Amendment No. 1 is in the names of Deputy Mac Giolla and Deputy De Rossa.
Finance Bill, 1983: Committee Stage.
SECTION 1.
On a point of order, I was notified a short time ago that amendments Nos. 7 and 58 had been ruled out of order.
The Deputy was given the reason. I presume he will accept the ruling of the Chair.
I am not challenging that. I am giving notice that I have put down in the Bills Office a further amendment to that section which will be circulated and I am asking for permission to move that amendment.
I have noted the Deputy's remarks. In the absence of Deputy Mac Giolla and Deputy De Rossa amendments Nos. 1, 2, 3, 4 and 5 have not been moved. Therefore, they fall.
Question: "That section 1 stand part of the Bill" put and agreed to.
SECTION 2.
Amendment No. 6 is in the names of Deputy Bell, Deputy Mac Giolla and Deputy De Rossa. Is Deputy Bell moving amendment No. 6?
There seems to be some confusion. I am trying to figure out on the Order Paper what amendment has been ruled out of order. I have just been informed by the office of the Ceann Comhairle——
We are dealing now with amendment No. 6 and I am calling on the Deputy to move that amendment, which is in his name and that of Deputy Mac Giolla and Deputy De Rossa.
I move amendment No. 6:
In page 7, before section 2, to insert the following new section:—
2.—(1) Section 2 of the Finance Act, 1982 is hereby amended as respects the year 1983-84 and subsequent years of assessment, by the substitution of the following Table for the Table to the said section:
TABLE
|
Statutory provision |
Amount to be deducted from total income for 1982-83 |
Amount to be deducted from total income for 1983-84 and subsequent years |
|
(1) |
(2) |
(3) |
|
£ |
£ |
|
|
Income Tax Act, 1967: |
||
|
section 138 |
||
|
(married man) |
||
|
(man married in the year of assessment) |
2,900 |
3,300 |
|
(widowed person) |
1,950 |
2,250 |
|
(widowed bereaved in the year of assessment) |
2,900 |
3,300 |
|
(single person) |
1,450 |
1,650 |
|
section 138A |
||
|
(additional allowance for widows and others in respect of children) |
||
|
(widowed person) |
950 |
950 |
|
(others) |
1,450 |
1,650 |
|
section 138B |
||
|
(employee allowance) |
600 |
800 |
|
section 139 |
||
|
(housekeeper taking care of children) |
Nil |
Nil |
|
section 140 |
||
|
(relative taking care of unmarried person's brother or sister) |
Nil |
Nil |
|
section 141 |
||
|
(child) |
100 |
100 |
|
(incapacitated child) |
500 |
500 |
|
section 142 |
||
|
(dependent relative) |
110 |
110 |
|
Finance Act, 1969: |
||
|
section 3 |
||
|
(housekeeper taking care of incapacitated person) |
700 |
700 |
|
Finance Act, 1971 |
||
|
section 11 |
||
|
(blind person) |
500 |
500 |
|
(both spouses blind) |
1,200 |
1,200 |
|
Finance Act, 1974: |
||
|
section 8 |
||
|
(age allowance, single or widowed person) |
100 |
300 |
|
(age allowance, married man) |
200 |
600 |
(2) The First Schedule to the Finance Act, 1982 is hereby amended as follows:—
in paragraph 1 (a) (i) to delete "£2,900" and substitute "£3,300",
in paragraph 1 (a) (ii) to delete "£1,950" and substitute "£2,250",
in paragraph 1 (a) (ii) to delete "£2,900" and substitute "£3,300",
in paragraph 1 (a) (iii) to delete "£1,450" and substitute "£1,650",
after paragraph 1 (b) by the insertion of—
"(bb) in section 138B, subsection (1), by the substitution of `£800' for `£600' in each place where it occurs,".
in paragraph 4 to delete "£200" and substitute "£600".
in paragraph 4 to delete "£100" and substitute "£300".
We have some sympathy with the amendment moved by Deputy Bell and I see now that the names of Deputy Mac Giolla and Deputy De Rossa have been added to it. This amendment deals with personal allowances for income tax purposes. While we consider it would be desirable if personal allowances could be improved and increased, we consider that in this year a better way of doing it is to increase the 35 per cent band, the standard rate, as we have done in our amendment. While we have some sympathy with the amendment put forward by Deputy Bell, we will not support it; but we consider, as an alternative, that Deputy Bell should support our amendment because it is a better way of dealing with the matter.
The purpose of this amendment is to raise for this and subsequent years certain personal tax allowances by a considerable amount. The total cost of the package of changes proposed in this amendment would be £112 million in 1983 and £173 million in a full year. While many of us would have a deal of sympathy with the proposal, I must point out to the House at this early stage that the Bill is based on the taxation provisions of the budget and since it has to give effect to those taxation provisions, there is not the leeway to depart in such a major way from the budgetary arithmetic as set out on 9 February. For this reason I cannot accept the amendment.
Is the amendment being pressed?
As I said, I was issued with this document only a short time ago and since then I have been running from one section of the House to another in an effort to find out what has happened. I got about 15 or 20 minutes' notice. The package proposed contains a number of Financial Resolutions that were interlinked. Amendment No. 58 was intended to introduce a wealth tax which would help to counterbalance——
Perhaps we could help Deputy Bell, who is a new Member. We should explain to him that from his own point of view he should press amendment No. 6 because that is his attempt to increase the personal tax allowances this year. That is all we are concerned with in amendment No. 6.
I thank the Deputy but I was trying to get the procedure correct in my mind. The amendment is quite straightforward and clearcut, as the Deputy has said. I am trying to establish at this stage whether I have the right now to move an amendment to the following resolution. Have I the right to move an amendment to the wealth tax amendment which was ruled out of order? The answers to those questions will dictate what I have to say.
The Deputy's amendment regarding wealth tax was ruled out of order by the Ceann Comhairle. We are trying to conclude the debate on amendment No. 6.
On a point of order, I gather this matter may have been mentioned by other speakers but I regard it as important. I was one of the Deputies unable to gain admission to the House through the Kildare Street gate. I have been a Member of this House for 14 years and it is the first occasion on which I have been advised by a member of the Garda Síochána that I would have great difficulty in entering the House by way of Kildare Street. I hope it will not happen again. There should be some type of emergency——
I will draw the attention of the Ceann Comhairle and ensure that it will not happen again.
I understand that Deputy Brady raised the matter as well, regarding entry to the House.
I am bringing it to the attention of the Ceann Comhairle.
We are a democracy and the entrance to this House is of paramount importance to the people. The pressure groups are important also.
I appreciate the Deputy's concern but it is not relevant to amendment No. 6.
Like everybody else, I appreciate the rights of people who want to make a protest but this is a democracy and entrance to this House is of paramount importance. It is important that the business of this House should proceed and the Deputies entering it should be allowed to do so.
I have already told the Deputy that I will bring the matter to the attention of the Ceann Comhairle. Is Deputy Bell pressing amendment No. 6?
Yes.
Question proposed: "That the new section be therein inserted."
Votáil.
, Dún Laoghaire): There is a very serious problem. It took one Deputy 25 minutes to gain access to the House. People are stopping Deputies coming in. We also have a problem with some Ministers in their Departments. The bells are ringing and they may not be able to gain access. I would like to know if there is a law which forces people to stay a certain distance from this House which is not being looked into.
Who has responsibility for enforcing the law? I am also concerned about this matter.
(Dún Laoghaire): I am glad the Deputy accepts my concern about the matter. It is of serious concern that people cannot gain access to the House.
I hope the impression is not being created that I am somehow responsible for people having to gain access to the House. When I am in Setanta House I also have to get over here.
In view of the concern of everybody I suggest that we adjourn for ten or 15 minutes to try to clarify if people can gain access to the House. We will postpone the vote. If people cannot gain access to the House there is no point in having the vote.
I do not think that you can do that. You have called a division and the division must now go ahead.
(Dún Laoghaire): I will have to deal with your ruling. Surely people are entitled to gain access to the House.
Perhaps you should send for the Ceann Comhairle.
The Ceann Comhairle is coming.
The question before the House is "That the new section be therein inserted". Will Deputies claiming a division please rise in their places?
Deputies Bell, De Rossa, Mac Giolla and Gregory-Independent rose.
As fewer than ten Deputies have risen in their places to claim a division I declare the amendment defeated. The names of those Deputies who have risen will be reported in the proceedings. Amendment No. 7 has been ruled out of order. Amendment No. 8 is in the name of Deputy O'Kennedy. There may be many divisions during the next few days and I ask Deputies please to leave the House quietly immediately after divisions so that business may be proceeded with in an orderly way.
I move amendment No. 8:
In page 8, to delete the Table, and substitute the following:
TABLE
PART I
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £1,000 |
25 per cent |
the reduced rate |
|
The next £4,000 |
35 per cent |
the standard rate |
|
The next £2,000 |
45 per cent |
|
|
The next £2,000 |
55 per cent |
the higher rates |
|
The remainder |
60 per cent |
PART II
|
Part of taxable income |
Rate of tax |
Description of rate |
|
(1) |
(2) |
(3) |
|
The first £2,000 |
25 per cent |
the reduced rate |
|
The next £8,000 |
35 per cent |
the standard rate |
|
The next £4,000 |
45 per cent |
|
|
The next £4,000 |
55 per cent |
the higher rates |
|
The remainder |
60 per cent |
I will first give some background to why Fianna Fáil decided to limit ourselves to this proposal to broaden the tax bands, particularly those between 35 per cent and 45 per cent. We deliberately refrained from putting down a motion to raise the exemption limits, the subject of motions already on the Order Paper. We deliberately refrained from requesting increases in the tax allowances which, as the Minister pointed out, would have involved considerable expenditure for Revenue. For the same reason we refrained from putting down a motion, which we were tempted to do, to index the tax bands at every point, in line with Fine Gael policy some years ago.
We refrained from doing all those things because we are conscious, as we said yesterday, of the need to take account of the revenue situation. Though we refrained from those things, we felt it appropriate and essential to put down an amendment to adjust the tax band range, to increase the tax band range in the 35 per cent to the 45 per cent range from £3,000 to £4,000 in Part I and accordingly from £6,000 to £8,000 in Part II of the Table.
Before we come to arguing precise details I will give some of the background to this. Before the Minister comes in I should like to point to circumstances outside this House which presented some problems for Members today. We totally disagree with what happened out there but it must be said that in the past few months, particularly since the Minister made a statement in the House which did not disclose the full facts in relation to the PAYE dilemma, it has been conveyed to people outside that there is a huge amount of unpaid tax and that the PAYE sector are bearing the entire burden. We have seen reactions, protests, divisions in our society, the very last thing we want at this time. We have seen heat generated, like we saw outside the gates here today, which prevented people from coming in here to discharge their democratic responsibilities.
It might help if I mention in that context that the level of income tax as a proportion of total tax revenue in the last two years has increased by a huge proportion. In 1981 the level of income tax was 31.3 per cent and, two years later, the estimate for this year is a huge increase in tax revenue of 39.45 per cent. Income tax as a proportion of total tax revenue has risen by that huge percentage. While income tax has risen as a proportion of total tax, total tax revenue this year will have risen from £3,135 million in 1981 to £4,730 million this year. We are seeing a very much bigger percentage of a very much bigger tax revenue being claimed by Revenue.
This is obviously having a very serious effect not just on those who have to face and to pay that burden but on the whole economic climate. Clearly, the work incentive is being undermined in this area. I am confining myself here to those who are fortunate to be in employment. The level of taxation they see facing them has gone too far. This tax burden is so great that it has caused comment by objective outside observers. The EEC, commenting on our general strategy and supporting the idea of reducing our deficit, make the point very clearly that we are going in the wrong direction because the level of increase in taxation is such as to slow down the growth of our economy and deflate the economy at a time when we need to maintain a level of activity. Other provisions, such as the 1 per cent levy and not adjusting the tax bands, are calculated to increase greatly the burden of income tax on the PAYE sector. That is having a very damaging effect not just on PAYE taxpayers but on the economy generally. This is very worrying. Our taxes on income as a percentage of the total must be nearly the highest in Europe, next to Denmark and the United Kingdom. We are very far ahead of the Federal Republic of Germany, France, Italy and the Netherlands. A Dutch banker came here recently and told us clearly that he thought our level of taxation was too high.
What do we want to achieve in this Bill? Is it purely a means of collecting extra revenue? Is it seen as being appropriate to maintaining the work ethos, or is that being cast aside? We are very concerned about the fact that under the existing provisions a person pays 25 per cent on the first £1,000, 35 per cent on the next £3,000 and then one jumps into the 45 per cent band. These figures apply to a single person and they are doubled for a married person. After £12,800 — exemptions of £4,800 plus £2,000 plus £6,000 — a married person comes into the higher tax band of 45 per cent. Many people who reacted to this measure are in industrial employment. Some of them have taken unprecedented steps recently because they are in the 45 per cent tax band. Company executives say this Bill will have two effects: first, it will kill the work ethos and second, it will encourage people to stay away from work, particularly at the end of the year so that they can get tax rebates. Anyone who is not aware of that is living in cloud cuckooland. I am not accusing the workforce of bad work practice, far from it. The opposite is true. If there is already a tendency for people to stay away from work, when they go into this higher tax band they may ask themselves why they should go to work. Under the existing tax bands this has been happening but what will happen when the new rates are introduced, especially if under the new wage agreements there is a small increase of 10 per cent when many more people will be in the 45 per cent band?
We have given this a lot of thought and I would like the Minister to give me a cost on this. When I was Minister for Finance Fine Gael asked Fianna Fáil to index the tax bands in line with inflation. That was part of their election programme. They argued in this House at great length for this indexation and accused us of not being concerned, but we have refrained from going as far as that. Deputy Bell was adjusting in line with Fine Gael policy, but we are not going that far.
Another point I would like to cover is the 65 per cent tax band. We take the view that we need to encourage initiative and incentive and, where possible, a moderate degree of wealth which can only redound to the advantage of the community generally. As a consequence of the climate in which we are discussing this legislation the direction of the Bill seems to be to move stronger, harder and more determinedly above a certain line. I wonder how many of the Minister's colleagues believe we need a 65 per cent tax rate at this time.
I heard the Minister say — and I support him — that the better road is to control public expenditure, but we will criticise him if later in the year he says he will need more money for public expenditure. If he exceeds the amount provided for public expenditure, revenue must be increased accordingly. It is getting to the point where tax revenue is becoming an end in itself. That must not happen. As Edmund Burke said a few hundred years ago, any fool can devise new impositions of taxes. In measuring these impositions we have to ensure that we keep within a range that is reasonable.
Revenue for the first quarter of this year was lower in some areas, such as excise duty, than was estimated by the Minister.
In two areas, the estimates are running ahead, one of which is VAT with which I shall deal later. The other area is income tax where already we have reached almost 25 per cent — 24.2 per cent to be precise — of the total estimate in the first quarter, not taking into account the impact at this stage of this Bill of the 1 per cent levy and the effects of the restrictive impositions of maintaining the present tax bands. I await convincing by the Minister and events may convince me even more later on in the year, but that suggests that while there is a consumer resistance on indirect taxes in matters of this sort, the impact of the Minister's budget proposals now being introduced is such as to increase the estimates which the Minister provided at the beginning of the year. In my considered opinion at this stage he has overrun what he estimated he would get at the end of the year from income tax. If that is the case, there is room for adjustment in that part of the band to which I referred, where people jump into the 45 per cent band after the first £4,000 of their taxable income. Having regard to the need to maintain productivity, work ethos, work incentive and so on, we can very reasonably and cogently argue that our proposal is deliberately a very moderate proposal, one calculated to lift the burden from where it hits hardest and, above all else, encourage what is vitally needed at present in our economy — the incentive to work.
Deputy Bell has submitted a revised amendment No. 7. With the permission of the House, I shall allow him to speak on that if he so wishes. This is an alternative amendment.
Amendment No. 7 has been dealt with.
That amendment has been ruled out of order.
It was ruled out of order in its original form, but Deputy Bell has submitted a revised amendment.
Deputy Bell should put down his revised amendment on Report Stage.
I shall move the amendment on Report Stage.
The Minister to reply on amendment No. 8.
Amendment No. 8, which we are discussing now, proposes to increase the present and proposed 35 per cent band from £6,000 to £8,000 for a married man and from £3,000 to £4,000 for a single and widowed person and to do away with the proposed new 65 per cent rate. The Deputy raised the question of the cost of this amendment. This would be £49 million in 1983 and £76 million in a full year. The new 65 per cent band — that is the contraction of the 60 per cent band and the introduction of a new 65 per cent rate — would in this year raise an extra £7 million and £11 million for a full year. That puts the figures in perspective. We would then be talking about a total cost for both measures of £56 million in 1983 and £87 million in a full year. These are substantial figures. Were we at this point to modify the tax structure in order to carry these out, we would have to make adjustments elsewhere in order to accommodate those figures within the budgetary targets which we have fixed.
Just for clarification, are these figures net or gross?
These are gross figures, to begin with. We would then have to accommodate the adjustment for those figures within the overall budgetary targets. To do that we would have to raise a corresponding amount of taxation elsewhere or reduce expenditure by a corresponding amount, or have some combination of both of these.
From Deputy O'Kennedy's remarks in general on taxation, I doubt if he would make the case that we could raise a corresponding amount of taxation elsewhere. Certainly, the general tenor of his remarks was that the tax burden is already heavy enough as it is. What he had to say about inventing new impositions did not appear to indicate that he considered there was a great deal of room elsewhere for new impositions. Were we to make the changes proposed, there would be a very substantial gap of £56 million in 1983 to be covered in one way or another and within the budgetary framework of this year it would not be possible to do that. We do not have the third option of increasing borrowing on that scale. In any case, it would not be desirable, given the overall picture of total Exchequer borrowing requirements for this year. I would not intend, by means of the measures suggested by the Deputy, to add further to our borrowing requirements which, in turn, would add further to our requirement for revenue for future years. That is the problem with which we are grappling at the moment, one which has built up over a number of years. This is not a valid answer to the problem. I am not quite sure what the Deputy meant when he referred to all the things which he and his colleagues refrained from doing in past years.
To clarify, I thought I had made it clear that the amendments being put down by others in the House asked for a lot more in increasing exemptions and much greater allowances in the tax bands than we had asked for. Those were the things we had refrained from doing.
To that extent, the Deputy is less far out of court than some of the other amendments would have been but, nevertheless, he is out of court in terms of the overall budgetary constraints with which we have to live this year. What the Deputy said about overall levels of taxation and the development of these is a matter of fact, as is the total of tax revenue proportion of national income taken up by taxes. These things must be dealt with year by year and on a medium-term basis, in the way which appears most appropriate.
The Deputy's proposals do not fit in with what is possible within the budgetary confines of this year. He referred to the perception of levels of taxation. I would remind him that the report of the Comptroller and Auditor General setting out the situation with regard to taxation in each given year was published on this occasion in exactly the same format as in previous years, with the same notes and the same qualifications. I leave it to the Deputy to draw conclusions from that. As I have said here before, I do not dispute that we could probably present it in a more concise and more immediately meaningful way but I reject utterly any suggestion that the presentation of the figures so far as I was concerned was anything other than clear or anything other than accompanied by the proper qualifications.
Is the Minister talking about the PAYE figures?
I make the point that we have published those figures in exactly the same format as they were published in previous years and with the same qualifications.
That is not so.
The Deputy says he supports moves to reduce expenditure. Perhaps that is not a discussion that is particularly appropriate to the business in hand here but it is something that I will hold the Deputy to when that discussion takes place. I hope that on that occasion he will take the same view as he takes now and that his party seemed to take in October and November last.
Regarding the 65 per cent rate, Deputy O'Kennedy says that I am hitting hard at those above a certain level and he included the self-employed in that reflection. That is not in any way part of my intention. The question of how equitable and efficient our tax system is in its operation is a separate one. At this point I am outlining the constraints we have this year. We have had to go for a particular balance between modifications on the expenditure side as well as on the taxation side. Those modifications were set out clearly in the budget and passed by this House. They are the measures that this Bill is designed to implement. Without going into a long discussion on budgetary strategy, all I would say is that the amendment proposed does not fit into the framework of the budget as agreed by the House. Deputy O'Kennedy seems to have the impression that on the basis of the evidence contained in the returns for the first quarter this year, the revenue——
Is the Minister referring to income tax revenue? I referred to both.
Deputy O'Kennedy did refer also to VAT.
I got the impression that he said we would have a bigger revenue. I thought he referred to total taxation but now he is saying that he was referring to income tax.
I said specifically both income tax and VAT.
I do not know the basis of the Deputy's assumptions in making these forecasts but unless he has some new evidence of which I am not aware I do not think there is enough evidence to warrant him drawing that conclusion.
My first question relates to the total number of taxpayers. The second relates to the number of people in the PAYE category and the third is the number paying tax in the various categories and within the different bands. The second point arises from the Minister's reply to Deputy O'Kennedy regarding the inability to accept the new table as proposed in our amendment because to do so would bring the cost to £56 million, that is, the £49 million plus £7 million. However, only a few weeks ago the Minister said this was not possible because he could not find the extra money within the existing system and that he could not borrow the extra money. Deputy O'Kennedy has made the point regarding the additional revenue from income tax and VAT. Taking into account the further imposition on the PAYE sector and also the 1 per cent levy, the least the Minister should do in the light of the situation that has developed since the budget is to accept the amendment. I am sure the figures I have asked for will reveal that a huge percentage of those in the PAYE sector are on the higher tax rates. This will affect many people, both married and single, whose incomes are reasonably low. Therefore, the Minister should give this amendment much more serious consideration than he has indicated he will give to it.
Taking into account the points made about not being in a position to adjust the budgetary figures by the amount that would be involved, it is obvious that the Minister is overlooking an action taken by him a short time ago when, with one stroke of the pen, he added hundreds of millions of pounds to our foreign debt by accepting, indeed promoting, the devaluation of our currency within the EMS. Did the Minister give as much consideration then to the impact of the level of borrowing or to the impact of these budgetary figures or is he not too concerned about a decision of that kind? He is not prepared to give any consideration to the hard-pressed PAYE sector, a sector that this amendment would go only some way towards helping?
On the information available to me at the moment, the total number of taxpayers in the PAYE system is approximately 904,000. This includes people who benefit from marginal relief and some whose income tax is collected via the PAYE system but who are not strictly speaking within the PAYE sector. Excluding the marginal relief, the total number of people paying is 870,000. This means that between 34,000 and 35,000 are benefiting from marginal relief.
The figures in respect of the various bands are as follows: 25 per cent, 71,000; 35 per cent, 435,000; 45 per cent, 194,000; 55 per cent, 88,000; 60 per cent, 40,000 and in the new 65 per cent band, it is estimated that 41,000 will be included in the year 1983-84. In each case, the band given is the top band that the people concerned will reach.
Regarding the second part of the Deputy's question, I must make the point again that the realignment within the EMS will give rise to certain extra costs in debt servicing and that it gives rise to an increase in the total of our outstanding debt to the extent that it is denominated in foreign currency.
What is the cost of the budget deficit this year?
We have had a long discussion on that.
And the Minister has given different figures from time to time.
The day I made the statement about that measure I made the point — I will repeat it now — that it is not the intention of the Government that any consequential changes resulting from that devaluation will be allowed to affect the overall budgetary balance which we have targetted for this year. We will take whatever measures appear necessary in order to stay within the limitations I set out in the budget.
The devaluation impact is not felt only on the level of our foreign interest payments, nor is it felt only in terms of the outstanding level of foreign borrowing. It is felt in particular in the competitive capacity of Irish exports. I am sure that Deputies on the other side of the House have heard, as I have, a number of firms who have made the point that they have now found their situation considerably eased as a result of the measures taken during that realignment. We have all heard of the woes of firms that were in serious difficulty because of the previous position of our punt as against sterling. Now they have had a very substantial easing of that position and their competitive capacity has been increased. It is their competitive capacity which in the end allows them to employ people to come into the PAYE net and pay their PAYE taxes. That is something to which we must have regard. It was for that reason that we followed the particular course of action we did during that realignment.
I am prepared to accept, as Deputy O'Kennedy has said on a number of occasions, that there are the negative side effects of this realignment but I am surprised that Deputy O'Kennedy so far has not said one single word about the positive side effects of the realignment. He has managed to remain silent on the positive side effects——
That is not being debated today.
——in spite of what has been going on on the industrial front since and in spite of what has happened, for example, on the agricultural front.
The Minister is out of order.
The matter was raised by Deputies on the opposite side.
I did not come here today in order to argue devaluation.
When a Deputy opposite raised these points during the debate surely I am entitled to reply to them. They are relevant to this because the fact of the matter is that that measure was one of a series taken by the Government to improve the position of people at work and those looking for jobs.
On a point of order, the Minister is now ranging over broad economic policy and I want the Chair to confirm that it will be in order for us on this side of the House on each amendment to range over broad economic policy, devaluation, agricultural prices and everything else.
The Chair will endeavour to ensure that the debate is relevant to the amendments as they arise. I should refer the Deputy to the fact that Deputy O'Kennedy referred to the question of devaluation.
He did not; it was I who referred to that matter.
Deputy MacSharry asked the cost.
I am sorry. I thought the Minister was endeavouring to reply to Deputy MacSharry.
If I have ventured too wide on this matter I will be happy to accept the guidance of the Chair but since the question was raised by Deputy MacSharry I thought it proper to reply.
I should like to make the position clear. I am not objecting to the Minister ranging as wide as he wishes, that is not my job. I want to get it clear that the Chair is permitting the Minister on an amendment dealing with bands of taxation to discuss devaluation, agricultural prices, the general economic situation and the general position of employees. As long as we are clear about that I am happy.
It was Deputy MacSharry who raised the question of devaluation and the Minister replied. The Minister should now come back to the terms of the amendment.
I have concluded the remarks I wish to make in reply to Deputy MacSharry.
The only significant matter the Minister relied on in his reply was the question of the borrowing requirement in the budget deficit. We accept that that is of significance. It is the only reason the Minister gave. The Minister deliberately avoided giving any reply to any of the other points raised. His statement was rather cold, was matter of fact but it is not a matter for the Minister for Finance, or the Taoiseach, to make a nice objective, cool comment and leave it at that. The Minister acknowledged that it was a fact that the level of our taxation had increased to an extent but he did not go beyond that. The Minister has confirmed what we already know. His facts speak for themselves. We want to impress on the Minister the impact of those facts and the role he has to correct that impact. It is not enough for the Minister, or the Taoiseach, in such circumstances to acknowledge facts. We want them to go a little further.
In giving the increase in the income tax rate I referred to how that fact is demonstrated. That is very serious at this stage. The Minister relied only on the effect of the budget deficit. He said that if he gives it here he will have to make it up somewhere else and he asked me to provide it somewhere else. My first answer to that is that the Minister is the person with the responsibility. Minutes after I sat down the Minister said that I did not give any basis for my opinion but that is all it can be at this stage, that income tax revenue at the end of the year would be more than he projected for in his budget. I thought I had given the basis but I will repeat it. I said that if already in the first quarter of the year the income tax returns are 24.2 per cent before the impact of the budget measures, the levy and the fact that we have no adjustment — the income levy in particular — that that suggests that the Minister will get more in income tax at the end of the year than he budgeted for at the beginning. I have a feeling that the Minister is aware of that fact because today, and previously, the Minister said that the extra costs he had undertaken recently in relation to devaluation — we will not argue the pros and cons of devaluation today although Deputy MacSharry's point is relevant — will not be allowed to upset his budget arithmetic.
How can the Minister guarantee that? The Minister has extra costs and he has his budget arithmetic and how can he tell us this will not upset his budget arithmetic? It would seem to follow that it would but perhaps the Minister is aware of something that we do not know. Perhaps the Minister is in agreement with the recent report of the ESRI which suggests that the budget deficit is likely to be lower — of the order of £800 million — than the £897 million he budgeted for at the beginning of the year. Perhaps he sees signs, for one reason or another, that that is the case. Perhaps he knows that he can play around here and there having regard to the situation. He has the advice and is aware of the trends from reports by the Revenue Commissioners every month. He has available all the facts while we can only go on terms of indicators generally. I suggest that in the light of the knowledge he has what we are asking is not such as to throw his budget arithmetic out of order and will keep him within the parameters he has set. I do not wish to object to what the Minister has done. He has had some changes of mind since his budget arithmetic was introduced. The one example I will give is sufficient, the relief in respect of hotels. In introducing his budget the Minister had a very orthodox, clear opinion based on the advice of his advisers in relation to VAT on hotels and other matters. He has made adjustments there at some cost to his budget arithmetic. I believe we are talking about something of the order of £20 million.
£2½ million.
There were some other adjustments here and there which we are not objecting to, such as car repairs.
That is self-financing.
If it is self-financing it is a wonder the Minister did not do it at the beginning of the year. If something is self-financing, will give employment and will satisfy an industry as important as this, how in hell's blazes did the Minister not do that?
That is a very ingenuous question.
It is not. That it is self-financing is the Minister's only concern.
It is not.
The other would be employment.
Exactly.
Is the Minister telling me that the impact of what he was doing then would be to increase unemployment——
I will come back to it.
——and that since then he has become so aware? We will leave it for what it is worth. There have been adjustments and the Minister is satisfied that it will not affect his budget arithmetic, including devaluation. Nevertheless, Deputy MacSharry is quite right to ask that question in terms of the budget deficit. The Minister concentrated on that and that must be allowed for also.
The adjustments we are all talking about and the figures he has given us here today are interesting and I want to tease them out more. The adjustment in the middle of the tax band at 45 per cent will, he tells us, be £49 million this year and the new top rate of tax at 65 per cent will be £7 million, a total of £56 million which I understood from the Minister was the gross cost. If that is gross, unless things have changed a little since the Department of Finance advised me, you can reduce that gross considerably because when making a concession of this sort you get a buoyancy through your indirect taxation, it feeds into the general system and you can allow for reductions of, let us say, 25 per cent on the gross figure, maybe more.
You could allow 30 per cent.
It is closer to that, but let us be conservative. If I go on 25 per cent only we are talking of cost this year on our figure of——
Thirty-two million.
Thirty-two million to £42 million. A Cheann Comhairle, when I sat over there and you sat over here I think you were engaged in a debate as were the Minister's predecessors also. We must not be personal to the Ceann Comhairle. The record shows that on this very stage of the Finance Bill the cost of what I was being asked to do then even in money terms — remember that small money was bigger in those days than it is now — was much more — well over £60 million and as far as I recall it was £65 million — than we are asking for here two years later when the value of money has decreased considerably.
What was the Deputy's target at the time?
It would be more expeditious if this Deputy on his feet would conclude his remarks and then another Deputy would rise.
The Minister ignored completely the taxes on income and wealth here as a percentage of total by comparison with other countries, but it is very relevant. I am going back some years because we have not the latest figures, but I think that as a consequence of indirect taxes and the level of indirect tax increases here now, we are towards the top of the league in Europe, with the possible exception of Denmark and the UK, and the Minister must bear that in mind. He makes no comment on that, although I am not saying that he will not comment afterwards. If the only answer is the budget deficit — an important one — we accept that. We want to suggest to the Minister that because of the importance of our proposal for the reasons I have already given when I introduced it the Minister will have leeway. It would not upset his budget arithmetic and some of the adjustments, as he himself claims, will not upset his budget arithmetic, and trends, particularly the quarterly trend for the first quarter indicates that that is the case. If that is so then in terms of the interest of both the revenue and economic activity and the interest of what is regarded as a major issue now, equity in taxation and lifting the burden of direct taxation, our proposal here is framed for exactly that purpose. It is a carefully calculated proposal to which we gave much thought, consideration and discussion and it does not measure up to some of the things that I, Deputy Mac Sharry or others have been asked to do in our time by the Opposition parties. It asks for very much less for very good reasons. The Minister should decide that he will have a look at it and come back with some suggestion on Report Stage.
He has not answered the comment that it is at the middle of the tax bands that a major problem occurs, as is the case. As I heard frequently when I was in the Department, people in the business world, the industrial world and fairly highly paid skilled workers will tell you that it has a very bad effect on productivity. I cannot produce day, date and case to prove it nor would it be appropriate that I should. We move into a new rate of tax at 65 per cent when more than anything else — one is almost in despair — we need to encourage incentive, get up and do, get up and succeed and if necessary be wealthy; it is not a sin provided you recognise your role in society. At that very time we introduce a tax which is to bring in £7 million this year. This is an extra tax band. The Minister should reflect seriously on this. His disposition may be in that direction but I recognise that he has responsibility, that he is told to keep his books right. I press him to reconsider on Report Stage this very reasonable proposal on our part which is not of such dimensions as to upset his arithmetic. It will have a very major impact on the problems that have been expressed outside this place and elsewhere and it will be an encouragement to people. Work is the answer to our problems.
I will not delay the House. I want to make a few points on section 2 of the Bill and the Fianna Fáil amendment in particular. It is absolutely lunatic policy to attempt to introduce a 65 per cent rate now and we on this side of the House are vehemently opposed to it. When you examine it closely you will agree that it is a lunatic policy. It is exactly wrong for the economy at this time. Somehow the Minister has managed to get it wrong at both ends of the scale, at the top by killing whatever small incentive is left in the economy by upping the rate from 60 per cent to 65 per cent, and towards the bottom of the scale at the 35 per cent rate where he has refused to widen the band so as to allow people some take-home pay.
Effectively the Fianna Fáil amendment, if accepted, would bring the bands back to where they were in the tax year 1981-1982, the year before last. If you look at the suggested 65 per cent and the 2 per cent levies which are now on gross income you have a top rate of some 67 per cent. The corresponding figure in the UK is 60 per cent. I have not the US figure but it is certainly lower than ours. Therefore, some of our big competitors are put at another advantage by having a greater attraction for management skills and expertise. This 65 per cent tax rate will add further to the number of skills, particularly at management level, the number of people with good management skills, leaving this country in vast numbers. I say that having talked to many executives in Irish companies and throughout the Irish economy. They are absolutely browned off with the crippling draconian level of taxation. They will throw their hands in the air and say: "This 65 per cent is the final straw, the final attack." The Minister should think about one of our greatest assets — our management skills and expertise.
The higher rate of taxation — the phrase used — now starts at 45 per cent. One would swear that the higher rate of taxation was to be applied to millionaires, but a single person with no mortgage and earning £5,450 a year will hit that rate with a personal allowance of £1,450, the first £1,000 and the next £3,000. He is into what the Minister now calls the higher rate of taxation. Why should anybody work when we have penal and draconian taxes like that?
The Fianna Fáil amendment is an effort to slow down entry into the 45 per cent band, and should be accepted. It is sensible and reasonable. In some ways it is only a gresture, but it is a very important gesture to the people now in that tax band, 435,000 people. Nearly half a million taxpayers would be keenly interested in seeing the Minister accept the Fianna Fáil amendment. Our amendment recognises the difficult Exchequer situation to which the Minister referred.
The figure is 363,000 to be exact.
Diminishing returns are just about to set in, if they have not set in already at this level of taxation. We ask the Minister to pause and consider that his failure to widen the 35 per cent band and his introduction of this draconian 65 per cent are the two wrong policies for the Irish economy. Our amendment is pretty sensible.
In reply to Deputy O'Kennedy the Minister said he could not give in on this because of budgetary measures, and so on — the usual answer. His refusal to accept our amendment will do two things. By hanging onto this higher rate of tax he will reinforce the view now sweeping the country dangerously that we are anti-incentive, anti-investment and anti-enterprise, and that the energy and the initiative to work have left us. There is also a feeling in the Government that the introduction out of the blue of a 65 per cent tax rate is giving in to the left, as it were, and giving in to those policies without having any regard to the need of the Irish economy. The Minister should ponder on that.
I ask him to accept the reasonable and sensible Fianna Fáil amendment. It is a gesture towards common sense to leave the 60 per cent alone and widen the 35 per cent band. If the Minister does that, he will encourage the Irish people to work. He will encourage incentive and initiative and prevent the brain drain which is starting up again. This is lunatic policy. Ireland is quickly getting the reputation of being a country in which anybody would be crazy to invest. By refusing to accept our amendment the Minister is adding to that widely held view and damaging our economy gravely.
The Minister gave us a breakdown of the total taxpayers amounting in all to 870,000 if you leave out the marginal relief people. Could he give us a breakdown of the 870,000, or 904,000 if he wants to stay with that number, in the various categories as suggested in the Fianna Fáil amendment in the name of Deputy O'Kennedy?
I want to add my voice to the voices of my colleagues in support of this amendment. I will be very brief because we are all under great time constraints in dealing with this very important finance measure. I want the Minister to answer a query put by Deputy O'Kennedy. If we are dealing here with a cost of £49 million plus £7 million — £56 million less the usual 30 per cent, as Deputy MacSharry called it — that would bring us down to about £38 million. Is that in fact what the Minister says is the cost of our amendment?
I want to put it to the Minister as strongly as I can that he should accept this amendment. The 35 per cent bracket is of very great significance for a very large number of very hard pressed employees. The amendment is a very small movement. As somebody said, it is more a gesture than anything else. It is an attempt by us to be totally responsible. We could have framed this amendment and this table in a completely different way. We could have looked for the moon. We might have made ourselves very popular with the taxpayers by asking for all sorts of outrageous concessions. We have not done that. We have made a very restricted and limited plea on behalf of possibly the hardest pressed section of the PAYE sector.
I strongly urge the Minister to consider the amendment favourably. It would have an enormous effect in taking the heat out of the present situation and in damping down this very dangerous feeling of frustration, irritation and envy which is building up. I want to blame the Minister and some of his colleagues very largely for the feeling which is rampant today among employees. In an endeavour to protect their own political hides the Minister and his colleagues contributed to this feeling of envy. They tried to persuade decent working class people that there was a great big pot of gold there and, if only the Government would do something about it, that would make their lot a great deal easier. That accusation can be levelled very fairly against the Government.
I said exactly the contrary.
Two months later the Minister said to the contrary.
The Government contributed to that feeling. Much of the anger and frustration now making themselves evident in the PAYE sector arise from the deliberate policy of the Government in trying to create that feeling among basically very decent people who do not want to be on the streets, who do not want to be protesting, and who do not want confrontation. The Government helped to engender the anger we are witnessing today. The Minister should accept this amendment. It is very limited in scope and it would help the hardest hit section of the community.
I want to reinforce what Deputy O'Kennedy said. The Minister can accommodate this in his budgetary resolutions. He has already given clear evidence with his very welcome concessions to the hotel industry and the motor trade that there is some flexibility there. Admittedly the two concessions he made in those areas were very limited and of very small dimensions, but they indicate to us that the Minister has a little room for manoeuvre, has scope for flexibility. I appeal to him to use that scope to accommodate this proposal of ours.
I am aware of the ESRI report to which Deputy O'Kennedy referred. That would seem to indicate that the Minister has £100 million at his disposal to accommodate concessions of this sort. The Minister pitched his current budget deficit at £900 million and, according to the ESRI report, it will work out at £800 million. Without either increasing taxation or increasing the budget deficit planned, he could accommodate not just this proposal of ours but a number of others as well.
That is the reason for my brief contribution. I want the Minister to look on this not just as an Opposition amendment which has to be rejected out of hand; it is more than that. It is not an attempt by us to embarrass the Government or to put the gun to their heads. It is an attempt by us to put forward a moderate, reasonable proposal in an effort to mitigate the effects of taxation on this section of the tax-paying public. I would ask the Minister to consider it very much on its merits from the point of view of fairness, justice and equity. Secondly, he might consider, from the point of view of his overall budget arithmetic, whether or not he has not really got scope in which to accommodate a concession of this size.
I support the Fianna Fáil amendment. It does not go quite as far as ours but something on those lines must be inserted into this Bill if it is to have any acceptance among the public. Our proposal would mean that those people earning under £6,000 would still remain within the 35 per cent tax band. The Minister's proposal is that once one reached £4,000 one moved into the 45 per cent tax band. It must be remembered that that amounts to £80 a week, out of which probably there must be met payments into a pension fund, probably union dues, perhaps repayment of a loan to a credit union and so on. That proposal is unbelievably bad. I would appeal to the Minister to revise that provision. Under the Fianna Fáil amendment one could earn up to £5,000 before moving into the 45 per cent tax band. At least that would constitute a fair improvement on the present situation. Certainly, I add my voice to the appeal to the Minister to accept that proposal at least.
We have no objection to the 65 per cent band. However, we would not agree to its implementation where the Minister suggests: that once one earns £10,000 one is subjected to the 65 per cent tax band. Under our proposal one would be earning over £12,000 before entering the 65 per cent tax band. The Fianna Fáil amendment would keep the rate down to 55 per cent under £9,000.
I do not think that this Fianna Fáil amendment — or even if ours were accepted — will reduce the level of protest because that has accumulated over a number of years and has become firmly entrenched among PAYE workers. As has been said here time and again, it is not so much the amount they pay but the small amount everybody else seems to pay and the fact that other people seem to get away without paying is the contention.
When the small pay increases allowable by the Government are implemented it will be found that for every pound a person receives almost 50 per cent will be absorbed by this tax proposal under which one enters the 55 per cent tax band once one earns over £6,000. In other words, one will receive only 45p out of every pound of any wage increase. It will be found that when a worker receives a wage increase of, say, 5 per cent, 6 per cent or 7 per cent, having had a long struggle, and rather than receiving £5, £6 or £7 on every £100 he or she will receive only £2, £3 or £4, there will be an unbelievable reaction. The Minister should take that into consideration. The reaction to this will increase throughout the year, not just when this Bill is passed. As every pound increase in wages is received — whatever workers receive — it will be much too low to cover the current inflation rate and 50 per cent will be taken from them under this taxation proposal.
I would appeal to the Minister to look at the lower rate again and allow the 35 per cent tax band to apply at least up to earnings of £5,000, as is the case in Deputy O'Kennedy's proposal. It is a minimal amendment of the Bill the Minister might accept and I appeal to him to do so.
Was I correct in hearing the Minister say that the proposed upper tax band of 65 per cent would yield £7 million next year? Is that the figure he gave?
I said it would raise £7 million in 1983.
With respect, I feel the Minister is out of touch with the reality of the situation prevailing in the business community at present. I say that realising the grave difficulty the Minister faces in his portfolio. But business at present is literally under siege. In regard to any incentive to employ more people, this penal taxation proposed to be introduced will be the last straw. Rather than pandering politics of some kind, the Minister has a firm duty to the business community, to those struggling hard to keep businesses going, who appear to act as tax gatherers for the Minister's Department, in contrast to the PAYE people who are paying directly. But there are tax gatherers in the form of employers who already have an enormous amount of paper work to do.
The Minister estimated that 41,000 people would be paying this upper limit. Again, with respect — and I am sure it is merely an estimate of some kind — I do not feel for one moment that that yield will be forthcoming at all. On the contrary, people will turn away from this form of taxation, will not expand their businesses or be encouraged to enlarge their scope in various areas they might otherwise do. I am not optimistic on this one. As the debate continues the Minister will see that there is a very valid case to be made. Given the economic climate in which we now find ourselves, I hope the Minister will be seen to be a person who will give the incentive to business which is being called for all over the country at present. This is where the gesture can be made. The more equitable mix we have put forward in our composite amendment here has been commended at great length from both sides of the House.
Talking to the business community — I am certain the Minister has encountered this himself and will have read in this morning's papers about the Chamber of Commerce comments — it is felt that we are taxing ourselves out of existence. It is a constant finger-pointing exercise against those people endeavouring to give solid employment here, not realising that all the time three fingers on the hand are pointing back at ourselves. We are causing and compounding that problem. The introduction of a mad taxation of this kind, this upper limit, will cause untold damage to the business community. Having said that, I am sure the Minister could well argue: well, it will be only those people who can afford to pay who will have to pay this taxation, those who are qualified to pay. Certainly, that is so. But, apart from a civil service-type approach to framing legislation, one must consider in an open economy such as ours that the creation of wealth and its distribution is an integral part, the very bedrock, of our democratic system. The time has come when the incentive must be given back to private enterprise. The Minister will concede that this is how the system got under way in the first place. We have been overtaken by a Goliath of a taxation system which is throttling business houses to death. The Minister has a golden opportunity to give a badly needed incentive to private enterprise.
Regarding employment, disincentive on a continuing basis will add further to the numbers in the dole queues. That point has not been brought out fully. More and more people will become more and more frustrated with the system of paying enormous sums of taxation and will not employ people. That will lead to dimishing returns. I appeal to the Minister in good faith to accept this amendment in its totality.
I would make a point which I would ask the Chair to consider in future. What happened here today was unfortunate. I am not blaming the Bills Office or anyone on the staff. I know that many amendments were put down by the Government, The Workers' Party and Fianna Fáil. I was ruled out of order at such short notice that it was most unfair. I am not blaming you because you are only exercising your powers under Standing Orders. The amendments were lodged a week ago last Friday and I became aware of what had happened only a short time before the amendments were to be moved. The dash to the Bills Office and the dash back here to try to get in this amendment before the motion was reached were unsuccessful, mainly due to the time limit involved.
Deputy Haughey suggested that the amendment or an amended version of it could be moved on Report Stage but there is not a great deal of difference between this amendment and the Fianna Fáil amendment. There are differences in emphasis but the objective is basically the same in so far as it is an effort to improve the taxation position in relation to that category of the work force which is suffering greatly as a result of the budget and by the continuing burden of taxation.
Those of us who have worked in the trade union movement and have been deeply involved on the factory floor know that the demonstrations which have been going on will not go away. Perhaps we could get changes by democratic means through the good offices of the ICTU or other unions in making representations to the Minister of the day. The approach of the trade union movement to successive Ministers has been the same but very little has been achieved in relation to this subject. It is not a matter of the trade union movement demonstrating outside the Dáil; that does not move me. What does move me is that the danger signals are there for us to see. The very foundation of democracy could well be at stake.
The industrial and commercial worker is the backbone of democracy. He or she is the person who is paying the lion's share of the money needed to keep this State going. My colleague, Senator Kirwan, recently said that this is the sector which is being milked. There is no doubt about it. Successive Governments have suggested various ways of raising capital such as the imposition of levies on other sections of the community. They simply did not pay and nothing was done about it. The fellow on the factory floor can see what is happening. He can see that other sectors have been allowed to get away without paying the appropriate level of taxation because successive Governments did not do their job, did not tackle the problem of tax evasion, did not do anything about the sectors which do not pay tax at all and did not do anything in relation to the wealth tax except remove the tax which did exist.
I make a very strong appeal to the Minister in regard to one sector. In my constituency I have been inundated during the past few weeks with representations from old age pensioners and widowers. Retired employees of one concern in my area, Cement Limited, are in receipt of a small industrial pension of between £15 and £20 per week, say £100 a month. All of those pensioners have now been brought into the tax net, as have widows of deceased pensioners who are in receipt of small pensions ranging between £10 and £12 a week. The Minister is responsible for the taxation of these people, men and women who have built up this State and worked for 40 or 50 years.
At the end of their working life they receive an old age pension which is not sufficient to keep them and some of them may also get a small industrial pension. As a result of the provisions of this budget, all these people are now being taxed and they cannot understand it. I know a woman aged 82 who is confined to bed and for the first time she was asked to fill in a tax form. She has not worked for 50 years and her husband died about 30 years ago. As a result of filling in the form she is now paying tax on a pension of about £5 a week. That is one of the reasons I got very annoyed when I was ruled out of order in my attempt to introduce an amendment with regard to wealth tax. It was an effort to get more money from those who can afford to pay——
I am intervening in an attempt to be helpful to Deputy Bell in case what he has said might be misunderstood. He said that a person with a pension of £5 per week is paying tax. I do not think he meant that.
I am saying that a widow whose husband was an industrial worker was asked to pay tax on a figure of £5 per week.
We cannot conduct the debate in this way. The Deputy in possession should be allowed to continue without interruption.
What is happening is that old age pensions and widows' pensions are being calculated for taxable purposes. The old age pension and the widow's pension are being taken out of the total tax allowance and total tax is being applied. I do not know if the Minister is aware of the situation but in the past week I have been informed of 40 or 50 such cases. The trade union movement is the only section speaking on behalf of the retired; many of them are former members of trade unions but now they have no voice and are not organised. I am asking the Minister to keep this matter in mind and to make provision for people who have worked in industry all their lives. I had many things to say in relation to the amendments we had tabled but the two most important amendments have been ruled out of order. In my opinion if a vote had been taken on the first amendment it would have gone through. A great opportunity was missed today, perhaps by accident. I appeal to the Minister to give special consideration to the section of the community to whom I have referred, even if it means taking more from the people who are working and if we reduce still further the incentive to work. The Minister should give some positive consideration to the old people to whom I referred.
During the debate reference was made to the level of taxation here as compared to the level in other countries. Deputies will appreciate it is not easy to lay one's hands immediately on information of that kind but I have here some information in relation to comparative levels of taxes on incomes and profits as a percentage of total taxation.
From what year?
For 1980, which is the most recent information we could get in a hurry.
I should have thought the Department would have more up-to-date information.
As the Deputy knows from his time as Minister for Finance and when he was involved in making international comparisons as a Commissioner of the European Community, it takes some time to get together information of this kind. I give the following information with regard to 23 OECD countries for what it is worth. Seven countries had a lower proportion of taxes on incomes and profits as a percentage of total taxation than was the case in Ireland and 15 had a higher proportion but to what extent the figures are significant in absolute terms is debatable. For example, the difference between Ireland and the highest was as follows: we had about 36½ per cent as a proportion whereas the highest was New Zealand where the proportion was 69.9 per cent.
How many countries had a 65 per cent tax rate?
I do not know that. I am talking about the proportion of taxes on incomes and profits to total taxation. For the information of the Deputy, I would remind him that from 1967-68 and from 1973-74 the combined top rate of income tax and surtax was 80 per cent. We had rather high rates of taxation in the past and they do not seem to have resulted in all of the difficulties to which the Deputy referred.
Deputy Haughey and Deputy O'Kennedy suggested that I had said that adjustments which I have made so far in the past few weeks do not upset the balance of the budget. I should like to make this point very clear. One of them does not, namely, the measures we have taken in relation to the motor industry. As I said, that was intended to be a self-financing measure to the extent that the reduction in VAT on garage services is offset by an increase in excise duty. I am sure the Deputy will appreciate that we spent a considerable time discussing that measure with the motor industry who had been making a case in relation to this matter since the summer of last year. It took some time to arrive at the final balance between the various parts of the proposal. I am sure Deputy O'Kennedy appreciates that one does not jump in and find a readymade solution particularly when one's concern is to find a way of compensating for the effect on revenue.
The measure in relation to the hotel industry is not self-financing in that respect because there was no other means by which we could make it so. The cost this year will be in the region of £2,500,000. When the Government announced that measure I said it would be necessary to take measures to ensure it does not affect the overall balance at the end of the year: having said that, obviously it will affect the overall balance and other measures will be necessary. Deputy O'Kennedy on a number of occasions has asked what this means and I have replied on a number of occasions that I cannot say now what that means. If Deputy O'Kennedy thinks back to events last summer he will appreciate what I mean.
Deputy Haughey and Deputy O'Kennedy examined the cost of the measure proposed in this amendment. The various calculations they made conclude that the net cost is considerably less than the gross cost to which I referred of £56 million. It is true that if we were to reduce the amount of taxation in the order of £56 million, there would be some factor of buoyancy to be taken into account. On the other hand, the measures we would have to take to compensate for that to remain within the budgetary balance would have their own negative effects on buoyancy. There would be a negative effect on buoyancy if we were to increase taxation elsewhere and, equally, there would be some negative effect if we were to take action to reduce expenditure. The two sides of the balance have to be weighed up against each other. It is not enough to say that because of the buoyancy factor the total cost of the measure would be less than the figure I have put on it. There are compensating factors on the other side that would have to be taken into account.
Deputy Haughey and Deputy O'Kennedy referred to forecasts recently published by the ESRI. The ESRI concluded, on the basis of their examination, that the budget deficit this year would come to rather less than the forecast we have at Government level. I must point out to the Deputies that the ESRI forecast is based on a number of assumptions which differ in several respects from the assumptions I use in my forecast. I do not propose to get into a discussion on the relative merits of the ESRI forecast as against those of the Department of Finance. Suffice it to say, having examined it, that I do not have any particular reason to change my mind about my forecast of the budget deficit at this point.
The Minister hopes he is right.
The Deputy will not provoke me by that kind of remark. A few people have tried it and it has not worked. It will not work here today either.
Who is right?
I am right. I have no reason to depart from my forecast at this time. No amount of provocation will make me venture the kind of remark that Deputy MacSharry would like me to make.
(Interruptions.)
If it amuses the Deputy to have that kind of admission I am very glad to be of service. The point I am making is that I do not accept that particular forecast for the reasons I have mentioned. I am not being at all disobliging to the people who do the forecasts for the ESRI. The conclusion that Deputy O'Kennedy is drawing from that forecast that I have a great deal more leeway than I say I have is not one that I accept at the moment.
It will be £100 million.
I have said I do not accept that. I assure the House that were I in the position where I felt today that there would be £100 million that could be given in relief in relation to various measures we have taken I would be extremely happy to find that was the case.
The Minister would not tell us.
I assure the Deputy that such would be my haste to tell him that he would not see me coming for the dust. I do not see that kind of latitude there at the moment. It is extremely unwise to base proposals of this kind on those forecasts and that is another reason why I am not inclined to go along with the amendment before us.
Deputy S. Brennan suggested that we are getting into the area of diminishing returns in relation to total returns. It is probably not my business to say this but I invite Deputy S. Brennan and Deputy O'Kennedy to get together on this because they seem to be facing in different directions. Deputy O'Kennedy is trying to make the point that I will collect more tax than I claim I will. Deputy Brennan is making the point that I will collect less tax than I claim I will. When those two Deputies can get together and face the same way perhaps we can resume the discussion later on.
I have a great deal of sympathy with what Deputies on the other side of the House have been saying with regard to the total level of taxation. I have made the same observations also. We are, unfortunately, in the position where we are obliged to have a fairly high level of taxation. I am not talking in comparative terms, comparing us with any other country in the world. I am talking in terms of absolute levels of taxation here. The reason we are in that position is that we have built up an enormous amount of foreign debt servicing burdens which we must repay. The only people who can repay those debts are the people who live, work and pay tax in this country.
We have seen that the option, which people seemed to feel was the proper one to take in recent years, borrowing to finance current expenditure on a fairly large scale, is not one we can continue with indefinitely. We are now picking up the tab for that particular policy in past years. That is what gets us to the point where we have our present levels of taxation. I believe Deputy O'Kennedy agrees with this. Taxation is not the only side of the coin. There is another side to it and, as I said earlier, I will be relying on Deputy O'Kennedy to keep to the opinion he mentioned earlier on about expenditure.
I hesitate to return to this but Deputy Haughey deserves a reply. He made an allegation that the Government have deliberately engendered anger among what he calls the PAYE taxpayers. I utterly reject that suggestion. If anything has engendered anger among PAYE taxpayers and elsewhere it is the fact that we have found ourselves, as a result of policies followed in previous years, with so little leeway in terms of the kind of policies we can pursue, if we are to meet squarely the problems we have to deal with today. The tragedy of our situation now is that the policies which have been followed have left us with so little leeway that we find we must deal with them in the way we are following now.
With no incentives given.
I fully agree with the Deputy in relation to incentives but I will not follow the policy of giving spurious incentives this year at the price of mounting up further debts in future years that will be required to be met by taxation in those years. The point has been made that we have got to the end of that particular line. Within the limit of our present budgetary constraints I agree we must try to organise things in such a way as to leave the greatest levels of incentives. That is what we are doing but those limits are very tight, very strict and do not allow a great deal of latitude for doing the kind of things this amendment proposes to do.
Deputy Mac Giolla made a number of points about the moment at which a taxpayer gets into particular rates of taxation. I would like to pick up those points in case there might be any misunderstanding in the House. Deputy Mac Giolla made the point that a single taxpayer gets in to the 45 per cent tax band at £80 a week. He is referring to a figure of £4,000 of taxable income. A single taxpayer begins to pay 45 per cent tax at a total income level, assuming he has only the personal and PAYE allowances, at a total income level of £6,336 and not £4,000, as Deputy Mac Giolla said. The same applies to the other examples he took in relation to the point at which the higher tax rate begins. He was speaking about taxable income and not total income. We have to add the total allowances to that. Deputy Brady spoke about pandering politics.
Yes.
We are now seeing the results of pandering politics.
You are in Government.
We are now seeing the results of years of pandering politics.
You are still doing it.
We are paying the price for it and it is up to us now to make sure that we will deal with the results of that so as to give ourselves leeway in the future to increase employment and to give some scope to people at work and in business to expand production.
You are not doing it.
We cannot do it without dealing with the problems as we find them.
You are stifling the economy.
The Deputy also made the point that businesses are tax gatherers. I invite the Deputy to consider what has been happening here for many years past. It happens in every other country in the world. There is no country in the world where businesses do not gather tax for the State in one way or another. All of the EEC countries have VAT collected by businesses. All of the countries in the OECD have systems more or less akin to PAYE for income tax which businesses collect on behalf of the Government. The fact that businesses are gathering tax here does not mark us apart from any other countries with developed economies. It has been proved by experience that that is the most convenient way to collect those taxes.
Realistically, there is not any way we can get out of that, and to make that point as a criticism of any Finance Bill is not in any way to be taken seriously. I did not exactly understand what Deputy Bell meant when he spoke about a lady who pays tax on £5 a week. Particular cases cannot be discussed across the floor of the House like this, but I would remind Deputy Bell that we have increased the overall exemption this year from £4,400 to £4,800 for a married couple and from £2,200 to £2,400 for a single person.
A more fundamental point made by Deputy Bell is a suggestion that, given what is going on around us, the foundations of democracy could be at stake. I wonder if we have given enough thought to that claim. I am not sure I would agree with that statement for the reason Deputy Bell gave. It is up to us today to face the capacity of this country to continue to expand——
You are not doing it.
We cannot any longer avoid the kind of action that is required to do that. I will give an illustration to underline the situation we are in and that we are dealing with. The equivalent of approximately one third of total tax revenue this year will be required to pay the interest on foreign debt, roughly £1,700 million. I am sure Deputy O'Kennedy will appreciate this point. As Minister for Finance I find it a great pity that that much revenue is being collected from our people that we cannot use directly to deal with the difficulties we all see around us — to provide for investment and for current services.
I find it a great pity, to put it mildly, that such a big proportion of our tax revenue should have to go to pay for yesterday's bread. I do not intend to allow that to continue. We must rectify it, and therefore it is most important, this year particularly, to stay within the kind of budget targets we have set. For that reason alone I cannot recommend acceptance of an amendment of the kind put forward by the Opposition. It does not fit in with the overall targets, which will be of fundamental importance this year, next year and the following year. We must regain our own capacity to use our tax revenue, which is produced by our own people, to provide on a continuing basis for future needs rather than to pay for our past mistakes.
I asked the Minister about the 904,000 taxpayers in the bands laid out in the amendment.
The information I have relates to the post-budget situation. I do not have to hand information in the exact form requested by the Deputy but I can get it for him at a later stage.
The issue here is very important. The Minister has recognised it, the House has recognised it, but unless we can convince the Minister I do not think there is any point in prolonging it, due to the time constraint. I will make some observations which may be of some importance for the record. I am glad the Minister has acknowledged that he has a good deal of sympathy with the amendment. I do not think he is the only one on that side who must have a good deal of sympathy with the amendment. The Labour Party, whose benches again are significantly vacant, as they sometimes are in debates like this, must also have a good deal of sympathy with the amendment.
On a quick head count, there is a higher percentage of Labour Deputies here than of the Fianna Fáil Party.
We respect the Deputy's views. He would love to come with us, but he cannot.
I have to apologise to Deputy Prendergast because earlier I wrongly excluded him from my Labour Party count. He is the only one who is in the House of the existing Labour Party. He is the only one who has made a point of this whole issue.
Deputy Bell still happens to be a member of the Labour Party.
Hear, hear. There is a higher percentage of Labour Party Deputies here than of Fianna Fáil. It is elementary mathematics,
I will make some other points for the record. As I have said, the Minister has a degree of sympathy with the case made by this side because of the impact higher taxes can have on incentive, the damage they can do and their effects on the work ethic. It is also important to have on record that the Minister disagrees with the forecast for the budget deficit. Time alone will tell who is right.
Do not exaggerate its importance.
The Minister's job is to make calculations that he will adhere to and that will be right. The Minister does not accept that income tax revenue this year, on the basis of the first quarter's returns, will be in excess of the estimate at the beginning of the year. They are the reasons why the Minister is not accepting our amendment.
It is much wider than that.
If the forecasts were wrong then the Minister would have much greater leeway to accept what he has frankly acknowledged would be reasonable and which in other circumstances he might be disposed to accept, but in these circumstances this year he cannot. That is the first point and it is very important. We are asking less at this time than any of our Fine Gael predecessors when in Opposition asked in money terms, much less in real terms. That is a matter of very considerable importance. The Minister does not feel free to accept an amendment.
I want to put these final points very clearly on the record. The Minister must acknowledge that two statements he made in this House have had a very significant impact on what happened outside the House. First, there was the reply he gave to Deputy De Rossa about the amount of outstanding tax. He gave a figure in the region of £960 million and made a general qualification which is on the record. If I thought the Minister intended questioning it I would have brought it into the House. He said these were fair assessments but the actual figure which would become due would be substantially less. Two months later in this House the Minister gave precise figures, which he should have given on the first occasion, because in his political judgement he must have known they were important. He said the amount of tax outstanding at the end of this year would be of the order of from £80 million to £100 million. He started with the figure of almost £1,000 million and came down to £100 million. I remember Deputy Mac Giolla saying he wondered what the debate was about. He said he knew it was to enable the Minister and myself—he thought we were in cahoots—to give a distorted impression. I am not blaming Deputy Mac Giolla because it sounded strange that the precise figures which were very relevant on day one were only mentioned two months later. If they had been mentioned on the first occasion we would not be caught in a strait-jacket.
The Minister should have told us that 9 per cent of PAYE tax is paid by company directors. I asked for that information by way of a written question some time ago. It might have helped if that information had been made known, but it was not. At a time when we are trying to promote cohesion in the community, as distinct from dividing the employee from the employer, the worker from the director and so on, these significant facts should have been put on the record from day one. Now we find that comments we make can be misunderstood, misrepresented and so on. That is a matter for concern. I will not say that was a deliberate action by the Minister, but it had to be a lack of political judgment that, unlike his predecessors, he did not put all the facts on the record from day one.
In refusing to accept the amendment the Minister pointed out that the net cost, which, understandably, he would not want to quantify, but which he said would be of the order of about £40 million and that is probably an over-estimation would be so marginal that it would not upset his budget arithmetic. The Minister says he cannot upset his budget arithmetic, but it was upset when devaluation took place. The devaluation costs have to be added and they will change the budget arithmetic.
The Minister is providing £2½ million for the hotel industry. We do not object to that but it would have been more beneficial if that had not been imposed on them at the start. The Minister must know that hotel bookings were cancelled and that business was lost because of the climate generated here. I wish the Minister could have shown the same degree of concern for the hotel industry on day one as he did on day 101. If he had, the coming season would be much healthier. This is a simple fact.
The Minister says other measures are necessary but we do not know, and he will not tell us, what they will be. That being so, I press him to accept our proposal and if the other measures are necessary—they will not be major ones—perhaps he will consider what adjustments will be needed. I can show him where he can save £7 million. We are interested in keeping within the proposed figure for public expenditure. The Minister could save an extra £7 million on the National Development Corporation. Perhaps not everyone on the Government benches would agree but if public money is to be spent, it should provide an incentive for doers rather than dreamers. This will help to bridge the gap we are talking about very quickly and renew the climate of confidence Fianna Fáil are very concerned about.
The Minister is interested in foreign debts and so are we, but his actions earlier this year did not show that this was his only concern. I urge him to accept this amendment because if he does the "other measures" may not be necessary.
Would the Minister give an estimate of the numbers that will slip into the higher rates of tax during the year? We will reach the stage in the not too distant future when over 50 per cent of the PAYE taxpayers will be paying the higher rate of tax. I do not think anybody in this House should accept that position. It is disgraceful. It is no wonder the PAYE sector have once again raised their voices in protest. One has to agree substantially with the case they are making, especially as 50 per cent of them will be paying income tax at the higher rate.
On the basis of the forecast for 1983 and the tax bands contained in the Finance Bill, some 40 per cent of taxpayers will be paying tax at the higher rates—45 per cent and above—and 60 per cent of taxpayers will be paying tax at the 35 per cent rate and under.
As of now?
I asked about the slippage from the lower rates into the higher rates.
That is the situation as I see it for 1983.
Does the Minister say it will be exactly the same at the end of 1983?
During the year the number of people who will end up paying tax in those tax bands——
Will it be the same next month, the month after and the month after that?
No. This is something that changes over the year. The rate of movement between bands will be influenced by a number of factors during the year, including what happens to the overall level of wages and salaries during the year. I could not give the Deputy any indication now as to how things might change this year as compared with last year. However, I shall see if I can get a more detailed forecast than that at a later stage.
I am putting the question: "That the words and figures proposed to be deleted stand part of the Bill."
Question put.
The Committee divided: Tá, 78; Níl, 70.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Myra.
- Bruton, John.
- Bruton, Richard.
- Burke, Liam.
- Carey, Donal.
- Collins, Edward.
- Conlon, John F.
- Connaughton, Paul.
- Coogan, Fintan.
- Cooney, Patrick Mark.
- Cosgrave, Liam T.
- Cosgrave, Michael Joe.
- Coveney, Hugh.
- Creed, Donal.
- Crowley, Frank.
- D'Arcy, Michael.
- Deasy, Martin Austin.
- Desmond, Barry.
- Desmond, Eileen.
- Donnellan, John.
- Dowling, Dick.
- Doyle, Avril.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Farrelly, John V.
- Fennell, Nuala.
- FitzGerald, Garret.
- Flaherty, Mary.
- Flanagan, Oliver J.
- Griffin, Brendan.
- Harte, Patrick D.
- Hegarty, Paddy.
- Hussey, Gemma.
- Kavanagh, Liam.
- Kelly, John.
- Begley, Michael.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- Kenny, Enda.
- L'Estrange, Gerry.
- McCartin, Joe.
- McGahon, Brendan.
- McGinley, Dinny.
- McLoughlin, Frank.
- Manning, Maurice.
- Mitchell, Gay.
- Mitchell, Jim.
- Molony, David.
- Moynihan, Michael.
- Naughten, Liam.
- Nealon, Ted.
- Noonan, Michael.
- (Limerick East).
- O'Brein, Fergus.
- O'Brien, Fergus.
- O'Brien, Willie.
- O'Donnell, Tom.
- O'Keeffe, Jim.
- O'Sullivan, Toddy.
- O'Toole, Paddy.
- Owen, Nora.
- Pattison, Séamus.
- Prendergast, Frank.
- Quinn, Ruairí.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick Joseph.
- Skelly, Liam.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madeline.
- Timmins, Godfrey.
- Treacy, Seán.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Andrews, Niall.
- Aylward, Liam.
- Barrett, Michael.
- Barrett, Sylvester.
- Bell, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Browne, John.
- Burke, Raphael P.
- Byrne, Hugh.
- Byrne, Seán.
- Calleary, Seán.
- Colley, George.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Bernard.
- Mac Giolla Tomás.
- MacSharry, Ray.
- Molloy, Robert.
- Morley, P. J.
- Moynihan, Donal.
- Nolan, M. J.
- Noonan, Michael J.
- (Limerick West)
- O'Dea, William.
- O'Hanlon, Rory.
- O'Keeffe, Edmond.
- O'Kennedy, Michael.
- Daly, Brendan.
- De Rossa, Proinsias.
- Doherty, Seán.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzgerald, Liam Joseph.
- Fitzsimons, Jim.
- Flynn, Pádraig.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Gregory-Independent, Tony.
- Harney, Mary.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Kirk, Séamus.
- Kitt, Michael.
- Lenihan, Brian.
- Leyden, Terry.
- McCarthy, Seán.
- McEllistrim, Tom.
- O'Leary, John.
- O'Malley, Desmond J.
- Ormonde, Donal.
- O'Rourke, Mary.
- Power, Paddy.
- Treacy, Noel.
- Tunney, Jim.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Tellers: Tá, Deputies Barrett(Dún Laoghaire) and Taylor; Níl, Deputies B. Ahern and V. Brady.
Question declared carried.
Amendment declared lost.
I move amendment No. 9:
In page 8, after Part II of the Table, to insert the following: "Notwithstanding anything in the Tax Acts, Part 2 of the Table to section 8 of the Finance Act, 1980 (inserted by this section) shall apply to persons with dependants who are widows, widowers or single parents."
We must have order. It is unreasonable for Deputies to be talking in the lobbies and drowning the voice of the speaker.
This is a similar amendment to one moved by us last year on the Finance Act. The then Minister for Finance indicated at the time that he believed there was some legal or constitutional difficulty about implementing such an amendment.
We must have order. The Deputy cannot be heard.
At that time the then Minister agreed to investigate the position with a view to being able to introduce an amendment to deal with the situation in this year's Bill.
About six weeks ago I wrote to the present Minister about the matter and he indicated that he would look into the question with a view to being able to introduce some alleviation for the categories of persons concerned. The main reason for my proposing this amendment is that parents, whether they be unmarried, widowed, or separated, but who are rearing children single-handed, are treated for the purposes of taxation as single persons. It seems to me and to those who have been in touch with me on the matter that it is at least as expensive for the single-parent family to meet their expenses in the way of mortgages or rent, food, clothing, travel, education and so on as it is for the family with both parents at home. For that reason I am asking the Minister to accept the amendment or at the very least to indicate some good reason for not being in a position to do so. The previous Minister indicated that he would endeavour to find some way around the difficulty but there is no proposal in this Bill in that regard.
Acceptance of this amendment would have the effect of applying double rate bands to persons in the situation described by the Deputy. This would create an anomaly in the tax system and would be likely to give rise to feelings of discrimination on the part of other persons. It could create an interaction in the sense that other people who previously had an advantageous position compared to these people would wish to see that advantage restored. We could have a tendency, too, for leapfrogging in terms of the total allowances that would apply to different categories of persons. As the Deputy is aware, there are already certain extra allowances for particular categories of persons. For example, the income tax allowance for a married person at the moment is £2,900 and for a widowed person there is an allowance of £1,950. For a person who is bereaved in the year of assessment there is an allowance of £2,900. We already have built into the allowances to a certain extent figures which go in some way towards meeting the problem the Deputy has pointed out. Single parents also have extra allowances but do not have the double rate bands. The effect of the amendment proposed by the Deputy would be to add the double rate bands to those allowances. For the reasons of the new anomalies that this amendment would create I would not be disposed to accepting it.
What would the cost be?
The cost of the amendment in 1983 would be roughly £2½ million, or £3.8 million in a full year if married couples were excluded from it. The cost if we were to include them in it would be considerably greater than that.
The Minister accepts that the law at present is that persons who are bereaved, who lose their spouse, retain the double allowance for that year. It would seem to me that it is no less difficult for widows or widowers to survive in the following years. If the present situation is not open to challenge I do not think there is a strong case for saying that it could be open to challenge if it was extended to the categories concerned indefinitely or for as long as they have dependants.
I would have liked if the Minister in his reply to Deputy De Rossa had said that he would like to do this but he could not because of the cost. Instead the Minister has resorted to some specious argument about leapfrogging. The Minister should be honest with the House and say that this would be very desirable and the only reason he is not doing it is because of the cost involved.
I would be sympathetic to the sentiments in the amendment. Recently I had to deal with a case of a widow with three sons, aged 16, 14 and 12. We all understand what it costs to feed and clothe boys of that age. That person was in receipt of a widow's pension of £67 and a salary of £100 from her employer per month and out of her total income of £92 per week that widow had to pay £8 tax. Something should be done about that situation. Should widows be in the same category for taxation purposes as a married couple or should the allowance per child for a widow or widower be increased from the present figure of £100? If the Minister is not prepared to accept the amendment before the House I would be grateful if he would give consideration to the problem because it causes difficulty to some people.
The legislation already provides to a certain degree for an increase in tax free allowances for people in situations described by Deputy De Rossa. It was rather gratuitous of Deputy Haughey to hop up and make the type of remark he has made about my reply. However, the fact remains that the operation of the amendment proposed by Deputy De Rossa would give rise to a certain number of anomalies. It could give rise to situations in which married couples would justifiably feel discriminated against because they would find themselves now, contrary to the present situation, getting smaller allowances than people in other situations. For that reason the substance of the amendment is of a discriminatory nature and of a kind that would give rise to these anomalies. It is not one that would commend itself to me. Deputy Haughey rightly mentioned the question of the cost and that is another reason why I cannot accept the amendment. I fully accept the fact that people in this position have to face particular difficulties but I do not think this amendment is the most appropriate way of dealing with them. I do not have a closed mind on the problem. This amendment is not the way for dealing with it.
The Minister should bring in his own amendment.
I would wish that we could find a better way of dealing with it but that has not yet been found in spite of the consideration that has been given to this over a period of years. If any Members have better proposals for dealing with it I am prepared to look into them.
I find it difficult to understand how the Minister can tell the House that he agrees that something ought to be done about this problem but will not accept the amendment as it stands because, he says, anomalies will develop. The last Minister for Finance and the present office holder gave me a commitment that they would look at the situation and bring in something in this year's Finance Bill to deal with the problem. I am not necessarily arguing that my amendment is the ideal one. I do not have the resources that are at the Minister's disposal to produce an ideal solution, but I find it extraordinary that the Minister does not appear to be making any attempt to offer an alternative to meet the problem. There are many people paying tax who in justice should not be paying because of their situation. There are widows and widowers with children who are paying tax. It is not good enough for the Minister to say that the amendment is not the ideal one. He should indicate that he will attempt to bring in an amendment of his own to relieve the people I have mentioned.
I should like to add my voice to what Deputy De Rossa has said. I accept it is easy for us on this side of the House to press the Minister to do all sorts of things, but there is a case here. If the Minister's only reason for rejecting the amendment is that it would lead to discrimination against married couples he is on very weak ground. Certainly, while rejecting Deputy De Rossa's amendment in its entirety, he could agree that on Report Stage he will come along with a compromise. There is a fair difference between £1,950 and £2,900. I am sure Deputy De Rossa for this year would be satisfied if the Minister split the difference or brought in an amendment along those lines. We must accept that very often a widow or widower who is in a position of being head of a family is in a more difficult position than a husband or a wife. Particular problems and disadvantages attached to the situation of a widow or widower do not apply in the case of a husband and wife. It is often very much more difficult and more expensive for a widow or a widower to run a household than it is for a couple to do so, particularly when a family of any size is involved. Acknowledging that it is easy from this side of the House to press the Minister to be a general sort of Santa Claus, on the other hand, this is something he should consider between now and Report Stage and if he is not prepared to accept the full implications of Deputy De Rossa's amendment he could very well go some distance, perhaps half-way to it.
Amendment put.
Will Deputies claiming the division please rise in their places?
Deputy Bell, Deputy Mac Giolla, Deputy De Rossa and Deputy Gregory-Independent rose in their places.
As fewer than ten Deputies have risen, I declare the amendment lost.
Progress reported; Committee to sit again.