Amendment No. 10 has been ruled out of order.
Finance Bill 1983: Committee Stage (Resumed).
Section 2 put and declared carried.
SECTION 3.
Section 3 agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
We support the principles embodied in sections 3 and 4 for a variety of reasons not least because they follow on what we introduced in terms of the principle of the split incomes of married couples. These two sections deal with the arrangements for separated couples. Perhaps the most significant provision in the tax code in respect of married couples was made two or three years ago when we introduced the provision on split incomes in respect of the working wife at home. This illustrates to a considerable extent the fact that financial legislation can be used to create a desirable social climate.
We are dealing here with the consequences of marital breakdowns and separations, and the tax conditions which arise as a consequence. By far the most important thing which has been done to protect marriage and to encourage the role of the woman in the home was done by this party in Government just over two years ago when we split the incomes on this basis. We support what the Minister is doing in applying the same principle now to separated couples. In terms of maintenance arrangements or payments they will be liable to single or joint assessment by agreement. We support that.
Legislation of this kind has a very important role in ensuring that the social order we support will be strengthened and supported. That is what we achieved two or three years ago in this area. This Bill in general does quite the opposite. We went beyond the Murphy case in the Supreme Court which dealt with the working wife outside the home, and applied the same principle to working wives in the home. Had we not done that, the level of tax in the PAYE sector would be such that the outcry would be enormous. The relief introduced then for good and sufficient reason is now a base of our tax. It is a major element of tax reform and I am glad it is there. Were it not there we would have more problems of separated couples to deal with than we are coping with this morning.
Some of the pressures on young married couples arise to a considerable extent from the pressures of the tax system among other things such as mortgages and so on. If anything, the section of the Bill we will be dealing with later makes it more difficult to maintain the institution of marriage from day one. Perhaps the provisions of sections 3 and 4 will become more operative and we will have more separated couples to deal with because of the pressures on domestic situations particularly in the early years of marriage. The Minister should take account of the fact that tax legislation of this kind can promote social stability and encourage it, having regard to what we have always recognised to be the role of the woman in the home, and we should encourage married women, if possible, to look at their role in the home, rather than prevent them working outside the home. We have done that under income tax legislation. That is what we should be at, not what this Bill generally will be doing when we come later to the reduction of the relief for mortgage interest, but quite the opposite. While we support sections 3 and 4, I am afraid we may see the application much more of the effects of these sections because of the Minister's failure to act consistently in other directions.
I welcome these sections, especially section 4, but I do not think it goes far enough. Separated couples are now explicitly entitled to either single or joint assessment but are still denied separate assessment. Joint assessment will require that either the husband or wife submit a tax return on behalf of both of them. Also, when husbands and wives are separated, generally they do not know what each of them is earning and refuse to co-operate in joint assessment. In practice very few couples whose marriage has broken down will be able to agree or communicate sufficiently well to complete a tax return. There is the additional problem in this area, where one partner has deserted the other: of how it can be contended then they they should have joint assessment? There will still be the partner with a family who has been deserted, be that husband or wife, left in a situation in which he or she will be subjected to single assessment and will be unable to benefit from the provisions of this section because it does not provide for separate assessment. Therefore, I would ask the Minister to consider that point.
I welcome the main thrust of the remarks made about these two sections because they are designed to deal with a situation which has created not only an anomaly but an injustice for many people. It is for that reason that we have provided these two sections in this year's Finance Bill.
I must say that I regret somewhat that Deputy O'Kennedy should have felt so sour on such a nice morning as this as to make the concluding remark he did make. It seemed to me to be unnecessary to the case he was making. It appeared to me that he brought into this discussion an angle which is rather extraneous, not to say totally irrelevant to the objective of these two sections. We had a long discussion yesterday on the rates of taxation, on the tax bands, on the effects of taxation on incentive to work and so on. I had a number of remarks to make yesterday to Deputy O'Kennedy and to some of his colleagues during the course of which I acknowledged — as I think we all must in the light of the facts that we face — that we do have a very serious difficulty in relation to the overall level of taxation. But to bring that into this discussion seems to me to be more than a little waspish and not really relevant to what we have in hand.
The situation we are aiming to deal with here arises from the fact that there are differences in treatment of separated couples depending on whether they separated under a voluntary agreement or under a court order. Essentially what we want to do here is to give separated couples the same range of tax options as those available to married people so that they will not find themselves, as they do today, very often in a situation in which their total tax bill is greater than it would have been had they remained together married. Of course, the very fact that in some circumstances their tax bill can be greater than if they were living together as a married couple creates an extra problem for them, because in the circumstances about which we are talking normally they would be maintaining two households. It seems to me inequitable that, in face of that fact which creates its extra costs, it should be the case for some of them that their tax bill is higher than it would be if they were living together. What we need is an adjustment of the provisions of our tax system in order to overcome that problem.
I can see the concern expressed by Deputy J. Doyle but I might simply assure him that separated couples, under the provisions set out here can have separate assessment. We have endeavoured — with, I think, complete coverage — to ensure that the same tax options are available to such a couple as are available to married couples.
If I might give a brief outline of the sections it might help to fix it in our minds. Sections 3 covers cases involving separation, divorce or annulment and provides that in future all maintenance payments made in these cases will be payable without deduction of tax. To the extent that they are for the maintenance of the other spouse they will be deductible in computing the income of the spouse who is the payer and will be chargeable to tax in the hands of the recipient. Maintenance payments specifically for the benefit of children will remain the income of the payer, who, dependent on the circumstances, will be entitled to all or part of the income tax child allowance in respect of those children. Both spouses will be taxed, then, as single persons. This, therefore, provides the same tax treatment for all maintenance payments as is provided under existing law for maintenance payments under a deed of separation.
Section 4 provides in the case of a couple who are married but separated that the couple will have the right jointly to elect to be assessed to tax on their combined incomes as if they were living together. This is the key part of it. In that event the husband will pay tax on his income without the benefit of a deduction for the maintenance payments and will be granted the married personal allowance and the double rate bands. If the wife has other income apart from maintenance payments, the tax on their combined incomes will be apportioned between them so that she will pay the tax appropriate to the other income and the husband will pay the tax on his full income without deduction of the maintenance payments.
The provisions of these two sections will apply to maintenance payments made on or after the passing of this Bill. They will apply to payments made under existing arrangements only if such arrangements are replaced or varied after the passing of the Bill, or if the couple concerned jointly elect that the arrangements should apply. In those circumstances the provisions will apply only to payments made after the variation of the arrangement or the election for the application of these arrangements, as the case may be.
I welcome the approach the House has taken to these two sections because, as has been generally recognised, they represent an advance in equity for people who find themselves for one reason or another in a very difficult situation and one in which we should remove the obstacles to the fair treatment of those persons which have been in our law for some time past.
We, too, welcome these sections of the Bill. But, if the Minister is going to comment on what I say in the House, let him not misrepresent me. I did not this morning go back into the tax bands argument we argued forcibly here yesterday and which the Minister rejected. He must live with the consequences of that. What I did say was that the application of the provisions of sections 3 and 4, which we support for a lot of reasons — it is consistent with what we have done before — unfortunately will be called into play more often because of the provisions of other sections of this Bill. To keep it on the record, the Minister can comment but he should listen first to what I say before commenting on what I did not say. For instance, section 6 proposes to reduce the tax allowances in the first year of marriage at a time when most couples face heavy costs. They start their marriage with extra financial burdens as a consequence. As an example the reduction in the mortgage interest relief in respect of couples who have commitments will bring extra pressure to bear on marriages. We are dealing simply with these facts.
While supporting sections 3 and 4, I regret that other provisions in this Bill perhaps will ensure that the provisions of sections 3 and 4 will apply more often than any of us would wish.
Is section 4 agreed?
I welcome these sections because in my experience the existing tax code creates enormous problems when marriages break down. The tax code was complicated in this area before the Murphy case and it became a good deal more complicated thereafter. It had reached the stage where it was so complicated that I believe neither lawyers nor accountants fully understood it and one often saw conflicting advice given to people in identical circumstances. I agree with the Minister's comments that under the existing tax code if a marriage breaks down, depending on the type of arrangement reached and whether a wife is to be supported pursuant to a court maintenance order or alternatively if the parties conclude a separation or a maintenance agreement, they may often find due to anomalies in the tax code that they are paying more tax as separated individuals than they were paying when they resided together. In so far as these sections will now apply a uniform tax system for dealing with all couples who are unfortunate enough to experience marital breakdown and find themselves living apart, I welcome them. There is a need for uniformity in these areas and there is a need also for persons to be treated equally and to ensure that when marriages break down people do not have to incur unduly large fees for lawyers or accountants in trying to sort out basic day-to-day arrangements for the support of a wife and children.
I do not feel it is appropriate to score unnecessary party political points in a debate such as this. The Committee Stage of a Bill such as the Finance Bill gives this House a true legislative role in trying to make some sensible input to the development of legislation. I do not intend to refer to the remarks made by Deputy O'Kennedy but I note with some amusement the claim by his party to the benefits of what accrued as a result of the Murphy tax case which led to this House having to ensure that married couples were not discriminated against in the area of income tax as opposed to single people.
Deputy Shatter is chancing his arm now as in every other walk of life.
He was not even here.
I note with some amusement Deputy O'Kennedy's suggestion that this was an innovation on the part of his party when in fact it was something his party, when in Government, were forced to do.
(Interruptions.)
Order. I think Deputy Fitzgerald should withdraw that remark. Deputy Gene Fitzgerald said of Deputy Alan Shatter that he is chancing his arm now as in every other walk of life. That could be regarded as a slight on Deputy Shatter in his private and professional life and I would ask Deputy Fitzgerald to withdraw it.
I will withdraw the second part of it but I will not withdraw the first part.
By way of clarification I want to ask Deputy Shatter——
Is this a point of order?
It certainly is because he has put on the record as a fact that the Murphy decision obliged us in Government to do what we did.
Deputy O'Kennedy can make a speech, as long as it is not a point of order.
I will not have Deputy Shatter misrepresenting the position.
We have to clarify it.
Deputy O'Kennedy will have the opportunity to contribute again when he wants to do so.
The Chair should ensure that Deputies on the other side of the House who give the impression of having legal qualifications do not misrepresent the facts. It is as simple as that.
Question put and agreed to.
SECTION 5.
Amendment No. 11 is in the name of Deputy O'Kennedy. Amendment No. 12 is an alternative amendment and the Chair suggests that these amendments be discussed together and put separately.
I move amendment No. 11:
In page 11, lines 27 and 28, to delete paragraph (b).
This is the section which proposes to reduce the PRSI allowance when the indicators are that if anything we should be moving in the other direction. How much would it cost this year to accept this amendment which is designed to restore the allowance to what it was last year, £312? We are not dealing with huge figures here.
The other amendment is tabled by Deputy Bell whose proposal is concerned with indexing the allowance this year. This is a reasonable proposal in view of the climate of opinion among employees. Our approach is to acknowledge that we are in a difficult fiscal situation. Normally an Opposition would propose that the allowance should be indexed, as the present Government when in Opposition asked us to do in many areas. However, we are simply asking that the allowance be maintained at the level which existed last year. We want to ensure that this reduction, which is seen as a penalty, will be removed. What would it cost to remove that penalty on the basis of our proposal?
The purpose of the section is to modify the special allowance first granted in 1982-83 and to continue it in operation this year but at a slightly lower rate. The amendment put forward by Deputy O'Kennedy would propose to keep it at the same level as last year and Deputy Bell's amendment would propose to increase it somewhat over last year's level. The cost of maintaining the allowance at the level at which it operated in 1982-83 would be roughly £60 million in 1983 and approximately £92 million in a full year.
We came to consider this year what we would do with that allowance which was introduced last year on a one-year basis for 1982-83. The total cost of maintaining it at last year's level would be approximately £60 million. There are a number of problems to be met in relation to PRSI payments and the introduction of the allowance last year was a response to a particular kind of pressure. Perhaps Deputy O'Kennedy will remember that some of the events we have seen in recent weeks have not been completely without precedent in previous years. I am sure Deputy Mac Sharry has a very keen memory of that time. We had to consider what to do with that allowance on the basis that it would cost some £60 million this year. There are groups of people in our society who are not particularly well looked after.
Before the Minister goes further, perhaps he would give us the figure.
I said that the cost would be £60 million. The extra cost over and above my proposal would be £5 million this year.
I wanted the Minister to give this information before the press carried away the figure of £60 million instead of £5 million.
We just wanted clarification.
The Deputy should have a little patience and listen to what I am saying. The facts come in a particular order.
On a point of order, I asked the Minister——
That is not a point of order. The Deputy cannot have any complaint about the way he gets the answers except that he and his colleague interrupt so frequently that it takes a bit longer to get the answer to them. If Deputy O'Kennedy and Deputy Fitzgerald will wait for a moment, I will come in proper order to the specific answer to the specific question.
In the Minister's own time, his own tone and his own style.
I am sorry if that gets under Deputy O'Kennedy's skin. That is his problem. I am making the point in a certain sequence and if the Deputy would have a little patience we will get there. We had to consider what we could do about this allowance. There are some groups who are not particularly well served. There are low paid people at work who have a special problem and in order to deal with that problem we have to look at ways of improving the conditions in which they live. For people at work on low incomes there is a limited benefit they can get from our tax system. For example, if their incomes from work are the below the exemption thresholds, no amount of changes in tax-free allowances will be of any benefit to them because they simply do not have a taxable income. Even for people whose taxable incomes are low, changes in tax-free allowances cannot help them because they have not enough income to take up the full amount of the tax-free allowances. There was a particular difficulty here which we wanted to meet. That was the reason we decided this year to use £5 million of the £60 million which retention of this allowance at last year's level would have cost to provide a scheme of assistance for people at work on low incomes. We will use the £5 million we have made available by changing the PRSI allowance to bring in a family income supplement. I referred to this in my Budget Statement and I think I mentioned the figure then. We will use the £5 million to bring the scheme into operation later this year.
I make the point that that use of that portion of the moneys which we would otherwise have spent totally on PRSI allowances represents a more equitable way of using the funds. I take the points made about the general level of taxation and its impact. If there is a measure of this kind that we can take which evens out the use of the tax revenue foregone by the State that the allowance represents I think we can do that with a gain in terms of equity in the system and with a positive gain in terms of another measure that will be specifically directed at people who otherwise get little benefit from tax allowances. That is the complete answer to the question posed by Deputy Kennedy.
Deputy O'Kennedy said that the reduction in the allowance is a penalty. I am afraid the word "penalty" is a word that springs very easily to some people's lips. It is not in any sense a penalty. We could equally well represent the reduction in the allowance as being a tangible and real gesture of solidarity by people in a position to benefit from the full amount of the allowances in favour of their less fortunate neighbours who are not in a position to benefit in full from tax-free allowances. Far from it being a penalty I would regard it as a measure of solidarity.
The Chair reminds the House we are discussing amendments Nos. 11 and 12 together.
I thought it was a rather peculiar situation. I wondered about the motive for the reduction but it appears that the Minister gave me the answer before I asked the question. From what he has said it appears that the £5 million income subsidy is being financed out of this reduction. It is rather like robbing Peter to pay Paul. At least that is how it appears to me.
That is a summary of what the Minister said.
The £5 million income supplement is being financed out of this reduction. That may be very clever but it is not acceptable. Does the Minister know that in addition to the severe cuts in social welfare already implemented, the Government intend to reduce the special PRSI tax allowance from £312 to £286?
I am proposing that.
This is being done at a time when the people concerned are getting a reduced service and when many do not qualify for the benefit. Most of the points I wished to raise have been made by Deputy O'Kennedy. It is not my intention to hold up business other than to make the comments I have put on the record of the House.
I agree with Deputy Bell that the explanation by the Minister has worsened the situation. Many of us considered that the family income supplement would be of some benefit but it is rather disturbing to learn how it is being financed.
It is going to people who cannot get the benefit of tax-free allowances.
As Deputy O'Kennedy pointed out, there are many other ways by which money could have been found, particularly in the extra revenue which will be available to the Minister. Even at this late stage I appeal to him to do one of two things. The Minister tried to convey the impression in this House that the cost would be £60 million. Deputy O'Kennedy's amendment calls for the retention of the sum of £312 which was given last year and at the time I supported that. The gross cost will be £5 million and the net cost will be substantially less than that. For the sake of that £5 million gross the Minister is taking one of the most stupid steps in the budget and in the Finance Bill.
The Minister said that Deputy O'Kennedy and Deputy MacSharry should be aware of the protests last year regarding the increased PRSI rate. Those protests were very mild and subdued in comparison with the climate of today. We have heard a lot about equity. We must appear to endeavour to have equity in the tax system. We are aware of the problems regarding different rates of PRSI for different groups and we know there is a lack of understanding as to why the different rates exist. Deputy Bell used the figure of £351 and I have no doubt that that is the indexed figure. Deputy O'Kennedy is merely asking that the figure of £312 be maintained.
I ask the Minister to indicate to the House that on Report Stage he will introduce an amendment on the lines suggested by Deputy O'Kennedy. It is imperative that he does this before it is too late. Deputy O'Kennedy was right when he said if ears are closed and do not listen then let those closed ears be responsible for the consequences. I do not like protests and I have never supported them but the sincere attitude of people at present should be taken into account despite the difficult Exchequer situation.
This is an ideal opportunity for a Finance Minister to allow the £312 allowance to continue. This is a very minor continuation. This is an opportunity for the official Labour Party members to maintain some of the small semblance of respectability they may have left, to row in behind that amendment and tell the Minister that if he does not give an undertaking to bring in an amendment in relation to this on Report Stage they will at least indicate to the Minister that he does not have an appreciation of the problems of the PRSI sector and the apparent growth in equity taking place. It is sections like that in a very large Finance Bill which are causing many of the protests. If subsection (b) were taken out of section 5 it would be a very small move by the Minister to indicate that he has at least some appreciation of the plight of the PRSI contributor.
The £312 was introduced last year because dissatisfaction was expressed at the increased rate of PRSI. I remember the Minister for Finance earlier this year making play of the fact that he was not increasing the rate of PRSI. He is now doing it by a mean, backdoor method. I heard it preached in my constituency that there was not any increase in PRSI this year but there is now a nice backdoor method of increasing the PRSI rate. We are taking a miserable £26 from the allowance that was given to the PRSI contributor. The Minister will do himself and the Government a favour and he will help to defuse a difficult situation if he lets the present figure of £312 stand.
I appeal to the Minister to indicate to the House now that he will introduce an amendment on Report Stage to cover this. It will cost £5 million gross which is substantially less net and will make very little difference to the figures. Obviously the Minister has quite a lot in his back pocket already. This has been freely admitted at Fine Gael meetings by some of the Minister's colleagues. They say one thing he will do is have the deficit right because he has a nice handy surplus in the back pocket. The PRSI people have supported what the Minister's colleagues are saying at Fine Gael branch meetings around the country. The Minister should act magnanimously and tell Deputy O'Kennedy that he will introduce an amendment on Report Stage to meet the situation. If he does not do this the official Labour Party, for God's sake, before it is too late, should give a message to the Minister for Finance.
I wish the workers could have a televised view of what is going on in this debate and see the contrived artificiality being advanced, moryah, by the Opposition benches. It does a disservice to the workers that we have to watch this play-acting by members of the Fianna Fáil Front Bench——
We will give the Deputy a television show any time.
——allegedly in the name of the workers. Not alone are the workers feeling the brunt of this thing but their intelligence and sincerity are being insulted by what is happening in the Fianna Fáil Front Benches here.
(Interruptions.)
There are some of us whose outlook and philosophy is irretrievably locked into the trade union movement and everything that it stands for. That is why we stand for this House. We do not need lectures from anybody on how to conduct our affairs.
It must be pinching.
Our credentials in that regard are well known. I support, in the name of my union, Amendment No. 12, which is being moved by Deputy Bell on behalf of the union. I appeal to the Minister to listen closely to what we are saying. The Government's stated philosophy is that this year they will concentrate on the elimination of the abuse of tax evasion and next year in the budget they will look at the restructuring of the taxation system on a more equitable basis. I want to ask the Minister to reconsider that position.
I want to advert to something which was said yesterday, which greatly worries me. Members of the Government and others may be so far removed—I say this with all objectivity—from the on the ground scene that they are missing out the real feelings of workers on the factory floor. We are not talking about £5 million, £20 million or £30 million, we are talking about a tidal wave of resentment from workers who see themselves being asked to carry an unfair burden. Somebody said that the Minister was robbing Peter to pay Paul. It is even worse than that. He is robbing Peter to pay Peter. I would not mind robbing Paul to pay Peter if Peter was the worker and Paul some other sector of the community. There will be a great cost to be paid if we ignore what is going on at the moment. There is a very real danger to the whole parliamentary system here because respect for it is being weakened by the apparent inequity in the present taxation structures. There is a very serious social and political spin-off for the community if we fail to take cognisance of that.
There is a well-known precept in the trade union movement that what we have we hold. In the context of industrial relations it is well recognised by employers that when workers have something it is not taken from them unless it is done by an agreed exchange principle where one is traded off against another. I am aware that the Minister is saying that the money saved there is being given to the less well off section of the community. The argument of the trade union movement and my union is that we are expected to carry to an inordinate degree the unfair tax burden in the country. I am saying to the Minister and the Government on behalf of my union, to apply that principle equally in a political context, that what people have should not be taken from them. There is an actual reduction in this special allowance this year. My union, through Deputy Michael Bell, have put down an amendment to have that figure increased from £286 to £351 because that makes allowance for the CPI indexation for this year.
What are the Deputy's parliamentary party doing?
(Interruptions.)
Deputy Prendergast did not interrupt.
He did.
Whatever else the Government and the Labour Party may be accused of it can never be said that they indulged in unseemingly and dishonest dealings or in any kind of wrongdoing and, if the Government falls, it will not be for that reason. We will handle our affairs in a judicious manner. Not for one moment do I believe this Government will fall because of any lack of integrity.
I am asking the Minister now to take into account that the workers are sick because of the impact on them of the budget. I know that this is really the result of the legacy left to us by the last Fianna Fáil Government. In their own document The Way Forward some of the toughest and worst aspects of this budget would have been brought in last January had Fianna Fáil been still in power. That fact has not been spelled out. The workers are entitled to be informed of all the facts and this Government do not sufficiently stress the facts, because had Fianna Fáil continued in power, the workers would have suffered all these tough measures five months earlier. The proof of that is to be found in their own document The Way Forward.
I am asking the Government now to remember that nothing makes the heart so sick as hope deferred. Some gesture should be made to the workers this year. There is not all that much money involved and I am asking the Government to look at the situation and take account of it because by doing so they will restore some degree of confidence in the workers. Only a small gesture is needed. It need not be deferred until next year. Some small gesture is needed, small in cost but large in improving community relations and I appeal to the Minister to consider the amendment seriously.
I have offered three times.
I did not see the Deputy.
Maybe the sun is in the Chair's eyes. The reason for this special allowance must be kept in mind. It was designed to alleviate the burden of PRSI on those caught in the PAYE net. It is a mistake possibly to spend too much time arguing about whether a few pounds should be chopped off here and added on somewhere else in the PAYE sector. I would prefer to see a proposal designed to reform the whole PRSI structure. Having said that we did put forward an amendment, No. 13, which has been ruled out of order. That amendment sought to assist those on low incomes who would not benefit from the special allowance. We also sought to have this converted to a tax credit. It is possibly a sign of the times that neither the Coalition nor the Fianna Fáil Party talk very much about tax credits these days. It is generally accepted that this system is more beneficial to those in the PAYE net and makes for a better spread of tax within that sector.
I would be interested to know why the Minister has not introduced this system. It was promised on previous occasions. The Government intended to bring it in both this year and last year but so far it has not been introduced. Amendment No. 10, which has also been ruled out of order, sought to have the tax allowance converted to a tax credit. In supporting this amendment then I would draw attention to the fact that the real solution to this problem is not special allowances but a restructuring of the entire PRSI system on the lines I have suggested.
First, I should like to say to the Deputy representing the Labour Party and the Deputy representing The Workers' Party that they obviously did not read The Way Forward. Had they done so they would not this morning have made the wild and sweeping statements they did. The Minister in his reply to Deputy O'Kennedy gave, as far as he was concerned, a suitable resume of the allowance and the implications of it over the last year. It is no harm at this stage to recall the necessity for the allowance. Deputy De Rossa said that in January 12 months the Labour and Fine Gael Parties in Government put forward these huge increases in PRSI. Those are the facts. They were carried in the Dáil before 25 March when I introduced the budget. This allowance was introduced then because of the impact on the taxpayer of the overall changes made and because it was not possible for tax-free allowance certificates to issue to the taxpayers prior to 6 April. That is the first reason why that action was taken.
I recall a whole day last year when many Deputies from the Labour Party, The Workers' Party — there were no trade union representatives then — and the Fine Gael Party argued about the size of this particular insurance clause. It was not enough. It was no good. People were being robbed under PRSI and taxation. It should be much more. Fine Gael made great play that this allowance would not affect the lower paid. The excuse the Minister now puts forward for the reduction in the allowance is that it is in order to transfer that £5 million from other taxpayers to the lower paid. What he is really doing is transferring this £5 million from the taxpayers to those who do not pay tax. If he is so concerned about the lower paid why did he in another section later on take a 1 per cent levy off their total income? I trust the Minister will be able to give a satisfactory explanation for that.
It is no harm to recall that this allowance was introduced first on a temporary basis last year and this year. Obviously this Government have felt obliged to continue it. Rather than confusing the taxpayers and adding further administrative difficulty to the task of those concerned in the collection of revenue it would have been far better — the moneys would be something similar — if the Minister had taken a decision for which he would have been respected in the light of what he has done since. If he was doing his job properly he could have discontinued the allowance and forgotten about the 1 per cent income levy. Now he has two systems which do exactly the same thing. We hear about the difficulties of administration and of collecting taxes from people who are evading or avoiding tax and that it cannot be done because there are not sufficient personnel. How many people in the Revenue Commissioners will be involved in the additional work created by the PRSI allowance and the additional 1 per cent levy? In effect, what the Minister is doing is giving with one hand and taking back with the other from the same section of the community. I do not accept that he has done anything to help the lower paid about whom he is so concerned. If he is so concerned about the people to whom he has given this £5 million family income supplement, would he not also give them an exemption from the 1 per cent income tax levy? He will be accused, when this Bill becomes law, of many contradictions in the various items he has proposed.
May I reply to one point made by Deputy MacSharry? I happen to represent the constituency of Louth. I am not a trade union Deputy and I am sure that goes for my colleague, Deputy Prendergast, as well.
I understand that.
Perhaps if we had in this House a majority of people who would represent the views of the trade union movement and the workers in the factories and on the shop floor, we would not be having the type of discussion we are having today.
Hear, hear.
On a point of order, perhaps Deputy Bell was not here but I was referring to a statement made by his colleague sitting beside him that he was supporting Deputy Bell's amendment, his trade union's amendment. That is exactly what he said. So he was representing the trade union.
What is wrong with that?
I am not saying there is anything wrong with it at all. It is Deputy Bell who thinks so.
I am just correcting an inaccuracy.
It is not an inaccuracy. He said he was supporting the trade union amendment.
I am not taking Deputy MacSharry's intervention as a point of order but he was perfectly entitled to come in and make it.
I must reaffirm my deep disappointment with some of the actions and statements of the Opposition in this. I only wish the workers of this country could see on television or hear on radio what is going on in this House.
He is embarrassing the Deputy.
Order.
That is the type of thing I am referring to. It demeans the level of this debate and abuses the workers of the country. We are here by conviction and I am speaking on an amendment put forward by my trade union in the name of Deputy Bell. I share his sentiments 100 per cent on that and I have asked the Minister to consider it on that basis. I welcome the political thrust of the trade union movement rather than the endangering of existing employment by other types of protest. I believe it should be concentrated on a political basis as has correctly been done by my own union. It has been brought to the highest level of political debate. I hope the Minister and the Government will take cognisance of that fact and respond in like manner.
Is the amendment being pressed?
I wish to make two points. Understandably Deputies Bell and Prendergast, as members of a trade union, refer to the position of the trade union and, as Deputy Prendergast has now said Deputy Bell has put forward an amendment on behalf of his union. What the House is anxious to inquire is whether Deputy Prendergast is speaking as a member of the party of which he is a member.
What has that to do with the Finance Bill?
We understand the union position. We have met the unions and we share many of their views. The cost of adopting our amendment is £5 million, net cost about £3½ million. Has the Minister given a figure for Deputy Bell's amendment?
£13 million.
£13 million gross. So we are speaking probably of a cost of £10 million or less.
The Deputy should not do his sums too fast.
If the Minister wants to get the figure from his advisers I will sit down. It will not vary very much from that. It is a fallacy for the Minister to imply that the adoption of either our amendment or Deputy Bell's amendment would have to be at the expense of the family income supplement. That is not the case. The Minister deals with a whole range of financial dispositions and there is no point in the Minister saying that the reason he reduced this from last year's figure was to introduce the family income supplement. He said the two are dependent on each other. That cannot be. He could pick any other element in the Bill and make that case. There are a whole range of areas where he could either make savings or, if necessary, impose additional taxation. I believe the workers would be as happy to see the £7 million, which is half way between our proposal and Deputy Bell's proposal, being lifted off their shoulders by dropping the development corporation idea. That will generate a lot of time, activity and excitement for those who are involved but will not reach out to anybody to encourage them to get up and do things or promote incentive or initiative. That is the kind of public expenditure which we say might be saved.
The Minister said I was stinging like a wasp. It is a bit disingenuous of him to suggest that this is a gesture of solidarity on the part of the workers towards those on lower incomes. The Minister could ask the thousands of workers out there whether any one of them sees the reduction of the PRSI allowance as a gesture of solidarity on their part. It is a gesture they resist very strongly and the Minister, in the fashion of the old school teacher, has asked for volunteers: "You, you and you" to express this gesture of solidarity. I am telling the Minister that far from expressing solidarity on the part of the workers who are affected, it does the other thing — it causes dissension and division. The Minister made the mistake of saying that the reason that this had to be done is that the workers would get a reduction in their PRSI tax allowance in order to help lower paid workers who might not be in the tax bands at all. That sort of statement in itself can give rise to further reaction because the indication is that those workers who resist this proposal have no care for the lower paid. That is not the case. They care considerably for the lower paid but they should not be made to appear as if they do not care because they do not accept the Minister's spurious argument that this is a gesture of solidarity on their part.
Does the Minister intend to respond to the points I made?
That is a matter over which the Chair has no control. The Chair will not do more than prod the business on gently.
I appreciate that and I do not intend to take a great deal of time gently or ungently prodding the debate backwards and forwards. There are a few questions I should like to take up. The cost of the amendment which Deputy Bell is putting would be £13 million in 1983 and £20 million in a full year. Deputy Fitzgerald returned to a matter which we discussed last night when he suggested we could finance a family income supplement from all of the extra revenue which he and Deputy O'Kennedy think I will have at my disposal because they believe certain forecasts made by a certain body in the last few days. As I said last night, those forecasts were made on the basis of assumptions different from those which I believe to be relevant in this year's situation. I do not expect to have a substantial amount of extra funding available in my back pocket or my side pocket or any other pocket.
But the Minister expects to have extra funding.
I caution the two Deputies against over-sanguine expectations. They should know what the price of such expectations can be since they suffered that themselves. Deputy Fitzgerald suggested that I tried to convey that the cost of Deputy O'Kennedy's amendment would be £60 million. I do not think even Deputy O'Kennedy thought that. The figure is £5 million. I wondered, listening to Deputy Fitzgerald, if he is in any way against the alleviation of poverty, based on the objections he put forward to the section. He seemed to be suggesting that we should not carry out an action of this kind. He said "We should be endeavouring to improve equity". I have no interest whatever in appearing to endeavour to promote equity. I would rather get on with the job and provide in a measure like this a step to meet the problem of low paid people at work who cannot benefit from the type of allowance we are talking about. This is the essential point; there are people who will not get any benefit, no matter what kind of tax allowance we give, because their incomes are not high enough to be able to absorb their tax free allowance. They are the group I have in mind when I say we will set up this family income suplement.
The Minister said this is a gesture of solidarity.
I said it could be presented more fairly as a gesture of solidarity than anything in the nature of the penalty the Deputy suggested. Deputy MacSharry made a number of points about the operation of the allowance and he pointed out, quite rightly, that the change involved here will reduce somewhat the tax free allowance for one group of people and pay over the benefit of that to people who do not pay tax, paying it over to people who would not be able to pay tax and would not be called upon to pay tax because their incomes simply are not big enough to attract tax.
Deputy Fitzgerald said in his own colourful way that the reduction was a miserable £26. If he believes it is a miserable £26, what is all the argument about? A reduction of £26 in tax free allowances in a case like this means a change of £9.10 in a year to a person paying tax at 35 per cent, a change of £11.10 a year at 45 per cent and a change of £6.50 a year to somebody paying tax at the initial rate of 25 per cent. I do not think the change can be represented as being dramatic in the terms of the impact it will have on those who are paying it.
It is an accumulation of things.
The people who will benefit from this allowance are those whose incomes are at least £286 in addition to their normal tax free allowances. The people who will benefit from these allowances will get them from the £5 million to be raised from those earning £8,000 a year to those earning £25,000 or £30,000 or £40,000 a year. I do not think there is any great inequity involved in this change in the distribution of these funds in the way we are doing it. We were looking for a way in which we could use the total of £60 million that would be provided if we were to retain the allowance at its old level.
I make the case that we will now have a more equitable distribution between different groups. I cannot repeat too often that it is not open to us simply to increase the total amount because of our overall budgetary limitations.
We have accepted that point.
It is perfectly legitimate for any Government to look at the equity of the distribution. Deputy O'Kennedy suggested that it is a fallacy to say that we need this measure in order to finance the family income supplement. It is not by any means a fallacy because we are talking about the over all value of a particluar tax relief. It is for those reasons, in addition to others, that it is appropriate for me to vary the provision in this section. I ask the Members to face the fact that we had to use in a more equitable way the total amount of funding.
I reject the implication that workers who resist paying this extra PRSI amount and who will not get the allowance for it are not in support of the lower paid workers for whom a family income supplement is to be provided. I reject the submission that a family income supplement can be provided only in this way. Otherwise, unless that is made clear, there is a grave danger of one more misunderstanding outside the House among those who already feel that PRSI is heavy enough. Of course they will be affronted by the suggestion that they are selfish, that they do not care anything about the people who will have family income supplements. The Minister should be very careful when he is making cases like that.
The Minister did not deal with a couple of points I made about his intention to continue with this special allowance in future years. The allowance was introduced as a temporary measure to relieve the burden of PRSI and because the Minister had to bring in what he considers a more equitable distribution of the allowance, it is not the best way to deal with the problem of those paying PRSI. Do the Government intend to introduce a restructured PRSI system which will apply to all sectors, including the farming, the self-employed and the PAYE sectors? What is their intention in relation to tax credits?
As Deputy Prendergast pointed out, our concern this year has been to deal as far as we could with the question of equity and efficiency in the collection of taxes. I made the point that next year we will be having a look at the structure of our tax system with a view to bringing about improvements which many of us desire. I do not wish at this stage to make any specific suggestions as to what line we might follow either in relation to the tax system itself or the PRSI system which should be looked at in the same exercise. The contributions made by PRSI taxpayers do not cover the total cost of pay-related benefits paid out. There is another contribution from the general taxpayer to make up the balance. Therefore there is a case for looking at the two systems in the same context.
Deputy O'Kennedy seems most uncharacteristically to refuse to take the point I am making. What I said about the genesis of this section was this: we looked at the section in relation to the special PRSI allowances. Since it was introduced last year only on a one-year basis, I had to decide whether to propose to the Government that we would continue with it, abolish it or do something else with the money. I am particularly concerned about people on low incomes at work who cannot benefit from the tax-free allowance or the special PRSI allowance. It seemed to me we could use the £60 million involved in maintaining the PRSI allowance in a more effective and equitable way if we used a portion of it to address directly the problems of the people on low incomes at work. It was not suggested that there was any inevitability about that measure. It is simply a fairer way in my view of using the money. It is not a decision that was made with any intent to divide. Only an opposition put to the wall to find arguments could dredge up an argument of that kind in this context.
It was the Minister who dredged up the argument.
We must look at what the effect of the allowances on our system is and if we can find a way of making the effect more equitable, it is something we should be anxious to do and Members should welcome it.
I asked the Minister a specific question about the extension of PRSI. Presumably he will argue that he is not responsible for that area but he is responsible for parts of it. I understand that both partners in the Government are committed to the introduction of tax credits in place of tax allowances. The Minister said he is not prepared to say what he is going to do, but if a decision is not made now or quite soon in relation to tax credits, they cannot be introduced again. Preparations have to be made now to introduce tax credits next year. If that is not done now, the introduction of tax credits will have to wait for another year. When precisely are these tax credits being introduced?
I have answered the Deputy's question and said I will be addressing this matter when we have finished the Finance Bill. I am not prepared to say now what precise measures will be in question because I have not worked them out. I am not prepared to say what specific action we will take in relation to PRSI because I have not worked it out. I can assure the Deputy that as far as the administrative difficulties are concerned. I am fully aware of them and he can be sure full account will be taken of them.
The Minister is leading us a merry dance. We were told in 1981 there was no time to introduce tax credits or restructure the PRSI system because the Government had to produce a budget in a matter of weeks. We were told the same thing in 1982. Now we are being told the Minister does not know what he is going to do about tax credits and PRSI, although both partners in Government have compaigned in at least three general elections on the basis that they would introduce these measures.
That has been abandoned.
We are dealing with the 1983 Finance Bill and the section dealing with PRSI allowances. This is an extremely interesting debate raised by Deputy De Rossa but it is not relevant to today's business.
Deputy De Rossa wants the Minister to deal with his proposals on tax credits and he wants to know what is happening about them?
It does not arise here.
It is relevant.
It does not arise on this Bill.
It has been abandoned.
The Deputy has been concerned that this Bill should be discussed properly. I am very glad to say that with the agreement of the Whips we have arrived at an allocation of time. If Deputy O'Kennedy wants to fritter away this time amusing himself making points of this kind, he must take the consequences. I am concerned that we should stick to this Bill.
Question put: "That the paragraph proposed to be deleted stand part of the Bill."
The Committee divided: Tá, 76; Níl, 71.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Myra.
- Begley, Michael.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- 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.
- Crotty, Kieran.
- Crowley, Frank.
- D'Arcy, Michael.
- 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.
- 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.
- O'Brien, Fergus.
- O'Brien, Willie.
- O'Donnell, Tom.
- 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.
- Calleary, Seán.
- Colley, George.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Bernard.
- Leonard, Jimmy.
- Leyden, Terry.
- McCarthy, Seán.
- McEllistrim, Tom.
- 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.
- Daly, Brendan.
- De Rossa, Proinsias.
- Doherty, Seán.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzgerald, Liam Joseph.
- Fitzsimons, Jim.
- Flynn, Pádraig.
- Foley, Denis.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Gregory-Independent, Tony.
- Harney, Mary.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Kirk, Séamus.
- Kitt, Michael P.
- Lenihan, Brian.
- O'Kennedy, Michael.
- 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.
Amendments Nos. 12 and 13 not moved.
I am putting the question, "That section 5 stand part of the Bill."
On a point of order, can you explain why amendment No. 12 falls?
The amendment falls because the House has voted that the paragraph as it is stands. In accordance with Standing Orders that is the decision of the House. Amendment No. 12 may not be moved.
May I take it then that we were voting on both amendments Nos. 11 and 12?
We were voting on the paragraph.
How is it possible to vote simultaneously on two resolutions that are distinctly different?
In accordance with long-standing practice, the question is put as I put it, that is, that the paragraph or the words proposed to be deleted stand. A subsequent amendment which proposes, as the Deputy's amendment proposes, to alter the words is contradictory to that decision and therefore cannot be put to the House.
I shall have to become more familiar with the rules of the House.
By way of explanation and to make the position crystal clear, Deputy Frank Prendergast has now voted against an increased allowance for PAYE taxpayers, an increase that Deputy Bell, the Workers' Party and Fianna Fáil supported.
On a point of information——
Deputy Prendergast will find it hard to sell that one.
I am proposing that section 5 stand part of the Bill and Deputies can then talk as much as they wish.
Question proposed: "That section 5 stand part of the Bill."
On a point of order, I do not consider it correct to argue that because the amendment which sought to change the paragraph in a certain way has been defeated another amendment to the same paragraph but seeking to change it in a different way should fall.
I will clarify the position but beyond this I am not going.
The question I put to the House was that the paragraph which was proposed to be deleted stand part of the Bill. The House voted on that and decided that the paragraph should stand part of the Bill. In these circumstances any attempt to move Deputy Bell's amendment would be an attempt to undo the decision taken by the House and that would not make sense. I will now allow further argument on the matter.
It is only fair that I should be allowed to make a point in relation to this.
The Deputy has made three points already.
The amendment we were voting on was one that sought to change the paragraph in a certain way. The Dáil divided on that but this side of the House did not want it changed in that way. We are proposing that the paragraph be changed in an entirely different way in which case we might get a very different vote.
The Chair would point out to the Deputy that he should not overlook the fact that there is a Report Stage.
Is the Chair saying that it is possible to reintroduce the amendment on Report Stage?
I am telling the Deputy that he might consider that.
For clarification, Deputy Bell's amendment was taken in the discussion. It was on that amendment that Deputy Prendergast made his very moving speech and he has now voted against the amendment. He has voted in favour of retaining the section.
Does section 5 stand part of the Bill? Agreed?
In fairness to The Workers' Party and Deputy Bell, Sir, you should make it clear to them that they can now make any points they want to make.
I am doing so.
You just said "agreed", which would have indicated a curtailment of discussion.
No. If it is agreed there is no discussion. If it is not agreed there is a discussion.
We are now in a position to discuss the section. Let us be clear about this. Anything that any Deputy in the House wants to say about the section, the allowances in it and whether they should be bigger or smaller can now be said on the section.
I remind Deputy Haughey that there is only one Chair.
Question put.
The Committee divided: Tá, 76; Níl, 72.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Myra.
- Begley, Michael.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- Bruton, John.
- Bruton, Richard.
- Burke, Liam.
- Carey, Donal.
- Collins, Edward.
- Conlon, John F.
- Connaughton, Paul.
- Coogan, Fintan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Andrews, Niall.
- Aylward, Liam.
- Barrett, Michael.
- Barrett, Sylvester.
- Bell, Michael.
- Blaney, Neil Terence.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Browne, John.
- Burke, Raphael P.
- Byrne, Hugh.
- Calleary, Seán.
- Colley, George.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Bernard.
- Daly, Brendan.
- De Rossa, Proinsias.
- Doherty, Seán.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzgerald, Liam Joseph.
- Fitzsimons, Jim.
- Flynn, Pádraig.
- Treacy, Noel.
- Tunney, Jim.
- Walsh, Joe.
- Walsh, Seán.
- Foley, Denis.
- 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.
- Leonard, Jimmy.
- Leyden, Terry.
- McCarthy, Seán.
- McEllistrim, Tom.
- 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.
- O'Leary, John.
- O'Malley, Desmond J.
- Ormonde, Donal.
- O'Rourke, Mary.
- Power, Paddy.
- 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.
|
Cooney, Patrick Mark.Cosgrave, Liam T.Cosgrave, Michael Joe.Coveney, Hugh.Creed, Donal.Crotty, Kieran.Crowley, Frank.D'Arcy, Michael.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.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.O'Brien, Fergus.O'Brien, Willie.O'Donnell, Tom.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. |
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."
How much does the Minister expect to save——
(Interruptions.)
Order, please. Deputies are giving the impression that they have met after a long recess and wish to talk things over.
How much does the Minister expect to claw into the revenue as a result of introducing this amendment to the 1967 Income Tax Act which affects the allowances of young married couples in the first year of marriage?
The proposal is estimated to save £6 million in 1983 and £8 million in a full year.
That represents the usual gross figure of about £6 million with a net figure of about £8 million. Couples getting married obviously face considerable expense and it has always been acknowledged that income tax legislation should take this into account and give an inducement if necessary. No one has ever questioned this allowance. Many young married couples face great financial strain because of their mortgage commitments which will also be affected by this Bill and this reduction will mean that they will get a fraction of what they would otherwise have got in the first year of marriage. Their net income afterwards will also be affected by this Bill. In view of the small amount involved surely this change could be left aside. To introduce what many people describe as a mean little amendment to the 1967 Act is petty. Also, many people in the Revenue Commissioners will spend a lot of time working out this fraction. We often hear about the money due to the Revenue Commissioners but we should also acknowledge that a lot of people wait for a considerable time under existing legislation to get rebates from the Revenues Commissioners and the Revenue Commissioners have the benefit of that money while those people wait. When they get it back they do not get interest——
What did the Deputy ever do about that?
The administration of the system in recent times, as any young married couple will tell you, is bogged down to the point where they are waiting for considerably longer than when we were in Government. If the Minister does not know that, perhaps it is because he is not long enough in office. Every other Deputy seems to know that these people are waiting for the rebate to which they would have been entitled under present legislation. They are now going to wait longer for less because the officials in the Revenue Commissioners will have to work out what fraction they are entitled to——
The Deputy should support me.
Improvements in the administration rests with Government. They must ensure that these things are done efficiently and properly. We are opposing this because it changes what has been an established and appropriate allowance in our income tax code. It is a mean little amendment, as it has been described, and does not take account of the special financial burdens that any couple meet in their first year of marriage. It will also mean that the rebates to which they are entitled will be even slower in coming back to them than they are under the existing provisions.
Deputy O'Kennedy is getting quite expert at using words like "small amounts". The difficulties facing us are the result of years of actions by his party ignoring the small amounts, but they all add up in the end. If Deputy O'Kennedy and some of his colleagues had paid a bit more attention to small amounts when they were in Government we might not have such a large amount to deal with now. Far be it from me to advise Deputy O'Kennedy on how he might look back on his period in office; but there is an old, true saying that when you look after the pennies the pounds will look after themselves. Deputy O'Kennedy let too many pennies slip through his fingers and we now have to find the pounds to repay.
Deputy O'Kennedy has also spent too much time on that bench in recent weeks with the First Report of the Commission on Taxation in his hand. People have mentioned how he has waved it around, but I wonder has he ever read it. Recommendation No. 73 states:
In the year of marriage, both spouses should be taxed as single persons. However, they should have the right to opt to be taxed jointly in the year of marriage. In such a case any repayment due should be reduced in the proportion that the period of marriage in the year bears to the full year.
That is from the report that Deputy O'Kennedy has been waving about for the past few weeks and criticising me for apparently not paying any attention to it. Now that we come to a proposal which implements a recommendation of the commission, Deputy O'Kennedy chooses to ignore the report. It would be instructive if the Deputy would read what is said about this measure in that report. That is, broadly speaking, why I am proposing this measure now.
Deputy O'Kennedy also spoke about how long people had to wait for refunds. We all know there are problems in this area and the Revenue Commissioners deal with them every day. They are due partly to the fact that we have a fairly complicated tax system with a large number of various kinds of reliefs brought in at different times for different purposes. That complicates the operation of the system and inevitably means that it takes longer and costs more to establish what an individual's entitlement is if a number of different heads of entitlement have to be examined. I am not so sure that Deputy O'Kennedy really applied a huge amount of energy to the improvement of the system of collection in the Revenue Commissioners. He has seen evidence in recent weeks that we are moving on improving the overall efficiency operation and making available to the Revenue Commissioners the sources needed to carry out their job more effectively. Since the Deputy has expressed concern on this aspect, I will hold him to that concern and if and when any aspect of that comes into this House I will expect his full support for measures to improve the efficiency of the system so that we can avoid the problem he mentioned, which however is totally irrelevant as far as the provisions of this section are concerned.
Improving the efficiency of the revenue works two ways, first, in collecting and, secondly, in repaying. I was dealing with the second one here because it is relevant. I am glad the Minister has acknowledged that, because it is a fact that there are considerable sums due to people who are applying for tax rebates. The Minister knows that and he should direct very serious attention to it. I accept that the system is complex. I am simply suggesting that this provision is going to make it more complex and for that reason the likelihood is that people will wait longer for less. If the Minister can do anything to correct that, he will have our full support.
The Minister quoted from the Report of the Commission on Taxation in support of what he is doing here. He must not have read the introductory chapters because the Commission on Taxation make it very clear that the one thing they do not want to see argued, much less adopted, is individual items being extracted by the Minister and used as if that is implementing the whole report. The very next section runs completely contrary to what the Commission on Taxation suggest, so it is a little false on the Minister's part to use the commission in support of what he is doing here. The next section in relation to the reduction of tax credits for investors is quite the opposite of what the commission recommend. I am sure the Minister's advisers will recognise that fact. To say the least of it, the Commission on Income Taxation do not support the Minister's general position. If he wants to use them, he should not use them so selectively.
The Deputy still has not given us information about the Commission on Income Taxation. I thought he was about to make history.
Dún Laoghaire): I have been extremely interested in listening to the contributions from the other side, not only on this Finance Bill but also——
There has been only one contribuiton on this section.
(Dún Laoghaire):——on Private Members' motions looking for this relief and that relief. Nobody in this House denies the fact that there is a need for tax reform. Very often from the Fianna Fáil benches we hear suggestions which I support. Democracy is at risk. The same people who are asking us to act responsibly come into the House on an important issue such as this and act totally irresponsibly. There are people in the Public Gallery——
What did the Minister do this time last year?
(Dún Laoghaire):——and people in the Press Gallery who must be wondering whether we are playing a little game here, a little game of politics with one party versus the other. Are we playing the offside rule one week, or what tactics will we apply the following week? As a former Minister for Finance, Deputy O'Kennedy knows that the simple reality is that the opening current budget deficit is over £1,200 million.
On a point of order, agreement has been reached between both sides of the House to which the Government Chief Whip was very much a party. The agreement was that we would work to a timetable. We are now dealing with a particular section of the Bill. If we are to have an attempt by the very man who was a party to the agreement to delay us we will be wasting time. I argued specific issues on this section. The very man who was party to the agreement is now ensuring that we waste time.
(Dún Laoghaire): That is not a point of order.
It certainly is.
(Dún Laoghaire): I am making my contribution.
The order was agreed by the very Deputy who is now wasting time.
The Chair will decide who is wasting time. I accept the Minister's contribution, but he is going a little bit outside the section. We are dealing with section 6.
(Dún Laoghaire): Section 6 deals with a further reduction in the level of income of something in the region of £6 million.
I want a ruling on this. If that is to be in order on each section as it is debated, it is open to any member of the Government parties on each section to ignore the precise provision in the section and spend 15 or 20 minutes or an hour or an hour-and-a-half talking about the overall taxation position.
(Dún Laoghaire): No.
Of course it is. They can waste the time of the House.
(Dún Laoghaire): I am not wasting time. I would be finished if the Deputy had not interrupted.
I want to ensure that nobody comes into the House to waste time as the Minister is wasting it now.
(Dún Laoghaire): I have respect for Deputy O'Kennedy as a Member of this House but he is insinuating——
The Minister should confine himself to the section.
(Dún Laoghaire): The Deputy may dislike what I am going to say but I am making my contribution. I did not come in here to waste time. I agreed a programme which allowed a certain period of time for the various chapters of the Bill. I do not intend in any way to waste time. I am making a point which I am entitled to make as a public representative, whether or not I am Government Chief Whip. I am interested in tax reform and the sort of reforms Deputy O'Kennedy spoke about. We will never get to that point unless we are realistic. If we are to go through this exercise of reducing and increasing the level of expenditure and income for the next three days in an effort to fool the people that we are reforming the tax system we will be wasting time. The fact is that the opening deficit this year was £1,200 million.
This is really out of order. I protest.
This is not right.
I am in the Chair. I would be very thankful if Deputies would sit down and let me deal with the matter.
I protest most strongly. This is an abuse of the agreement.
I appreciate that the Minister has made his contribution and that his concern is the same as the concern of the Opposition. I appeal to the Minister. We will have confusion unless he confines himself to section 6 of the Finance Bill. I would be very grateful if he would conclude on section 6.
On a point of order, a Leas-Cheann Comhairle, I appreciate your appeal and your gratitude but you have a greater responsibility than that. You do not discharge your responsibility by appealing or being grateful. I want a ruling.
I am in the Chair. Deputy O'Kennedy is the spokesman for his party. He should allow me to do my duty. I am asking the Minister to confine himself to section 6.
(Dún Laoghaire): Could I have a ruling? We are debating section 6. It is being proposed by the Opposition. Opposition to that section means a loss of revenue to the Exchequer. Am I not entitled to make the point that, if there is that loss of revenue to the Exchequer, the deficit will be far wider than suggested?
I am asking the Minister to confine himself to section 6. What he is saying is more like a Second Stage contribution. We are addressing a specific part of the Finance Bill at the moment. I appreciate the Minister's concern.
(Dún Laoghaire): Section 6 is being opposed by the Opposition.
I accept that.
(Dún Laoghaire): If I were to support that opposition to the section it would mean a loss of revenue to the State. Surely I am entitled to make the point that we cannot afford to lose that revenue. Am I not entitled to do that?
The Minister has made his point.
(Dún Laoghaire): Why is everybody getting so excited because I am making that point?
I want to be quite clear. The agreement we reached enables us to deal with the Bill section by section. The sections are wide-ranging and very complex. If the Government Chief Whip is to set this example to other Deputies on that side of the House the agreement means nothing. He knows that. We will have to come back and ask for further time into the small hours of the morning.
(Dún Laoghaire): I will sit until 5 a.m. if it means I can have my say.
Could I finish my point? The order of the House is now established. The Minister for Finance is well capable of reminding us — as he has done not once but a number of times — of the general economic situation. While we are dealing with the precise position of the allowances in the first year of marriage, is the Government Chief Whip about to demean the role of the House to such an extent that we will hear a broad argument on budget deficits and go back four years to borrowing requirements? Now is not the time for that.
(Dún Laoghaire): The Deputy will not even listen to me. What is wrong with letting me say what I have to say?
I am asking the Minister to conclude on section 6.
(Dún Laoghaire): The fact that I am the Government Chief Whip does not mean I am not entitled to have my say.
Yes, on section 6.
(Dún Laoghaire): That is the point I am making.
We could go on indefinitely on the different sections on the very same basis and we would be here until Saturday evening.
(Dún Laoghaire): If the Fianna Fáil Party oppose a section and their opposition would involve a loss of £6 million to the State, surely they have an obligation to say where they would get the £6 million.
That is the Minister's contribution on section 6.
(Dún Laoghaire): It is not. I want to expand my point. My point is that, if the Opposition ask us one day to govern the country and put the books right, and come in here the next day and ask us to spend another £100 million on reforms, they have a duty to tell the people where they would get the money.
That is not fair.
The Minister has concluded his contribution on section 6. I am calling Deputy Connolly.
I will be very brief. I call this a very mean type of provision because it will affect newly married couples who are involved in a great deal of expenditure. The Minister said the figure was approximately £5 million.
£6 million.
Approximately £6 million. I am of the opinion that revenue from VAT and PAYE at the end of the year will be greater than forecast in the budget. Therefore, there is room to manoeuvre on this issue. If the Minister cannot see his way to considering this now perhaps he would do so before Report Stage. Many of the young couples with whom I spoke were quite perturbed about this.
In regard to the fraction, we are getting into a lot of bookwork on this. I am open to correction but, as far as I know, refunds of PAYE in some cases can take up to three months. Judging from my correspondence with the Revenue people refunds, on average, take three months. We are here dealing in fractions. As the Minister pointed out, the Income Tax Acts are sufficiently complex without getting into this complicated arena. With all due respect I call it a mean provision, we are stooping very low on this issue. I am very much in favour of giving newly-weds a chance for the first year at least. In many cases the amount may not be that high. I know the Minister will say £6 million is involved. But I am allowing for buoyancy over and above the amounts projected in the budget with regard to both PAYE and VAT returns.
Arising from the contributions so far on this issue, the difficulty people on this side of the House are in is that the only amendments which are acceptable and are in order are amendments which seek to reduce revenue. We are precluded from putting down amendments to collect additional revenue. For that reason the Minister of State's point in regard to people being irresponsible in promoting amendments which seek to reimburse money to people or whatever does not hold. Particularly in relation to The Workers' Party the Minister for Finance is aware that we had a comprehensive submission made to him in relation to the taxation system covering the areas of indirect taxation, capital taxation, corporation tax, taxation of the self-employed, farmers, personal income tax, administration. PRSI and so on. Therefore the Minister of State's argument certainly in relation to The Workers' Party does not hold. Fianna Fáil can fight their own corner in relation to that matter.
The provisions of this section constitute another belt at the PAYE sector, people who, perhaps after years of trying to gather together some money to get married, are now confronted with the withdrawal of the facility they had hoped to have at the end of the tax year. As other Deputies have said, it is a mean way of trying to balance the books. There are many other areas in which this money could be collected and with which we shall be dealing as we progress through the Bill. For instance, last year a section was deleted entirely from the Finance Bill with the support of the three main parties, Fianna Fáil, Fine Gael and Labour. That was in regard to the resource tax which would have yielded practically the same amount of money as it is proposed to take from young married couples under the provisions of this section.
I should like to add my words to those already expressed appealing to the Minister to have second thoughts about this. As I see it, we accept in this country, the Constitution accepts, the desirability of people getting married; normally it is younger rather than older people who get married. This Government came into power promising a particular interest in young people. We are in the midst of a depression and whereas formerly the two people getting married would both be working now one only is working. Therefore the relief is all the more important now. Traditionally there has been recognition of the fact that, when two people are getting married, not on love alone will they live and that the State should, in respect of this allowance, recognise that what they are doing is desirable. The Government should recognise that in regard to their undertaking they will be incurring increased expenditure. I might ask the Minister if, in his calculation of the figure of £6 million, he has made provision for the fact that all newly married couples purchase a certain amount out of which he gets a return. That is the essence of my point. This seems to me to be a reversionary move from the State's recognition of the fact that it is desirable that young people get married, of the fact that the State should be conscious that, in their first year of marriage, they have commitments and expenditure from which they might be relieved to some extent.
I know the Minister will contend that it is being done in part. Here I agree entirely with our spokesman who would contend that the additional burden in calculating that percentage might further reduce the figure of £6 million. I put that argument to the Minister. The Minister of State at the Department of the Taoiseach may talk about responsibility and irresponsibility. I might say in passing, a Leas-Cheann Comhairle, that I had the privilege of being in your position when the boot was on the other foot last year. I would not want to embarrass either the Minister of State or indeed the Minister who seemed to think it was possible to get money other than that which was provided. The Minister need not look aghast at me. I can remember him saying, on some other matter, something like, "To Jericho with the Revenue Commissioners, they do not run the country. We run it and if we say the money is to be there it must be there." That is by the way only.
I would never use a phrase like that.
It is there; I will get it for the Minister.
Not to Jericho.
Maybe stronger.
Well, if not to Jericho perhaps to some place much further down beneath our feet. I do not want to prejudice the case I am making on behalf of young couples. I note that I have changed the Minister's frown to a romantic smile.
Does the Deputy want a romantic smile from me?
Would he look at this matter again, recognising that he, I and the rest of us, I think, availed of the provisions that were there when we were moving into that happy state. I would not jettison——
I had more important things to worry about concerning the date of my marriage. I was married just after the beginning of the tax year.
The Minister might say, "Look after the pennies" but perhaps the pennies the Minister will receive from this in the long run will be pennies that will be dearly bought.
Would the Minister tell us if the £6 million is estimated to be the gross amount yielded? For example, has he taken into account the VAT that would accrue if there was not a change in this section? As I think most people are aware, most of the money refunded under the provisions of this section will be spent on furniture, electrical and general household goods. If young married couples are not given this refund many of them will be placed in difficulty. Again, it is mainly the less well off members of the community who will be hit by this provision. Indeed the Minister of State at the Department of the Taoiseach hit the nail on the head when he said that if they did not do this they would not balance the books. That is what the people opposite are doing, balancing the books and forgetting about the people.
I might point out to Deputy M. Ahern that he is now following a line that has recently become unfashionable in his party. I remember the days when the Fianna Fáil Party seemed to have a kind of antipathy to anything like balancing the books. I might remind Deputy Ahern that they missed the boat last October. At that stage his party found a new enthusiasm, after their Pauline conversion in the late summer of last year, when not only were they diligently promoting the balancing of books but I might remind him also that his party were going to balance them in a rather more severe way this year than we intend doing now.
With more humanity.
Where is the extra humanity in taking another £150 million in tax from the people of this country? I would like Deputy MacSharry to tell me. The Deputy cannot pretend that it could have been done with more humanity or with less difficulty than in this programme. The Deputy was never put to the test.
The Minister does not seem to have heard you, a Leas-Cheann Comhairle. The Chair has a difficult job and we at least will try to help him.
I agree that the Chair has a difficult job and I can fairly claim to have taken up less time in this debate than others and to have been more orderly. Deputies opposite have suddenly found out the difference between gross and net. Deputy Tunney referred to the gross cost of this measure and Deputy O'Kennedy said that Deputy Ahern mentioned it. They are looking at only one side of the equation. It is perfectly true that if the State did not take £6 million of revenue from various people, they would then spend the money on other activities which would produce other revenue for the State. On the other hand, were the State not to make this saving of £6 million, it would have to raise another £6 million in taxation elsewhere or reduce expenditure by that amount. The option of borrowing is not open to us. The very effect of switching from this method of saving £6 million to another method of gaining £6 million or spending £6 million less would in itself have the opposite buoyancy factors. It will take some time for the Opposition to learn that lesson because when they were in office buoyancy turned out to be a lead balloon.
It is £1 million less than is being wasted on the National Development Corporation.
Not every young couple getting married waits until just before the end of the tax year in order to claim benefit for the whole of that year. On the basis of my own personal experience, if no other, I am quite convinced that there are romantic reasons for people deciding not to wait until near the end of the tax year to get married. I, for very romantic reasons, got married a couple of weeks after the beginning of the tax year and was therefore not one of the people who made a substantial gain.
Ireland will be reassured to know that the Minister is touched by romantic reasons. That is not the picture his fellow citizens have of him.
I will tell Angela McNamara about the Minister.
The Deputy need not bother because I do not think I need any assistance from that quarter. Is it not nice that occasionally finance can have its romantic side?
The sun is bringing it out.
The contention on the other side that there is extra buoyancy in PAYE and VAT taken overall is one which comes up with monotonous regularity. As long as it keeps coming up, I do not think I am wasting my time in repeating what I said on several occasions yesterday and this morning — that the contention is based on a series of forecasts which in turn are based on assumptions different from those which I have used and which in my view are less representative of the situation than the assumptions on which I am working. I would counsel the Opposition against using that basis for saying that we can relieve a number of measures in the Bill without worrying about the effect on the overall finances. So long as the Opposition keep making that point I will feel obliged to reply because it is a snare and a delusion to think that on the basis of present trends there would be an extra £100 million in my pocket. That is pure hogwash and I would hate to think that any party, even the Opposition party, would adopt an approach to this Bill on the basis of that kind of chimera.
Could the Minister tell me, based on trends in recent years, the number of couples who will not now get this additional bonus in the year of marriage? According to my calculations it could cost the average couple — I am aware of the dangers of using that phrase — up to £1,000 or more per annum.
A thousand times £20,000 is £20 million.
How many couples and how much per couple approximately?
I would estimate that approximately 20,000 couples would be affected by this and if they were to be classified as average couples and the measure were to cost £6 million, the figure would not be £1,000 but about £300. The benefit of this measure came about in our taxation system more by accident than design and this is a point which Deputies opposite, especially Deputy Tunney, might consider.
We have a series of amendments to this Bill in relation to the impact of the Minister's proposals. If the Minister on each one of them intends to answer on the single basis that it would be irresponsible to adopt these amendments because of the money involved then we might as well withdraw every single amendment.
On a point of order——
The Chair cannot anticipate.
Of course the Chair cannot, but I want to make a point——
On a point of order, I said a very specific thing to the Deputy, I am sorry for taking up time in repeating it. I said that as long as he makes the argument to me that I can afford not to take some of the measures because he is taking on board a particular forecast, I will continue to reply that I do not agree with that forecast.
That point was made at the beginning of the debate. In reply to each argument we put forward, the Minister makes the general point that he cannot do it, that the Opposition should be more responsible and not ask for this exemption or that. He ignores the precise arguments on the precise sections. I protest against that form of response. On this basis we could let the whole Bill through because each amendment involves a fiscal adjustment and he is making the same old tired response. Apparently there is no problem if the Minister decides to make an adjustment, late conversion though it may be, knowing he has made an initial mistake.
The Deputy is making a caricature of the debate.
I am not. Let us concentrate on the issues in each section. We do not need to hear the Minister or the Chief Whip making the same general argument. That makes a caricature of the debate and the Minister knows it.
I know the Deputy dislikes hearing general argument but that is the reason he is here.
That is nonsense.
I know the points made by Deputy O'Kennedy regarding the Minister's response and the urgency to correct what he describes as false impressions created by spokesmen here. In reply to Deputy Ahern he referred to buoyancy in revenue last year. I would remind the Minister and put on the record of the House that the anticipated tax revenue last year was the same as the figure given by the same Revenue Commissioners to the then Minister for Finance, Deputy Bruton. That is the reality. It was not until some time in late July that it became obvious that there was to be some shortfall in the forecasts made by the Revenue Commissioners, not by either Deputy Bruton or myself. Those are the facts and I defy contradiction.
I am not confining my remarks only to last year.
Question put and declared carried.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.