of the Government in terms of well publicised departures to Venice or by meetings with Mrs. Thatcher.

An Leas-Cheann Comhairle

These matters are not relevant to the debate.

Mr. O'Kennedy

The Deputy has not been here very much and during this very brief appearance he persists in bringing in all those other matters.

An Leas-Cheann Comhairle

We are not having a full-scale debate on the economy. The Deputy must speak to the amendment.

Mr. M. O'Leary

The Minister spoke a few minutes ago with the zeal of a recent convert to fiscal responsibility. I find that somewhat difficult to take. His argument for not accepting the amendment might have some merit if we had an administration that was serious in dealing with the inflationary situation but in this, the second last summer of their existence, the Government are not showing any capacity for dealing with that situation. It is in that context that it is very difficult to take the Minister's arguments in defence of his not accepting the amendment. We are not in a situation of normal circumstances. Therefore, the Minister's argument falls. I do not see any reason at this point for altering what was my immediate reaction to the budget and when I predicted that by the coming winter unemployment figures will be in excess of 100,000, that the inflation rate will be more than 20 per cent and that the price of petrol will be £2 per gallon.

Mr. P. Barry

I am not pushing the amendment to a vote though I would be anxious that the House would divide on the motion so that we might ascertain who would be prepared to vote for this tax on jobs. However, in view of the short time left for discussion of the Bill, I have decided not to ask for a vote.

The Minister said that outside influences are having a damaging effect on our economy. That is true because outside influences must always be taken into account but what is the Government's response to these outside influences? Is it not true that they have magnified the damage by adding their own slice to the OPEC price increase instead of trying to do something within our own economy to minimise the damage being caused. It is this adding of further taxes to the price increases being imposed by the oil producing countries that is causing the most damage to our economy. We are talking now about the most serious element of the budget in terms of inflation and tax. The tax being imposed as a result of the Minister's refusal to accept the amendment will work its way through the entire economy. The Minister gave a figure of £46 million. That is a huge sum of money.

Mr. O'Kennedy

I gave that figure on budget day, too.

Mr. P. Barry

I am aware of that. One quarter of that amount is being contributed by the ESB and that is something that affects every individual, every household, every industry and every institution in the community. It will be added to the inflation figure. This will further damage our competitiveness abroad, which the Minister says—and I accept—he is concerned about. He proceeds to lecture our workers about how they should be moderate in their demands for wages in this year, otherwise they will damage the prospects of expansion of our exports abroad and reduce our ability to fight against imports. It is probably right, that immoderate wage demands do affect our competitiveness abroad, but the Minister himself is responsible for further damaging our competitiveness abroad. The Minister is asking the workers to be moderate in their demands but is giving no good example by putting this imposition on industry. My last point—and I have insufficient time to develop this—concerns the Minister's plea to buy Irish. I fully accept that plea and the plea to support our tourist industry, which is another form of "Buy Irish". Again the damage being done to tourism is being done by the Government.

Mr. M. O'Leary

Hear, hear.

Mr. P. Barry

It is not being done by the tourist industry or by anything happening outside this country. Our tourist figures will be down precisely because the Government have added tax on all sections, and particularly for the people most remote from the points of entry into this country, Irish tourism is less attractive than it was last year.

The damage which is being done to this country by the present price of drink, of tobacco, of pertol, and now the proposed increase on oil prices is in part coming from outside, but the Government have exaggerated and increased this damage by their internal actions. That is where the real damage is being done.

An Leas-Cheann Comhairle

Is the amendment withdrawn?

Mr. P. Barry

No, it is not.

Amendment put and declared lost.

Amendment No. 46 not moved.

An Leas-Cheann Comhairle

Amendment No. 47 is in the names of Deputy Bruton and Deputy Peter Barry. Amendments Nos. 48, 48a, 48b, 48c and 48d are related.

Mr. Bruton

I move amendment No. 47:

In page 73, between lines 7 and 8, to insert the following paragraph:—

"(c) Save that there shall be no increase in the rate of Value-Added Tax applied to furniture and furnishings.".

This amendment is concerned with the very dramatic increase in the price of a large number of items being imposed in this budget as a result of the increase in the value-added tax rate from 20 to 25 per cent on approximately 70 items, all of them alleged by the Government, presumably, to be luxuries which can afford to be taxed at this very high rate. The amendments which we are proposing here are designed to remove ten of these items from the list covered by the increased value-added tax. Each of these items can be demonstrated in the first place not to be luxuries and in the second place to be important for one reason or another to the improvement of the quality of life in this country.

The first item concerns furniture and furnishings. The furniture industry is very important in my constituency of Country Meath. At the present time furniture manufacturers who employ large numbers of people and are mostly small manufacturers are facing a very depressed market and are running the risk of having to lay off workers because of a declining demand. It is very unfortunate, therefore, that furniture and all the furnishings that go into a house are to have value-added tax increased from 25 to 25 per cent at a time of depression. In no sense can furniture be described as a luxury. Everyone now must have a house to live in and, if they have a house, they must have furniture to put in it. There is no justification for increasing the level of value-added tax from 20 to 25 per cent.

Furthermore, this increased tax will further aggravate the problems which the furniture manufacturers are now facing from imports. In the case of value-added tax on furniture manufactured here, the tax is collected at the point of production from the Irish manufacturers, whereas in the case of the imported product, value-added tax is not collected until the point of sale. As very often these goods remain in stock for some time, this deferred payment in the case of imported goods gives imported furniture a competitive advantage over the Irish manufacture. In increasing the value-added tax rate, this competitive advantage is being accentuated and this is something to which we very much object.

The next items with which we are concerned are carpets and curtains. Carpets are also a very important Irish manufacture and the industry is facing considerable difficuilty at the moment in maintaining employment. Indeed, there are threats to many of the jobs in the carpet industry. Obviously, demand for carpets on the home market is depressed at present and will be depressed still further by the proposed increased value-added tax to the luxury rate of 25 per cent. Our proposal seeks to mitigate that situation and to help preserve the jobs in the carpet industry.

We furthermore suggest that the proposed increase to 25 per cent rate on sports goods should not go ahead. The Government are spending very substantial sums of money encouraging people to take up sport. It is very regrettable that, when the people accept the advice of the Government and take up a sport, they find in purchasing equipment—and for practically every sport some form of equipment is necessary—that the Government have decided that that equipment should bear the luxury rate of 25 per cent. If sport is as essential to a healthy life as the Government spokesmen say it is, it is not a luxury and sports equipment should not be taxed at a luxury rate. This tax increase should not apply to many of the modern sports, where equipment is a quite expensive part of the total enterprise, particularly outdoor sports like canoeing where we are using our natural habitat to engage in sport.

We are, further, proposing that in the case of radios the increase in value-added tax should not take effect. Some might say that radios are a luxury, but I do not believe that they are, particularly for old and blind people for whom the radio is the only means of communication with the outside world for large parts of the day. We are all familiar with the advertisement on the radio put out by the National League for the Blind which says "Radio is the eyes of the blind in this Country". A radio should not be treated as a luxury, particularly for old people. Perhaps an exception would be made to mitigate the situation as regards old and blind people and I would support that move.

We are further suggesting that educational supplies, which are also to be treated as luxuries and the value-added tax increased to 25 per cent, should not bear this increase. Everybody accepts that education is an essential part of life and modern education requires various forms of audio-visual aid to get the message across appropriately to children. Educational supplies which are essential to that purpose should not be treated as luxury items.

The Government at the moment are not granting sufficient money to provide people with houses. Many people who are looking for houses from local authorities have no option but to live in a mobile home for perhaps three, four or five years until such time as the local authority get around to providing them with a house. In my part of the country there are large numbers of people living in mobile homes and caravans on sites who cannot get a house from the local authority. For this reason, we deplore the proposal in the budget to increase the value-added tax on mobile homes to 25 per cent. This will increase by perhaps many hundreds of pounds the amount that young couples will have to pay to get a mobile home, as a direct result of this budget. We propose that the 25 per cent rate be reduced in this case.

There are two other items to which I might refer before I conclude. We propose that the value-added tax rate on bicycles be not increased to 25 per cent, on the grounds that these are not a luxury. Indeed, it is very odd that the Government, who are making a big song and dance about their energy conservation programme, about the increased taxes they are levying on motor cars and on motor vehicle fuels as a means of encouraging people to be more economical in the use of these vehicles and to conserve energy for the country, should in the same budget increase the rate of VAT payable on the only alternative mode of transport, excepting one's two feet, namely, the bicycle. That seems to me to reveal the inherent anomaly and insincerity of the protestations of energy conservation being the motive behind the increases in tax on motor fuels and motor car sales.

Furthermore, the Government are giving out free tooth brushes to encourage young people to brush their teeth. Yet, in the budget they decide that toothpaste is a luxury and that the value-added tax thereon should be increased from 20 per cent to 25 per cent. Could there be any more apt commentary on the fatuity of the free tooth brush campaign than that the Government should in the very same budget—which is presumably paying for the free tooth brushes—increase the price of toothpaste by 5 per cent? Unless the Minister has medical evidence that toothpaste is not good for one, but brushing one's teeth is, it seems rather odd that toothpaste should be subjected to the luxury rate of value-added tax in this budget.

Those are some of the arguments for not increasing these items to 25 per cent. I would remind the House that a 25 per cent value-added tax rate is a very high one on any commodity. It constitutes one-fourth of the entire purchase price of these commodities which is now being taken by the Government. I believe it is a good deal higher than applies in most other European countries to these items. Therefore I would ask the Minister if he would at least consider accepting some of these amendments.

Mr. O'Kennedy

Taking the last point first, in relation to this being perhaps the highest rate that applies in any European country, I should say that it is not. In Belgium the rate is 25 per cent. The highest rate in France is 33? per cent and the highest rate in Italy 35 per cent. That puts it in context in terms of this being the highest rate applicable here or elsewhere and also, as Deputy Bruton suggests, that it is a luxury rate, on what he presented as luxury items which in reality they are not. It is important to disabuse the Deputy of the idea that the items chargeable at 20 per cent hitherto and now at 25 per cent are classified as luxury items. In fact in many cases they are within the standard rate of value-added tax which covers a range of items all of which are not included in the Deputy's amendment. I shall come to some of them in a moment. Therefore the Deputy will see that to accept his amendment, and exclude others, if that be his purpose, would leave certain anomalies that, if anything, would be more obvious than what he points out to be anomalies at this point.

One cannot take this proposal in isolation. In my budget statement I mentioned that I had considered the increase in VAT rates generally and, in so doing, came to the conclusion that an increase at this level would be more appropriate and would have less impact on consumer prices than any other increase. Just to give an example, if the rate of 10 per cent had been increased to 15 per cent that would have yielded to the revenue approximately £150 million which is very much more than what this particular increase will bring in this year, of the order of £17,500,000.

It is important to place on record the fact that I approached this on the basis of distinguishing between the various rates of charge, establishing priorities between them and, as far as one can when one is imposing any extra charge, be it an excise duty or a VAT rate, taking into account the increased cost arising therefrom. This is the first point.

Again the Deputy looks at these in isolation. He does not pay any attention—indeed I do not expect that he would or should from his point of view over there-to the other balance involved in the whole of the Finance Bill proposals, particularly those in relation to income tax reliefs which, to a very considerable extent, go further than anything that applies anywhere else vis-à-vis our European partners. Nobody wants to remember the effect or significance of those any longer, certainly not in this House. Neither does anybody want to acknowledge their cost any more. We just take all of that as being absolutely necessary. The only reference to it during the course of the debate was the implication that this was forced on me by the Supreme Court even though I said I had made this announcement before the Supreme Court decision and, equally that the cost of the Supreme Court decision would be £30 million and that what we are doing would cost us this year somewhere in the order of £150 million, never mind next year when it will be something in the order of £230 million. Whether Deputies consider that or not it is not something they are prepared to throw into the reckoning in making proposals of this type. I still hold the view that if a spokesman on Finance from the other side introduces an amendment he should then, in each case—taking the accumulation of all of them—work out what they would cost and tell us from where the money will come.

Mr. Bruton

The Minister has his officials to do that.

Mr. O'Kennedy

I can do it for the Deputy if he likes. Before we leave here I will tell him the cost of all of the amendments he proposes.

Mr. P. Barry

I will give an example in a moment.

Mr. O'Kennedy

It is not in Ireland one would want to be to cope with them but rather in Saudi Arabia.

(Interruptions.)

An Leas-Cheann Comhairle

We are dealing now with amendments on value-added tax.

Mr. O'Kennedy

The other important thing to remember is the manner in which VAT is paid. It is paid on the nineteenth day of the month following the two month leviable period in almost every case. Therefore there is a seven weeks deferment as far as liability to pay is concerned. It is important to recognise that it is a broadly based tax—there is no question about that—at the three rates we have. But if one were to do what Deputies Barry and Bruton now propose, we would have a fourth rate, a 20 per cent rate, because they are not suggesting that the 25 per cent rate be abolished entirely. They are saying that there should be exempted from it some of the items they have picked out now, and have a fourth rate of value-added tax at 20 per cent. Obviously then problems would arise in the administration of the system. Certainly also it would then be very much out of line with the operation of the value-added tax system general in any other country with one exception, Italy. With that exception they all operate more or less on the number of rates that we do: In Belgium and in Denmark there is one standard rate which is 20¼ per cent all round. In France there are three rates. Germany and Luxembourg have three rates also, as have the Netherlands, one of which is zero. Therefore were we to introduce a fourth rate here we would add to the administrative difficulties both for those who have to make VAT returns and also for the revenue.

The amendments cover a whole range of issues. In an endeavour to reply to the points made in relation to each of them I should say that, first of all, if one is going to exempt furniture and furnishings and bicycles—let us take that group—obviously it would be very difficult, outside of the context of a similar rate for many other goods such as household equipment, household non-durable goods, including soaps and detergents and sports goods, also liable at VAT rate, one would not be in a very strong position to argue with those who manufacture. Deputy Bruton spoke about an industry in his town. Although I was not thinking particularly of such I can think of one in my own town, one of the long established ones in relation to household goods, when perhaps I would have said, in the interest of industry in Nenagh, I should not have taken this step. I would find it very difficult to say to an industry like that "Well, we are going to exempt furnishing but not the household goods you produce for the kitchen, that the housewife uses every day, and they are included". Deputies Bruton and Barry do not propose that they should be. In other words, the effect of meeting Deputy Barry's proposals is that I would be asked to place myself in the position of justifying what is unjustifiable and not extending it to others, or else extending it across the whole range, which is not something I would be prepared to do. I would not be prepared to contemplate doing that this year. This is the standard rate, although Deputy Bruton used the word "luxury".

Mr. Bruton

Twenty-five per cent is a high rate.

Mr. O'Kennedy

By comparison there are terrifying rates in other countries. I do not classify these goods as luxuries. This will mean an increase of about 4.2 per cent on the price of the article and if one takes account of the various concessions in the budget which increase take home pay, the effect of this 4.2 per cent is more than matched.

The Deputy's intention is to reduce the VAT rate on furniture, furnishings and bicycles to 20 per cent. I will not say more than to emphasise that the effect of putting these articles outside the general VAT structure would be that we would have a fourth rate of VAT which, to say the least of it, would be untidy, would impose additional administrative problems and put us out of line with almost all other countries. There would have been some sense if Deputies opposite advocated the pegging back of the 25 per cent to 20 per cent all over. They would not then be distinguishing between teapots, which are liable to 25 per cent, and bicycles which would be liable to 20 per cent if the amendment were accepted. In their judgment a teapot is a luxury but bicycles are not. The overall rate of 25 per cent is less burdensome from the point of view of consumers and those who operate the tax.

On the question of mobile homes, I should like to point out that they are liable to the 25 per cent rate, but if a mobile home constitutes the principal residence of a person it is liable to three per cent only, and the difference between 25 per cent and three per cent would be refunded to that person if the mobile home were assessed at a rateable valuation. That should be some consolation to Deputy Bruton.

Mr. P. Barry

On a number of occasions the Minister challenged us to say where the money would come from to pay for this reduction. One of the amendments seeks to remove sports goods, including hurleys, from the VAT net. As the Minister knows, there are about 300 clubs in the country and their members have to pay £5 each for hurleys. It is obvious the Minister is contributing a fair share of their cost because a contribution of £100,000 has been given——

Mr. O'Kennedy

I should have said that the actual cost which would be imposed by this amendment in a full year is £40 million.

Mr. Bruton

There is no need for me to go back on all the arguments. The Minister pointed out that the amendment would create a new VAT rate. That is only an administrative argument. If the Minister had accepted the amendment he could even cut the rate to 10 per cent overall——

Mr. O'Kennedy

Did the Deputy say 10 per cent?

Mr. Bruton

My amendment is more modest. I do not believe the Minister should have increased VAT on a great many items which the Minister said he did not regard as luxuries. Many of them are essentials. The problem is in regard to the furniture industry that Irish manufacturers will be at a disadvantage vis-à-vis foreign competitors because of this higher VAT rate. As well, foreign goods attract VAT at point of sale whereas Irish furniture and furnishings attract VAT at point of manufacture. That puts our manufacturers at a big disadvantage.

The Minister pointed out that there is a seven-week deferment of payment in this respect and that that should put Irish furniture manufacturers on a par with foreign manufacturers. That seven weeks deferment would be valuable in the case of goods which would have a quick turnover, but furniture could remain for quite some time as unsold stock because it is a very expensive item and therefore seven weeks is insufficient. In order to reduce the competitive disadvantage suffered by Irish domestic manufacturers vis-à-vis foreign competitors I ask the Minister to give a longer deferment period or to give some other measure of relief.

Amendment put and declared lost.

Amendments Nos. 48, 48a, 48b, 48c, and 48d not moved.

Mr. P. Barry

I move amendment No. 49:

In page 73, between lines 45 and 46 to insert the following:

Section 16 (market value of certain shares in private trading companies) is hereby amended as if, the market value of each share in a private trading company, on or after the 1st day of April, 1980, is 50 per cent of its market value, or £150,000, whichever is the lesser."

Section 83 of the Bill, as amended in Committee, provides that the relevant section of the Capital Acquisitions Tax Act shall, as respects a gift or inheritance after 1 April this year have effect as if £150,000 were substituted for £100,000. The amendment proposes that in the case of certain shares in private trading companies each share should be regarded as 50 per cent of its market value for the purposes of this section. I am proposing that the same relief should apply to shares in private companies. It will be appreciated that the same difficulties could arise in attempts to hand down a business from one generation to another, as exists in farming. The purpose of this amendment is to amend the capital acquisitions tax legislation through this subsection in this Bill.

Mr. O'Kennedy

Deputy Barry clearly indicated what his amendment represents, that is, that the same relief be granted in respect of shares in private trading companies as applies to agriculture. I am not trying to be cynical but Deputy Barry has been consistent in that whenever I make a concession he asks for it to be extended to another area. I cannot do that. When I make a concession in recognition of the circumstances that apply in agriculture he asks me to extend that concession. Here again I must come back to the point which all Deputies are concerned about. From time to time I have heard them talk about the inequity of the application of tax. We make the case for each group when we are dealing with them but we forget what the impact of the relief would be on the total package.

Capital taxation yields considerably less than might be expected. The argument has been raised by those concerned about the narrow base of taxation, because the level of capital taxation is already unduly low. I do not know Deputy O'Leary's view on this because I have only heard his views about four times during this debate. Significantly when he does not wish to express a view he remains silent but whether that is in favour of Deputy Barry or in my favour I am not sure.

The agricultural relief was provided in recognition of the special problems affecting that industry, especially the fact that the value of land is quite often determined by factors other than the return that might be expected from it. Therefore, we have encouraged a degree of reason in an approach to coping with the problem of inflated prices of land. Because I acknowledged that the market value of land was higher than the use value of land, it was necessary to introduce very considerable concessions but that argument cannot be used to justify an extension to other areas. The same problems do not arise in other areas.

Agricultural relief is restricted to Irish land and Irish farmers. This amendment—and this may not be the Deputy's intention—is unrestricted and would make relief available to foreign shareholders, foreign companies and foreign beneficiaries. For those reasons I hope I have convinced Deputy Barry that what I have done in one direction I do not feel justified in doing in another area.

Mr. P. Barry

Obviously there is a difference between a Minister putting down an amendment to a Finance Bill and an Opposition spokesman, because I do not have the same research facilities nor can I see all the consequences of my amendment, but the spirit behind this amendment is quite clear. Many small Irishowned family businesses get into trouble when they pass from one generation to the next because of the capital acquisitions tax. I was trying to rectify that position by putting them on the same level as farming.

Amendment, by leave, withdrawn.

Mr. O'Kennedy

I move amendment No. 50:

In page 78, line 14, to delete "1980" and to substitute "1978".

I can assure Deputy Barry that this is a technical drafting amendment.

Amendment agreed to.

Mr. O'Kennedy

I move amendment No. 51:

In page 80, to delete lines 38 to 42 and to substitute the following Part:

"PART II

`SCHEDULE 3

Reliefs in Respect of Tax charged on Payments on Retirement, etc.

Preliminary

1. Relief shall be allowed in accordance with the following provisions of this Schedule in respect of tax chargeable by virtue of section 114, where a claim is duly made in accordance with section 115.

2. A claimant shall not be entitled to relief under this Schedule in respect of any income the tax on which he is entitled to charge against any other person, or to deduct, retain, or satisfy out of any payment which he is liable to make to any other person.

Relief by reduction of sums chargeable

3. In computing the charge to tax in respect of a payment chargeable to tax under section 114, there shall be deducted from the payment a sum equal to the amount (if any) by which the standard capital superannuation benefit for the office or employment in respect of which the payment is made exceeds £6,000.

4. In this Schedule "the standard capital superannuation benefit", in relation to an office or employment, means a sum arrived at as follows, that is to say—

(a) there shall be ascertained the average for one year of the holder's emoluments of the office or employment for the last three years of his service before the relevant date (or for the whole period of his service if less than three years);

(b) one-twentieth of the amount ascertained at (a) shall be multiplied by the whole number of complete years of the service of the holder in the office or employment; and

(c) there shall be deducted from the product at (b) a sum equal to the amount, or, as the case may be, to the value at the relevant date, of any lump sum (not chargeable to tax) received or receivable by the holder in respect of the office or employment in pursuance of any such scheme or fund as is referred to in section 115 (1) (d).

5. Where tax is chargeable under section 114 in respect of two or more payments to which paragraph 3 applies, being payments made to or in respect of the same person in respect of the same office or employment or in respect of different offices or employments held under the same employer or under associated employers, then—

(a) paragraph 3 shall apply as if those payments were a single payment of an amount equal to their aggregate amount and, where they are made in respect of different offices or employments, as if the standard capital superannuation benefit were an amount equal to the sum of the standard capital superannuation benefits for those offices or employments;

(b) where the payments are treated as income of different years of assessment, the relief to be granted under that paragraph in respect of a payment chargeable for any year of assessment shall be the amount by which the relief computed in accordance with the foregoing provision in respect of that payment and any payments chargeable for previous years of assessment exceeds the relief in respect of the last-mentioned payments;

and where the standard capital superannuation benefit for an office or employment in respect of which two or more of the payments are made is not the same in relation to each of those payments, it shall be treated for the purposes of this paragraph as equal to the higher or highest of those benefits.

6. (a) In computing the charge to tax in respect of a payment chargeable to tax under section 114 in the case of a claimant, if the claimant has not previously made a claim under section 115 and the relevant capital sum (if any), in relation to the office or employment in respect of which the payment is made, received or receivable by him did not exceed £4,000, section 115 (3) and paragraph (3) shall apply to that payment as if each reference to £6,000 were a reference to £6,000 increased by the amount by which £4,000 exceeds that relevant capital sum.

(b) In this paragraph `the relevant capital sum in relation to an office or employment' means the amount or value at the relevant date of any lump sum (not chargeable to tax), or, if there is more than one such lump sum, the aggregate of such amounts or values, received or receivable by the claimant in pursuance of any such scheme or fund as is referred to in section 115 (1) (d) in respect of the office or employment.

7. In computing the charge to tax in respect of a payment chargeable to tax under section 114, being a payment made in respect of an office or employment in which the service of the holder includes foreign service there shall be deducted from the payment (in addition to any deduction allowed under the foregoing provisions of this Schedule) a sum which bears to the amount which would be chargeable to tax apart from this paragraph the same proportion as the length of the foreign service bears to the length of the service before the relevant date.

Relief by reduction of tax.

8. In the case of any payment in respect of which tax is chargeable under section 114, relief shall be allowed by way of deduction from the tax chargeable by virtue of that section of an amount equal to the amount determined by the formula—

A — (P× T/I)

where—

A is the amount of tax which would be chargeable apart from this paragraph in respect of the total income of the holder or past holder of the office or employment for the year of assessment of which the payment is treated as income after deducting from that amount of tax the amount of tax which would be so chargeable if the payment had not been made;

P is the amount of the said payment after deducting any relief applicable thereto under the foregoing provisions of this Schedule;

T is the aggregate of the amounts of tax chargeable in respect of the total income of the holder or past holder of the office or employment for the five years of assessment immediately preceding the year of assessment of which the payment is treated as income before taking account of any relief provided by section 361 of the Income Tax Act, 1967;

I is the aggregate of the taxable incomes of the holder or past holder of the office or employment for the said five years of assessment.

9. Where tax is chargeable under section 114 in respect of two or more payments to or in respect of the same person in respect of the same office or employment and is so chargeable for the same year of assessment, those payments shall be treated for the purposes of paragraph 8 as a single payment of an amount equal to their aggregate amount.

10. Where tax is chargeable under section 114 in respect of two or more payments to or in respect of the same person in respect of different offices or employment and is so chargeable for the same year of assessment, paragraphs 8 and 9 shall apply as if those payments were made in respect of the same office or employment.

Supplemental

11. Any reference in the foregoing provisions of this Schedule to a payment in respect of which tax is chargeable under section 114 is a reference to so much of that payment as is chargeable to tax after deduction of the relief applicable thereto under section 115 (3).

12. In this Schedule "the relevant date" means, in relation to a payment not being a payment in commutation of annual or other periodical payments, the date of the termination or change in respect of which it is made and, in relation to a payment in commutation of annual or other periodical payments, the date of the termination or change in respect of which those payments would have been made.

13. In this Schedule "foreign service", in relation to an office or employment, means service such that—

(a) tax was not chargeable in respect of the emoluments of the office or employment, or

(b) the office or employment being an office or employment within Schedule E, tax under that Schedule was not chargeable in respect of the whole of the emoluments thereof, or

(c) the office or employment being regarded as a possession in a place out of the State within the meaning of Case III of Schedule D, tax in respect of the income arising therefrom did not fall to be computed in accordance with section 76 (1).

14. Any reference in this Schedule to the amount of tax to which a person is or would be chargeable is a reference to the amount of tax to which he is or would be chargeable either by assessment or by deduction.".

Amendment agreed to.

Bill received for final consideration.

Question put: "That the Bill do now pass."

The Dáil divided: Tá, 53; Níl, 29.

Tá

• Ahern, Bertie.
• Allen, Lorcan.
• Andrews, David.
• Andrews, Niall.
• Barrett, Sylvester.
• Brady, Gerard.
• Brady, Vincent.
• Briscoe, Ben.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Colley, George.
• Collins, Gerard.
• Conaghan, Hugh.
• Connolly, Gerard.
• Crinion, Brendan.
• Daly, Brendan.
• Doherty, Seán.
• Farrell, Joe.
• Filgate, Eddie.
• Fitzpatrick, Tom (Dublin South Central).
• Fitzsimons, James N.
• O'Malley, Desmond.
• Power, Paddy.
• Smith, Michael.
• Tunney, Jim.
• Flynn, Pádraig.
• Fox, Christopher J.
• Gallagher, Dennis.
• Herbert, Michael.
• Hussey, Thomas.
• Keegan, Seán.
• Kenneally, William.
• Killeen, Tim.
• Killilea, Mark.
• Lawlor, Liam.
• Leonard, Tom.
• Leyden, Terry.
• Loughnane, William.
• MacSharry, Ray.
• Molloy, Robert.
• Moore, Seán.
• Morley, P.J.
• Nolan, Tom.
• Noonan, Michael.
• O'Connor, Timothy C.
• O'Hanlon, Rory. O'Kennedy, Michael.
• O'Leary, John.
• Walsh, Joe.
• Walsh, Seán.
• Woods, Michael J.
• Wyse, Pearse.

Níl

• Barry, Peter.
• Barry, Richard.
• Belton, Luke.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Liam.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Cosgrave, Liam.
• Cosgrave, Michael J.
• Creed, Donal.
• Deasy, Martin A.
• Desmond, Eileen.
• Fitzpatrick, Tom (Cavan-Monaghan).
• Griffin, Brendan.
• Harte, Patrick D.
• Keating, Michael.
• Kelly, John.
• Kenny, Enda.
• L'Estrange, Gerry.
• O'Brien, Fergus.
• O'Brien, William.
• O'Keeffe, Jim.
• O'Leary, Michael.
• O'Toole, Paddy.
• Ryan, John J.
• Taylor, Frank.
• Tully, James.

Tellers: Tá, Deputies Moore and Briscoe; Níl, Deputies L'Estrange and J. Ryan.

Question declared carried.

An Leas-Cheann Comhairle

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