I should like to begin by thanking Members on all sides of the House who contributed to this debate over the past few days. I should also like to thank the many Deputies on this and the other side of the House who did not have an opportunity to contribute to the debate because our time was limited. We conduct our business with as much expedition as we can. Deputies spoke to me on a number of occasions between budget day and today about a number of the matters I referred to in my budget statement and various aspects of the Finance Bill. In today's climate, it is only right that I should call to the attention not only of the House but of the general public also that Deputies do not do all their work speaking in the Chamber. A great deal more goes on behind the scenes.
I do not intend to go into detail on the various sections of the Bill which have been referred to by speakers during the course of this debate. That is more appropriate to Committee Stage. In approaching Committee Stage on this Bill I will have an open mind in relation to amendments which may be put forward from whatever source which are compatible with the general direction of the Bill and the overall budgetary objectives which I set out in my budget statement and which this Bill is intended to bring into effect.
The inevitable trend or tendency in a debate such as the one we have had is for Deputies in Opposition to make a long series of suggestions for various tax incentives and reliefs and for reductions in the overall tax burden. When they put forward suggestions of that kind, Deputies on the other side of the House can be assured that they will find a very harmonious chord in myself. It is probably a little gratuitous for me to say it, but I will venture to say that there is no more enthusiastic tax cutter in the House than myself.
It is not enough to say we will reduce the burden of taxation and reduce various taxes. We have to cut the rest of our cloth according to our measure, even for people of my own length. It is not very constructive or helpful to list a series of tax incentives or reductions which one wants to bring into effect without looking at the other side of the equation and what the consequences of a reduction in revenue would be on the way the State provides the services we require it to provide and the degree to which it can provide, the various services which we have all come to take too much for granted, perhaps, as part of the economic background to our lives.
Reference was made during the course of the debate, particularly by Deputy O'Kennedy and by one or two other Members of the Opposition, to the Exchequer figures for the first quarter which were issued very recently. In a press statement accompanying the publication of those figures, I said that, broadly speaking, the situation is in line with our expectations and in line with our objectives as set out in the budget. I can find no reason whatsoever for changing that position.
Deputy O'Kennedy believes he has discovered a shortfall of some £80 million on the revenue side. He was somewhat carried away by an interpretation put on the figures by one commentator. Incidentally, I am very glad to hear that economic commentators and economic experts seem to be coming back into fashion on the other side of the House. I remember that between July 1981 and February 1982 one of the worst epithets which Members on that side of the House could throw at one was "economist" or "academic". In October 1982 they suddenly found they liked them because a number of authorities were brought forward to support their own "The Way Forward" or the great leap sideways as I often like to refer to it. Now the economists are enjoying a resurgence of popularity on that side of the House. That is good news. I caution them against being carried away by the particular interpretation put on figures by people who, with the best will in the world, have not got the full information. That is particularly the case in relation to the first quarter Exchequer returns.
Deputy O'Kennedy drew my attention to the fact that in our budget figures there is a target for a 17 per cent increase in income tax receipts this year. He compared that with the actual increase in income tax receipts of 15½ per cent in the first quarter. He detected in the difference between those two figures a reason for saying receipts for the whole year would be very substantially behind the target. That is not the case.
The increase we had during the first quarter is in line with my expectations as to the trend in receipts from income tax during that period. The Deputy should bear in mind the fact that there are some increases in income tax revenue which will accrue over this year, but which will not come in until the last quarter of the year. One example is the increase in revenue resulting from the change in the payment dates for building societies. There were some once off receipts of income tax in the first quarter of 1983 from back money paid to public servants which did not arise this year. The increase of 15½ per cent in income tax revenue achieved during the first quarter was a little higher, although not significantly higher, than the increase which I had expected over that period.
Deputy O'Kennedy also mentioned VAT receipts. As I told him during the course of his remarks, his record in predicting VAT revenue is not the best. I am very much afraid that he is embarking on the same kind of mistaken course this year as he did last year. He suggested we should have had an increase of 33 per cent in the first quarter of this year. I had expected an increase of some 16 per cent in VAT receipts during the first quarter of the year and we have, in fact, achieved a 21 per cent increase. There again, we are broadly on target. Other factors such as the effect of the introduction in September 1982 of VAT at point of entry by Deputy MacSharry when Minister for Finance affected the pattern of receipts over the first quarter of last year.
Excise duties are below my expectations, there is no doubt about that. However, it is not to anything like the extent suggested by Deputy O'Kennedy. To base his expectations on the simple operation of inflation, use that as the key factor in his predictions on the pattern of receipts is, of course, to ignore the fact that most excise duties are specific duties rather than ad valorem duties and will vary quite independently of the rate of inflation.
The overall situation in relation to the Exchequer position as at the end of the first quarter is that we are broadly on target. There is absolutely no evidence whatsoever at this point of the year that we shall have the kind of difficulties which Deputy O'Kennedy was predicting. I have said that it is very early in the year to be predicting these things, and that is something which we should bear in mind. The next point I wish to make is that the pattern and levels of receipts for the first quarter of this year are broadly in line with what I had expected.
Deputy O'Kennedy and other Members of the Opposition spent quite some time talking about the movement in the total borrowing requirement and the current budget deficit. Deputy O'Kennedy, in particular, attempted to demonstrate that I was presenting an increase as a reduction or vice versa— I am not convinced that he knew exactly what point he wished to make. The fact is that our intention this year was to continue with the process of reducing both the overall borrowing requirement and the current deficit as a percentage of GNP. We have done that. That is the situation which we have projected. To be specific, we are projecting a reduction in the current budget deficit from 8¼ per cent of GNP to 7½ per cent during the course of this year and a reduction in the total borrowing requirement from 14 per cent of GNP in 1983 to 12¾ per cent in 1984.
Deputy O'Kennedy and a number of his colleagues appeared at times to be objecting to the fact that we were not bringing about an even faster reduction in the level of the current deficit and of the total borrowing requirement. I think that I made it very clear in my budget statement what our objective was and why this year we adopted the particular budgetary stance which we did. Just to put it again on the record, we decided that the circumstances of this year were such that if we could avoid it we would be better to avoid a substantial deflationary impact from budgetary policy. We wanted to be sure that our budgetary stance did not interfere with our ability, as a community and as a economy, to benefit from the emerging recovery at world level. That was a deliberate policy choice. I am quite convinced that it is the right policy choice, and that is the choice which has given rise to the budget which I presented and to the measures in this Bill here today.
If Deputy O'Kennedy or indeed any of his colleagues are worried about the level of the current budget deficit or of the borrowing requirement, I should like to hear from them in some detail what alternative choice they would propose. Deputy O'Kennedy appears to be coming fairly near to proposing that we should aim for a lower budget deficit or a lower borrowing requirement. How are we to do that? Deputy O'Kennedy and his colleagues continue rather vaguely about more selectivity in public expenditure, but they will never say what precisely they have in mind in this respect. They will never say what the options are and where they could put the priorities. There has been only one case — and I listened very closely to this debate — where Deputy O'Kennedy has made anything like a concrete suggestion as to an area where expenditure should be reduced and he has made quite a meal of this on a few occasions. He thinks that we are spending too much this year on consultancy services. Now, the total allocation through all the Votes this year, for consultancy services is £4.2 million. That is an increase of £1 million on the allocation for 1983. A quarter of the total increase is for studies relating to computerisation in order to improve the efficiency of the public service. In other cases, expenditure is for studies and consultancy services in relation to a number of matters which are central to major policy development in a number of key Departments. If that is the type of suggestion which the Opposition can come up with to redress what they regard now as being a difficult situation in the public finances but which they did not regard as anything like so serious when they were in office, I am bound to say that their imagination could be stretched a good deal further than is happening at the moment.
How are the Deputies in the Opposition able to square their apparent concern over the level of the budget deficit and of the Exchequer borrowing requirement first of all with their own general criticisms of budgetary policy this year? How can they square their suggestion that we should have a lower deficit and a lower borrowing requirement with the fact that the only suggestion coming from them in recent weeks in terms of economic policy is one designed to spend another £200 million of taxpayers' money? I cannot see what logic or cohesion there is in that combination of policies, nor can I see how it could in any way be regarded as consistent with the points they have been making over the last few days in relation to the level of taxation or, indeed, the rates of taxation.
A number of Deputies referred to the sections of the Bill dealing with the long-term risk capital scheme. There are many queries about this. I would make the following points because they were raised by Deputies who, I think, are concerned to make sure that this scheme does achieve its aims. There is a general feeling in the House that this is a worthwhile scheme. Again in that respect, I am open to amendments which will make the scheme achieve the objectives we have set out for it.
Quoted companies are excluded from the scheme simply because they already have a satisfactory track record. We want as far as we can, to get extra activity generated by this scheme. I would be against extending the scheme to sectors of the economy where the risk level is not high. We have deliberately designed this scheme to attract investment funds into the high risk areas, which is where we are going to get a multiplier effect in terms of activity and jobs.
A number of Deputies appear to think that things are excluded from the scheme which are actually specifically included. As I said a few days ago, part of the reason for the length of that part of the Bill and for its apparent complexity is that I want to make sure that the scheme will do what it is intended to do — that is to get extra activity going, in so far as that is possible. Product development, research and development and information technology are included there. The scheme will also apply to a number of services covered by the activities of the IDA at the moment. These are listed in the Industrial Development (2) Act of 1981. It is a great pity — I know other Deputies feel the same way — that we do not have a little more time for this.
The debate we have had has shown above all that it is totally wrong and unproductive to discuss taxation in isolation. It is wrong for Members of this House to speak about tax rates only if, on the other side of the coin, we are not prepared to look at what our proposals on taxation have to do with the level of expenditure. Of course we would all like to have less taxation and more services. The two cannot go together, and the fact that they do not go together is one of the reasons we are in the kind of difficulty that makes it so important this year to get the balance of budgetary policy right. That is reflected in this Bill, which I commend to the House.
