Dáil Éireann debate -
Thursday, 12 Jun 1980

Vol. 322 No. 3

Finance Bill, 1980: Report Stage (Resumed).

Mr. P. Barry

I move amendment No. 27:

In page 32, line 19, after "more" to insert "and has been shown on the basis of his accounts to have a taxable income in excess of £7,000 in 1980-81".

The purpose of this amendment is to make some effort to bring about a bit of equity in regard to those who have to pay resource tax. We have argued here on Second Stage and Committee Stage and last night on Report Stage that that blunt instrument of tax affects all those in the farming community with valuations over £70 whether they can afford to pay it or not. Deputy Bruton deduced last night that the maximum enunciated by the Minister for Finance in the person of the Minister of State at the Department of the Environment, Deputy Connolly, that nobody should have to pay tax unless he can afford it. That did not appear to weigh very heavily with the said Minister of State when the vote came on this issue later in the evening because he marched through the lobby in support of placing a tax on everybody with a valuation of over £70 whether or not such person could afford to pay this tax. It is the injustice inherent in that that we are seeking now to change by amending the Finance Bill for this year by proposing in page 32, line 19, after "more" to insert "and has been shown on the basis of his accounts to have a taxable income in excess of £7,000 in 1980-81". This is not ideal but it is some way of ensuring that those who will be asked to pay this will have at least a taxable income. It is doing no more than that. I hope the amendment will be accepted by the House.

Mr. O'Kennedy

The amendment refers to the taxable income. As defined in the Income Tax Act, 1967, taxable income is the income on which a person is charged tax. In other words, it is total income less the various reductions and reliefs given privately such as the ones we have been discussing here over the last few days on which I have made major concessions in relation to capital allowances and personal allowances. What we have to look at is what a taxable income will represent in terms of total income. A taxable income of £7,000, as has been suggested here, will in many cases represent a total income of £9,000, £10,000 or even £15,000 or more. It may well be that the Deputies opposite intended to specify total income instead of taxable income, but the fact is that as presented here it would mean that total incomes in excess of the figures I have mentioned—obviously it varies from case to case—would be exempt. Taking a middle figure, say £10,000, if the resource tax were to be limited to cases where farmers returned incomes of £10,000 or more very few farmers would be paying resource tax. On a taxable income of £7,000 a single farmer would be liable to income tax in the sum of, say, £2,550 and a married farmer with the same taxable income would be liable to income tax of £2,250. It is not known how many farmers would be in this category in this year but it may be helpful if I indicate that a simple survey for 1978-79—the one for 1979-80 is not yet available—showed that only 11 per cent of farmers with rateable valuations of £60 or over paid more than £1,000 in income tax that year. Even if one were to assume that half of those——

Mr. Bruton

What year is that?

Mr. O'Kennedy

1978-79. Even if we were to assume that half of those paid over £2,000 in income tax, it would be clear from that that very few farmers of those who are at present covered within this proposal would be liable to resource tax under the amendment. The yield would be negligible.

Mr. Bruton

That is because they do not have the income.

Mr. O'Kennedy

We have gone through this on that basis. I have indicated more than once during the course of this debate some of the anomalies that arise. I have given some examples of them. I could give further examples not just in relation to this but to the whole range of anomalies in the area of farmers' taxation.

An Leas-Cheann Comhairle

We should stick to the amendment. We cannot debate the whole field of the resource tax again.

Mr. Bruton

I hope the Minister will give all the information.

Mr. O'Kennedy

When I gave some examples yesterday Deputies opposite appreciated, as they said themselves, that they did not have that information. Apparently they changed their views on what they were proposing. I do not want to give information which might convey a wrong impression and which might give rise to some of the tensions we saw last year and before that. This whole question is under review and our hope is that we will not have to continue this next year.

Deputies opposite should realise that if as a consequence of what they are proposing—and they have tried in almost every way possible to abolish this provision which is being introduced—the yield from the resource tax was very small, there would be another consequence. The total yield from farm taxation this year would not be in line with expectations. It would be very much less than what was proposed last year when this package was first announced. Since my budget statement and throughout this Bill I have made every possible effort to encourage productivity and incentives for increasing herds by giving stock relief. I have given significant concessions at some cost to encourage productivity and recognition of the role which agriculture plays.

I have indicated to the farming organisations that you cannot review something before it starts. It would be contrary to what I have stated publicly in discussions. When we review the situation at the end of the year, I hope we will be able to take steps to terminate this tax. I do not propose to accept an amendment which, on the face of it, is intended to say, "It applies only to people with certain taxable incomes, not total incomes". It has been overlooked here, but not by the farmers, that if there is one element in our community which benefits more than another from the provision of income splitting, it is the farming community. I welcome that. It was part of my intention in introducing it.

Mr. Bruton

Why is that?

Mr. O'Kennedy

If the Deputy knows much about rural Ireland he must know that, in contrast with urban Ireland, in the vast majority of cases the wife has not an earned income, whereas in many cases in the towns and cities she has. As the Deputy must know, the proportion is very much higher.

Mr. Bruton

That is because she works on the farm.

Mr. O'Kennedy

The allowances would not have been available to her last year but they will be this year.

Mr. Bruton

The Minister does not deserve any credit for that.

Mr. O'Kennedy

This is Report Stage and when I sit down I will have said my piece. In relation to a whole range of things including stock relief and the exemptions which have been made, I have been asked to treat farmers in the same way as everybody else. I have treated them in a different way, but in a way which recognises how important they are in our community. I am determined to recognise that and to act on it. I cannot be forced into a position in which I undermine the whole package we are putting together from the start. That is what this proposal would succeed in doing.

Mr. Bruton

The purpose of the amendment which we have proposed is to ensure that resource tax will be payable by a farmer only if his or her taxable income exceeds £7,000. We are seeking to have inserted into the resource tax a provision that you pay it only if you are able to and if you have an income out of which you can pay it.

The Minister said that the amendment, in common with other amendments we put forward, indicated that we tried in every way to seek to abolish the effect of the resource tax. That is perfectly correct, and we make no excuse for that. We do not believe it is a fair tax. It is a discriminatory tax and the Minister, in describing our approach as seeking in every way possible to abolish it, was speaking the truth. The Minister, in the course of his reply, made a very interesting statement. It was that very few farmers who will be affected by the resource tax will have incomes in excess of £10,000 a year.

Mr. O'Kennedy

Taxable income.

Mr. Bruton

No, the Minister said income. Taxable incomes of £7,000 would indicate, in the Minister's own words, incomes of £10,000. This is what the Minister chose as the average, gross income of £10,000. The Minister said very few farmers who will be liable for this tax will have gross incomes in excess of £10,000 and, therefore, there will be no yield from the resource tax. Coming from the Minister, who has access to information that we do not have, that is very interesting, because it contradicts the impression that may have been created, that this resource tax would be paid by large numbers of rich farmers earning £20,000 a year and more. The Minister indicated that the vast majority of farmers who will be paying resource tax will have incomes of less than £10,000 a year. He said few of them would have bigger incomes.

There is no question of the resource tax being applicable, in the Minister's own words, and on the basis of the Minister's own statistics, to people with substantial incomes. These are people with modest incomes. They are in the higher middle income group. They are not earning very large sums of money each year. The impression other advocates of the resource tax sought to give, was that it is being applied to very well-off people. That impression has been contradicted specifically by the Minister who introduced the tax. What mystifies me is that the Minister is a member of a Government which came in here and, in the interests of economic development, abolished wealth tax which applied to people with incomes of £100,000 a year and, within two years of that——

An Leas-Cheann Comhairle

This does not arise. As I have already said, we are going to stick strictly to this amendment because we had hours on the resource tax and we cannot bring in other taxes at this stage.

Mr. Bruton

I am just pointing up the anomaly in the Minister's position.

Mr. O'Kennedy

It is an anomaly in the Deputy's own position with regard to the reintroduction of wealth tax.

Mr. Bruton

I will speak for myself. The position is that the Minister's party abolished a tax which was applicable to people with incomes of £100,000 or more and are now introducing a tax which, in the Minister's own words, is applicable to people whose income is less than £10,000 a year. It is a similar tax levied regardless of income on a productive asset, the only difference being that the resource tax is discriminatory and applies only to farmers whereas the other tax applied to all holders of property. Certainly it seems that there is a serious anomaly in the Minister's position when he can apply this method of taxation to the farming community only and ignore the other sectors. We have not introduced the resource tax. It is the Minister who has done so, so I do not have to explain any inconsistency in my position. The provision we propose would ensure that only those who had an income of a significant character would pay the resource tax and therefore it is a reasonable amendment and I would have hoped that the Minister would be able to accept it.

Mr. P. Barry

I cannot add any more to this debate. As the Chair has said, we have been debating this resource tax for a number of hours. The best compliment that can be paid to us on this side of the House is the Minister's remark that we have done everything in our power to see that the resource tax did not become law. That is an indication of how strongly we, on this side of the House, feel about this tax and the damage it will do to agriculture. I suppose it would be possible to argue that if agriculture was going through a boom period and the incomes of farmers were rising by 15 or 20 per cent every year this would be a handy way of collecting money from them even though it would still be unfair. But to impose on people whose income looks like being cut for the second year running a tax which they have no way of getting out of paying and are obliged to pay whether they have earned the income or not seems grossly unfair. This amendment seeks to limit the payment of this tax to those who have a taxable income. I am disappointed by the Minister's reaction and by what can only seem to be an anti-rural bias at the wrong time from that side of the House.

Amendment put.

The Dáil divided: Tá; 27; Níl, 49.

Tá

• Barry, Myra.
• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Bruton, John.
• Cluskey, Frank.
• Corish, Brendan.
• Cosgrave, Liam.
• Deasy, Martin A.
• Desmond, Barry.
• Fitzpatrick, Tom. (Cavan-Monaghan).
• Griffin, Brendan.
• Harte, Patrick D.
• Horgan, John.
• Kelly, John.
• Kenny, Enda.
• L'Estrange, Gerry.
• Lipper, Mick.
• Mitchell, Jim.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Brien, William.
• O'Keeffe, Jim.
• O'Toole, Paddy.
• Ryan, John J.
• Taylor, Frank.

Níl

• Ahern, Bertie.
• Allen, Lorcan.
• Andrews, David.
• Andrews, Niall.
• Barrett, Sylvester.
• Brady, Gerard.
• Brady, Vincent.
• Briscoe, Ben.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Conaghan, Hugh.
• Connolly, Gerard.
• Crinion, Brendan.
• Daly, Brendan.
• Doherty, Seán.
• Farrell, Joe.
• Faulkner, Pádraig.
• Filgate, Eddie.
• Fitzpatrick, Tom. (Dublin South Central).
• Fitzsimons, James N.
• Flynn, Pádraig.
• Gallagher, Dennis.
• Herbert, Michael.
• Hussey, Thomas.
• Keegan, Seán.
• Kenneally, William.
• Killeen, Tim.
• Killilea, Mark.
• 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.
• O'Malley, Desmond.
• Power, Paddy.
• Smith, Michael. Tunney, Jim.
• Walsh, Joe.
• Walsh, Seán.
• Woods, Michael J.
• Wyse, Pearse.

Tellers: Tá, Deputies L'Estrange and B. Desmond; Níl, Deputies Moore and Briscoe.

Amendment declared lost.

Amendments Nos. 28 and 29 not moved.

Mr. Bruton

I move amendment No. 30:

In page 32, between lines 42 and 43 to insert the following:—

"33.—Resource tax shall not be payable if the Revenue Commissioners certify that, in the case of a person to whom section 30 applies, he did not have an income in the year of assessment which exceeded the personal tax free allowances to which he was entitled in that year.".

This amendment proposes that resource tax shall not be payable in the case of a person who does not have an income. Regardless of what the Minister may say about provision regarding the payment of resource tax by people who are below a certain income level, surely those without any income should be exempt from this tax. This is the simple and in my opinion incontrovertible principle that this amendment seeks to achieve.

The provision would be that if the Revenue Commissioners certified that a person to whom the resource tax applied on the basis of valuation did not have income in the year in respect of which assessment was being made which exceeded the tax-free allowances to which he was entitled, he would not have to pay resource tax. This, then, is an eminently practical amendment because all of those farmers who are to be liable for resource tax will now have to keep accounts on which their tax liability will be assessed. Those accounts will have to be lodged with the Revenue Commissioners who will be in a position to make a declaration that a farmer did not have any income in a particular year, should that be the case and, consequently, they will be in a position to decide to waive resource tax for that farmer in that year. There is no case that the Minister might make to the effect that the amendment would result in farmers who would be liable for resource tax escaping the net because if a farmer does not have an income in any year there should not be any question of liability so far as this tax is concerned.

I do not think that any reasonable member of any party would oppose the amendment and I trust that there will not be any attempt to tell me that I am being fanciful in suggesting that there are farmers who in a particular year might not have any income but to whom this section might apply. We all know that, for instance, there are many farmers in the cattle business. If cattle prices fall in a particular year, from one end of the year to the other, there will be many cases of farmers who in that year will have no income whatsoever. It is clearly inequitable that those farmers should have to pay resource tax in a year in which they have no income. This type of farmer already has many problems, especially the farmer in the cattle business who is liable to have no income. We have evidence that our land is understocked and that these farmers are not producing enough cattle to keep our meat processing factories busy. It is very reasonable that these farmers should not have to pay a resource tax if they do not make an income. That would merely be piling difficulty on their existing difficulties. There is enough risk already in the cattle business—and that risk is the reason why our cattle business is under-invested—not to justify adding a resource tax to be payable in a year when the farmer does not make an income, on top of the losses which may be incurred in the cattle business. This present year is one in which this may be so.

The Minister has said that he has a lot of secret information about farmers and their tax position which he pretended he was reluctant to reveal to us here in this House which, if revealed, would suddenly make everything clear and that we would all see how justified his proposals are. I challenge him now, if he has any information about particular farmers which would justify a rejection of this amendment, to produce that information here and now. If the Minister has information to show that there are farmers who do not have an income and who, because of his secret information, could justifiably be asked to pay the resource tax, even though they do not have an income, let the Minister produce that information to this House here and now. We do not want legislation put through on threats, nods and winks of "If you press me too hard, I shall reveal information, which you will not like to hear, about farmers in this country and I do not want to do this because of all the damage it will do".

Mr. O'Kennedy

I am not worried about what the Deputy thinks.

Mr. Bruton

If the Minister has any secret information about the tax position of the farming community which would justify his levying a resource tax on individual farmers in a year in which those farmers have no income at all, let him produce that secret information. I should like to hear the information about the farmers in that position and I should like to hear it in considerable detail. The only basis upon which one can carry on a debate about taxation of any sector of the community is on the basis of having the facts on the table.

Our amendment is eminently reasonable and I certainly hope that the Minister will be able to accept it. In conclusion, would the Minister indicate the revenue loss, if any, that he would expect from the adoption of this amendment. This information would be very useful. It would indicate just how many farmers who do not have an income, or are anticipated not to have an income this year, who still will be asked to pay a resource tax. If the Minister has not got that information he should have it. He should not be imposing a tax in the dark on farmers who do not have an income, without even knowing how many are in that position. I hope that the Minister, on the basis of existing statistics, will be able to tell us how many farmers there are who do not have an income and who still will be asked to pay resource tax and, as a complement of that, his estimate of the cost, if any, of adopting this amendment.

Mr. O'Kennedy

Deputy Bruton has said that one should not make assessments or assumptions in the dark. In this whole area, the assessments which have been made up to the moment have, by definition, been less than satisfactory. Unless Deputy Bruton has not been aware of the whole question—as farmers themselves are now very much aware—of not only paying the tax but being seen to pay their fair share of tax, he cannot begin to understand how delicate and important, in the interests of the farming community and of tax equity generally, this whole provision is. Deputy Bruton speaks always in terms of income, as if the taxable income in this case were as immediately definable as that in the case of, say, the PAYE tax-payer——

Mr. Bruton

Is it not?

Mr. O'Kennedy

——as if the PAYE taxpayer had an opportunity of returning accounts in the same way as operates here, as if those accounts returned by farmers were as precise and accurate in every detail as is the case with the PAYE taxpayer. Now, one of the issues——

Mr. Bruton

This is very interesting.

Mr. O'Kennedy

The Deputy is going to suggest that, in fact, it is as precise as is the case with the PAYE taxpayer.

Mr. Bruton

The Minister is saying that the farmers are putting in dishonest accounts.

Mr. O'Kennedy

What I am saying is that there has been concern expressed, even by many farmers themselves, about the way the system has been used. I have given examples of the operation of the notional system and indications in relation to claims for depreciation on farm plant and machinery reducing and taxable income. Obviously, it is not in anybody's interest, farmers or otherwise, to continue a situation where there will be either real or perceived anomalies which give rise to reactions of the kind which, unless the Deputies opposite have not been listening, have been very evident. My constant main preoccupation in this area is to ensure that this division between town and country, as expressed—let me say clearly—by the Irish Congress of Trade Unions in relation to this and other areas, will stop. I do not wish to get representations each year as Minister for Finance from one section about the other. I can assure the Opposition Deputies that if all they were attempting to do were achieved——

Mr. P. Barry

The rumours in the newspapers must not be correct if the Minister is expecting that each year.

Mr. O'Kennedy

——and if, by any chance, they ever found themselves over here, as Deputy Barry did, they would have problems in trying to build up again what I have worked at very painstakingly over the last six months since I came into this post and that is to achieve a degree of understanding between the sectors.

I do not expect to get much help from the Opposition in trying to achieve that. That is not what their function is, as they see it. Deputy Bruton says, "Trot out all the facts. Give us all the facts". I have given some of the facts and shall give some other examples which may be indicative of the problem here, which is one which we are well on the way to overcoming. I take the example of the farmer with £100 valuation who would pay £350 resource tax—that that is of such crippling dimensions, such a huge burden, such a major onus in that year. I do not accept that at all. This is the issue which the Opposition, Fine Gael, are conveniently forgetting each time.

Mr. Bruton

It is a crippling burden if he has no income. That is what the amendment is about.

Mr. O'Kennedy

Now we come to what we are moving towards achieving. I shall have to remind Deputies again of all the concessions—indeed I regard them as incentives—I have given in this area. They keep concentrating on one aspect only. My hope would be that the more productivity we see, the more real income and returns we see then the more we will be able to ensure that farmers will be treated the same as anybody else, allowing for the fact that they do have expenses over and above, that they do have to cope with losses, and I have dealt with that in relation to stock relief. They do have to face hazards others do not. I have taken account of all of those.

So much for the general picture. I might revert now to what is being proposed in this amendment. The effect of this is that a person who did not have any liability to income tax would not be liable to resource tax. That is simply what this amendment proposes. The amendment would drastically reduce the number of farmers who would be called upon to pay resource tax. Deputy Bruton can argue what he likes from that but what he is saying is that men with over £70 valuation have no income. Obviously this would have a significant effect on the amount to be collected. But apart from that, and this is important in relation to what he is after—which shows that when one tries to achieve something very often one winds up achieving the very opposite even of what one intended to achieve oneself—it would mean that in the case of farmers, say, with the same rateable valuation and the same income, in-so-far as it can be ascertained and defined, those with the higher personal allowances, for instance the married farmers, would escape the charge to resource tax while those with lower personal allowances, for instance single and widowed person, would be called upon to pay the tax under this proposal.

Mr. Bruton

I would accept that as reasonable.

Mr. O'Kennedy

Widows as well. There seems to me to be a certain anomaly there. If Deputy Bruton were over here presenting his amendment obviously I would be enjoying the luxury of picking holes in his from the other side.

Mr. Bruton

Do not hit me now with the baby in my arms.

Mr. O'Kennedy

It is not my intention to transfer the baby to the Deputy anyway.

Mr. Bruton

It might fall and I might have to catch it.

Mr. O'Kennedy

That says more than I could say. Obviously the Deputy does not want to hold the baby. Talking now about this amendment as proposed, taking three farmers with a rateable valuation of £80 and returning an income of £2,000, the single farmer and the widowed farmer will each pay £280 in resource tax while the married farmer will pay nothing at all. That is the effect of this proposal. Of course one can get very emotional about widows. I wonder what Deputy O'Leary thinks about that?

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): Surely a widow has a somewhat greater allowance than a single person and less than a married person?

Mr. O'Kennedy

I have given credit for the allowances.

Mr. Bruton

And less liability than a married person.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): If your allowances are unjust——

Mr. O'Kennedy

But she has not got the same capacity to work the place, as Deputy Bruton must know. Deputy Fitzpatrick is not too far from the land either. I know he represents a number of them and he must know that widows are in a rather difficult position when it comes to farming after their husbands die.

Mr. Bruton

This is a most irrelevant argument.

Mr. O'Kennedy

Is it? It is precisely what the Deputy is proposing, that they would be liable to the resource tax whereas others would not.

Mr. Bruton

It is the principle for the personal allowance——

An Leas-Cheann Comhairle

Would Deputies please allow the Minister to continue?

Mr. O'Kennedy

While the single or widowed farmer with a rateable valuation of £80 and an income—this is at the other end of the scale—say, of £1,200 would each pay £280 resource tax a married farmer with a farm of £100 valuation and an income of £2,200 would be exempt from the resource tax. In this case, although the married farmer had a higher income and a farm of greater valuation than the others he would escape the charge under this amendment. I do not think distinctions of that kind would be welcomed by the farm organisations, by the farmers.

Mr. Bruton

They are the very distinctions that are made in income tax.

Mr. O'Kennedy

There are income tax allowances provided for widows. We have effected generous increases in those allowances this year, as the Deputy is well aware.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): That will be reflected in Deputy Bruton's amendment as well.

Mr. O'Kennedy

It will not. I am talking about the situation taking account of those, including those. Deputy Bruton asked me to give some further examples of the situation about farm tax generally and what is being paid in relation to it. Deputies opposite talk about the crushing burden of taxation on farmers. I do not want to be interpreted here as saying that farmers have no sense of responsibility. I want to make it quite clear that what I am endeavouring to do all the time is achieve equity. If Fine Gael are going to try to make a presentation on the one side, concentrating on one aspect only, then it is as well that I state some of the facts as they are in the round without any implications, just stating the facts. Deputy Fitzpatrick, at various stages, and Deputy Bruton now talked about the crushing burden this would impose on farmers. I have given some examples of the figures involved.

I have here sample surveys taken over a considerable period. For instance, for the year 1978-79 47 per cent of farmers in the tax net on the accounts basis—that is farmers who at that time had a rateable valuation of £60 or over—paid no tax.

Mr. Bruton

Why?

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): Because they had an income.

Mr. O'Kennedy

I am simply stating the facts. They paid no tax.

Mr. Bruton

Why?

Mr. O'Kennedy

Of those who did pay income tax, that is the remaining 53 per cent, 18 per cent paid less than £300. A further 23 per cent paid between £300 and £1,000. Only 12 per cent—and that is 12 per cent not of total farmers but of farmers with a rateable valuation of over £60—paid over £1,000 in income tax. It is important to note that these percentages relate to the number of farmers in the tax net which, at that time, was 26,000 of a total of approximately 150,000. The percentages I have given relate to the top level of farmers, 26,000 of them out of 150,000. I shall summarise it by saying that of the 26,000 farmers in the tax net for 1978-79—which was not a bad year, as Deputies will appreciate—12,000 paid no income tax and over 4,500 paid less than £300 in income tax.

The resource tax of £7 million will be paid by 15,000 farmers, giving an average payment throughout the lot, from the very top—where, to say the least of it, there have been some anomalies because of the operation of a notional tax system and I gave some examples of that only yesterday—of something of the order of £437.

Against this kind of background it is very difficult to see how there can be emotional complaints about the crushing burden of taxation on farmers. One can argue at some length about the principle, maintaining that one should not work to principle on the basis that the only exceptions in this year will be paying a tax which is not related to income, that there are other major distinctions that have been made in this and other legislation in favour of them because they are a special case. I have given precise examples of how this amendment will operate inequitably and would not even achieve what the Deputy wants to achieve.

We hope that in what will be a temporary measure overall, we will bring about a balance in equity. As far as the Fine Gael Party are concerned, this is like the old bone. The dog can keep on chewing it and barking for as long as he likes. Deputy Barry beat his breast and said it is unfortunate we have not got time to debate all the measures in this Bill. Deputy Oliver Flanagan gave us a "sermon on the mount" on one issue, and of course the major issues in the Finance Bill, either because they are too positive or too complex, do not merit any consideration from the Opposition. They are not convincing anybody. I am making a genuine move towards equity for all farmers, and the farmers welcome this.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The resource tax being imposed by section 25 is manifestly unjust because it does not have regard to the capacity of those concerned to pay it. The section imposing it does not provide for methods of ascertaining whether a man has an income or not. It is a repetition of last year's levy which split the rural and urban population apart with disastrous consequences. That levy did not have any regard to the farmers' capacity to pay. It was so unjust and indefensible that the Fianna Fáil Party were pushed away from it, 50 per cent, at the Ard Fheis not long after it had been imposed, and finally it was withdrawn completely by the then Minister for Finance within a couple of weeks.

What was the result? That levy was abandoned because it could not be justified, and this 2 per cent resource tax being applied to the two-cow man as well as to the 200-cow man has been devised on a similar basis. Fianna Fáil were pushed away from the levy last year because they could not defend it and the result was that urban workers were encouraged to go on the streets in hundreds of thousands to protest at the taxes imposed on them. This resource tax is a repetition of the levy and I feel that its abandonment ultimately will have the same disastrous effects on industrial relations.

Mr. O'Kennedy

Is the Deputy suggesting there will be 200,000 people parading the streets? He need not worry.

An Leas-Cheann Comhairle

The Minister and the Deputy are aware that the resource tax has been debated fully and that we are now on an amendment.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): By this amendment we are trying to introduce some equity into it. It would shorten the debate——

An Leas-Cheann Comhairle

We have spent three hours on the resource tax. The Deputy is now using his own time.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): I am not cutting into my own time but the Chair is. Last year's levy was indefensible and abandoned and this tax similarly will lead to a worsening of industrial relations. Last year the Government were seen to abandon the levy because they could not defend it and the danger is that the resource tax will cause the present bad industrial relations to worsen.

Mr. O'Kennedy

I do not believe we will see 200,000 people in the streets.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): There have been recent revolts in Fianna Fáil and this debate has been marked by an absence of Fianna Fáil rural Deputies. Noticeably they have not been trotting into the lobbies in division.

An Leas-Cheann Comhairle

Can we get back to the amendment at some stage?

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The Minister will not accept the amendment because it seems to introduce some element of justice into this unfair tax. We seek to provide that a farmer shall not be asked to pay this tax unless he has an income that would make him liable to pay income tax, and our yardstick would be the assessment of his income by an inspector of taxes. The Minister's reply was that some people would get off more likely than others and he drew attention to the fact that assessments would be based on allowances. When I see a Minister coming in and relying on technical Departmental advice I know he has not got a defence.

Mr. O'Kennedy

The Deputy could do with some of it.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): Deputy Bruton's argument is full of common sense and could not be opposed on any reasonable basis. Yesterday the Minister referred to the Fianna Fáil manifesto as a rattle in the hands of Fine Gael. I will give it another rattle.

Mr. O'Kennedy

I said it is a soother to be sucked by the baby before going to sleep.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): On page 15 the manifesto states that Fianna Fáil would allow rates to be regarded as an instalment of farmer taxation and this would mean a tax saving for farmers of £10 million. That despicable promise was never meant to be fulfilled. The Minister is taking back £7 million through a new form of rates, £7 million being clawed back by this resource tax.

An Leas-Cheann Comhairle

The Deputy must not discuss the resource tax. The House has already agreed, and the Chair has ruled, that we will not have another full-scale debate on the resource tax.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The object of this amendment is to introduce some sense of justice and equity——

Mr. O'Kennedy

What about the widows?

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): I want to show the Minister how absurd is the resource tax and to emphasise the need for him to accept this amendment to take away some of the damaging effects of this section. Fianna Fáil promised the farmers that they would give them a present of £10 million but they are taking back £7 million here, having already taken £17 million through relief of rates tax. Is the Minister not ashamed of himself? How will he face the electorate at the next election? The story goes that he will not have to face them.

Mr. O'Kennedy

We are giving them credit for that £17 million plus £7 million, £24 million——

An Leas-Cheann Comhairle

Deputy Fitzpatrick is in possession and he should deal with the amendment. He is not dealing with it.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): Of course, I am.

An Leas-Cheann Comhairle

The Chair decides that.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The Minister is making a point and I have to reply to it.

An Leas-Cheann Comhairle

The Minister should not be making any points at this stage and the Deputy should be dealing with the amendment.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The Minister will give credit for rates to taxpayers who are liable, but when he comes in here next year he will have done more research into this subject. I would like to know how many married farmers with a valuation of £40 will be liable for rates at that time?

Despicable treatment was given to a solemn promise made to farmers at the last election. If I understood clearly another argument put forward by the Minister, he said Deputy Bruton's amendment would not work because in some way the farmer's income was not as precise as the income of the PAYE man. I agree with that, but it is every bit as precise as the professional man's income, as the solicitor's income——

Mr. O'Kennedy

The Deputy was pleading for him yesterday. He said I was treating him badly——

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): I did not.

Mr. O'Kennedy

Yes, he did.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): It is every bit as precise as the barrister's income——

Mr. O'Kennedy

I am well aware of that.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): It is every bit as precise as the doctor's income and the businessman's income, but I do not see the Minister tying a block, as he would around a dog's neck, around the neck of the professional man or the businessman. This is unique treatment for the farmers.

The Minister trotted out a number of cases of farmers who were not liable for income tax, but he did not tell us why they were not liable. I gave him a case yesterday and the day before of a farmer with a valuation of approximately £80 getting a disabled person's allowance, who will have to pay this tax. If this amendment were accepted he would not have to pay it. There could not be anything more relevant than that.

The Minister wants all the hard luck stories on one side but he is not prepared to extend this relief to the other. The only reasonable yardstick is income, but the Minister will not consider it. I do not believe all the people on the list he read out should by paying income tax but are not. He gave valuations and said these people were not paying tax. If the Minister got into Ulster he would probably have on his list a man with an £81 valuation who is not paying income tax. He would not have told the House that that man's case had been investigated by the North-Eastern Health Board and it was found he was so much in need that he got a disabled person's allowance.

Mr. O'Kennedy

I would not have got him because the cases I gave had valuations of over £130, and most were over £300 or £400.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): I listened to the Minister's cases and I am giving him my cases now. This is a very reasonable amendment that seeks to provide that if this crazy tax——

Mr. O'Kennedy

There was no case under £130.

An Leas-Cheann Comhairle

Deputy Fitzpatrick is in possession.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The valuation I gave is double the threshold, which is £40. That is a big valuation in my constituency, although it may not be very big in the Minister's constituency. This amendment is manifestly just and will introduce some element of equity and justice into this absurd tax if the Minister must go on with it. We are told it is a temporary tax but we know that the Minister and his troops, depleted as they are for this Bill, voted down a proposal to write into this legislation that it would be for only this year. There are many precedents for that in the rates relief legislation.

I appeal to the Minister to think again about this between now and when the Bill is discussed in the Seanad and to accept this amendment. The substance of the Minister's argument is that the income tax personal allowances for single people, widows and married people are not fair. There is no other meaning to his argument. If they are not fair he is the man with the power to make them fair and he can amend this legislation accordingly.

Mr. Bruton

The Minister made no argument against this amendment and I do not propose to reply to a non-argument.

Amendment put and declared lost.

Mr. Bruton

I move amendment No. 31:

In page 32, between lines 42 and 43, to insert the following:

"34.—In any case in which a person to whom section 30 applies has shown to the satisfaction of the Revenue Commissioners that the combined total of the amount of resource tax paid and the amount paid in respect of his income tax liability exceeds 80 per cent. of his total income for that year, the Commissioners shall repay to that individual, his nominee or personal representative the amount by which the combined total exceeds that percentage, provided that, however, the amount of tax repaid shall not exceed 50 per cent. of the amount of tax which, but for the provision of this section, would be payable by the person in that year.".

This provision says that in the event of a farmer paying resource tax the combination of his resource tax and his income tax liability in no year shall exceed 80 per cent of his total income. This provision existed in the wealth tax legislation—wealth tax combined with income tax in no case should exceed 80 per cent of total income. As the resource tax is effectively a wealth tax on one section of the community, namely, the farming community, I believe this saving provision should exist here too.

On the figures given by the Minister in reply to a previous amendment, 47 per cent of farmers with valuations in excess of £60 had no taxable income in the year in question, 1978-79, yet these are the farmers to whom the Minister is applying this resource tax. The Minister may argue that this is because their accounts do not reveal the true position. If this is so the situation should be remedied. I do not believe it to be the case. The accounts kept by farmers, which in many cases have to be vouched for by accountants, show what they actually earn. The figures given by the Minister show that almost half of those who pay this resource tax did not have an income in 1979 which exceeded their tax-free allowances. It is reasonable to say that income tax and resource tax should not exceed more than 80 per cent of their total income.

If the Minister feels there is something wrong with the income tax code as applied to farmers, which either makes their income declarations inaccurate or enables them to get away with something which is unreasonable, his proper attitude should be to amend farmers' income tax and not to introduce a novel resource tax. The Minister might say that we have not enough experience of the tax situation of the farming community to enable us to do this. However, I would point out that farmers have been paying income tax since 1974 and, if there is something wrong with that code which enables farmers to have an income without paying tax, it should have been discovered by now. I believe that the farming community pay their fair share of tax on their income and that a resource tax is not justified. This amendment in mitigation of the resource tax is justified.

Mr. O'Kennedy

For once perhaps it can be noted that there is a measure of agreement between myself and Deputy Bruton because I am endeavouring to have a system of farm accounting for tax purposes which will achieve the result desired by the Deputy. He has confirmed many of the suggestions I have made during the course of this debate. While farmers have been paying income tax since 1974, it must be pointed out that during most of that period the notional basis was in operation. This system has now been abolished because it gave rise to a considerable number of anomalies. We must apply the knowledge we have gained to make the system more fair.

I do not believe that the Deputy would be entirely enamoured of the consequences of this amendment. It would not have any practical effect where a farmer pays a significant amount of tax. In the event of a farmer being subject to income tax at the top rate of 60 per cent he would have a total income of over £10,000 in the case of a single man and over £20,000 in the case of a married man. A single farmer with an income of £11,000 would be liable to income tax at £4,181, without taking account of credit for rates paid. Eighty per cent of his income would amount to £8,800 and unless he had a farm having a rateable valuation of £1,320, which would produce a resource tax of £4,620, there would be no question of a refund. If the credit for rates were taken into account the income tax liability would be wiped out completely and in that event the resource tax would be less than 80 per cent of his income. That is the anomaly which emerges at the top end of the scale. The figures I have given relate to a single man and the corresponding figures for a married man would be even more extreme.

A single farmer with the very low income of £1,735 would pay about £21 in income tax. Eighty per cent of his income would amount to £1,388 and the proposed amendment would not come into operation unless the resource tax exceeded £1,367, which would be the charge on a farm with a rateable valuation of £390. Taking account of the credit for rates there would be no income tax liability and the resource tax would not exceed 80 per cent of his income unless the rateable valuation were in excess of £396.

While I appreciate what the amendment is intended to achieve, its implementation would not achieve the desired result. A married man would not be liable for income tax unless his income exceeded £3,400. On an income of £3,500 the income tax liability would be £60 and 80 per cent of that income would be £2,800. The amendment would not come into operation unless the rateable valuation of the farm exceeded £783. I have given during this debate some examples of valuations and we have not come anywhere near this super league of rateable valuations of £1,320 or £783. Not even in Tipperary as I aware of such valuations.

Mr. Bruton

Perhaps if the resource tax is continued next year we could table a more appropriate amendment.

Mr. O'Kennedy

I believe that for once I have succeeded in persuading the Deputy.

Amendment, by leave, withdrawn.

An Leas-Cheann Comhairle

Amendments Nos. 32 and 33 are cognate and may be discussed together.

Mr. Bruton

I move amendment No. 32:

In page 32, line 44, to delete "1st day of October" and substitute "31st day of December".

The purpose of this amendment is to postpone the date of payment of the resource tax until 31 December. As I pointed out on Committee Stage, there will be a bunching of liability and many farmers will have to pay most of their tax in one month. We are proposing the postponement of resource tax payment in order to avoid that situation.

Mr. O'Kennedy

Deputy Bruton is concerned that what he would describe as the "crushing burden" of taxation comes on the same date. I would point out that I have already put back payment by one month and professional and self-employed people will have to pay a month earlier. Payment on 1 October relates only to half the liability for the year in the normal income tax accounts and the second half is payable on 1 January. The burden is not as crushing as has been represented because I have already made adjustments in favour of farmers. It must be remembered that we are talking only in respect of this year and I have already stated my hope and intention. If the effect of the amendment would be to ensure that tax would not be payable this year having regard to the two months' grace, my hope in the light of the review of the entire package would not be realised.

Mr. Bruton

Does the Minister know how much he will pay?

Mr. O'Kennedy

I am talking about revenue for this year. What I may know is one thing but what appears in the books is another matter. I am sure the Deputy will appreciate that when a Minister prepares a budget he makes provision on the basis of what is available. I cannot spend more money on important matters such as education and health simply on the basis of getting some money in the future. I must ensure that where I propose to spend money I get enough money to do so in that year.

Mr. Bruton

Did the Minister ever hear of borrowing?

Mr. O'Kennedy

Is the Deputy suggesting that we borrow an extra £7 million? I have said many times that it is my firm intention to reduce the borrowing requirement——

An Leas-Cheann Comhairle

It does not arise on this amendment.

Amendment put and declared lost.

Amendments Nos. 33 to 36, inclusive, not moved.

Mr. P. Barry

I move amendment No. 37:

In page 38, between lines 44 and 45, to insert the following subsection:

"(3) For the purposes of this section a trade shall include fish farming, mushroom cultivating, ship repairing and books and printing cards not printed by publishers".

We had a long discussion on Committee Stage about the 10 per cent corporation tax that will come into operation from 1 January 1981. At that time the Minister indicated that ship repairing, fish farming, mushroom cultivation and books and printing cards not printed by the publishers were trades and industries that were able to avail of freedom of tax on exports under the old regulation but were not included in this Finance Bill. The Minister indicated that he would introduce an amendment to next year's Finance Bill to include fish farming, mushroom cultivating and ship repairing among those categories that could avail of the 10 per cent rate. However, I gather there is some technical problem regarding books and printing cards not printed by the publishers. I do not think the Minister explained why he could not amend existing legislation to include these categories. I would be willing to withdraw my amendment if the Minister gives a satisfactory answer about the three categories and also about that dealing with publishing.

Mr. O'Kennedy

As I said on Committee Stage, it is my intention to introduce amendments on the lines suggested by the Deputy in the Finance Bill for next year. The Government are favourably disposed towards their inclusion. As I have said already, we are in discussion with the EEC on this matter and obviously I am anxious to ensure before including a provision in the Finance Bill that it will not be shot down. If we can make provision for this matter next year, it will operate retrospectively from 1 January 1981. That statement of the intention on my part and on the part of the Government should be a significant confirmation of the position.

In making those comments I am talking about the production of fish on a fish farm, the cultivation of mushrooms and the repair of ships. I am not talking about publishing. The extension of the new relief to the publication of books and greeting cards not printed by the publishers, which is a non-manufacturing service, would make it difficult to avoid extending it to the other non-manufacturing services, including professional services. Besides being costly and difficult to justify on general grounds, it is fair to say from the discussions we have had and from what we know of the attitude of the EEC Commission that it would give rise to immediate objections from the Commission on the grounds that it would dilute the character of the new relief which was presented as being confined to manufacturing.

The publishing of books and greeting cards not printed by the publishers was included in the export sales relief scheme to enable that relief to be claimed in respect of the export of greeting cards and books. This was because the printing company, the actual manufacturer, could not claim that relief because their product was not exported by them but by the publisher. That is the reason it was included in the export sales relief scheme. Under the new scheme the export of goods will no longer be a condition for relief. Accordingly, the printing of greeting cards and books will qualify as a manufacturing activity but I do not think there could be any justification for treating publishing as manufacturing for the purpose of the relief. The new relief is confined to manufacturing and to extend it to a non-manufacturing service industry such as publishing would cause difficulties in justifying the scheme as a whole to the EEC. In addition, it would give rise to demands that could not be resisted logically for the extension of the new scheme to service industries generally. For that reason, I cannot accept the amendment in the form set out. Nonetheless, we are agreed on extension to other major areas. I hope I have explained satisfactorily the reasons I am not in a position to extend this provision to publishing.

Mr. P. Barry

Although I do not fully accept the Minister's contention that there is a danger this provision could be shot down by the Commission of the EEC if it were extended as I suggested in my amendment, I am not willing to run the risk of damaging the chances of including the categories next year. I do not agree with the Minister when he said we could not extend this to the service industries. There is a very good case to be made for the services industries getting the benefit of this new corporation tax. Some of them already get the benefit of the export tax relief.

Amendment, by leave, withdrawn.

Mr. P. Barry

I move amendment No. 38:

In page 38, to delete lines 45 to 48 and in page 39, to delete lines 1 to 12.

This section excludes from the benefit of the corporation tax sales into intervention. The Minister made the point that sales into intervention do not qualify under the existing rules because they are not sales for export. The person who manufactures the goods before they go into intervention is going through the manufacturing process and he should be allowed to benefit by the 10 per cent rate of tax on his profits.

Mr. O'Kennedy

The Deputy will be aware that this was excluded from the export sales relief which the 10 per cent corporation tax is intended to replace. There were good fiscal and policy reasons for this and they still hold good. The main reason for the exclusion of the intervention sales from the new relief is that the long-term interests of agriculture would not be served if a tax relief were to encourage sales of processed products into intervention. To resort to intervention tends to discourage independent commercial marketing by removing the incentive to develop——

An Leas-Cheann Comhairle

Will the young people in the Public Gallery please come and leave quietly?

Mr. O'Kennedy

They are all right, they are from my constituency. I am very glad they are here and I am sorry I cannot talk to them directly.

An Leas-Cheann Comhairle

The Minister is looking forward to ten or 12 years' time.

Mr. M. O'Leary

Unfortunately, they will be unemployed as a result of the way in which the Minister is managing the economy.

Mr. O'Kennedy

Those young people are in absolute security.

An Leas-Cheann Comhairle

We are leaving interevention at this stage. We will get back to it.

Mr. O'Kennedy

That is the first intervention that Deputy O'Leary has made for some time.

Mr. M. O'Leary

I did not see much point in intervening in the debate about rural Ireland.

Mr. O'Kennedy

Some of the people that the Deputy represents and some of the unions he is most closely associated with are——

An Leas-Cheann Comhairle

We are not going to have that debate at this stage.

Mr. M. O'Leary

I would be very interested to see the Minister's agreement to my amendment on the wealth tax.

Mr. O'Kennedy

I have very strong views on that.

An Leas-Cheann Comhairle

We will stay on amendment No. 38 for the moment.

Mr. O'Kennedy

The resort to intervention tends to discourage independent commercial marketing by removing an incentive to develop and maintain permanent export markets on which the long-term prosperity of our agricultural exports depends. It makes diversification into non-intervention products rather unattractive. Official policy over the years has been to encourage the sale of agricultural produce on the open market and to discourage the resort into intervention. Intervention gives rise also to a significant cost to the Exchequer in interest, transport and storage charges that are not recouped from the EEC Commission. The estimated net cost to the Exchequer in 1980 is £6.7 million. These are all cogent reasons why the distinction has been maintained in this section.

Intervention is primarily designed to protect producers from the effect of over-supplies of certain goods and it would be less than justifiable to grant a tax incentive which would indirectly stimulate further increases in oversupply. I act here as an agent of overall Government policy which must be seen to be consistent in every direction. My colleague, the Minister for Agriculture, at the end of last month appealed to the beef industry to improve their marketing of beef and to be less reliant on permanent intervention. The Minister is also proposing to take definite steps to ensure that the marketing arrangements generally in agriculture will be enhanced and developed. The Minister for Agriculture is particularly conscious of the need to have a more sophisticated marketing programme for agriculture. I am confident that the direction in which the Minister is moving will be in the interests of the agricultural industry generally. The Minister's appeal followed the announcement from the EEC Commission of a study of changes in the beef support system and the decision of the Council of Ministers not to proceed with the threatened suspension of beef intervention during the summer. The Minister for Agriculture succeeded in having that suspension lifted. The Minister argued persuasively with his colleagues in the Council of Ministers of Agriculture that that would have a very damaging effect on Irish agriculture. The force of the Minister's argument would be very much undermined if we were to extend this provision to sales into intervention when it is evident that we are trying to encourage the opposite.

Mr. P. Barry

No side of the House would encourage sales into intervention. That is not what we are talking about here. We are talking about the manufacturing of goods. It is quite clear under existing regulations that goods sold into intervention are not exported and would not qualify for freedom from tax on profits. We are talking about people manufacturing goods which are put into intervention. If a company manufactures cheese it could end up in intervention even though that would not be the desire of the manufacturer who might have wished to sell it on the open market. If it ends up in intervention it is because the manufacturer has been unable to sell it, in theory at least, on the open market. Therefore the manufacturer should be allowed to benefit from the new rate of 10 per cent tax.

An Leas-Cheann Comhairle

Is the amendment withdrawn?

Mr. P. Barry

No.

Amendment put and declared lost.

Mr. P. Barry

I move amendment No. 39:

In page 41, line 56, to delete "Minister for Finance" and substitute "Revenue Commissioners or the Industrial Development Authority".

Under the new Act companies that are at present enjoying tax free profits on their exports will be allowed to have them tax free until 1990 or until they expire. On 1 January next the new regulations being passed in chapter vi of the Finance Bill will come into operation for all companies. In other words, a company must be manufac turing on 1 January next year if they are to enjoy completely tax-free profits on exports except where a company indicates to the Minister for Finance that, even though they are not in production now, at some future time during 1981 they will be. As the Minister is a political figure what I am trying to ensure is that the decision will not be the Minister's but will be made by the Revenue Commissioners or the Industrial Development Authority. I assure the Minister there is nothing personal in this.

Mr. O'Kennedy

I know there is not. As one political figure to another, I know there is no implication that political figures are less commendable or reliable in these areas.

Mr. M. O'Leary

Whatever about survival.

Mr. O'Kennedy

The IDA are more permanent than any individual political figure.

Mr. P. Barry

The Minister can say that again.

Mr. M. O'Leary

Survival is their chief virtue.

Mr. O'Kennedy

The Revenue Commissioners will be around after some of us have left as well. In practice, the assurances in question will be given by the IDA as the sole authorised agent of the Minister for Finance. As regards the political figures and the role we play, these assurances impose a contractual obligation on the Government which would mature if circumstances arose, such as action at European level, which would preclude the giving of export sales relief. It is appropriate that any action imposing on the Government a conractual obligation which might involve direct financial commitment should be taken by the Minister for Finance as principal with the IDA acting solely as agents. So much for the IDA. I hope Deputy Barry will see my point.

While I or other Ministers for Finance may not have the survival rate of the IDA one thing hopefully will be so, and that is, that the Minister for Finance as such will be there as long as the others. Significantly he is the only member of the Government, apart from the Taoiseach and Tánaiste, who is mentioned in the Constitution. Unless there is a change in the Constitution there will be a Minister for Finance who will have to act on these contractual obligations, which is what I am proposing in this case.

The amendment also touches on the Revenue Commissioners. The Revenue Commissioners are concerned with the care and management of the taxes and duties entrusted to them. It would be inappropriate that they should be concerned with the giving of guarantees in relation to the continuance of a particular tax regime or whatever other remedy in contract a person who had received a Government guarantee might have in the event that the guarantee had to be implemented because circumstances arose which precluded the giving of export sales relief to that person. I know what Deputy Barry intended and I am sure he knows that it is not a question of rejecting his amendment but rather of explaining why I cannot accept it. We are both aiming at the same thing and want to ensure that the contract commitment will be honoured by the person with prime responsibility to honour it, and that is the Minister for Finance at the time and not the IDA or the Revenue Commissioners.

Amendment, by leave, withdrawn.

An Leas-Cheann Comhairle

Deputy Barry will move amendment No. 40 and amendment No. 41 is consequential on it.

Mr. P. Barry

I move amendment No. 40:

In page 54, lines 18, after "1980-81',", to insert "and by the deletion of `three-fourths of'.".

The purpose of this amendment is to restore stock relief to the level of 100 per cent that operated up to last year. It was an ad hoc measure introduced on a temporary basis in 1975 because of the high rate of inflation at that time and the damage being done to industry by their having to pay tax on profits which were not real profits but which had only come about by the inflation of their stocks and so on. It operated every year at 100 per cent until the Finance Act last year brought it down to 75 per cent because, as the Minister for Finance at the time said, inflation was falling and the same necessity was not there for it. Since then inflation has risen at an extremely fast rate. If the rumours about the figures to be published at the end of this week are correct, it appears that the inflation rate for the 12 months ending mid-May will be over 20 per cent. If this is so, and there was justification in 1975, 1976, 1977 and 1978 to give 100 per cent stock relief because of an inflation rate whch was lower than it is at present, in justice the Minister should restore the 100 per cent rate that his predecessor cut back last year.

Mr. O'Kennedy

When we consider this issue it is important to bear in mind the whole structure of tax concessions that industry enjoys at present. Apart from enumerating them I shall state the consequences of them and indicate how narrow the base of taxation is here and the contribution industry is making, taking account of the 10 per cent I have made provision for.

There is relief under the export sales relief and Shannon relief. There are capital allowances for plant, machinery and buildings and, as Deputy Barry knows, there is a generous 25 per cent corporation tax rate for manufacturing firms that meet certain employment criteria. If we put these reliefs together and stock relief on the basis which it is at present, they represent a concession to industry of the order of £150 million which is a sizeable sum. The introduction next year of the 10 per cent corporation tax rate for manufacturing companies will represent a further concession estimated to be of the order of £15 million. I am sure this is one of the areas that the commission on taxation will look at because I referred to the narrow base of taxation and mentioned in my budget statement that they might be concerned to look at the rate of corporation profits tax generally. I understand they are doing that.

The total intake last year in corporation tax was £130 million of which manufacturing industry contributed about £17 million. That cannot be said to be a burden when one looks at the whole range. In the current year the total intake from corporation tax will be of the order of £150 million and manufacturing industry will account for about £22 million or about 15 per cent of the total corporation tax. It is fair to say that the overall picture is most favourable for manufacturing industry. That is not to say for one moment that manufacturing industry here as elsewhere is not going through a difficult period. That is a reality that the western world is facing. What I am saying is that the tax climate here for manufacturing industry is recognised throughout the world as being very favourable, to the extent that the IDA advertise it widely in well-known international magazines as being a tax haven for industry. The tax climate is very attractive and the contribution made through direct taxation is modest. The concessions are very attractive. Against this background, despite the various difficulties which I recognise face industry and every sector of the economy, an improvement would not be warranted. We are always being asked why we do not treat farmers the same as everybody else and everybody else the same as farmers, as if we were all the same which, of course, we are not. We are different in many ways. I did lift this in respect of farmers but there was a special reason for that, as Deputies opposite who supported this at the time are aware. The purpose of doing that was to create an incentive in that area to increase the national herd. Obviously, the same does not arise in industry. There is not the same question of the incentive there. When this stock relief was introduced the annual increase in the consumer price index was 23.81 per cent. I will restrain myself and not make reference to when or how that occurred.

Mr. P. Barry

Will the Minister tell the House the figure that will be published this weekend?

Mr. O'Kennedy

I am stating the facts. The annual figure to mid-February this year, the relative period we are concerned with, was 15½ per cent.

Mr. P. Barry

The Minister has the figure to mid-May which he should reveal.

Mr. O'Kennedy

That is not the relevant comparison at this stage. I do not have the figures the Deputy referred to. We are almost 8½ per cent behind the situation that existed when this relief was introduced. Having regard to the reasons I have given it would not be reasonable to make a further concession which would mean a further reduction on the relatively small direct tax contribution paid by manufacturing industry. Frankly, I would not be justified in accepting the amendment.

Mr. P. Barry

The incentives available to industry all existed last year and the Minister has added to them the new 10 per cent rate of tax but that will not be available to any company until next year because it will not operate until 1 January 1981. The problem is that this year we will have the highest inflation rate in Europe because of the behaviour of the Government. We also have very tight credit restrictions which affect many business concerns. Because of the credit restrictions there will be a 14 per cent increase in the growth of credit this year and the fact that inflation is likely to be 20 per cent effectively means a cutback in the amount of credit that will be available. Profits made by industries will be paper profits because of the high rate of inflation. The Minister should make a gesture to industry by increasing the stock relief from its existing 75 per cent—that has only been in operation for one year in exceptional circumstances—to 100 per cent.

Mr. O'Kennedy

I may have an opportunity on another occasion of responding to that case put forward by Deputy Barry. We are only dealing with the accounting period 1979 to 1980.

Amendment, by leave, withdrawn.

Amendment No. 41 not moved.

An Leas-Cheann Comhairle

Amendments Nos. 42 and 43 may be taken together.

Mr. O'Kennedy

I move amendment No. 42:

In page 56, line 8, to delete "1976, and" and to substitute "1976,".

This is a drafting amendment which moves the word, "and" from one line to the next.

Amendment agreed to.

Mr. O'Kennedy

I move amendment No. 43:

In page 56, line 9, to delete "in accordance with" and to substitute "and in accordance with".

This is consequential on amendment No. 42.

Amendment agreed to.

Debate adjourned.