This Bill is for the purpose of implementing the budget provisions introduced by the new Government in July. It is clear from the contribution of the Minister this afternoon that what I said at that time was correct, that was, that the budget was no more than a propaganda exercise on the part of the Government in an effort to throw responsibility on their predecessors. There has been reference already to the Pandora's Box offered to the public in the run-up to the general election. It is not my intention to dwell to much on the pre-election gimmicks of the parties opposite but it is well known now that the attitude of Ministers is that Government's programme was designed to woo the voters but that now that they are in office they will do what they believe to be right. Their programme and the so-called Gaiety programme constituted the reason for the July budget and, consequently, the reason for this Bill.
The Bill represents the implementation of the first stage of the Government's economic strategy and, despite the lip service paid to a non-existent counter-inflation programme, the Government have added 5 per cent to the cost of living whereas a reduction in the inflation figures was the central theme of the Fine Gael proposals. This additional 5 per cent in the cost of living has pushed the inflation figure from the 17 per cent level at which it was when we left office to a minimum level of 22 per cent, the figure admitted now by all experts. It may possibly be more. In these circumstances is it surprising that the national pay talks should break down? There is an apparent lack of interest on the part of the Government in those talks, but we must not be surprised at the breakdown in negotiations when there is a 15½ per cent difference between price rises and proposed income increases, which, according to the Taoiseach, will be a critical element in economic strategy. The prospects for wage moderation have been seriously damaged by spiralling inflation but what is particularly demoralising to the people is that there appears to be no end in sight so far as inflation is concerned. The Government have committed themselves to an income tax package which is regarded by every respected economic authority as madness precisely because it will add to inflation. Massive indirect taxation will have to be imposed in next January's budget, especially as the cost of the package has escalated from an estimated £263 million to £300 million.
Our opposition to this Bill is based mainly on its representing a major step in changing to indirect taxation which affects all sections of the community. Perhaps the Minister's recent activities and absences have led to his being out of touch with his own community but any Member of this House has only to walk into a shop or a public house to realise the decline in activity as a result of that indirect taxation. One has only to talk to the recipients of social welfare, a group to which the Government parties have paid so much lip service for so long, to realise how their problems have been added to as a result of the July budget. The pittances granted to social welfare recipients—5p in the case of an orphan, for instance, and 85p in the case of a widow—are insignificant having regard to the increase in the cost of living that has been fuelled by those parties who have talked so much about the elimination of poverty. However, Deputy Woods will be going into this area in much greater detail. Never before have this category suffered so much.
Neither the economy nor the people generally can afford the cost of this Government's programme. Industry is suffering from the high level of inflation and the situation is even worse in regard to agriculture. I am surprised to hear the Minister refer to the benefits in this Bill so far as farmers are concerned. When he was on these benches he ranted and raved about the impact of inflation on farm incomes.
We, too, believed that current deficit borrowing was not advisable and should be terminated but we contended that it should be terminated within a reasonable and a sensible period. We cannot compare our situation with that of the Belgians or of the Italians or, indeed, of any other of the Community countries. This Government have forgotten about people. We have a growing population, unlike our European partners. More than 25 per cent of our population is under 25 years of age, so the need for growth to cater for employment opportunities for those young people is great and every member of this House must have been inundated with requests from parents and young people themselves when the belated leaving certificate results — belated because of industrial action within the public service — became available. Fathers and mothers on behalf of their children and young people themselves are now seeking employment. It is sad to see how few the opportunities are. Of course, we are told there cannot be any further intake into the civil service, the public sector is overloaded, overmanned. The public service sector in this country has served the nation well and has catered for the community's growing needs, the growing needs of a bigger population and of current administration to meet the essential services for that growing population. This Government have set out deliberately to say: "It is on your shoulders, you shall not have any increase or any extra numbers." I understand that even within Departments at the moment replacements are not being approved for vacancies occurring. Young people have little opportunity of being recruited this year into the public sector at local or national level. The professional services even have been curtailed and the opportunities for those who have gone through third level education institutes are very few.
All in what interest? It is in the interest, as I have said, of propagating further a propaganda exercise all caused by the need to implement a mad tax package deliberately foisted on the electorate to win votes at some considerable cost and expense now and in the future. That is why we are opposed to this Bill designed to swing to indirect taxation at too great an imposition on those not well equipped to bear the impact and effect of that indirect taxation. This Government cannot go on adding gratuitously to inflation while at the same time maintaining a fixed exchange rate.
One of the points to come most clearly out of the report of the three economists is the crucial role of the exchange rate in maintaining competitiveness and this is underlined dramatically by the last-minute revision downwards of three percentage points of the proposed norms. Why and how was that 9.5 per cent norm originally reached reduced to 6.5? People in society realising the need for employment opportunities have to compare that 6.5 per cent with the 22 per cent plus inflation rate that we will see, at least 5 per cent of which has already been contributed to by the direct actions of this Government. It is clear that exchange rate involatility can make complete nonsense within a very short period of competitive norms and that the exercise lacks credibility. A major part of the Fine Gael economic strategy has collapsed as a result. We will hear more about that in the weeks and months ahead and see it more clearly. The independent economic commission and the norms which they would lay down were the centre-piece of that party's anti-inflation policy and it is manifest that they have not been accepted and that there was no chance of acceptance once inflation had increased. In other words, the action of the Minister for Finance in July immediately retarded those norms from ever having any public acceptance.
I understand from a reliable authority that the Government are having enormous difficulty in putting their tax package together, and small wonder. It is evident that little research was done on it and very little thought given to it. There are major difficulties, and major decisions on the mode of operation have still to be made. The tax officers are demoralised, as most Members of this House know well, and they are in a state of total confusion. Sending out some 300,000 cheques of £9.60 every week will not improve the circumstances of any household, will add an extra burden of administration and will require extra staff at a time when the Government have frozen extra posts for the civil service and said: "Thou shalt nor recruit, thou shalt not fill existing vacancies." How does one try to make those impossibles meet? We all know here that representatives of this House have resource to the tax offices because of the normal problems of their constituents, and one will be told there that they dread the impact here. This is only part of the whole problem. We are talking now about the wife at home and that famous £9.60. What about the wife whose husband is a low wage earner paying no or little income tax? How is she catered for? Where does her £9.60 come from and who pays it? We on this side of the House are interested in that. This is indirect taxation at enormous cost, again to fuel inflation. We want to know also about the widow in receipt of a social welfare pension. Does she get an increase in her pension, plus the £9.60 that she cannot get from the husband who is no longer there? What about the wife of a small shopkeeper or a small farmer? Do they get the £9.60? Have we now created further divides in society by switching the £9.60 and paying it by cheque into households that will, as the result of the measures which must be taken to provide it, be no better off and may be worse off?
We will be asking these questions during the weeks and months ahead and the answers are causing enormous tensions and strains within the Government at present. An election pledge which was no more than a cheap gimmick to win votes — and which has been described as that by some of the present Government in private conversation — is now no longer of interest to them because it did what they intended it to do. It is distorting the whole thrust of economic policy and is the whole reason for the Finance Bill which we are now discussing.
If the Government carry out their intentions we will soon be faced with departmental Estimates for the next year — at least that is what we were promised. We expect that this will be part of what the Dáil will be doing during this session particularly now that we have a heavy legislative programme, as we were led to believe this morning. Because we have a heavy legislative programme the people of Cavan-Monaghan were deprived by the vote of this Government and a few supporters walking through the lobby from exercising the normal opportunity that would be afforded to electors in such circumstances where a seat lay vacant. If the Government carry out their intentions we will be seeing shortly the departmental Estimates for next year which may cause substantial reductions. We will be awaiting with interest what these Estimates will be or if there will be cutbacks in them and are some of the current speeches of Ministers at present designed to cater for cutbacks? Are those cutbacks all in the interest of the madness of a package prepared by the Fine Gael Party in the early months of this year?
The Tánaiste, although there seems to be some confusion as to how or why he missed a decision that apparently had been taken at Government level, added words of advice, along with the IMF and the Director of the ESRI in pressing the Government to postpone its tax package or to have it introduced on a phased basis. While the Government are ready to quote these authorities when it suits them they will ignore their advice when they choose. I was interested in the Minister's speech to the House this evening and to see his change of heart in a short time. It was interesting to hear him say that it is not correct to argue that our credit rating abroad is confirmation that our borrowing policies are in line with accepted practice. He is using the argument that we have a good credit rating. Yet the Taoiseach said outside the country and at home that our credit rating abroad at that time was not a worthy one. Of course, he knew it was, but his irresponsibility was forcing him to say other things for purely party political purposes. His colleague at the time on this side of the House, Deputy Bruton, now Minister for Finance, made the very same accusations, but now he uses the fact that our credit rating was good — in other words, admitting that what he had said then was incorrect. He uses it now to advance his argument here.
That is the type of Government we have, putting an unbearable burden on the ordinary citizen simply because of a mad tax package devised in a moment of desperation. It was not researched or thought out and will cause great difficulty in its implementation. Most people will probably be worse off. It will be divisive and discriminatory unless it covers all people in a similar category, including the stay at home wife, whatever position her husband holds.
At a recent conference attended by the Taoiseach on The Irish Economy and Society in the Eighties, Mr. K.A. Kennedy, Director of the Economic and Social Reserch Institute, said that the Government had abandoned the fort on unemployment. Surely it is our biggest problem? I said earlier that youth unemployment was a problem far greater for our economy than for any of our EEC partners because of our young population and because of its growth. Yet every action of the Government has been directly opposite to what it should have been if they were interested in promoting employment. The drop in activity in the services sector has been so evident because of the impact and impositions of the budget that gave rise to the Finance Bill. As a result not only are there no job opportunities in the services area but the numbers of jobs are being reduced in many different areas.
We strained to hold down unemployment figures which, until June last, has risen at a lesser rate than in most other EEC countries. It rose by 27 per cent here in comparison with a rise of over 60 per cent in Britain and the Netherlands and 44 per cent in Germany. Unemployment showed signs of estabilising in May and June. It is now bound to rise as a result of the Government's inflationary policies. They have frozen jobs in the public service and put the whole burden of job creation on the private sector. If, as the Taoiseach said for the first time at the weekend, the creation and preservation of jobs is the Government's first priority, why has he imposed a freeze on the creation of posts in the public sector? Why has he reduced the number of teaching posts in primary schools and teacher training colleges? I am sure my colleague, Deputy Wilson, will cover that subject in greater detail. With so many of our population under the age of 25 this must be viewed with great seriousness.
The Tuam sugar factory is to close down in a year's time with the loss of 400 jobs and jobs in our semi-State companies such as Aer Lingus and the B+I are at risk. One major job-creating organisation, the IDA, are also under attack from Coalition Ministers. They are talking about paying back grants. The Coalition Government, by knocking the economy, are discouraging foreign investors and no amount of palliatives, national development corporations or youth employment programmes will have any effect. The Government's economic policy is having the effect of throwing large numbers on the dole. There is little doubt that by next year unemployment will have reached 150,000 or 160,000 as a direct result of the Government adopting the wrong policy at the wrong time.
Our young people have little hope. To give an indication of the lack of interest by State agencies at present or perhaps the lack of interest by the Government, recently the ESB sent a circular letter to State agencies like the Industrial Credit Corporation, Fóir Teoranta and other agencies of that nature involved in financing industry, especially ailing industries. The ESB, in their wisdom, decided on a change of approach. They said that, if there were any moneys due to that State body by companies in receivership, before a recommendation of supply the ESB would be paid first or, alternatively, at best, that arrangements would be made so that the receiver, and not the company which had run into receivership and probably might not be in a position to pay, would accept responsibility for the burden. That may sound very good in economic terms. It may be very sensible bookkeeping on the ESB's part. However, it demonstrates very clearly the lack of Government commitment to maintaining jobs, let alone creating them. All of us know in our own constituencies that such unfortunate happenings take place from time to time and there is always a problem of power supply. Furthermore, this State board have informed their Department which is run by the Tánaiste, Leader of the remanants of a once proud Labour Party, and he has not seen fit to take any action to prevent this measure being implemented. That is the commitment which we have from this Government towards employment.
Now, let me take the details of the Bill itself. We spelt out in detail in the debate in July what would be the result on the CPI of the imposition of indirect taxation on beer, cigarettes and spirits. It cannot be denied that we had, in the two previous budgets, also hit those old reliables. One must ask when is the stage of diminishing return reached? If we are to judge by the lack of activity in the various shops, hostelries and pubs, that diminishing return stage is being reached.
In addition, there is the very serious impact on employment. One knows so well that the intake into the services sector in recent times has been extremely valuable, particularly in the case of youth employment. It now appears that there is a shedding of employment rather than an intake. All those early sections of the Bill are affecting the CPI substantially and throwing a greater burden on industry, the farm, the home, the worker, and on the social welfare beneficiary who, as I said, was offered in return a mere pittance by a Government which pays lip service to eliminating poverty.
That brings me to some of the other impositions. During the last budget debate and the previous one we listened to the speeches from the other side of the House. The present Minister for Finance and his colleague, the present Minister for Fisheries and Forestry, those two particularly, condemning us, as a Government, for increases in petrol costs and the hard, savage imposition on the rural and urban dweller and on the industry generally. Our imposition on the motoring public fades into insignificance compared with the terms of this Bill. Look at one after the other of the savage impositions, first on petrol itself secondly, the duty on the price of a car. Remember we still have a substantial number of people working in our car industry in exceptionally difficult times. Now there is a car duty. They are further affected by the increases in VAT in this Finance Bill. Also, the fact that VAT is added to servicing the car and to spare parts makes it a savage burden on the motoring public.
This afternoon, the Minister obviously forgot all that he had said when here on this side of the House and I look forward to Committee Stage of this Bill, to reminding him then of what he said to me a few short months ago. When he was going through the sections of the Bill today, he spoke about the car tax and said that the abolition of the road tax in 1977 was unwarranted. It meant a loss of our badly needed tax revenue and ran contrary to the commitment to energy savings. "Most people will agree that it is right and proper that it should be restored."
Who "most people" are, I am not sure. Certainly, I will find it very hard to discover anybody who agrees that it should be restored. I remember him, a few short months ago, crying to high heaven because we had increased the registration fee, saying that we were really imposing a car tax. He now turns and says that it should never have been abolished. The hyprocrisy emanating from the Government is almost unbelievable.
What about the impact on those employed in that industry? Again, there is a very important service sector in that industry. Is it already true that people are being shed in that area as well? We talk about monetarist policies, although there are people in this House, including Deputy Ryan, who would tell me that these are not monetarist policies being introduced by the present Government. This Government have forgotten completely about the most important ingredient in our 1981 society, and that is people — young people, particularly. That is why this morning the Government fear the voters of Cavan-Monaghan. The House knows full well that when they went there to test and sound out the ground, they knew full well that those voters would give them the answer which the voters of Ireland would like to give them at present. No Government can afford to forget about people, particularly in a population as young as ours.
Can we be sure that the motor industry, already hard his prior to the July impositions, will not now suffer more severly, and the very important services sector? The Bill goes into some detail to reintroduce the road tax. The Minister, with some relish, referred to section 8 of the Bill this evening as if he were getting great satisfaction in imposing a tax on the farmers in his own constituency and on the workers in mine — those whom he cried for back in the earlier months of this year, those working 20, 30 or 40 miles from home, driving to and fro. Since this budget was introduced, in my constituency people have come to me seeking employment nearer home, happy that they have employment but realising that the added cost of travelling is eating into their earning power. Taking all this into consideration, an independent commission come out with a norm of 6½ per cent. I am not in any way of taking from the capacity of those three experts to do a job afforded to them. However, I am saying that their task was made impossible before ever it started, because of the impact of this Finance Bill, the fuelling of inflation which seems to give such satisfaction to all spokesmen on the Government side of the House.
I can see the diminished Labour Party voting for this Bill and I want to tell them that their supporters are extremely disturbed. Here is a once proud party supporting tough monetary policies typical of any Fine Gael Government of the past. I have no doubt some Independents may purge their consciences by press statements or otherwise and who will remain seated or else walk dutifully through the lobbies when the time comes simply because they have had the playback from the ground which frightened them from facing the electorate at this time.
In principle, my party believe banks and financial institutions should pay a fair and equitable amount of tax. We will discuss the details of this Bill more fully on Committee Stage. My predecessor, Mr. Michael O'Kennedy, established the commission on taxation whose members were representative of Irish society. He hoped to get an interim report from them on financial institutions simply because as I said, we believe banks and financial institutions should pay their fair share of tax.
It is very important that we should have a strong banking system. I hope the relevant section in this Bill is not being introduced to buy votes because if that is the reason I would regard it as a dangerous precedent. What happened the commission on taxation established by Mr. O'Kennedy? What are the views of the present Minister for Finance? Has he met the members of the commission? Can he say when a report might be issued? I should hope that because of the interim report the Minister for Finance will have a broader base on which to work at budget time when he is imposing taxation. Everybody knows the scope for movement of any Minister for Finance has been narrowed but I would like the Minister to tell the House what his attitude is towards that commission and when he expects to receive their report. As I said, this is an extremely important commission and I too am looking forward to reading their report.
I am not very sure about the intentions behind section 17 (3) which reads as follows:
There shall be furnished to the Revenue Commissioners by a bank or a promoter, as the case may be, such particulars as the Revenue Commissioners may deem necessary in relation to any statement required by this section to be delivered by the bank or promoter.
To what statements are we referring? How deeply are we going into the banking business? Are we going into individual accounts or are we, by a back door method, pursuing certain people? I have read the earlier sections but I want to know if that section gives the Revenue Commissioners more scope to go after people they suspect of avoiding tax. I would like the Minister to spell this out clearly in his reply. I realise we will have the opportunity of going into detail on Committee Stage but in the meantime we are entitled to know the intentions behind this section.
It is on Committee Stage that every Deputy can make his contribution to improve a Bill because sometimes measures appear ideal on the surface but when looked at in detail can be found to cause many problems. That has been the experience in relation to Finance Bills in the past. Sections imposed for very good reasons were used by certain people to avoid or evade tax. We must examine every line of the Bill very closely and carefully to ensure that this does not happen.
Was the Minister wise to jump at the 50 per cent increase in VAT on what are essential ingredients in the life of the ordinary person? We talk about essential foodstuffs and clothing being exempt, and it is right that they are. The Minister has increased VAT on other essential items by 50 per cent. One could sum it up by saying that luxury goods, essential foodstuffs and clothing are excluded, but the VAT rate is increased on everything else. I referred to the impact of this imposition and the decrease in activity which has become so apparent in every area. Last month will be known as "Black September" because of the introduction of the new VAT rate. We are opposing this Bill because of its move towards indirect taxation and the real hardship which is being caused. My colleague. Deputy Woods, will give details of the severity of these impositions on the less privileged in our society. Has the Minister any idea of the difficulties faced by an elderly widow trying to buy coal? She receives an increase of only 85p.
The Minister married only recently and perhaps he is not aware that September is the time when children return to school and parents must buy school books. This heavy burden has been worsened this year by the 50 per cent increase in VAT on these books. Was this deliberately arranged by the Minister so that there would be a worth-while income from these sales? Parents have no option but to buy the required books.
During the term of the previous Coalition Government the present Taoiseach was the very flamboyant Minister for Foreign Affairs while Deputy Richie Ryan carried the burden of Finance. They became known as prophets of doom and gloom and perhaps that is why Deputy Ryan is sitting on the back benches. The present Government are fighting for the same title and if they remain in office long enough they will outstrip their prede cessors in undermining confidence and preaching doom and gloom. I accept that this is a time of world difficulty but at such a time we must endeavour to support our own economy.
The Minister spoke about the deficit and referred to the same figure as the present Taoiseach when interviewed during the election campaign. Prior to that election he led the pleading from these benches for more subsidies. Is he now saying that the needs of social welfare recipients should not have been attended to, that extra assistance should not be given to farmers, that subsidies should not have been given on essential foodstuffs? It appears that there has been an about-turn since he left these benches. The first step was the budget, the implementation of which we are now discussing. When its full impact is felt it will be seen as both inflationary and deflationary. One brilliant spark opposite asked how it could be both. The inflationary impact on the cost of living is caused by the imposition of indirect taxes and the resultant down-turn in activity causes the deflationary effect.
The VAT increase was the most savage of all, especially in its timing. Some may ask why people did not purchase school books before 1 September but perhaps the books were not available then or the money was in short supply. The newspaper industry gives substantial employment in major towns and cities. Is the new income derived to be pro rata as high because of an understandable reluctance, perhaps, in the case of homes suffering the effects of this budget to buy a newspaper or periodical less? Is somebody's job being placed in jeopardy by that change and will any extra revenue earned be worth the possible impact this measure will have on employment?
We have all heard of the campaign by provincial newspaper proprietors about the difficulties they are experiencing. They would be entitled to say that we all turned the deaf ear to them but there is no doubt that in some cases they were going through extremely difficult times. At that time they appealed for the removal of the tax but now they are faced with a 50 per cent increase and that is bound to have an impact on sales. If it does have that impact on sales will it have a resultant impact on employment? If that is so will it mean that there will be other people queuing up to draw unemployment benefit and taking away any revenue that may be gained because of the imposition? It is interesting to note that copybooks are not included.
When we discuss the building industry we must remember that it is our second major industry. It is of great importance in rural and urban Ireland and it has given good and lucrative employment over the years. The industry can be fuelled quickly by Government action or resources and, because of the widespread nature of its operations and the many services and service industries or suppliers it builds around it, it gives great employment. That industry is not going through the easiest of times at present. We are all aware of the hike that has taken place in bank interest rates and we have been warned that there is more to come. Young couples faced with a big mortgage last July must now pay a lot more and, if experts are right in their predictions, they will be paying still more shortly. Such happenings affect the building industry. If in this important area we suffer a down-turn and consequent unemployment then those people will return to the employment exchange to draw money which is being collected by the Government in VAT but must be used to pay unemployment benefit. Again, an extremely deflationary aspect of the budget.
One could list all the items that are affected by the budget, those that used carry the 10 per cent VAT rate which has been increased to 25 per cent. The easiest way to describe those items that now carry the 25 per cent VAT rate is to eliminate or omit the luxury goods and items such as clothing, footwear and essential foodstuffs. Other than those items everything that goes into a home, an industry or a farm is caught by additional taxation.
Children's drinks, ice cream and sweets are also subject to the increase. Is that human consideration? We must remember that in this case we are not only talking about the children because the drinks, ice cream and sweets are manufactured here. Again, one must ask the question if there must be a cutback in the purchasing power of a household because of the tax imposition will there be a cutback in the purchase of children's drinks, ice cream and sweets? We must also ask if that will result in jobs being lost. If that is so we will witness more of the deflationary impact which is an integral part of the proposals before the House.
We should all examine our consciences about the impact of the budget. The summer recess must have given Members an opportunity of assessing the real impact of the Minister's proposals. If Members moved among their constituents during the summer they would certainly be aware of the downturn and the lack of activity I have referred to. If that is the situation are we encouraging and promoting unemployment in our growing young population at a time when school leavers are seeking employment? They should be, and must be, the major consideration.
The introduction of the Finance Bill serves a very important function. I am not saying that discussion on the Constitution is not important but in regard to it, as our leader stated, we have made our position known and it is now up to the Government to put forward their proposals but in the meantime let us return to the main problems of our society which I have outlined this evening. Those problems relate to youth employment, which should be given a high priority, and unemployment generally. What about the employment agency? What good things will we hear about it? The sooner we hear them the better so that we can examine them. Any measure that will help create employment in any way, particularly youth employment, will have our support provided it is a real and genuine attempt by the Government to solve that important problem. It appears that very little thought was given to anything else other than justifying a propaganda campaign implementing and imposing a tax package that had not been researched or thought out and is now a burden around the necks of the members of the Government and is the cause of much internal strain. It is causing headaches to many people who are well advised, well informed and experienced in regard to taxation because they do not know how it can be implemented or serviced at a time when the Government are talking about cutbacks and about non-replacement of people. How does one bring those two ends together? The results, I fear, are frightening. The Leader of the Labour Party put himself in a rather unusual alliance with the International Monetary Fund in advising caution and phased introduction because even he saw the folly of this policy. It will make no household better off and will obviously make some worse off.
I referred to the commitment by the Minister for Finance in the budget in saying that the departmental Estimates would be changed in format and that they would be introduced here before Christmas instead of after the budget as before. I would not disagree that that is a worth-while step forward. But if, on the other hand, the indications at present being given by some of the Ministers are designed to be kites flown to cover possible cutbacks on the way, then I fear that the mistakes of the budget will be seen as a way of compensating for all that has already been promised in Pandora's Box.
I referred already to the price increases, the imposition of indirect taxes. They are also affected by the imposition of the 50 per cent increase in VAT. Of course the services are affected to an enormous degree. What I am saying is that the measures here before us this evening are not designed to help our country at a time of world recession, at a time of explosion in our population never seen before by us and not being experienced by the other EEC member states. I do not defend borrowing for the sake of borrowing. I have always said that borrowing for productive purposes makes sound economic sense, particularly in a world recession, because it generates more activity in our infrastructure and services, which we need. If I would level a charge at Governments of the past it is that during periods of recession such investment was not made in our roads, water services and communications. We have evidence of this in all areas of our country. The better our infrastructural services are the greater chance we have if we have a Government committed to groups like the IDA in promoting and developing industrial growth and job creation in our society. Therefore, on the capital budget I believe it is proper to borrow to meet our needs.
The current deficit is a different problem which has to be brought under control. But how, over what period and by what method needs more thought and careful consideration than just imposing hardship on people. That is not being done for the purposes for which the Minister for Finance is trying to make out it is being done. It is being done to accommodate the tax package that was used so extensively in May and early June this year to get votes for the Government. This tax package is now costing the Irish people dearly. The buying of votes is one thing but they were bought dearly. It was a very clever manoeuvre by the Taoiseach on the evening he announced his Government when he said that the books were much worse than he thought. Everybody knows that he barely had time to fit in a two or three minutes press conference on his way back from the Park to appoint the Government here. Obviously it was a strategy that had been thought out in advance to condition the people for the measures that will be necessary to introduce the £9.60. It will be paid out in a discriminatory way. It will make no household better off. It will not apply to many housewives who will have to stay at home too because their husbands are not in the tax net or because they are widows or because they are small farmers, shopkeepers and business people. These are questions I would like the Minister to address himself to when replaying to this debate. I would like the Minister to tell us who will get this money and to give us good reasons for not opposing this Bill. But until such time as the Minister does this to our satisfaction, I see no option but to oppose the Bill.
This Finance Bill affects every person in our society. I referred to the farmer. Some small concessions are being made. But the imposition of the 5 per cent minimum increase in CPI is a huge burden on him. His motoring costs have gone through the roof. The worker in the city, the town or in rural Ireland finds that nowadays a car is no longer a luxury but an essential means of transport to work. I remember Deputy Richie Ryan introducing an imposition some years ago saying that there was waste and people could use one car where four were being used. That is very easy to say for someone who does not know the difficulties in rural Ireland. What is being imposed today is increased duty on the purchase of the car, increased VAT on that car, a huge hike in petrol, the restoration — with some delight apparently on the part of the Minister — of the road tax and, of course, the most expensive item of all: the VAT on spare parts and servicing that makes motoring very expensive.
The tourist industry has been given a temporary concession in the Bill before us. We are all aware of the difficulties being experienced by the tourist industry. The imposition of that 50 per cent increase in VAT on almost everything will affect the tourist industry too. The tourist industry is a service industry and hotels do worthwhile packages. Groups book 12 months in advance. It can be difficult for the organisers and the operators of those tours to get the 50 per cent increase in VAT. A concession is given to them in the Bill extending this up to the end of December. I am glad the Minister has seen some light. He needs to see more light before any other steps like that are taken which can hinder this industry.
