Having made much of the case made by Deputy McCreevy in the past on behalf of motorists from my constituency and his who must travel considerable distances to and from work I have a lot of sympathy for the case he is making.
I shall deal with the section first and then with the point made by Deputy McCreevy. The increase in the price of petrol as a result of the budget, it would be fair to say, was the one aspect of the budget about which I had the greatest reluctance. I do recognise that for many people there is no choice but to travel to work by car considerable distances at considerable cost or else not work at all. Unfortunately, as has been pointed out earlier in this debate — and I think agreed in part on both sides — first of all the Government had no choice but to turn to indirect taxes in a supplementary budget, because one cannot introduce other taxes in a supplementary budget.
Secondly, we could not have put on more taxes on either drink or cigarettes than we did because we were already in the position of diminishing returns. Therefore we were left with no option but to return to the main residual source of taxation, namely, that on the price of petrol. Had it been possible to introduce other taxes which would have avoided this eventuality and still achieve the relatively modest rectification of our financial position which the budget did achieve, obviously I would have done so, because I did not wish to introduce a substantial increase on the price of petrol. There was no choice whatever but to introduce the tax that was introduced or otherwise face the prospect of not doing anything significant about putting our finances in order. It was in that context that the Government reluctantly had to introduce the measures they did.
Deputy McCreevy made a point about the possible introduction of an allowance against taxation for motoring expenses incurred by employed people going to and from their place of employment. I have a lot of sympathy with this concept because I recognise that employed people are at some disadvantage in that a self-employed person may be able to charge such expenses against his work or business and use some petrol expenses in that context. In fact he may be working from the moment he leaves his home. He may be working at home and legitimately may be able to claim expenses of that sort not open to the employed person to claim to quite the same extent. Obviously this imposes a problem as far as the PAYE person is concerned.
However, I should like to say two things: first of all, any allowance of that sort would be very difficult to administer because there would arise the necessity to have vouching for petrol expenses. Also the attribution of petrol expenses as between journeys to and from work and other journeys which would not be allowable would impose a massive paperwork burden on the Revenue Commissioners who have already more than sufficient such burdens. Secondly, there is the fact that under our present tax system anything like that given in the form of a tax allowance would be essentially regressive in operation because a person with a very high income paying the bulk of his tax at the 60p rate would receive far more benefit from such allowance — because it would be worth 60p in the £ to him — than would somebody with a relatively low income paying in the 35p band, when it would be worth 35p in the £ only to him in terms of an offset against his tax. I know this is an objection which is inherent in the whole concept of tax allowances. The addition of a new tax allowance would merely constitute one further step in aggravation of what is an inherent injustice in the system.
The major purpose of the Government's tax reform programme is to move away from the allowance system to the tax credit system which will not have the same regressive effect. But, as the tax system stands at present, those objections stand against the suggestions made by Deputy McCreevy.
The third point I should make is one that is very obvious indeed, that is, that any tax allowance reduces revenue substantially. Deputy McCreevy I know appreciates that the scope for reducing revenue in present economic circumstances is very limited indeed. I suppose that is an overriding and almost conclusive objection, at present at any rate, to the proposal he is making. I have urged what he has urged in the past. I am sympathetic towards the case and should the opportunity arise I will be more than happy to introduce it, but I cannot see that happening in the immediate future.
