Finance Bill, 1984: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Before I moved the adjournment of the debate yesterday I was referring to remarks made by Deputy Séamus Brennan that people were forced into the black economy due to the high taxation prevailing. I said that in my view that was not the reason that a black economy prevailed. It was generally confined to people who were in a small way of business and who entered the black economy whether or not taxation was high. That in itself was not a cause of the huge black economy which exists in the country at the moment.

There were some genuine efforts made by speakers on both sides of the House in this regard, and Deputy Brennan tried to put forward positive suggestions which could be considered by the Minister in trying to improve the business climate. One of the examples he gave was that where companies had very few employees and made excessive profits maybe we should consider taxing those companies or giving an advantage to companies who had a larger number of employees. That is just an example of the genuine efforts being made and the recognition in the House of the difficulties that exist in the economy, how business needs to be supported and the climate changed in order to provide more jobs.

This Bill proposes to add a further 93 pages of legislation to the thousands of pages of tax legislation already in existence. The administration of these thousands of pages of legislation involves large numbers of civil servants, accountants, solicitors, estate agents and others in an enormous amount of pointless, detailed work in order to comply with rules dreamt up by people who very often had no experience of commercial life. That is not a criticism of the people who drafted them, but it is a fact that they may not have experience of commercial life. While accepting that a tax system must be complicated, it is admitted that the gobbledegook included in the Finance Bill is difficult to understand and in many cases capable of different understandings which may end up in court if the amount involved is significant and gives rise to an awful lot of unnecessary work.

A perfect example of this can be found in page 45 of the Bill at subsection (b) (ii) which states:

notwithstanding subsection (2) of the said section 318 (but without prejudice to paragraph (a) and to the order in which income is to be treated as reduced under subsection (2) (a) of the said section 307), the claimant may specify the extent to which any reduction of income treated as occurring by virtue of the said section 307 is to be referred to so much of the loss as is attributable to the loss, if any, actually sustained in the trade of leasing, the specified capital allowances or any other capital allowances, and, where the claimant so specifies, section 320 of the said Act shall apply in accordance with the claimant's specification and not in accordance with the said subsection (2) of the said section 318.

The meaning of this sentence is impossible to understand.

The Deputy is dealing with the Bill and, to that extent, he is in order, but he is now dealing with a matter which would be much more appropriate on Committee Stage.

I am not going to dwell on it. I just referred to it as an example and I intend to move on.

As suggested by the Commission on Taxation and following the lead given in the UK budget, I suggest that the Minister should simplify the system by reducing the tax rate and cutting out all the reliefs which the Government grant, which parliamentary draftsmen frame and which those involved in business try to understand. I know that may not be possible immediately, but in the last 15 months the Minister's actions may have set the scene so that he could attempt it in the future. I hope he will be able to do that and to at least make a start next year to reduce the allowances and widen the bands.

Turning to specific references in the Bill, I should like to deal first with the business expansion scheme. I agree with the proposal that it should be attractive for people to invest money and get a tax write off to encourage them to do so. However, the relief as drafted is only available where the company invests in and carries on a manufacturing activity and where employment grants are given by the IDA. This has been referred to by other speakers, and I should also like to bring it to the Minister's attention as it gives rise to differences of opinion between the taxpayer and the Revenue Commissioners, because what constitutes manufacturing is not defined and is probably incapable of definition as its meaning changes continually over the years. If one goes back to the Control of Manufactures Act — which I think was introduced in 1932 — when Eamon de Valera tried to set up a self-sufficient state, the matter was dealt with in broad terms; but it is capable of much wider application because of the high technology involved in today's industry. I should like to give some examples of those changes. In 1960 the metals and engineering sector, which includes the electronic industry, employed 21,000 people. In 1974 it employed 49,000 people and it now employs over 60,000 people. Similarly, the chemical industry now employs 12,000 people compared with 5,000 in 1960. The technology-based industries have exhibited strong growth while most other sectors of industry are stable or have declined. In the last five years technology-based industries have expanded by 15 per cent per annum while the manufacturing industry only grew by 2 per cent. The pace of the growth of these industries is forcing structural change, and it is important that our policies should be geared to accommodate and accelerate this growth and not to inhibit it. That is why I seek a different emphasis so that it should not be confined solely to what we consider our traditional manufacturing industries.

I should also like to refer to the Confederation of Irish Industry's comments on developing the new technology growth centres. They have expanded at a rate of 15 per cent over the last five years. They now account for one-third of the total output of the manufacturing sector. The achievement of such rapid growth during an international recession clearly demonstrates that these industries, comprising electronics, electrical engineering, chemicals and pharmaceuticals, have the potential to expand at an even faster rate over the next five years. The output, for example, of office and data processing equipment was 70 per cent higher than in the same period last year. Unlike most European countries Ireland is a strong net exporter of new technology products. These new technology industries have also become major contributors to employment and now account for over 40,000 manufacturing jobs, and employment has continued to grow during the recession. There are about 3,000 people employed in internationally traded services such as computer softwear, engineering, architectural and management consultancy. The majority are in computer softwear, and employment in this sector is expanding by about 30 per cent per annum. The European market for computer software is now £4,000 million.

I should like to see the business expansion scheme extended to include those, and it is worthwhile referring to a table which was printed in the CIINewsletter, volume 39, No. 22, on 4 October 1983. The average annual increases from 1973 to 1983 are listed as follows — office and data processing — 39 per cent; chemicals — 10 per cent; instrument engineering — 7 per cent; electrical engineering — 4 per cent, whereas all manufacturing was 4 per cent.

In employment, the average annual increases from 1978 to 1983 in office and data processing were 24 per cent; instrument engineering, 9 per cent; electrical engineering, 3 per cent; chemicals were 2 per cent and all manufacturing was - 2 per cent. As a percentage of total exports from 1978 to 1983 chemicals increased from 12 per cent to 14 per cent, office and data processing from 4 per cent to 13 per cent, electrical engineering from 3 per cent to 4 per cent, professional and scientific from 1 per cent to 3 per cent. The new technology sector increased from 20 to 34 per cent. We must take account of those changes and encompass them in our economic planning for the future.

It is absurd that a person engaged in an enterprise giving employment should have to get into a hassle with the Revenue Commissioners as to whether he is engaged in manufacturing. I suggest to the Minister that any investment in a company that means an increase in employment should qualify for relief. For example, why should not the relief be available to building firms? It is constantly said that the building industry is the backbone of the economy. That is a bald statement and one has to analyse it but perhaps we should agree to give the relief to the building industry and expand it on a much wider basis.

The Government have done good work in the past 15 months. The climate is now right for us to try to improve the job creation programme and increase employment. That should be the aim of all of us for the duration of this Dáil. Most investors would be reluctant to put £25,000 into one company. However, funds will be established by the banks and others so that people can invest in them and this money can be further invested in companies. This will enable the individual investor to spread his risk. The begrudging attitude of the parliamentary draftsman is shown in the fact that the maximum expenses payable to people to launch the fund is 1 per cent of the amount subscribed——

I do not think it is right for the Deputy to refer to the begrudging attitude of the parliamentary draftsman. Presumably the parliamentary draftsman is carrying out his instructions and it is not in order to reflect on him in that way.

I was not criticising any person but I was referring to the fact that it would appear to people outside——

I want to make it clear that the Deputy should not reflect on the parliamentary draftsman in that way. The political head of the Department is the Minister in charge of the Bill.

I wish to take it back. I am not talking about a particular person but it appears from the outside that there is a begrudging attitude. I shall leave out the words "parliamentary draftsman" and will say that this Bill seems to show a begrudging attitude.

That is quite in order.

That is what I meant. The various Finance Bills comprise thousands of pages and this year a further 96 pages are added. I heard other people in the House refer to the niggardly and begrudging attitude. There is a constant witchhunt of people who are trying to run a business and make a living. There seems to be an anti-business, anti-profit and anti-investment attitude in the legislation. These measures are compiled by people. I do not know who they are: they are probably working in the Civil Service and in the Minister's office. There seems to be an almost Churchillian fight going on in that their attitude seems to be that they will fight people with income tax, corporation profits tax, property tax, capital acquisitions tax and advance corporation tax. It is the politics of the lowest common denominator. Every time a person makes a success of his business and makes a profit there is a begrudging attitude shown towards him. A change is needed here.

The day before yesterday there was a request by the Minister for Labour, the Minister for the Public Service and the Minister for Finance to companies to put profits or available cash into job creation. However, if they want people to do that they must create the right climate and environment. People are so crucified by taxes it is difficult for them to even consider investing. In any event, I think advance corporation tax should be withdrawn.

The Minister for Labour spoke about the 30,000 redundancies in 1983. At the same time there was talk of an incentive which it was considered would be of interest to workers in co-operatives who might wish to invest £25,000. There is a negative and unrealistic approach here, that industries will close and, as a result, the workers will invest their redundancy money. Workers do not invest their redundancy money in businesses. It is unrealistic to think that people will invest this money, especially in a sector that nobody wishes to invest in, namely, a capital-intensive industry. If a person is willing to take a risk and invest his money in order to create employment he should get tax benefit. The prevailing attitude shows clearly that there is no understanding of how private enterprise works.

Another example of this niggardly attitude relates to the provisions of section 23 which ended on 31 March and which related to the apartment building sector. I checked on this matter with the Department of Finance and they put me on to the Revenue Commissioners. I asked them what criteria they would use to decide what qualifies for relief under section 23. They said solemnly: "Oh, construction is the operative word and we will stick strictly to construction". They said that whatever portion of the building or apartment was erected at that time would qualify for section 23 prior to 31 March and whatever was not built would not qualify. I asked if they were going to measure it and they replied: "Yes, it will be brick upon brick". Can one imagine the inspectorate or officials from the Department trying to examine a half built apartment building or trying to find out whether there were two bedrooms, half a bedroom or a room without a ceiling to make up this calculation as to whether a person was entitled to this or not? What is that but niggardliness, instead of being generous about the whole matter and saying: "if a building was being constructed before 31 March that qualifies" and stop this nonsense? They will probably have 100 people running around for the next six months fighting with developers as to whether or not something qualifies.

In relation to the £25,000 that one is unlikely to put into one single company I should like to say that the begrudging attitude is shown in that the maximum expenses payable to people to launch the fund is 1 per cent of the amount subscribed and the maximum fees they can get out of it is 5 per cent in dividends. Obviously, the people who drafted this are unaware of the fact that most places where money is invested are not in a position to pay dividends for some years. This makes it very unattractive for banks, and others, to set up such funds. Again, it reflects — I do not like using these words — the Civil Service mind. Accordingly, I should like to ask the Minister to throw open the relief to any person who can increase employment.

I should like to deal with the position of section 84. Section 40 deals with the changes proposed for section 84 and it runs to four pages. It sets out to withdraw section 84 relief and ends up by granting so many exemptions that section 84 financing continues in effect unchanged. I should like to know if the Minister is in a position to state the amount of revenue that will be gained by those four pages of what we would call at college waffle. The Minister should be aware that section 84 financing is really only attractive to exporting companies because the introduction of advance corporation tax made it unattractive. It is submitted that the changes introduced by section 40 are absolutely irrelevant. I am aware that it is different from the original budget proposals, and that shows to my mind that the section was ill-thought out.

Similar comments apply to preference share financing which is the precusor of section 84. One either recognises these as incentives to people to borrow money for investment purposes or one does not. In effect it is the State subsidising people to borrow money at low rates. Business people, however, would not see it that way. They see the State as a grabber, taking money from them, and they feel they are entitled to use the legislation to obtain cheap money.

I should now like to refer to the leasing provisions in the Bill. Broadly these provisions are introduced because many tax-paying companies, for example chain stores, who would have a massive cash-flow but very few allowances because there are no write-offs for buildings and shopping centres, were in a position to avoid paying tax by entering into leasing transactions. In practice chain stores would buy the equipment and lease it on to the lessee. The chain stores would get the allowances and write them off against the profits from the supermarket, if it was a supermarket. The provisions in the Bill provide that the write-off on the leased equipment is only available against profits generated by that equipment. From now on the write-off will be available only in the case of equipment grant-aided by the IDA. It is difficult to argue with that provision.

It is difficult to argue with the provisions in the area of bond washing. I should like to point out to the Minister that people who are crucified from paying tax will try to avail of loopholes to reduce their liability. That is how bond washing grew up. It should be open to people who make investments to be taxed only on any real income generated from those investments. For instance, if the income generated from a £100 investment is £10 the amount taxable in my view should be £10 reduced by inflation.

Another section in the Bill to which I should like to refer is the restriction on the sale of a principal private residence. This is another example of begrudger legislation. To anyone who sells a residence and gets an additional amount for it because it is nearer development I would say good luck. In the Bill the Minister wants to tax that person on the additional amount he gets. One can see how complicated that provision is if one looks at the memorandum produced by Stokes, Kennedy, Crowley and Company on the Finance Bill, dated March 1984 (No. 26). An example of the computation necessary to arrive at the figure is given in that memorandum. A person has to go through a complicated procedure to arrive at his or her liability. It would not be appropriate for me to give an example in the House because it would be difficult to grasp it. In the main it involves in the case of a person making a disposal valueing his or her house at April 1974 on a residential basis and on a development basis. Further valuations have to be obtained on the house at the time of sale between its residential value and its market value. There follows then a complicated formula to work out the tax on the development aspect of the property. I cannot see any real sense in that type of approach.

I should now like to deal with the capital acquisition tax aspects of the Bill. Broadly the capital acquisition tax is levied on gifts and inheritances made by Irish domiciled persons and which consist of Irish assets, and the Finance Bill proposes to change the method of calculation of the tax in a manner which will result in a significantly higher tax charge in many cases and extend the tax of certain types of discretionary trust which do not suffer the tax at present. The amount of tax payable up to now depended on the relationship between the donor and donee. There were different tax free thresholds and different rates of tax applicable to four classes of relationship. The Minister has reduced that number to three. The revised proposals in the Finance Bill in relation to gifts and inheritances taken on or after 26 March 1984 provide for the reduction to three in the number of classes of relationship for tax-free threshold purposes. They also provide for the abolition of the distinction between classes for the purpose of ascertaining the rate of tax payable so as to provide a new single rate structure in lieu of the present varying rates; that the revised classes of relationship are a spouse, a child, a minor child or a deceased child; brothers, sisters, nephews, nieces, grandparents and more remote ancestors. There is another class, "all others". The tax-free thresholds for the respective class relationships mentioned are £150,000, £20,000 and £10,000 respectively.

I submit that these are probably the most penal aspects of the Bill and have very significant ramifications for people, particularly those in business who want to pass on assets to their sons or daughters. In effect, the thresholds between the people are telescoped and the tax is made significantly more penal than it has been. This is not generally known because people have not concentrated on it.

I will refer again to the memorandum, page 11, where the main points of the Bill are summarised as well as the procedure. I refer also to section 107 of the Bill and particularly to the last line on page 86 which states that "provided that the tax so chargeable shall not be greater than an amount equal to 55 per cent of that taxable value". Section 107 is concerned with defining a new method of levying the tax, but the thing became so complicated that the draftsman had to put in at the end of the section: "The tax chargeable shall not be greater than an amount equal to 55 per cent of the taxable value".

If the thing were readily understandable such a provision would not be required. It has to be said, because this has been going on and evolving for a period, that the tax on discretionary trusts is a confiscation. That is what I think it amounts to, but I have heard stronger words mentioned, like extortion. It seems to me to be a confiscation because in effect what it means is that if assets are in a trust where the person is dead and the children are older than 25, the State is saying to the trustees, "Give us 3 per cent of your assets". What is 3 per cent this year, of course, could be 5 per cent next year. Supposing the trust had not the cash to pay, it would have to sell assets to realise the cash. There is a further snag because this sale of assets is a disposal for the purposes of capital gains tax on which further tax will be paid. Therefore, if the trust got investment income and sold its investments and decided to pay the 3 per cent out of them, it is still not good enough because the trust is liable to a surcharge of 20 per cent on its income.

That is an unfortunate piece of legislation. It is another example of why all Finance Acts have to be looked at and brought up to date, in the same way as property law has to be looked at. When the Minister has got the major problems out of the way, when things are settling down, when the time comes right, there will be an opportunity for the Government to sit down and examine these areas. It would be difficult, if there were changes of Government in a short period, to make a serious effort to do something like that but there are examples of things being started by Ministers with very good ideas and because they were beneficial to the populace at large were continued. Deputy Wilson was one with different portfolios who was involved in a continuing process, though his ideas might have come to fruition under the aegis of another Minister in a different Government. The legislation is extremely complicated, it will give rise to much difference of opinion and probably lead to very little revenue. I look forward to discussing the different sections on Committee Stage.

I will start by expressing appreciation of what Deputy Skelly had to say with regard to the complications of finance legislation, and in particular one must pursue certain sections backwards in time to one Act or another. It is difficult, without doing major research, to get out of any Finance Bill its clear meaning just by reading the Finance Bill. One would hope for some format or publication which would include the current Finance Bill and section of Acts referred to in their original or amended forms. Such work is done by research scholars. This Bill is bulky as it is, but I argue that it should be even bulkier because it would help to clarify what the Minister for Finance is trying to do.

My main criticism of the Bill is directed at its tone, the use that is being made of it or not being made of it in the current economic situation. It is adeja vu Bill, there is no sursum corda in it, no attempt to use taxation or revenue collecting as an instrument for reviving the economy, for increasing employment, though the Minister referred in his speech to the need for increased employment.

It is a very disappointing document. The Minister said that the forecasts made in his Department for this year were accurate—that the revenue and expenditure were more or less on target. If one reads the commentaries in the newspapers or listened to the comments from this side one would be doubtful and sceptical about the Minister's claim. I have a copy ofIris Oifigiúil for 27 March 1984 which gives the receipts, which I will go through quickly to indicate to the House why the Minister could not have been convinced that what he was telling us was the truth.

Up to 23 March 1984 the customs receipts were £16,900,000 compared with £15,600,000 in the same period in 1983. The excise collected in the same period was £220,940,000 about £20 million down in the same period last year which brought in £239,112,000. Not merely have you to take account of the difference, almost £20 million, but you must also take into account that you were in a different inflation period between 1 January 1983 to 25 March 1983 and January to March 1984. Estate duties are also down from £584,000 to £198,000. There was no residential property tax last year but £127,000 was collected this year: in this context, peanuts. Capital taxes are down from roughly £5.5 million to £5.185 million this year. Stamps are up to £2 million. Income tax on the other hand has risen from £413.7 million in the first quarter of 1983 to £462.9 million this year. This indicates where the shoe is pinching in our economy.

Corporation tax, significantly, yielded £25.4 million last year and £25.5 million this year. In real terms that is a major decrease. The income levy reads at £18.6 million this year and there was nothing for the corresponding period last year. Again the unfortunate customer is filling the gaps. Value-added tax this year yielded £330 million against £277.7 million last year. Inflation applies in this area as well. It is significant that income taxation and value-added tax are the items which show significant increases, as do agricultural levies at almost double what they were in the first quarter of last year — £3.7 million as against £1.9 million.

Motor vehicle duties are also up by £7 million, from £23.9 million to £30.9 million. The youth employment levy is down — probably indicating that fewer people are employed and contributing — from £12 million to £11.6 million. The Post Office is out of the reckoning this year but it contributed £47.2 million last year. The figure for Miscellaneous — always an interesting customer like A.N. Other on a football team — is down to £15 million this year. Mr. Miscellaneous was much more productive last year when he accounted for £21 million.

I agree that the vagaries of when payments come in can affect the overall figures, but three months is not a bad indication of what is happening in the receipts field as far as this year is concerned. I know various factors have to be taken into account and that various receipts come in bulk at different times of the year, but nevertheless one can take it that, losing on swings what one is gaining on roundabouts, there is some indication in those figures.

I am not confident that the Minister for Finance is right when he says the whole system of monitoring of both revenue and expenditure has improved. The total receipts for that period were £1,163,733,766 and the issues for the same period were £1,565,888,166 or a gap of £402 million. Four hundred and two million pounds for a quarter would indicate £1,608 million for the whole year. Again taking into account the vagaries of receipts and making allowance for them it is still a substantial deficit at this time of the year. On the issues side there is a figure which interests me, that is, the pay out under the Transport Acts, 1964-81 of £3,853,000. If the Minister has time I would like him to tell me exactly what that covers.

There has been great stress on restoring order to the public finances. This has been made a fetish by the present Government. We contend, and we can back it up with facts, that there is no significant impact being made on the deficit on current account and that the finances in general are not being improved by the policies of the Government. Some financial people in Europe are interested in bringing order into finances at international level. I have spoken — a voice in the wilderness — in this House about the desirability of doing something about the relative rates of exchange. Recently we had the advantage of a drop in the price of petroleum products, particularly petrol and diesel because our currency had strengthened against the dollar. For the last number of years we have been on the receiving end of a very strong dollar. The point I made already, and which I repeat now, is that no matter how good our Minister for Finance may be, no matter how good his advice in the Department may be, no matter how cannily financial policy is decided by our Government, these are factors over which we have no control.

The Bretton Woods Agreement drawn up by a number of people — a man who is not very popular nowadays, Keynes, played a large part in drawing it up — served us well up to the early seventies. Now it is of no use. It has been discarded since then but there are aspects of that discarding which have benefited our economy. My contention is that there should be at international level — when I say "international level" I include not merely the EEC plus Britain, who stayed out of the EMS, but the United States and Japan — an attempt made to bring some kind of order into the rates of exchange. I spoke some time ago about a meeting at Williamsburg. People hoped that some form of international agreement, no matter how loose, would be reached as a result of that conference but nothing emerged. Many economic commentators expressed disappointment.

In the current issue ofThe Economist an interesting proposal is put forward by a man called McKinnon in which he wants to involve the yen, the Deutschemark and the dollar. I will not go through the details. He is a monetarist but nevertheless he sees the need for a formula whereby some kind of order can be brought into international finances. From our point of view it would have been desirable for the United Kingdom to join the EMS. They chose not to do so but not all of the establishment there are satisfied that they did the right thing in this regard. There are still strong advocates of the UK joining the EMS. Our exporters have benefited from our being in the EMS and the fact that the pound sterling is stronger than our punt. Very few commentators or whiners among the exporters call attention to this. The only journalist who called attention to it was the economic correspondent of the Sunday Tribune some time ago. There is a 20 per cent advantage in the UK market.

Later I will refer to our loss of competitivenessvis-à-vis the countries in the EMS, a fairly serious matter which is referred to by the people who put together the ESRI report, edited by Kennedy and Cunniffe, on employment and unemployment. This document did not get the attention it deserved from this House or from the economic commentators. It was cast aside by people who are purblind, concentrating like hypnotised rabbits on one thing only, balancing the books, and not directing their attention to the unemployment scene which is a running sore in our society. It must be remedied. It cannot be done overnight but we must be seen to be thrusting in that direction. If not, we on all sides of the House are failing in our duty to the country, particularly to our younger citizens.

McKinnon believes that exchange rates powerfully affect real economic activity and that if they are misaligned they will increase protectionist demands. I do not subscribe to monetarism and I do not believe anybody on either side of this House subscribes to the full, bare, naked, Stone Age central theory of monetarism, although the Government have obviously taken most of the monetarist philosophy and are trying to put it into effect. McKinnon wants to make monetarism international so that it recognises what every banker knows but most monetarists ignore, that demand for a country's currency is not confined within its border. This is a very short article and I would recommend Members to study it and to try to get the Minister and his officials working along the lines which will save us from what is happening with regard, for example, to what we are paying per annum for oil. In farming you can do all the right things and the weather will let you down. You can do all the right things in finance and the exchange rate may let you down, affected by the interest rate in the United States.

The opening paragraph of this article states:

After a dozen years of floating exchange rates, much of the argument about the results is sloppy and stale. Some (mostly Keynesians) want to return to fixed rates,—

The term "fixed rates" might be too strong for what I am advocating. The EMS is perhaps the best in that there is a kind of constricted float between the currencies. The article continues:

—saying that they helped to bring the steady growth and low inflation of the 1950s and the 1960s. Others (mostly monetarists) want a squeaky-clean float giving each government absolute freedom to choose its own fiscal and monetary policies without importing the effects of others' policies via a semi-managed exchange rate.

That is all right if you are in the big league but it is a horse of a different colour if you are paying, as we are, for all our fuel in dollars.

If the GNP of all EEC countries was added together, including that of the UK, it would be greater than the GNP of the United States. Because of that, there is no reason whatsoever why we should not have a European currency — call it, perhaps, the ecu — which we could use for buying oil. It should be as strong as the dollar. It would mean that the UK would have to join so that there would be a ten-country pool or basket. I know from reading some EEC documents that there are financiers in Europe who are interested in this.

The Minister says in his speech that the first requirement is to secure the right financial and economic climate for the creation of employment. That is the one thing which was not included either in the budget or the Finance Bill. There is a story told about the couple who waited to get married until they could afford it. The door of the church was opened and a clanking of crutches was heard as the two approached the altar. If you wait until the finances are right for making a drive to create employment then you will have waited too long. You will not be able to achieve the purpose which was supposed to be the basis of your financial activity in the first place. The reference to the couple who waited to get married until they could afford it is apposite and to the point.

The Minister talks about wage cost competitiveness. I agree it is very important. We are inclined to talk about our borrowing as a percentage of our GNP. We must also talk about our borrowing as a percentage of our exports of goods and services. As has been said by Deputy Skelly, our exports have been particularly buoyant, but the buoyancy is on a narrow base, mainly in the chemical industry. In the data office equipment electronic area we have been very successful over the past year. There are other areas as well. We must never forget our agricultural exports, and so on. Reckoning borrowing as a percentage of our exports of goods and services may carry certain little dangers, seeing that the export is so narrowly based. It is important to take cognisance of it, and it is important that the Minister for Finance should take cognisance of it.

There is a table in this week'sEconomist giving the interest payments on external debt as a percentage of exports of goods and services. The story the graph shows here is a sad one, in that the percentage is as high as 45 in some countries. I am sure every Member of the House who takes an interest in economic affairs would be able to name the countries. In Brazil the interest they pay on their exports of goods and services is up to 45 per cent. In Argentina, Mexico, the Philippines, Sudan, Costa Rica, Turkey, South Korea, Nigeria and Yugoslavia the percentage goes down to a little over 10 for Yugoslavia.

I have a question down to the Minister about this. I do not know whether it has appeared on the Order Paper yet. If we are looking for a grain of optimism in dealing with our economic affairs, perhaps we could look at that. I may be wrong. We have big interest payments per annum. I should like to see the figure. I do not think we are in the kind of league I have just mentioned.

I want to refer to cost competitiveness and price competitiveness. I referred already to the advantage we have in the UK market because the punt reads roughly 80p as against sterling. There are disadvantages when we are importing raw materials. I suppose the ideal would be to import raw materials from areas where the punt is a stronger member of society, so to speak, perhaps the EMS if possible, although transport costs would come in there, and to export to where we have the exchange rate advantage.

In the context of the discussions which are about to begin with the trade unions and the volleys which are being fired by the Government at the trade unions and the Congress of Trade Unions, and the counter volleys, perhaps we are attaching too much importance to the issue of wages and salary only in relation to competitiveness.

On page 88 of the ESRI Employment and Unemployment Policy for Ireland we have indices of the price competitiveness of Irish manufacturing exports. It is a strange story, because we were more than highly competitive in the UK market. I have here a graph which nearly went through the ceiling in 1980-81 for competitiveness in the UK. The very strange thing is that in the EMS from 1975 to the present time, with a little spurt up here and there, we have been losing our price competitiveness. We should think about this. I am sure the 20 per cent advantage we have in exchange rates is responsible for a great deal of the high price competitiveness in the UK market.

I am quoting from page 90:

The decline in competitiveness against the EMS countries, and the gain in competitiveness against the UK, remain the main features if such adjustments are made.

There is an interesting table 6.1 on page 90 which gives unit wage cost competitiveness indices for Irish manufacturing industry from 1975 to 1982. It has its own lessons with regard to the Finance Bill. I do not intend to go into it, but on costs it says:

There is relatively little information on non-labour costs in Ireland compared with other countries.

That is a deficiency we should try to make up. The reason I am talking about this is that the only thing referred to is the labour costs, the wage deals, such and such a round. Energy, telecommunications and transport are all highly relevant also, and others about which, as the study says, we do not have very much information. The report says that the conventional wisdom is that electricity charges are very much greater in Ireland than in other EEC countries. This was not always the case. In 1978 at comparable load factors electricity charges here were relatively cheap by EEC standards. Since 1978 there has been a deterioration to the extent that, at comparable load factors, charges in Ireland in 1982 were close to the very highest in the EEC. I am talking about this in the context of what is starting up — a row between the Government and the trade unions.

The report says that since 1982 the situation has deteriorated. There are all kinds of implications for the production of energy. I want to refer to a lecture Dr. Whitaker gave recently in which he pointed out the massive capacity for over-production the ESB have, and the problems which will arise from that. The House already knows about some of those problems, for example, in connection with the turf generating stations in the midlands. I will come back to that again.

In regard to oil they say that residual fuel oil carries the second highest EEC selling price. Again, so far as cost competitiveness is concerned that must be taken into account. The report says: "Diesel oil selling prices are also second highest in the EEC." Again, this is highly relevant to the Finance Bill because that Bill has provision for increasing the prices of diesel oil. "...there has been a marked deterioration in the position relative to the UK and West Germany over time. This deterioration has resulted because of taxes and duties, since excluding these the base price improved its relative position." The UK are a big market and West Germany are a growing market. "Heating fuel oil selling prices of Ireland were the lowest in the Community, only because of the relatively low level of taxation on that particular fuel." Again, there are telephone costs.

If we are talking about competitiveness as the Minister is, we must not talk either about cost competitiveness or price competitiveness in isolation. We must not home in on the wages and salaries end alone, important as they may be. One could perhaps argue that they are the most controllable factor, on which we can make the most impact, but that is not an excuse for ignoring the other factors.

I refer to the exercise, which I think would be illuminating as far as this House is concerned, of reckoning our interest payments as a percentage of export of goods and services. It is important to find what makes success in exports — cost and price competitiveness yes, but there is more to it than that. I quote from the report:

In relation to export performance it needs to be said that the statistical relationship between competitiveness and export is not a neat and tidy one.

It is important to realise that.

The determinants of export capacity in the long run have related largely to the decisions of firms (mainly foreign) to locate in Ireland.

Costs — and wage costs in particular — are important to our developing exports, but they are not the exclusive factors to be taken into consideration. I am repeating myself there, but doing so deliberately.

...it would be simple-minded to expect that a strategy which relied on improvements in relative costs alone would lead to a resolution of the employment and balance of payment difficulties facing the Irish economy.

Even when an economy has a comparatively favourable cost position in products that are already being manufactured, exports do not take place without a measure of entrepreneurial and marketing effort.A fortiori they do not take place automatically for products in which the country has a potential cost advantage which remains to be exploited.

It is important to realise that. I shall give from the commercial world one example which has a strong relationship to my constituency. Bailey's Cream is one of the great commercial successes of recent years. There are, of course, Bailey's, Emmets, Waterford, Carolan's but the market leader is Bailey's. We had excellent grass-produced cream, not an artificially induced production. We had the whiskey which to my mind is the only whiskey in the world, but I am prejudiced. Whiskey started here and, to my mind, it still stays here. We did a little harm by weakening its strength down to 13 u.p., supposedly to help the tourists, but I believe the best way to help the tourists would be to leave the whiskey stronger. We had the 24 u.p. whiskey, we had the cream and the formula. However, it is a splendid exercise of marketing which put that product into every hotel and every bar that think anything about themselves. It is an up-market product in Europe, and particularly in the United States where it was the thing to have in the cocktail cabinet, although that is perhaps a dated description. We had advantages — the splendid raw materials, the idea, but above all we had a powerful marketing effort in that regard. As this study says, you may have an excellent product but the world will not come to get it. You have to go out and sell it. The conclusion, therefore, is that cost competitiveness is a necessary but not an exclusive condition for success on the export market.

I am again hanging my remarks on the reference made by the Minister to the damage done by absenteeism and industrial disputes. Again, we tend to hammer our work people. I shall read to the House some statistics on this matter in a moment which will indicate that we are not as bad as we believe ourselves to be. I opened a factory in my constituency where the main interest is a European one. I should not have been listening to a conversation which took place immediately following on the formal ceremony, but overheard one European asking his man on the ground in my constituency about Monday morning absenteeism. No doubt the man questioned did not tell the local trade union official this, but his reply was "We are much better here than you are in the mother factory". I was pleased to hear that, but made no comment because I was earwigging.

I have here all the articles written criticising the report. I am not holding a brief on the report but am saying that it is trying to do probably what all should be doing, thinking out every possible way for creating employment in our society. We have that duty and obligation and I am not speaking in a party political sense. That is the duty of the Government because that is where the power lies. That is the duty of the Opposition, because we were elected to this Parliament, and that is the duty of every citizen. We tried to get that message across through an overt Fianna Fáil programme at Christmas to get people to buy Irish goods, so that more would be employed in Irish manufacturing.

The House will be interested to hear the absentee rate in the following countries: The Federal Republic of Germany, 5.7 per cent; Sweden, 5.6 per cent; Czechoslovakia, 5.5 per cent. They are the top of the league, according to Table 6.4, page 98 of the report. There is nobody in this House who is not aware of the achievements of the Federal Republic of Germany in manufacturing, in exports, in giving strength to their economy. Many people hold up Sweden as the paragon of western democracies as far as development is concerned. Czechoslovakia, 5.5 per cent — that is a country where the ideology is different — but apparently they are in the top three of the league; France 4.6 per cent, Norway, 4.6 per cent, Ireland 4.6 per cent, the United Kingdom 4.3 per cent, Yugoslavia 4.1 per cent, the Netherlands 4 per cent, Spain 3.8 per cent, Austria 3.7 per cent, Belgium 3.2 per cent, Italy 2.6 per cent, the United States of America 1.9 per cent and Canada 1.1 per cent. Obviously that is the most recent information available to researchers. Therefore from the point of view of absenteeism we are not the best but we are far from being the worst.

The study is narrower in relation to sickness rates and gives cause for worry. In 1954 the sickness rate in the Republic of Ireland was 6.6 per cent, in Northern Ireland 6.8 per cent and in Britain 4.5 per cent. In 1966 it was 7.9 per cent in the Republic of Ireland, 8.1 per cent in Northern Ireland and 4.8 per cent in Britain. By 1976 we were deteriorating, and badly, in that the rate in the Republic of Ireland was 8.5 per cent — the first time we had a higher sickness rate than in Northern Ireland — almost double the rate in Britain. It must be remembered that our society was not subjected to the kinds of pressures to which people were being subjected in the Six Counties — in 1978 the rate in the Republic of Ireland was 10.5 per cent, in Northern Ireland 9.6 per cent and in Britain 6.1 per cent. If we are talking about competitiveness those are areas of which we must take cognisance.

In the second paragraph of the Minister's introductory remarks — and this is related to my theme — he said there are provisions in the Bill before the House designed specifically to encourage employment, that there are now grounds for optimism, that the worst is over — but the melody lingers on — and that the employment outlook will gradually improve. I hope that is true but it appears to me to be flummery. There is no specific provision in this Finance Bill, nor was there in the budget speech, plan or policy to indicate hard thinking with regard to the encouragement of employment. Deputy Skelly even referred to the niggardliness of the few little references in the Bill with regard to employment. The Ceann Comhairle had to take him to task because, in order to be easy on his Minister, he turned the blame onto the draftsmen. There is nosursum corda in this Bill, as there was not in the Minister's budget speech; there is no sursum corda with regard to the improvement of the employment position here.

We on this side of the House accused the Government of having swallowed wholesale the diabolical economic policy of Milton Friedman. I suppose we are not being totally just to the Government in that they are not 100 per cent sparkling blue monetarists, but the general principles of monetarism are those that are being applied. I do know that in our schools of economics there has been a bit of a heave towards monetarism. I suppose this is something one might expect, as Deputy John Kelly might say — what they do in the United Kingdom today we try to do yesterday. I should make it more colourful — I am doing an injustice to Deputy Kelly by using such pedestrian language — but the fact is that those are the lines on which our economic wagon has been travelling. I want to tell the House what the harbingers of monetarism are doing. One of the basic principles is the control of money supply. I will give the money supply and its percentage rise of a year ago for the two countries in the world at present pioneering monetarism. The narrow money supply in the USA — one can call it what one likes; there are different names for it in different countries — was plus 8.5 per cent in the past year, and the broad, plus 9 per cent. In the United Kingdom it was plus 10.5 per cent on the narrow and plus 9.9 per cent on the broad in the last year. I think I read last evening that with the exception of Italy and Australia, that constitutes the greatest expansion in money supply there has been over the last year in the following countries: Australia, Belgium, Canada, France, West Germany, Holland, Italy, Japan — the narrow figure is not available for Sweden but the broad was 6.8 per cent (and it must be remembered that Sweden is a socialist country), Switzerland, the United Kingdom and the United States of America. If we want an argument in this House to impact on the Government about their fiscal and monetary policies one has one there where the godfathers of the system are expanding money supply.

The Minister in his introductory remarks also referred to the Commission on Taxation. I have sympathy with the Minister — he is not a man who attracts sympathya priori anyway — with regard to the recommendations of that commission. I would go along with what he says for the most part, that one cannot do it in a hurry. What Deputy Skelly said about policies being started and then continued is significant and relevant in these circumstances, namely, that to do something with regard to income taxation one needs a consistent and fairly long spread of government. Of course the fact is that the spell in government is short and we on this side are very anxious that it should be even shorter and, as Joxer would say, vice versa. There is no doubt at all about that. But the shortness of the spell is one of the weaknesses and I appreciate what the Minister said. He will give his views, he said, on this report on another occasion.

To have a radical overhaul of the taxation system in any particular year is not perhaps so simple since the budget and the Finance Bill are taken for only one year. It is a very difficult situation. I admit that. There is no question about it. In a sense a dictator who has ten years in which to plan is in a stronger position. However, if he is on the wrong line, as I think this Government is fiscally and financially, then there is no way of shifting him. That is the weakness in that system. I think it is a pity that Dr. Miriam Hederman's work has not been put into effect. I read the first volume. We have just got the second volume on our desks. It would really need all-party agreement in order to have anything effective done with regard to taxation and the figures I read out fromIris Oifigiúil would indicate the necessity for a very hard look. There we saw there was a fall back in customs and excise, a fall back here, there and everywhere, but income tax is up and so is value-added tax, both carrying the can for everything else.

The relief in regard to the £25,000 for long term risk capital — I take the point Deputy Skelly made — should be welcomed by both sides since it can lead to new trading or the expansion of existing trading. In this regard there has been some change from the date of the budget. Certain services were mentioned. When we were in Government we were considering the whole area of services. I understand that seven out of ten employed in the United States, a strong country economically, are employed in services of one type or another. For that reason we should not be ashamed of extending our services in order to increase employment. We seem to have pitched services into a kind of corner. We adopt hushed tones when we talk about increasing employment in the services. I just cannot understand it. I do not think it is a valid approach. I think we should encourage the development of services. When we were in Government there was talk of some international services, like the American Express, getting headquarters here. We should attract people like that because they will bring development and in that development there will be employment.

I have had a letter from someone who was recently in Ethiopia and the writer said CIE had a chance of getting a contract in Addis Ababa for a development there. I do not want any cynical remarks with regard to that. Some semi-State bodies have already exported their services to the Middle East and so on. I just make the point about CIE to indicate that all our semi-State bodies should be trying to get contracts, contracts designed to give employment to our citizens who, according to this report, will be coming on the market at the rate of a future 25,000 to 26,000 extra qualified personnel per annum.

I am glad the Minister dealt with groups of workers and co-ops in his speech. I know the co-ops were very worried about some of the sentiments expressed in the budget speech of the Minister. Those Deputies who peruse the co-op magazine will have noticed how many co-ops are in the top 500 companies at the moment. Everything that can be done to strengthen them, particularly in their job creation activities, should be welcomed. I was glad to hear on the news on the way in to the House today that Bailieboro Co-op had about a 45 per cent, £1.5 million, profit last year. Now there you have diversification. You have an engineering section. You have a cream section, a food section as well as the basics associated with a co-op.

There is a beauty of a sentence here. In relation to bond washing the Minister said the announcement brought on a strong overreaction which temporarily disrupted the fiscal market but that the market had settled down and is now functioning normally having absorbed the change. I think the last sentence is a beauty. It is, of course, one of the functions of the market to adjust to change. I think that sentence has the genius of simplicity. I agree with the Minister in what he did.

With regard to tax relief for money expended on education and the arts I welcome that provision. Here I would like the House to take note of what Mr. Potterton has said very bitterly recently about the weakness in our legislation in that we cannot stop very valuable works of art from leaving the country. We have no law to stop them. He was, I think, referring to a statue of Venus in Westport House which turned up at an auction in Christies. This is an area to which we should direct our attention. Works of art are capital and, if they are allowed to leave the country, it means capital is scattered and lost to the country.

With regard to the relief for toll roads and bridges, I think this is an excellent idea. There is a labour content in the construction of bridges and toll roads. In these there is a strong employment content, and I would hope the coverage here would be extended. The House will remember we had a major programme of decentralisation involving many provincial towns up and down the west coast, in the north midlands and midlands, in the south and particularly in some areas in my own constituency along the Border. I would appeal to the Minister to extend this tax relief for that particular sector and encourage privatisation so long as that decentralisation is conserved. It would be a welcome boon to the moribound construction industry. At regular intervals we get statistics from the Central Statistics Office on the numbers unemployed. Sticking out at between 40,000 and 50,000 month after month is the huge number of skilled people in the construction industry who are idle. This is a haemorrhage which can be staunched by intelligent investment in worthwhile infrastructure. I shall refer to Dr. Whitaker's lecture later. That is one of the recommendations he makes.

If I could sow the seed in the Minister of State's mind or in the minds of his officials to have a look at that it would be a good day's work. I am not advocating any kind of foolish investment or one from which there did not flow direct economic and social benefit to the country. The energising of the construction industry must carry economic and social benefit to the state.

Section 84 loans has been covered adequately by various speakers. I am glad that services activities are included. However, nobody spelled out which ones, and if I remember correctly the Bill stated "certain activities". I do not know if it is tied to "international" or not. It is to be welcomed if the end result is an increase in employment. My stamina is reasonably good but I nearly collapsed when reading through all the provisions in which this section 84 concession is wrapped. It is there in paragraph after paragraph, as if there was a crowd of chefs around a dish and one saying add another little ingredient there to block off this chancer and another saying add this little ingredient here to stop that chancer. It is hedged with caution, but no one can cavil if the main purpose is to protect the nation's finances and see to it that the concession is used to the benefit of the community.

Great play was made about principal private residence and developments. I have no argument with what was done. Is there any idea of what the gain to the Exchequer will be as a result of this? It looks like something to catch the eye, with very little relevance. Only a few people will be affected, but it is good as a propaganda exercise.

To be quasi-parochial for a moment, I have written down in my notes — pints, petrol, electrical goods and electronics. I do not have to tell the House what they mean with regard to Border areas. The price of all those and tax, whether VAT or excise duty directly imposed by the Government, has put us at risk as an economy. I do not want to sound alarm bells. I and my fellow Deputies from the Border areas have spoken about this so often that there is a great danger of the wolf, wolf syndrome applying. I put it on the record that the effect on business is catastrophic. As far as my constituency and other areas around the Border are concerned, when one adds to that the gash that has been inflicted regarding the development of the dairying industry one gets an idea of our economic plight as of now. Our young farmers were on a course to raise productivity from the national average of 700 gallons per annum per cow to 1,200 gallons. Many of them had achieved that and many were on a five year plan to achieve it. That has been guillotined. This is an area which has been bled by emigration since the Famine and has lost 30,000 or 40,000 people since we won our last All-Ireland. That is something which should give the House thought and the Government should take direct and positive action to try to remedy it.

It is a reflection on the Minister's speech that there was so much time given to talk about betting duty. No comment, a Cheann Comhairle. The Finance Bill and the budget should be an instrument of resurrection and hope. It should be a stimulus to an ailing economy. The money supply in the UK and the US has been increased by respectable percentages in the last year and they are the powerhouses of monetarism. Could the Minister not look at something other than the books? Could he not get something else? Make no mistake, he is a cold fish; but he is an intelligent man. He knows exactly what should be done. I am sure, unless they have become dumb altogether, the Labour Members of the Government must be telling him that the unreformed Scrooge should not be the leading philosopher with the country in the plight it is in.

There is 8 per cent VAT on clothing. In the area I referred to that was the only sector where we had a little advantage and, damn me, but they took it off us this year. The best of boxers, like Cassius Clay, get punch drunk at the end of their careers. The economy in my area, as blow after blow lands on its head, is becoming punch drunk. There can be no doubt about that. I am not exaggerating. The Minister is giving extra powers to VAT inspectors, God save the mark. They must get the powers to do their job. For God's sake, let him get somebody of reasonable courtesy and urbanity in his Department. I am sure they are there. Poets, writers and philosophers have come out of the Department of Finance, believe it or not. I hope the Minister will get someone to teach his inspectors what to say, something that the Minister for Social Welfare did not do before the last blitz on the unfortunate people who were drawing unemployment assistance.

In my area, where they are trying to push ahead a little with tourism, if they go to buy an overcoat that cost £100 last year it will cost £108 this year, and they will wear it to protect them when the weather gets bad on the Sheelin or Oughter or any of the other lakes or rivers. I am glad that there was a reduction from 23 per cent to 18 per cent on the hiring of boats, etc. I am glad also that there has been a continuation of relief with regard to inheritance by young farmers. That has exercised the minds of Macra na Feirme, the ICMSA, the IFA and the Department of Agriculture, and there was a danger that if this was not continued the transference from father to son would be delayed again on many farms.

The final paragraph of the Minister's speech is a joke. The Minister must have left the room and the only humorist left in the Department of Finance wrote that final paragraph. The Minister said that this Bill was important legislation which provided for substantial improvement in our tax code. He said that in the course of his Budget Statement he set out the principles that would determine the Government's tax policy over the next few years. In regard to Dr. Miriam Hederman's work he said the direct opposite, that he would make a statement some other time. He said that we were working towards a more equitable and efficient tax system based on a wider tax base and lower rates of taxation. I will not let people in my constituency read that paragraph because my credibility would be gone; indeed, if I took that speech in a bag to a meeting my credibility would be gone. The Minister said that we had a long distance to go yet before we could claim that these objectives had been achieved but progress was being made and the Bill before the House was evidence of this.

I said that I would refer to a lecture that Dr. Whitaker gave recently. I want to make way for a man who has particular expertise in agriculture and I do not want to deprive him of an opportunity to speak. Dr. Whitaker in an address which he gave to the Confederation of Irish Industry's National Council recently had a number of things to say. In fact, one could talk for two hours on what he had to say in that address. I will tell the House in a moment why I am referring to it. Criticising the budget and so on he said:

Although current expenditure nearly held in real terms, the current budget still tops £1,000 million...and seems impregnable.... The national debt is now 120 per cent of GNP and involves debt service which takes 37 per cent of tax revenue....

I was referring earlier to a percentage of export of goods and services. We should have a look at that, and anyhow I have put down a parliamentary question about it. Dr. Whitaker continued:

The State's borrowing requirement is still high and vulnerable to exchange losses....

And also vulnerable to what happened in 1983, namely devaluation which added to the external debt. Then he said, and I wish he had expanded on it a little:

The public capital programme, although down in real terms, still contains doubtful items....

He did not exactly specify them. Now I will give the reason that I said I would refer to this. He talks about pay and the need for moderation, and the trade unions themselves will admit that. My main thesis in the earlier part of my speech today was that it was not the only thing that impacted on competitiveness, whether cost competitiveness or price competitiveness. Again I refer to the ESRI report which in this House, because it did not fit in with the philosohpies of the Government, did not get the credit it deserved in addressing itself to employment and unemployment problems.

Dr. Whitaker in the course of this address talked about productivity being good. I want to make a point about that which occurred to me years ago. I do not know whether it is practicable, but we are all agreed on the importance of exports. We are all agreed that manufacturing industry for the most part produces what we export. On the agricultural side it should be more than it is. However, what if we showed our appreciation of the importance of the exporters by giving the workers in manufacturing industry, whose products are exported on which we all live, some income tax concessions? We give the entrepreneur an income tax concession. Could we not think of giving a concession to the worker in manufacturing industry? That would have several effects. It would point up the importance in our economy of manufacturing exports. It would recruit very good people for the factories concerned because if they were getting a tax advantage they would be very anxious to work there. It would raise consciousness of the importance of this sector in the community. It would attract to the industry the very best people who would be anxious to be well paid and get these concessions. I can hear people asking why they should have that advantage, and so on. All right, I am prepared to argue that also. It would be discrimination amongst citizens, but we discriminate amongst manufacturers for the advantage of the manufacturers.

Regarding the capital side Dr. Whitaker said:

Telecommunications outlay has passed its peak. Energy expenditure has left huge overcapacity in ESB.

Moneypoint will cause a great deal of trouble, apart altogether from the overcapacity and the trouble it may cause in the generating stations in the midlands and the west. Also, it is in a south-westerly corner. I intend to put down a parliamentary question today about acid rain. The emissions from such generating stations have caused a great deal of acid rain and damage to forests and the environment all over Europe. The ESB should be cognisant of it and take steps to remedy it. However, that is an aside. Dr. Whitaker continued:

The probable tailing off of some large expenditures—

Moneypoint, of course and telecommunications——

and the curtailing of the loss element in others should provide room for some increase in effective unemployment-reducing expenditure on roads and other infrastructure.

Deputy, this Bill deals with taxation.

I am talking about taxation in the sense of how it is used when it goes into the Exchequer. We know, for example, that the county councils are crying out for money for road works. However, in deference to the Chair I will move on from that.

Dr. Whitaker talks about competitive tendering for specified works. That is something we should pay attention to also. He talks about the Commission on Taxation and the Minister refers to that commission also in his speech so I am safe enough in making reference to them.

Dr. Whitaker talks, too, about increasing revenue and checking expenditure and says that this scissors movement, expenditure being held and revenue surging up, would do more to phase out the deficit than would any conceivable cuts in public sector expenditure. The people in the Department of Finance should take note of that. We have had enough gloom and darkness so far as that Department are concerned.

I shall conclude with the following quotation from Dr. Whitaker:

As to the prospects for the future, I see no need for despair. We have taken our problems in hand and are beginning to get the better of them. We are not alone in our difficulties: low growth and high unemployment are features common to the member countries of the EEC. They are not necessarily a permanent or universal affliction. Indeed, in the US in recent years there has been a steady rise in output and in employment (particularly in services and small industries). There is no need to conclude that a goal of reasonably high employment is no longer attainable because of automation, competition from the Third World, or any other reason. A good deal more industrialisation is possible before our society attains "post-industrial" status.

I should like if the Department of Finance, of which Dr. Whitaker was once a part, and also the Minister for Finance would ponder those words. There is asursum corda in them. There is a dispelling of the gloom. I do not wish to indulge in any kind of falsely-based euphoria, but we need something other than what we have been getting from the people who control our fiscal and financial policies.

I rise mainly to compliment the Minister for the cautious approach he has been adopting to our financial problems since coming to office. Most of the provisions of this Bill are expressed in a rather reserved way. While the Minister admits that some progress has been made he tells us that we must be cautious as to the future. I would contrast that with the performance of the Minister's predecessors during the past ten years, a period that has been termed by some commentators as a wasted decade.

Doctor O'Riordan said that but the Deputy is not putting it in context.

So far as Dr. O'Riordan was concerned, that decade was beset by three serious problems — a rapid growth in Government deficit and current account, a serious deterioration in our balance of payments and a massive increase in the numbers of unemployed. This was manifested particularly in the period from 1977 to 1981. It was during that time we had a Government who had come to power with the strongest ever majority and who by 1978 had decided on a change in leadership. I understand that their reason for changing their leadership was that they understood our financial problems to be so grave as to have to be tackled in a much more serious manner than was the case then. When Deputy Wilson refers to recent comments made by Dr. Whitaker, he is acknowledging that the Minister for Finance has set the economy on the right course towards some kind of moderate recovery.

He was talking about Fianna Fáil.

I do not think that Dr. Whitaker would consider paying such compliments to the Fianna Fáil Ministers for Finance of recent years.

Nonsense.

There must be an acceptance of the fact that the country is faced with severe financial difficulties, that we are faced with an uphill task.

Deputy Kenny talks about the black economy.

It must be dawning, albeit slowly, on the Opposition that they had some responsibility for the creation of those difficulties. Perhaps if the Opposition accepted their responsibility in this matter, some of the cynicism that is directed towards politicians would be lessened.

I compliment Deputy Wilson on having delivered a well-researched speech, but he did try to take advantage of what he referred to as short-term emotive issues and he tried to portray the Minister for Finance as being the big bad dragon, trying to worsen the lot of everyone.

A tall slim dragon.

I compliment the Minister particularly on the proposal in respect of income tax relief for venture capital. This complements some of the earlier work done by previous Ministers, including Deputy O'Malley who, as Minister, endeavoured to bring small industries to the country. Major industry had failed to provide the growth in employment that was needed. Growth in native industry had stagnated. I come from an area in which substantial investments were made, especially in Shannon, and where large multi-national companies set up. The authors of industrial investment here, such people as the late Gerard Sweetman and the late Sean Lemass, were anxious that the Irish people would take advantage of this imported expertise. However, Deputy O'Malley was right in recognising that the Irish did not take advantage of the situation. In my area there has been extensive liquidity since 1960 and substantial funds have been available from the earnings of the 7,000 to 8,000 people employed in the Shannon Industrial Estate but there is very little evidence of Irish entrepreneurship. There are very few manufacturing industries that have been established by the native people in our area. That is why I am glad the Minister has introduced this venture capital provision. It will complement the small industries programme and should attract investment from patriotic Irish people.

Hear, hear.

There are too many people trying to take advantage of what is known as the black economy. Effectively, they will contribute in the long run to the destruction of society in Ireland.

Hear, hear.

Those who avoid paying proper taxation, who encourage malpractice and so on are the ones who are drawing down society. Perhaps at Committee Stage the Minister will introduce amendments designed to cut down on some of the limitations on the venture capital provision. He should have regard to the possibility of relatives of the owners of companies wishing to invest in them. In addition, those who would monitor and promote those investments, for instance, the merchant banks, are not adequately provided for on the basis of the 1 per cent limit. The Minister might consider improving on that limit so that these people might be encouraged to provide schemes and provide a platform by which people might be encouraged to invest under this new venture capital programme.

As far as the other investments in the budget are concerned one aspect of the financial difficulties is the serious deterioration in the balance of payments. Ógra Fianna Fáil are to be complimented on the programme they did at the end of last year encouraging a buy Irish campaign. There is also the import substitution in relation to agricultural products such as potatoes which was recognised in the budget. The aspect of the import substitution I would like the Minister to concerntrate on is the importation of frozen chips, which amounted to £16 million last year. I would like, because there is a limitation on the amount of money set aside and because the Minister was limited in investing only £100,000 to see the post of Mr. Potato being established, that there would be one executive, like we have in An Post and An Bord Telecom, in charge of the processing of the marketing of potatoes. The people would be encouraged as a result of that. The present position is a sad reflection and the sugar company, who had a policy of promoting potato production in the west but when it came to alternative products they did not seem to research the matter very well. I urge the Minister to ask the Department of Agriculture to make this appointment.

I would like the Minister for Finance to consider improving on the amount of money set aside for the assistance of the unemployed people who want to take advantage of the enterprise allowance scheme. The limitation of £500 is too small. The Minister should reconsider the position about this investment. There are occasions when £500 is very useful, but when a person is setting up a business with current values more money should be set aside. I would like the Minister to increase that allowance to £1,000 or more.

Deputy Skelly commented on the fact that the Finance Bill has 93 pages of complex sections and 22 pages of it are devoted to a new scheme of tax reliefs. Everybody wants to see tax relief but I appeal to the Minister, when he is formulating his policies for the coming year in relation to a fairer system of taxation, to consider simplifying the entire tax code. The tax code has got so complicated that an enormous service industry is now established in the country making huge profits at the expense of the general taxpayer in trying to circumvent the provisions of particular tax Bills. I would like to compliment the Minister for his cautious optimism, and I ask him to consider what I have said.

I would like to make a few remarks about the economy and about the effect of the taxation system on the economy in particular. The Minister in his introduction to the budget had a penetrating analysis on the symptoms of the economy. He said that consumption had declined, investment had fallen, unemployment had risen and growth had been stifled. In response to that chronic situation the Minister introduced what has been termed a neutral budget. He did nothing about the very serious situation in relation to the economy.

One of the major underlying problems of the economy is the adverse fiscal and financial environment. I do not believe the budget will bring about any alleviation of the problem of the fiscal environment. We have only to look at the anomalies and distortions in the financial institutions to know that there is something very wrong with our financial and fiscal environment. I consider that the taxation of deposit accounts is very penal and self-defeating. I feel that an individual who pays one of the highest tax rates in the civilised world has paid enough tax on his income without being further penalised for being prudent and generally responsible within the economic system.

A tax free limit of £50 on deposit accounts within our main financial institutions is derisory. When this measure was originally introduced in 1956 there was a limit of £25 which was increased to £50 in the 1967 Act. At that time interest rates were lower and a capital sum of £2,000 would provide interest of that amount. At present day rates that £2,000 will be valued £10,000 and at 10 per cent interest it would bring in £1,000 interest on deposit. Confining interest free deposit income to £50 which is the equivalent of a capital sum at 10 per cent of only £500 is absolutely ludicrous. A sum of £500 to an old age pensioner providing for funeral expenses causes problems when the social welfare officer visits that person and says that it has come to his attention that the old age pensioner has a second income. Surely when young people are trying to be prudent and save a few pounds to build their own houses a capital sum of £500 in a financial institution is not much use to them. I know a number of them avail of the anomalies within the system to invest their money in building societies.

This causes problems. The building societies have been availing of this anomaly to attract large amounts of capital. I believe the Minister appreciated that this might not be a bad thing because in last year's Finance Bill he did not implement his proposed budget regulation to force building societies to disclose their clients' accounts and open up their books generally. This has caused further problems in the last few weeks with a banking group, feeling the cold draught of the fiscal system and losing heavily in deposits, trying to acquire one of those building societies. It is not the fault of the bank but the fault of the system. They have not some of the privileges which building societies have, and I urge the Minister, perhaps in the next Finance Bill if he is still in office, to ensure that all financial institutions receive the same treatment regarding taxation of deposit accounts and disclosure requirements. It is most unfair to have anomalies between different institutions.

There should also be a revision upwards of the amount of interest which a person can earn. I suggest a figure of £1,000 would be reasonable, which represents £10,000 capital which, for a young couple trying to buy a house at an average price of about £30,000, is not a great deal of money by today's standards. The penalisation of depositors here has led to enormous pressure on people to withdraw their funds from the system and invest it elsewhere. According to the Central Bank quarterly report a sum of £819 million had been taken out of the economic system and diverted to areas where they would get a better return for their money. This has tremendous repercussions because it means that the Government have to borrow more abroad. In answer to a recent Parliamentary Question on devaluation of the punt it was stated that the total exchange losses on the external component of the national debt in 1983 was approximately £810 million. That sum on the exchange rates alone, never mind the interest and the capital repayments, makes the Flanagan bonanza look pale in contrast. I urge the Minister to improve the fiscal and financial environment in the country so that it is more attractive for people to keep their money at home and to invest in financial institutions. We should try to retain the money from private investment and also attract capital here.

Perhaps the Minister and some of the brighter lights in the Department of Finance should take an extended trip to Switzerland and look at their banking system, which is outstanding. They also have a spin-off from that system which provides them with the highest standard of living in the world. They have no natural resources and very mountainy terrain. For many centuries they were foolish enough to provide personnel for many of the mercenary armies in Europe but, in the middle of the last century, they matured and decided to work for themselves. They are outside the EEC and the general European economic system and are a bright economic light in Europe.

Many people are morose and despondent about our unemployment, much of which is caused by modern technology, new processes for almost all manufacturing disciplines and the introduction of robots as well as the troubles associated with labour in recent times. Massive redundancy payments have to be made, and the present day industrialist or factory manager is loath to take on additional employees. With the best will in the world, if he can get the job done by capital investment in plant and equipment he will opt for that. If the Minister goes to Switzerland he should look at their unemployment figures, which are 0.4 per cent. However, we should not be too despondent about our own position, we have better natural resources in terms of land and raw material generally. Our mineral and oil resources have had a set-back recently but perhaps they can still be utilised.

Another aspect of the economic scene which is putting great pressure on additional employment is the degree of Government services which are swallowing the taxpayers' money. I heard this morning, on the Order of Business, that the National Development Corporation are going to be set up shortly. Generally, about 75 per ent of the money allocated to these structures is swallowed by the structure itself and the amount which gets to an area like west Cork is minimal. In the administration of all schemes the amount that goes on wages and administration is too great. The taxpayer would not mind paying a fair and reasonable rate of tax if he thought that his money was being put to useful and productive purposes, but he sees that not alone is one national structure gobbling up a large slice of this money but that there is also a great amount of overlapping. Perhaps we could solve this problem by amalgamation or subsuming one structure into another. Certainly the problem will have to be confronted. We have agencies such as the National Manpower Service, the Youth Employment Agency——

This Bill deals with taxation.

I have referred every four or five minutes to taxation and the bad use that is made of the taxpayers' money and I am suggesting the Finance Bill will not improve the position. The Minister might study some countries which have greater productivity, a higher standard of living, a lower rate of unemployment and less interference generally by Government agencies. If we could have that situation here there would be a better use of taxpayers' money and this would lead to higher productivity. I realise any Government cannot do much other than providing the right environment and climate. We need to roll up our sleeves and do some work. If we wish to compete with other countries we must have higher productivity and products as good as those of other nations.

In the Finance Bill there is a gesture towards greater investment in manufacturing industry. However, the new measures are tied up in so many knots that I do not think many people will avail of them. The concessions are confined to manufacturing industry and to industry that has been grant-aided by the IDA.

There was a reference to IDA grant-aid in the original statement.

Not in the Bill.

It was stated that the concession was confined to new manufacturing industry availing of the 10 per cent manufacturing rate grant.

It is a further development.

I am glad about that. I should like to see the concession given on a wider scale with as few regulations as possible.

Considerable effort is being directed against those avoiding tax and against people who may be availing of loopholes in the law. For instance, a regulation was introduced to block off another loophole in the law regarding bond-washing. Certainly that matter does not affect anyone in the Beara Peninsula or in south west Cork. I do not think what has been done will make any useful contribution towards our finances.

In his statement the Minister said it was a matter for the Stock Exchange to adjust to the new situation. They have done this by continuing bond-washing indirectly. A number of financial institutions are still availing of some loopholes, and perhaps that is not a bad thing. Perhaps a sum of £600 million or £700 million was involved, but the people investing in Government gilts and stocks were not making any great killing when they got a return of 11 per cent. Inflation is of the same order, and if an investor is just keeping pace with inflation he is not making a great killing. I do not think that exercise did any good for the economy. I am glad the Stock Exchange and the financial institutions have adjusted to the changes in conditions and that they have at least kept the money in the economy. It is much worse when, despite exchange control regulations, people invest in Switzerland and more shady places such as the Cayman Islands and the Isle of Man. The Central Bank estimated that a sum of £1,000 million was invested in that way last year.

Not at all. That is not what the figures were about.

A cosmetic exercise was carried out on the nett outflow of money but the fact is that the money was taken out of the system. The taxation system and pressures on people have forced many of them out of the economic system and into this grey area. In the Irish Banking Review of March 1984 it was stated that £1,536 million was taken out of the system, that is 11 per cent of GDP. Even at a tax rate of 35p in the pound that represents a loss of revenue of roughly £500 million in one year. The fiscal and the taxation system are putting a lot of pressure on entrepreneurs and on people who create wealth and jobs. This Bill will not improve the situation.

I compliment the Minister of State, Deputy G. Birmingham, for widening the scope of the enterprise allowance scheme. That kind of imaginative initiative is what is required. The majority of members of local authorities, of all political parties, have been telling the Government and the Ministers concerned that there is no point in paying allowances and benefits to people who do not give any return on it. The enterprise allowance scheme is to be lauded and the Minister concerned must be congratulated on the initiative he has taken. Instead of giving able-bodied people money for nothing, he is giving an allowance to those who set up their own business and who give some return to the economy.

I welcome the stock relief provision given for agriculture. I was disappointed that the crusade of the Minister of State, Deputy Connaughton, on land leasing and the better utilisation of land did not get a better reception from the Department of Finance. The Minister of State put a tremendous amount of effort into that proposal.

The Deputy should confine his remarks to the Finance Bill. A debate on the Bill is not as wide ranging as one on the budget.

I am referring to the absence of any gesture in the Bill to recognise agriculture as an important contributory element in our economic system. I recommend to the Minister that he listen more to the Minister of State, Deputy Connaughton. The Minister for Finance should provide the environment necessary to permit that scheme to go ahead. I should like to thank the Chair for permitting me to go a little outside the terms of the Bill in the course of my contribution, and I hope the Minister will take the suggestions I have made into account when dealing with the remaining Stages of the Bill.

Having listened to Deputy Walsh, and some of his Fianna Fáil colleagues, one cannot help but come to the conclusion that when one strips away all the obvious political bashing and ritualistic stance — they must do that because they are in Opposition — and gets down to the more relevant contributions one will find that all Members accept that we have to tackle our major unemployment problem. The only way we can do that is by prudent management of our economy. Obviously, one of the areas to start with is taxation. I commend the Minister for the efforts he is making in this regard. It is conceded by all that reform of our taxation code is required. It has grown more complex over the years and has been used for the purpose of introducing all types of new taxes and levies. When it was introduced I am sure it was not envisaged that all the appendages would be attached to it.

When people refer to tax reform unfortunately they automatically mean reform that will lead to them paying less tax. If one asks people to explain what they mean by tax reform the bottom line always is that they are paying too much tax and that reform of the taxation system is necessary so that people pay less. Of course, the reality is that a certain amount of money is needed annually to run the country. If we reduce the tax take from taxpayers the money must be found elsewhere. Unfortunately, tax reform cannot be synomymous with tax reduction, certainly not reduction for everybody. Obviously, for some people in the lower income group tax reform will mean tax reduction. It should be synonymous with simplicity, equity and a good and effective system of tax collection so that we do not have the situation that tax owing cannot be collected because the system has fouled up.

The moves towards tax reform in the Bill are small because of the general economic climate in which we are operating. However, I welcome the changes that have been made. The removal of one of the tax bands is a move to get rid of some of the complexities of our taxation code. In his budget speech the Minister highlighted the fact that it was because of the complicated system of allowances, deductions and exemptions, that the tax base had been eroded. He announced that his objective was progressively to widen that base and bring in other receipts into the taxation system to try to improve it and permit a reduction in the rates.

From time to time the Minister has been slated in the media for not adopting the recommendations of the Commission on Taxation. Obviously, that is not possible until one reduces the overall tax burden. I have no doubt that the Minister will examine the reports and try to implement, where possible, recommendations of the commission. However, that commission have other areas to cover. They have issued two reports and it is expected that at least two more will follow. It is wiser and more prudent to undertake reform with a full assessment of the picture rather than embarking on anything in a piecemeal fashion.

I welcome the thrust of the taxation changes in the Bill which is towards helping the less well off. The Minister proposes to amend section 16 of the 1983 Act so that those with an income of £96, or less, or self-employed with an income of £5,000, or less, will not have to pay the 1 per cent income levy. At present the levy is payable on all income, from earnings and investment, but the Minister has not made any reference in the Bill to unearned income. It is correct that we should try to alleviate the tax burden on those with low incomes.

I should like to refer to section 8 which follows the stated policy of the Government to assist those in society who need most help. I welcome the decision to increase from £700 to £2,000 the deduction allowable for a person who remains at home to mind an incapacitated person. It is essential that we continue to support, where possible, people who undertake to keep relatives at home. We should support those who cannot work and are incapacitated. We should be moving towards reducing the number of people who are confined in homes and hospitals and who thus become a burden on the State. We are all aware of the cost involved in maintaining sick or incapacitated people in homes or hospitals. The more help we can give to encourage people to be cared for at home the better.

I realise that under section 194 of the Income Tax Act, 1967, a wife earning can be equally entitled to the £2,000 deduction but the language in the section in the Bill under discussion implies that only a husband, whether he is incapacitated or has a wife who is incapacitated, can get the deductible allowance. The Minister should remove as much of this sexist language as possible in coming years and substitute the word "spouse" for husband or wife. Everything possible should be done to ensure that the language used in our legislation is non-sexist. My first inclination on reading the section was to ask what happens if the husband is incapacitated and the wife is the chief bread-winner. Will she be allowed to claim the allowance? In certain situations she is allowed to claim but one could be forgiven for thinking that under the Bill she is not.

The decision of the Minister to introduce tax exemptions or allowances to those who are prepared to invest in manufacturing companies is a further indication of the Government's encouragement of and positive moves towards employment creation.

Deputies referred to the employment enterprise scheme, which is being extended. This is a positive effort to get to grips with unemployment, and the Minister and the Government should be congratulated. The important thing is to get constructive ideas on how to make these things work. One Deputy asked how much benefit would accrue from the scheme. This is very difficult to assess because we must calculate how many people have £25,000 to invest in a manufacturing industry. Therefore, it is impossible to calculate to the last decimal point how broad the scheme will be. Under its terms the Minister has broadened the criteria by which people can qualify. The important thing is that there must be an employment spin-off.

The success of any of these schemes depends on liaison and co-operation between the Government and the statutory agencies. The latter must ensure that they will streamline their operations in order to give the best chance of success to such schemes. It is no use bringing in a scheme riddled with rules and regulations if then, if somebody tries to operate it or avail of it, we find that some other body is involved. I appeal, therefore, to the IDA and to the planning authorities to carry out a study of these schemes so as to allow for new ideas and flexibility, particularly in regard to temporary planning permissions, so that people with £25,000 to invest can start to improve their businesses without being restricted in regard to temporary planning permissions.

There can be difficulties if planning managers will not allow flexibility, will dig their heels in and be retrograde. I hope the statutory bodies will help the Government in the implementation of such schemes.

Section 38 is welcome. It extends the qualifying period from 1984 to 1987. I hope many people will take up this 50 per cent tax incentive in regard to toll bridges and roads and that they will have the co-operation of local authorities. The extension of time will probably see many entrepreneurs and developers avail of the incentive.

Section 64 has come in for much criticism. I agree with the stated policy of the Minister and the Government to try to tighten up the existing law and to close loopholes. This section will benefit areas particularly in Dublin which have been experiencing huge increase in prices for houses and land. It applies to areas adjacent to most large towns because of the enormous population growth. This section will exempt private residences and gardens from capital gains tax in certain circumstances. When a person sells a private residence it will be exempt provided the value is invested in a new residence. People who have had enough money have been buying properties in potential development areas with huge resultant profits. That had to be closed, and the terms of this section are well worded so as to ensure that the Revenue Commissioners will not be out on top of every person who sells a house and makes a few pounds on it.

I live in Malahide. People just want to come to live there and therefore property values have increased. Perhaps it is because of the nice quality of life there, or the quality of their public representatives. It has become an attractive area in which people want to live and it is good to know that the Revenue Commissioners will not be running out if I or one of my neighbours wants to sell a house, because it will not have anything to do with development potential. In the past five or six years in County Dublin huge sums of money were made on residential properties which at the beginning nobody realised would be of great value but with the spread of the city the value of property in towns and villages has doubled, trebled and quadrupled.

I have not been able to find anything in the Bill referring to local authority CPOs. The Minister might be able to clarify this. If a local authority seek to acquire a property for road widening, etc., there is not much point in putting a tax on the extra price somebody might get for it because the person who owns the property might demand more from the local authority because of that tax. I do not know what the Minister's views are in regard to this, and I do not know whether I have missed reference to it in the Bill. As a local authority member I do not want to see CPO settlements going up proportionately to allow for this tax. That would bring us back to square one because ultimately the State, through the local authority, would be paying the owner for the tax.

It would be wrong of me to conclude without referring to a new section in the Bill. I have three young children and two of them, of average build, are more than 11 years of age. Obviously like everybody else I will be caught for the 8 per cent VAT on clothes. There is a general perception out there as opposed to in here that when these changes come about everybody in here is exempt from them and we have no understanding of what it is like to go out and pay for children's clothes. It is thought that when we go into our local shops we buy everything without paying VAT. We have to pay VAT too, as does the Minister, because his children are of average build and over 11 years of age. We heard the Taoiseach talking about buying presents for his grandchildren.

We know this tax will have an effect on people's pockets. People on smaller incomes usually buy their children's clothes in the bigger stores where they are reasonably priced. Many articles are in the price range of £5.99 and £6.99. On a garment priced £6.99 the increase will be approximately 56p, bringing the price of the garment to £7.55, not a very large sum in this day and age. The increases in the children's allowances and personal tax allowances will compensate for this extra charge. The people who will contribute to the £26 million the Minister expects from this tax in a full year are those who have more money to spend on clothes for themselves and their children. This 8 per cent tax will not materially damage the quality of life and the spending power of people on smaller incomes because the percentage of their income they spend on clothes is a lot lower than that spent by those with bigger incomes. In my view this is not a penal tax. When I buy clothes after 1 May I, like everybody else, will find an increase in the prices.

The Minister is trying to keep with his stated policy to broaden the basis of our taxation code. Our aim should be to have a more equitable VAT rate, because at present some articles are exempt while others are subject to the 35 per cent rate. Despite the cries of horror from the Opposition when this tax was introduced, if they sat down and did their sums they would realise it will not be as penal as they expect.

Contrary to what is believed outside, Ministers and TDs listen to representative groups. I welcome the Minister's ability to take cognisance of what the representatives of the clothing industry said. He has moved forward until 1 September the payment of VAT at point of entry for materials for clothes. This was a direct recognition of the case made by the clothing industry. The Minister was right to grant this concession, and he should be commended for it.

As a background to the Finance Bill it will be recalled that not so long ago the Taoiseach and the Minister for Finance indicated that in pursuance of financial rectitude the Government would have to cut a further £500 million of public expenditure. This was obviously flying a kite, because during subsequent discussions and interviews this was gradually watered down and the Minister's budget was rightly described as a non-event. It did nothing for employment, the economy or the hard pressed taxpayer.

Public spending cuts have been very niggling, disturbing and discriminatory in many areas. We had to listen to the tedious commentary and the old chestnut about capital taxation, the old promises of tax simplicity and equity as well as the old cliches of economic planning and so on. We have all heard this many times before, and the public cannot be blamed for adopting what would appear to be a very cynical attitude towards this Government and to some extent towards politicians in general.

The Finance Bill and the budget was not a very imaginative exercise. It will do nothing to help our seriously depressed economic circumstances. It will do nothing for employment, as has been proved. Unemployment figures are rising all the time, and I am genuinely appalled that the Minister has not seen fit to promote a more favourable climate for the creation of jobs. What we are witnessing is the opposite: a further stepping stone exercise for the Coalition parties to stay together for their own personal and probably selfish reasons.

I have said that very little consideration was given to the economy, to investment and to the unemployed. Worst of all, the standard of living of the weaker sections of our community was eroded even more. During 1983 everybody had to take a major cut in their living standards. This happened during a time of recession, and I accept that sacrifices will have to be made. Most people will be prepared and happy to make sacrifices provided they are in a position to do so and if, by doing so, they are helping the economy and contributing towards a general recovery from the recession. Unfortunately the severe cuts in 1983, and these additional cuts in 1984, did not and will not contribute to growth for improvement and those sacrifices will be seen to have been in vain.

Living standards have been dropping for some time. The Taoiseach, who has always put himself forward as being the champion of the poorer sections, has tried to tell us that the budget would maintain the standard of living of the socially deprived and the weaker sections of our community. Those expressions are rather hollow, particularly when one considers that the introduction of the new 8 per cent tax on clothing will seriously affect the weaker sections.

The Minister has emphasised that people buying expensive clothes, such as minks and furs, will be able to afford the additional taxation.

They already pay 35 per cent.

I am talking about clothing in general.

The Deputy mentioned minks.

Yes, as part of the overall exercise, and I agree with that, because certain sections of the community can pay additional taxation, but unfortunately this new tax will affect everybody, including the weaker sections of the community. This is something with which I find fault, and I am sure many members of the Fine Gael Party would not agree with the imposition of this tax. The method of imposing the tax is quite ridiculous and has been seen as a joke. There were many cartoons depicting children of different sizes aged ten or 11. This imposition will affect many younger children who have matured and grown more than others. The Minister has accepted that. The regulations have been deferred until 1 September. Surely the Minister must have learned of the terrible problems caused on a previous occasion by the imposition of VAT at point of entry. The clothing industry has been at its most vulnerable in recent years, as shown by the fact that this country is importing millions of pounds worth of clothing each year. The Minister has chosen to ignore representations made by the clothing industry. He states in his speech that these difficulties can be avoided without significant loss of revenue. He indicated in his budget speech that VAT on children's clothing would apply to ten-year-olds. Obviously the Minister has not learned from this controversy regarding the age and size of children. There is no fair way in which VAT can be imposed on clothing in the present climate, and the Minister should accept this.

Ours is a deeply depressed economy, and further draconian taxation measures will not solve our problems. They will have the opposite effect and bring down more and more businesses, with the resultant loss of thousands of jobs, which the country cannot afford. VAT rates generally are far too high for any company to be in a position to meet the commitment in regard to payment at point of entry. As any business firm will know, from the date of importation it can take six or nine months to sell goods and receive payment. It is only when a trader is paid for his goods that the sale becomes realistic. At that stage the business is already out of pocket for VAT during that period, and if the trader has been lucky enough to make arrangements with his bank the additional interest rates will have cost the company heavily. This must be at the cost of jobs in that company.

We are probably one of the most heavily taxed communities in Europe in regard to VAT. One has only to look at the prices of equivalent products in other countries which have higher standards of living and much high incomes. One would expect that the price of equivalent goods should also be higher, but this is not the case. The opposite is true. Some types of business are more heavily taxed than others. One such is the motor trade, which has been crippled by taxation during the past few years. Paris is a city which has always had a reputation for high prices. yet one can purchase a car there for 50 per cent of the price payable here. The same differential applies to other mechanical goods, electrical goods and foodstuffs. Clothing is an area where we were a little cheaper, but in this Finance Bill the Minister shows a determination to eliminate that slight advantage.

The latest unemployment figure is in the region of 220,000 but the true figure is probably nearer to 250,000 because many unemployed young people have not bothered to register. Everyone will concede that unemployment is our biggest single problem, but this Government would appear not to have the will or to be totally unable to face up to this reality and propose any solution to lessen the impact of unemployment. Unemployment must, without further delay, be declared a priority before the situation gets completely out of hand. The effects of the budget and the Finance Bill would appear to indicate that the Minister is totally unaware of the seriousness of the situation.

The budget increases in excise duties on items such as tobacco and the increase in the high levels of PRSI are viewed as a tax on labour. The retention of advance corporation tax and the levies on banks and insurance companies will also disappoint industrialists and will not create the environment necessary for investment, which in turn creates jobs. The volume of cigarette sales has been falling during the past few years. We cannot blame the Minister for this, but nevertheless cigarette manufacturers have recently announced redundancies and the start of the falling off of general employment in that sector. The company in question have been long established in Ireland and employ over 800 people in their tobacco division, but it is understood that there will be at least a 30 per cent lay off before the end of the year. That is a serious situation which is indicative of the fact that we have reached the maximum in regard to certain types of taxation. The Minister must consider this position.

The banks have expressed great disappointment with the retention of the levy on their profits. Many people would agree that some form of taxation should be imposed on banks, but I would remind the House that this is a levy on the public and not on the banks as such. This has been shown very forcibly during the past year with the huge increases in bank charges and the introduction of charges for ancillary services which in the past had always been extended as part of the overall service. There was a time when the public had a choice as to whether they would bank or not, but that choice no longer exists in this modern technological age. Most payments are made to employees by way of cheques or bankers' orders. Furthermore, in the interests of security it is a matter of necessity for a member of the public to have a current account at the local bank.

The bank levy is an example of another broken promise on the part of the Minister for Finance, because he said last year that the levy would be phased out over the next few years. This gave rise to expectations that the phasing out would commence in 1984. I would also condemn very strongly the proposed increase in duty in cheques from 5p to 7p and on credit cards from £5 to £10. These increases hit the ordinary worker very severely, and it is now reckoned that, taking all bank charges and duties into account, the average person is paying almost 25 pence for every cheque written. That is a penal tax which has reached ridiculous proportions. It is a typical example of the hidden indirect taxation which has been imposed by the Government in the past two budgets, and it bites very deeply into the pocket of the ordinary worker and taxpayer.

Each year the old reliables are easy meat for every Minister for Finance, and this year was no exception.

As I recall, in his budget statement the Minister agreed that the point had been reached so far as taxation on the licensed trade was concerned where smuggling was encouraged and also legitimate imports by travellers. Indeed, for some weeks prior to last Christmas, shoppers from the Republic were spending an average of £1 million a day in the Six Counties. The main attraction for most shoppers going north was the low price of spirits, beer, tobacco, toys and, of course, certain electrical items.

As it is now 2.10 p.m., in accordance with the order of the Dáil of this day I must call upon the Minister for Finance to conclude the debate. Before he does so, the Minister of State at the Department of the Taoiseach has a statement to make.

Could I wind up by expressing the viewpoint that this Finance Bill has done nothing whatever for the development of employment and investment. I sincerely hope the Minister will review seriously the whole overall policy of the Government which is detrimental to business. In the final analysis, it is business that creates jobs.

Debate adjourned.