Dáil Éireann debate -
Wednesday, 30 Jun 1982

Vol. 337 No. 2

Private Members' Business. - Finance Bill, 1982: Committee Stage (Resumed).

Debate resumed on amendment No. 33b.

In page 17, subsection (2) (a), lines 31 and 32, to delete subparagraph (i) and substitute the following:—

"(i) at any time during the year of assessment he was the age of 65 years or upwards or if under the age of 65 years he was at any time during the year of assessment in receipt of a taxable income (after deductions of normal allowances) of less than £4,500 per annum, and,".

—(Tony Gregory-Independent).

Mr. L.T. Cosgrave

Before Private Members' Business I was welcoming the relief given and hoped the Minister in his wisdom would go as far as possible to provide relief for people in rented accommodation. This legislation will benefit two sectors of the community, those over 65 years of age and those below a certain income limit. The introduction of this important measure is very important and I hope it marks the first step towards helping those people. For far too long people who had to pay rent each week failed to get any benefit. I hope that in this financial year the Minister will go a little further than he has indicated so far. I realise that whatever is done will cost money, whether we are talking in terms of £5,500,000 or £20 million. Obviously there is a difficult situation as far as finances are concerned, but having regard to the money that is made available for other schemes and projects I hope the Minister will make some improvements in this area.

I welcome the section in principle. Whatever is decided finally, I hope that help will be given to those who need it.

Minister for Finance (Mr. MacSharry)

I could give the same reply to Deputy Cosgrave that I have been giving to other Deputies, but there is no point in repeating the arguments that have been put forward. Deputy Cosgrave started his contribution by welcoming what I said in reply to other Deputies who asked me to have a further look at the proposals set out to see what could be done on Report Stage. I said I would do so without any commitment.

Mr. Fitzpatrick

(Dublin South-Central): We have been discussing this Bill for two days. On many occasions I have seen Finance Bills being discussed in this House and we have always reached the stage when the Bill has had to be passed without several sections being debated.

In this Finance Bill there are 97 sections. As we know there is a statutory regulation regarding the time this Bill must be passed by both Houses of the Oireachtas. The Opposition have been debating section 5 since practically 10.30 this morning. I should like to remind them that there are several sections of the Bill that require serious consideration. We will reach the stage, if not this week then certainly next week, when eight or ten sections will have to be put through without debate. There are amendments before the House that would entail additional expenditure. I ask Opposition Deputies to consider seriously the whole financial structure of the country at the moment. I ask Deputy Bruton to consider the consequences of the last division and what that may mean with regard to capital and the operation of companies. It is all right for us here to play politics, but people outside have no interest, good, bad or indifferent in what we do here. They are concerned about jobs, prices and inflation. These are the important matters we should be discussing here, not endeavouring, as have the main Opposition party, Fine Gael, to score political points.

Of course there is merit in the amendments put down by the Labour Party and Deputy Gregory. When finances permit I could see a Minister for Finance giving the amendments careful consideration and accepting them. However, we must have regard to the financial situation. There is no doubt that any concessions given will have to be met by increased taxation, and this will mean a further increase in inflation. That means the loss of more jobs.

We should direct our attention very closely to the issues involved in this Finance Bill. There are already concessions in the Bill for people over 65 paying rent for private dwellings. The motion put forward here by Deputy Gregory and Deputy Barry Desmond can be looked at when our finances are brought under proper control. It would be irresponsible at present to push the budget deficit over and beyond what it is now. We want to maintain the present budget deficit. This is only one of many amendments we will have to consider as we go through the Finance Bill. There is about £140 million involved in amendments to the Finance Bill. No responsible Minister for Finance could make concessions like that without throwing the whole financial structure of the country into chaos. If unpopular decisions have to be taken, so be it.

People today are looking for responsible government. Fine Gael have not put down any amendments. If they were sincere with regard to putting down amendments to section 5 of the Bill they had the past three weeks to formulate them. They did not do so because Deputy Bruton knows perfectly well, from his budget in January, that the amendments and concessions he is looking for here cannot be granted. It is not good enough to see that type of politics being played in the House. People will know what Fine Gael are like when they see them supporting amendments that they had not the courage to put down themselves.

I am very sympathetic towards people who are paying high rents for private flats. I fully understand the pressures they are under, and I believe we will have to look at this section because they are entitled, at a future date, to some concessions with regard to income tax. Some are paying astronomical rents. When the finances of the country are brought under control that is the first sector I would ask the Minister for Finance to grant concessions to. Trying to get an amendment to section 5 of the Bill to grant concessions at this time, without looking at the whole issue of private rented dwellings is only doing it on a piecemeal basis. We should have a full debate in this House and a complete examination of private rented dwellings. We should see that they are properly registered, that their standards are reasonable and that any concessions given by way of income tax will not be passed on to the landlords. When landlords see concessions being given in many cases they raise the rent.

I know his feelings about that section of the community, that they do merit consideration. I can see merit also in the previous amendments put down by the Labour Party and The Workers' Party. But we must wait until the finances of the country improve before embarking on these types of concessions. Before thinking of taking decisions on this issue I would ask the House to ascertain exactly what we are voting for and what will be the implications for the whole of our economy. There is no way that we can vote through measures here directing the Minister for Finance to do this or that. I am convinced that that is an irresponsible attitude. We shall see what will be the financial consequences for this country if we pursue policies such as those. I can assure the House that financial experts would take a serious view of the outcome of that type of policy. If there is anything we need in this country it is financial injections; there must be foreign investment to finance industry. People who think there is sufficient finance here to get new factories started and our infrastructure going must be living in cloud cuckoo land. Anything we do here to undermine the confidence of outside interest or affect finance coming into the country will hurt one section of the community only, the unemployed, those seeking jobs or those who may already have jobs. It is with that in mind that we should view the whole of this debate in a serious manner, because we can push the finances of the country to a stage where they will be irretrievable, when everybody in the country will be in trouble.

Of course there are merits in these amendments. At a future date on a Finance Bill I would be the first to ask the Minister to look at this section and ascertain whether the provisions of the amendments tabled here this evening cannot be granted in some way. We must see what figures are arrived at if our budget deficit is held under very trying conditions. We must remember that every country in western Europe and indeed the United States also is at present suffering the same type of depression. Inflation and unemployment are high, interest rates especially are high in every country in Western Europe. This has the effect of creating mass depression right across Western Europe. We must realise that we are isolated here on this island. To think that we can act independently, without taking into consideration the impact and finances of other economies, is not being realistic. We must ensure in this House that we create a climate receptive to foreign investment. The best way that can be done is within the context of the Finance Bill. That is, I believe the whole object of a good Finance Bill. I can see merit in the amendments. But at this time, especially taking the whole of our finance into consideration, it would not be opportune to grant such concessions. Rather there should be a thorough examination of private flat dwellings and, when that has been done, then by all means ask the Minister for Finance to give some concession to those people paying high rents for flats in private dwellings.

Mr. O'Dea

I advanced various arguments this morning against Deputy Gregory's amendment. Various Deputies replied to the arguments I advanced. One of those Deputies, Deputy Kemmy, sought to reply by the sort of usual argument ad hominem he uses. That means that when he cannot deal with issues he tends to attack the personalities who advance arguments about those issues. I will tell Deputy Kemmy that anything he can say about me in this House or outside it, whatever he may say about me here, I can say much more about him and I say to him across the floor of this House, outside or wherever he wants to hear it——

An Leas-Cheann Comhairle

Deputy O'Dea will appreciate that he could say it only in accordance with what might be appropriate under Standing Orders.

Mr. J. Bruton

And it would have to be relevant to the section.

An Leas-Cheann Comhairle

No, the Deputy is entitled to make his point. But, lest he be carried away in any enthusiasm as to what he might consider appropriate, I would remind him——

Mr. O'Dea

I cannot understand some of the arguments advanced by the people across the floor. Deputy B. Desmond spoke at great length about rents tribunals and the exorbitant rents landlords are charging tenants.

People have said that there is some merit in Deputy Gregory's amendment. I accept that there may be some merit in it. I can see merit in anything that seeks to help or aid the oppressed. But the question of rents tribunals, fair rent, fixity or security of tenure is a big social question. I cannot for a moment understand what that question has to do with income tax. I cannot see any necessary connection between the necessity for fair rents, rents tribunals and so on and the terms of this Bill. Deputy B. Desmond seemed to suggest, in the course of his arguments, that if these rents tribunals had been established the amount of rent people would be paying would be much less than obtains at present. That may or may not be the case. He seemed to suggest that if rents tribunals had been set up in the context of the rent restrictions legislation the rents which tenants of controlled tenancies would pay ultimately would be far less than those that would otherwise obtain. Of course that approach overlooks the fact that in the legislation dealing with controlled dwellings, we established District Courts, we appointed District Justices specifically to hear cases of rent control. We issued very definite, firm guidelines, to those District Courts which will be dealing specifically with applications from occupants of rent-controlled dwellings. There seems to be no evidence to suggest, that rents tribunals would decide the issues any differently.

Mr. J. Bruton

On a point of order, is it not the case that the amendment on rent tribunals has in fact been ruled out of order?

Mr. O'Dea

I listened today at great length to Deputy B. Desmond talk about rents tribunals.

Mr. MacSharry

And others.

An Leas-Cheann Comhairle

Deputy O'Dea, the Chair explained to Deputies during the course of their contributions that unfortunately a certain latitude was taken. Because of that the Chair did accept references to matter which, in the opinion of the Chair, was not entirely relevant. You say correctly that reference was made to tribunals. Deputy Fitzpatrick on one occasion referred to the price of land. We had a miscellany of matters. I would suggest to you that on every occasion I did indicate to the speakers that, while they might make a passing reference, they should not develop that extraneous matter to any great length. I know I can rely on Deputy O'Dea to keep himself within the confines of the latitude allowed other Deputies but not to move outside it.

Mr. B. Desmond

That is a new one.

Mr. J. Bruton

Do not do anything I would not do.

Mr. MacSharry

The Deputy may talk about anything so.

Mr. O'Dea

Certainly I will, that gives me very wide latitude. I have listened to every conceivable subject discussed today on these amendments. I am endeavouring to confine myself to answering some of the points raised by Deputy B. Desmond.

The question of rent control and security of tenure is largely a social one which the Government are considering at the moment and which will ultimately be debated in the House as a separate issue. That has nothing to do with income taxation. While I see some merit in the amendments, and I see the reason why Deputy Gregory has put them down, I cannot see any justification for using the Finance Bill and the income tax laws to bring about much needed reform in the area of rent and rent control. That is a separate question and I would like to see it dealt with separately.

Deputy Barry Desmond started off by supporting the amendment that tenants in private dwellings, whose income does not exceed £4,500 per annum, should be allowed to claim the rent against their incomes for tax purposes. He then introduced an amendment to the amendment to the effect that the people who would be allowed to claim rent against their incomes for tax purposes would only be people whose taxable income was up to a limit of £2,500. That is the sort of tactics which the main Opposition party have been engaging in for the specific purpose of defeating and embarrassing the Government without any regard to the financial consequences for the country of the budget being defeated. The figures have already been put to the Opposition, the people who only a few short months ago preached financial rectitude and who are now prepared to throw the country into financial chaos.

Deputy Dukes advanced the argument that since the rent which the occupants of private residences can claim as a deduction for tax purposes can only be given as a sort of tax rebate at the end of the financial year, it should not be taken into account in calculating the budget deficit for this year. I remind Deputy Bruton and the other Deputies on the other side of the House that financial rectitude is a continuing thing. They sought to use that argument in relation to the payment of corporation tax and VAT being moved around. They stated that it is keeping the deficit down this year only, at the expense of increasing it next year. They are now advancing the very opposite argument in support of a totally irresponsible approach to this Finance Bill and to the amendment.

I believe if this amendment is accepted many social consequences will inevitably follow, not all of which will be good. The question of fair rents and the whole area of landlord and tenant legislation and a comprehensive review of the whole area of landlord and tenant relationships would have to be postponed. I would not like to see that happening because in the present order of things I know it will be coming up fairly soon. I do not want it to be side-tracked in this way.

People do not in general have as much regard for the accommodation they do not own themselves as they do for the accommodation they purchase and which they will ultimately own absolutely themselves. Consequently, if we change the tax laws in such a way as to encourage more and more people into rented accommodation, the housing stock of the country will deteriorate. I said that this morning and nothing I have heard since leads me to believe anything else. I ask the Opposition parties in the interests of the financial rectitude they have preached so often and in the interests of honesty, if it is not too late for honesty as far as Fine Gael are concerned, to change their attitude now and accept the section as it stands.

Mr. O'Kennedy

This section gives effect to the commitment made by the Minister for Finance in his budget statement. That commitment in turn repeats the same commitment given by the previous Minister for Finance in his budget statement. Therefore, the original budget of this year was supported by the two main Opposition parties in the House at the moment. One, therefore, is entitled to ask what has changed to justify a change of this nature. One is entitled to ask the spokesman for Fine Gael, who was then the Minister for Finance, what has changed from the time he introduced his budget after deep and serious consideration was given to such a provision which, if he had the opportunity, I assume he would have introduced in the Finance Bill. One is entitled to ask the Labour Members of the House, who were involved in that Government ——

Mr. J. Bruton

The Deputy was not here to listen to what I said.

An Leas-Cheann Comhairle

Sorry, Deputy Bruton, you may not question if a Deputy was here. He could have heard the debate elsewhere, but whether he could or could not the Deputy should be allowed to proceed without interruption.

Mr. J. Bruton

The place to be is here where the arguments can be heard.

An Leas-Cheann Comhairle

Deputy Bruton should allow Deputy O'Kennedy to proceed without interruption.

Mr. O'Kennedy

I am not very impressed by what I have heard since I came into the House and I am waiting for the opportunity to be unimpressed again. If my intervention invites the Deputy to repeat again what he said maybe I will have served some purpose. The objective criteria I mentioned still applies. The second point I want to make is that Deputy Bruton will be aware that over two years ago I asked the commission on taxation to look at the whole range of our tax laws to bring about greater equity in taxation. Among other things the House must be conscious of the fact that in terms of allowances either for rent or in respect of rental incomes, going back over the years, irrespective of which Government were in office, we would like to be assured that we were always aware of the consequences of allowances of the kind proposed this evening by the amendments. Somebody thinks of a number, and the numbers being thought of this evening by two different Deputies vary considerably. In one instance the number is £4,500 income and in the other case it is £2,000 income. I am not sure where Deputy Bruton stands in relation to all of this and what his number is.

Deputy O'Dea has been very convincing on this. The reality is that from the point of view of the tax code and appropriate fiscal policy it is not just a question of thinking of a number and it is not a question of thinking what would seem to be reasonable in given circumstances without looking at the consequences of what that may be in other areas. One of the consequences that immediately occurs to anybody, without giving deep consideration to it, is that in respect of similar type property there could be two different rentals asked for, one where the beneficiary would be entitled to the kind of allowance being spoken of here and the other where the beneficiary would not be entitled to the allowance. This could, as Deputy O'Dea pointed out, have repercussions in the whole rents structure, which is a different matter entirely. We cannot play fast and loose with our tax allowances simply on the basis that it seems to be reasonable that people at a certain level of income should be given special exemptions having regard to the rent they pay.

That is my second point. My third point has already been made but should be repeated, that the cost this year would be £16 million and next year £25 million. Certainly, that is not consistent, whatever else Deputy Bruton may have said, with anything that he or those representing him said before now. Apparently, they seem to be in a mood not of fiscal rectitude but fiscal carelessness. We have seen one example of this in the House this evening. Taxpayers' money is no longer an issue, spend it where ever you can even though there may be impossibilities facing you in trying to achieve what all of us in the circumstances might like to achieve. The attitude seems to be to spend the money anyway and let the country face the consequences. For those three reasons I cannot support the amendment.

Mr. J. Bruton

As Deputy O'Dea was in order in mentioning rent tribunals in this context it might be helpful to deal with the matter. The obvious point is that rent tribunals would be a more informal method of having disputes about rental issues settled. The problem at the moment is where people have to have recourse to the courts. They have to go through a degree of formality in regard to pleadings and settlements that they find it very difficult to reach a solution to their problems. As a result they forbear from availing of the legal remedy at all. It is as a result of that that people continue to pay rents which are in excess of those they can afford. Deputy Kennedy said he was interested in hearing my views and specifically invited me to express them. For his benefit solely, and not for the benefit of the other Members who were here to listen to my contribution, I should like to outline my views.

An Leas-Cheann Comhairle

This is the second occasion I have to remind the Deputy that it is not given to him to satisfy somebodys request if it requires him to indulge in repetition. I would ask the Deputy at least not to make life more difficult for the Chair by announcing that he intends breaching Standing Orders. At least the Deputy might have used his imagination and endeavoured to pursue a line without embarrassing the Chair.

Mr. J. Bruton

I omitted to get the Chair's approval. I am still enthusiastic to enlighten Deputy O'Kennedy.

Mr. O'Kennedy

I am told that there is a faithful record of what the Deputy has already said and I will be satisfied with that.

Mr. Shatter

On a point of order, I presume the Chair will allow Deputy Bruton to confine himself to the degree of latitude that Deputy O'Dea confined himself to.

An Leas-Cheann Comhairle

Deputy O'Dea at least qualified it in so far as it was his first excursion into that field. Deputy Bruton has already mentioned this matter at least twice.

Mr. J. Bruton

The Minister for Finance gave certain assurances in regard to what he would be prepared to consider on Report Stage. He said that without any commitment he would be prepared to look at the matter. As to the technical issues involved there is a need for a delay between now and Report Stage. There is a case for waiting until Report Stage to frame the precise terms of an amendment as to how it would technically operate. The Minister brought forward a number of technical difficulties that could exist in regard to the way in which this matter would operate in practice. It is reasonable that he, and the House, should wish that we should have an opportunity to have the amendment framed in such a manner, with the assistance that is available to the Minister so that it would operate properly and would not cause problems such as those referred to by the Minister. The problems, I believe, he maximised unduly but they are problems nonetheless.

If we are to accept his assurances of being of any value the Minister should be clear about how much money he is prepared to set aside for this purpose or if he is prepared to raise the money in some other way. The Minister has indicated that he is prepared to take this matter seriously between now and Report Stage and, as to the technical drafting of the amendment he needs time, but he does not need time to say how much money he is prepared to put on the table. Deputy Gregory, and other Members who are interested in this subject, would have reasonable grounds for pressing the Minister to indicate precisely what his financial parameters are on this matter. The Minister should be able to tell us whether he is prepared to set aside £5 million, £4 million, £1 million or £10 million to extend this to the low paid. It is reasonable that we should press him at this juncture for clarification on this point. I would hope that he will be prepared to give such clarification because it would assist us in deciding on the course of action that ought to be taken further in the debate.

A further point I should like to raise with the Minister is the question of the difference between the estimates of cost given for 1983 and for a full year. As I understand it 1983 is a full year and rent paid right from 1 January 1982 will be allowable against tax in 1983. Is it because it will only be allowed in respect of the nine months of 1983 that are part of the 1983-84 tax year that 1983 is a lesser year in cost terms than a full year, which, presumably, would be 1984? In order to understand the figures that have been given by the Minister it would be useful if we had that data.

Mr. MacSharry

The only way I can respond to that is by saying that it is nine months of the next financial year, from April to December. In next year's financial year it is nine months of the 12.

Mr. J. Bruton

That is the information I was looking for. It is important that the Minister indicate the amount of money he is prepared to set aside for the amendments he may introduce on this subject. It is not sufficient for us to accept the assurance, welcome and all that it is, that the Minister will consider this matter seriously between now and Report Stage without some indication, broadly speaking, as to what financial parameters he is talking about.

Mr. MacSharry

Has the Deputy made up his mind?

Mr. J. Bruton

It would be of interest to the House to know in this context whether the Minister proposes to raise the money by some other way or whether he simply proposes to borrow the money necessary for the concession he has indicated to Deputy Gregory he is prepared to consider. I do not think it is sufficient to continue on the basis of an assurance that was reluctantly dragged from the Minister after a long debate. It is worth recollecting to Members who might criticise us for the length of time we spent on this section that it was only at the end of a five-hour debate that any assurance at all about the matter being considered on Report Stage was extracted from the Minister. If the Minister had given assurances of that sort at the outset of the debate the debate might have been a good deal less lengthy than it was.

Mr. MacSharry

That is untrue. That is not the way the debate developed and the Deputy knows that.

Mr. J. Bruton

I was here all day and I know I am accurately reflecting what occurred.

Mr. MacSharry

The Deputy is not.

Mr. J. Bruton

I am sorry that the Minister who has been extremely serene up to now is losing that serenity.

Mr. MacSharry

I am not. I am keeping the record straight as I always wish to do.

Progress reported; Committee to sit again.