I give this budget a very general welcome, not just because it deals with many specific problems articulated for some time by Members on both sides of this House, but because its clear approach is one of structural tax reform. One of my disappointments with the national plan was that it did not deal with tax reform at all, but this budget responds to that need. The case for tax reform goes back a long time. The late seventies saw huge masses protesting on the streets for reform of our tax system. As a response to that, the Commission on Taxation were established and subsequently produced a number of reports, the first and third of which are the most significant. The first report is on direct taxation and the third on indirect spending taxation. This budget goes half-way towards meeting these two reports. By rationalising six rates of income tax and six of VAT down to three in each case the way will be left open towards going the one further step opened up by the Commission on Taxation, that of having one rate of income tax and one of VAT. The criteria laid down, of simplicity, equity and efficiency in our tax code, are now being met. There will be greater efficiency from the point of view of the taxpayer, those in small businesses who have to do the tax collection, either for their employees or the business, and the Revenue authorities.
Tax reform never has meant and never will mean tax reduction. That is a misnomer. There were a number of significant reasons that this budget could not and should not have been a giveaway one. First, 1985 is a particularly difficult year as regards the bulge in debt services, especially on foreign loans. This was no year in which to embark upon a procedure of widening the Exchequer borrowing account to any great extent. There are crucial economic problems because of our dependency ratio of 70 per cent, which is unique in western Europe. One million of our people are at school and cannot produce anything. One must also include all those dependent on social welfare, the elderly and so forth. It is because of our unique dependency ratio that there was not room for manoeuvre. In relation to the overall fiscal stance of this Government, the time is not yet ripe for a giveaway budget.
Dealing specifically with tax reform, we have, first, income tax. All taxpayers will benefit under present incomes. Tax free allowances and tax bands have been improved and the rates have been reduced to 35, 48 and 60 per cent. This will solve some of the problems resulting from the income tax code, the first of which is that we have one of the highest rates of absenteeism in Europe. We saw the Travenol experience recently, with 20 per cent absenteeism. We are half way towards solving the problem. Why is absenteeism so prominent? The principal underlying reason was the narrowness of the 35 per cent tax band, which means that it pays people in the last six to ten weeks of the tax year to leave work in order to get a tax rebate. This budget has widened the 35 per cent band by 12½ per cent and will deal directly with the absenteeism problem.
In terms of international trade we are talking about unit cost production and absenteeism costs money within those units. It must be dealt with. I agree totally with this Government's stance in relation to prior consideration being given to absenteeism records before any IDA grant aid is given. Employers will not talk about absenteeism because if reflects poorly on their management performance.
The second positive response in the income tax code is plugging of the brain drain. In our work on the Committee on Small Businesses, we had access to a survey among the key technology personnel and key marketing and management personnel in a number of firms who had left this country and gone abroad. The abolition of the 65 per cent tax band will be crucial in this regard. I was recently at a conference hosted by the Confederation on Electronic Information. One IDA representative at the conference said that he was recently in the United States and saw a particularly crucial technological engineering post vacancy. Of the 28 applications, 12 were from Irish people. There is an incredible rate of emigration of extremely mobile and skilled personnel that this country so badly needs. It is hoped that the abolition of the top rate of tax will deal with that. It will also deal with another huge problem. Whatever else about international statistics, the number of man days lost through strikes last year went up to 43,500. That was a substantial increase and one of the reasons, in my view, was that in many firms there were pay disputes because any increase given by the employers meant so little increase in take-home pay. It is perfectly reasonable that employees should be dissatisfied at that. It is to be hoped that the modifications will also deal with that and that the more one earns the more one keeps.
The general exemption limits being increased for the low paid are particularly welcome, as are the age exemption limits for old age pensioners many of whom have a contributory or retirement old age pension and a superannuation pension from their previous work place. That will not now be taxed as severely as heretofore. These are modest changes but given the Minister's lack of room to manoeuvre they maximise its effect cost-wise in the best possible way.
In relation to VAT, in the second report of the Joint Committee on Small Businesses we said that the six rates of VAT were untenable and unviable and that they should be rationalised into three. I am particularly delighted that they have been so rationalised. I might give those who have not worked in the retail sector an example. If one is a draper and happens to sell household towels, sheets, sportwear, fur coats or other types of ordinary clothing, one had to complete forms in respect of five different rates of VAT, with every item sold being entered in a different column causing huge problems in regard to paperwork alone. This will now be covered by a single rate of VAT for most of those items and, in the case of the remainder, 23 per cent which will eliminate a bugbear for many smaller retailers.
In relation to the cross-Border situation we estimated — in our study of the black economy, when we had the Revenue Commissioners sitting on the benches opposite, and having heard their complacent attitude in regard to cross-Border trade — the losses to be of the order of £300 million in illegal and legal imports. There is no doubt that the black hole through which those funds fell will become considerably smaller by the 50 per cent reduction in excise duties on televisions and by the reduction in the 35 per cent top rate of VAT.
There were many capital goods and raw materials for industry subjected to VAT at 35 per cent which caused huge cash flow problems for companies, and delays in VAT rebates, which in turn meant unemployment was a factor in many of those companies purely because of cash flow considerations. The overall effect of the changes in VAT rates is that the Minister is giving away £9.2 million, which is very modest. Fianna Fáil naively put forward the point that the Minister will take in £122.6 million extra in VAT revenue next year and that he is giving nothing away. If Fianna Fáil's basic understanding of arithmetic and net returns on volume sales is that poor, if they do not understand that £10 will buy one less now than £10 bought last year, or more importantly that it will take more than £10 to buy the same goods next year, they cannot base their criticism on that type of fictitious response.
The retail sector of the electrical industry will benefit particularly from the effects of this budget. The combined effects of these two areas of reform — income tax and VAT — will be such that first of all we shall have an increase in net disposable incomes for the first time in four years. Net disposable incomes are due to rise by 1½ per cent to 2 per cent. Real incomes have dropped by 10 per cent over the last four years. Generally speaking, everybody has had less money in his pocket and the real purchasing power of that money is less than it was ten years ago. That trend will be reversed under the provisions of this budget. The single greatest ingredient to the success and expansion of the service and retail sector is the amount of disposable incomes in circulation. They will benefit greatly from this budget. This budget will have a minimal effect on inflation, a quarter of one per cent, the lowest for many years, which will ensure that competitiveness is restored and the necessary climate for enterprise and expansion created.
In those comments I have dealt with what is contained in the budget. For the remainder of my contribution I shall deal with unemployment. We have seen the figure this week of 234,000 constituting the biggest single social problem we have at present. If one looks at the OECD figures of 31 million unemployed, or the EC figure of 13 million unemployed, one will realise that this problem is not unique to us. I would be the last among politicians to hesitate to tell the truth about unemployment and the difficulties we have in relation to our young population.
I should like to put forward some suggestions in relation to the creation of jobs and the possibilities therefor in our economy. Before doing so I shall make two brief points. One is that perhaps more beneficial to employment than anything in the budget was the announcement by the Minister for Energy of a 6 per cent reduction in ESB charges, being reduced to 2 per cent for smaller users. The second point is that, while there is an air of depression, a drop in morale and in confidence, the fact is that job losses in 1982 amounted to 38,800, in 1983 they dropped to 28,000 and last year to 17,400. That is not good news but the bad news is less so and is abating. There are 15,000 extra school leavers seeking jobs. We have never had the type of employment creation record that can sustain that type of job record. Changes in technology have a direct bearing on this. There is need for a new move in relation to employment creation policy. When one speaks to the State's best experts in employment creation one foresees two difficulties. The first is that years ago, through the IDA, we offered the best capital grant aid, 10 per cent corporation profits tax, and we were ahead of our competitors in attracting investment. Now the Welsh and Scottish development agencies are competing with 10 per cent corporation profits tax. Given our peripheral location in Europe we find it particularly difficult to attract investment. Fixed investment was down 2 per cent in 1984. Foreign investment in terms of manufacturing industry has been down in terms of new industry. We must ask ourselves where have we gone wrong? The fact is that our competitors have caught up with us and to get ahead of the posse again we must think up new policies. That is the first difficulty I foresee. The second difficulty I foresee is that in this industry, and perhaps within this Government, we have an ideological conflict between what is to be done about the future role of job creation. Some people insist that it must be effected through greater State enterprise. Others insist on a total dependence on the private sector. I believe that those two difficulties combined — the paralysis of other countries getting their act together in industrial development and the ideological conflict we have had — have resulted in a lack of progress.
I should like to put forward this afternoon a new policy for job creation in relation to a third sector. We talk about the private sector and the public sector. There is a third sector, the joint venture, partnership, sector between the State and industry, not based on any ideological conflict. I should like to specify in some detail how I foresee this working. There are three principal areas, firstly in relation to infrastructure and capital expenditure. There is the whole joint venture area in which I shall outline some detailed areas for job creation between the State and the private sector. The second area is to be found among semi-State bodies — the losses and problems encountered there, their future and the role of partnership in that third sector. Finally there is the National Development Corporation with new potential, opening up new opportunities, a way in which partnership between private enterprise and the public sector can be worked to create jobs.
Firstly, I should like to turn to joint ventures. If we take the £420 million allocated under the national plan for the roads plan and roads programme we will see there are on the table approximately six potential developments for toll facilities for roads. We have seen already the East Link development. I understand that at present there are detailed negotiations being finalised for the Navan-Lucan by-pass with a bridge across the Liffey, in respect of which planning problems must be overcome. The East Link development speaks for itself. The private sector having had the go-ahead from the State, incurred the necessary expenditure and, through their own company, recoup that expenditure through tolls. There is another area of joint venture there. For example, take the town of Athlone or, say, Wexford. Let us say there is a desperate need for a by-pass road around those towns. If this was done on a toll basis it would be only 60 per cent viable. What do we do in such circumstances? Do we wait until the State has all the money to construct that by-pass itself? Do we neglect the possibility of tolls?
There is a new formula which should be available under which the Wexford town by-pass would be 60 per cent viable and 40 per cent would be put up by the State. It would be quite simple to work it up as a limited liability company. The Government would put 40 per cent up front. The rest would be put up by the contractor or developer and the percentage of the return on the tolls would be 60:40. For every extra £100 million we generate in construction on infrastructures, you are also generating a 5 per cent growth in construction activities and 4,000 extra jobs. I am putting forward formulae to get extra development without over-committing the State.
I strongly welcome the three year roads plan, but there are additional needs. Let us look at a third formula. The Naas by-pass cost £18 million and it was almost unique in so far as it was brought in on time and on budget. It was a success because they ran it like a business. Kildare County Council were given responsibility as project managers. They subcontracted out to the private sector elements of the work. I am putting forward three proposals for joint venture in the roads infrastructural programme. The first is straightforward tolls. The private sector builds them and gets all the receipts. The second is that where only a proportion of it is viable, all the tolls will not pay for the total costs. The State puts up a subvention in the first place and tries to recoup it. It only puts up 40 per cent if it is 60 per cent viable. Therefore you get more construction work for less State expenditure. The third area is greater sub-contracting combined with the direct labour of the local authority through a sub-contracting mechanism. Those three formulae will generate jobs in the construction sector.
The partnership in housing for the third sector I would see as this. At the moment we are building 6,500 local authority houses per annum. The waiting list for local authority houses has remained at about 30,000. This has meant that the number of new houses we are building is approximately commensurate with the number of new applicants. At the same time the State has in its possession sites for 44,340 houses. The land is owned by local authorities, owned by the taxpayers and suitable for building. How can we build houses on that land without incurring extra State expenditure? There is a formula in the third sector in the State's private enterprise partnership for this to be done.
You would give land to the contractor to develop under five different strict terms of reference. You would tell him in advance who the tenants would be. Funding would be arranged through the Housing Finance Agency loans scheme or the SDA loans. He would be contracted to build houses specifically geared to those markets. He could not sell the houses to somebody else. The State has no up-front involvement and the contractor and the housing applicants would be able to do this.
I suggest that up to at least one-third, or perhaps 20 per cent, of the 30,000 housing applicants could afford 100 per cent mortgage on the house. The difficulty would be the deposit. If the State arranged 100 per cent mortgages and got the private sector to develop the houses in housing schemes, we would get more jobs and more houses, and improve the standard of accommodation and not commit the Department of Finance to extra expenditure. There is enormous potential for that. We already have 11 projects. We have one in Limerick. We have one in Tipperary where they have been successful. There is one in County Kilkenny. They have worked on a very small scale. They are working very extensively in the United Kingdom. I see no reason why an extra 4,000 to 4,500 houses could not be built every year without committing the State to extra expenditure. That is a typical example of where the third sector can be used to generate wealth and create economic activity and jobs.
The second area of partnership is that of the semi-State bodies. I am speaking strictly about the commercial semi-State bodies. I should like to say bluntly that the difficulty is the losses of semi-State bodies. Irish Steel managed to lose more than their total turnover, which seems incredible. The losses are appalling. It is unfair to brand all semi-State bodies as inefficient, or poorly run, or inherently having many problems. They are all different. They all have different loan charges. They are all set up under different Acts and under different company registrations, or whatever.
If some of them come to the Government looking for money and their problem is that they have too much loan commitment and what they need is equity, the Government say: "We are very sorry. You have a great case but we have not got the money." Therefore, political considerations can act to the detriment of the company's future and vice versa. Then there could be a company which should be made insolvent because there is no possible future for them. They are an albatross around the neck of the taxpayers. For political reasons the Government will not take the necessary action. Surely that is wrong. Surely that is not the way a State commercial sector should be run. There is nothing wrong with a company being a State company. There is no reason why they cannot make profits. There is no excuse for inefficiency in the name of the State.
I suggest a number of formulae to strengthen the semi-State sector, to expand and sustain it, and to expand job creation. If you look at a number of them you could float 25 per cent or less on the Stock Exchange. This would give them the funds they require to strengthen their capital base. If you want to be reasonable about it, in having a Stock Exchange flotation, a rights issue, or whatever, you could give first preference to the employees and you could limit any individual as to the number of shares he would have so that there would be no controlling stake in it. Existing companies such as Irish Life and Aer Rianta would be very suitable for this. I am not saying we should sell all the semi-State companies. I am saying we should get money into them by raising money on the Stock Exchange without committing the Government to put money into them.
For the second procedure let us take Aer Lingus. I understand that in the eighties Aer Lingus will need somewhere in the region of £650 million to replace their trans-Atlantic and European fleet. The Government have not got £650 million. Aer Lingus have not got £650 million. This is a national airline. It must be made competitive. It could raise half that on loan capital, but after that there is an over-dependence on loan capital. What needs to be done here? Aer Lingus need capital. If the KLM airline in Holland can sell 25 per cent of their airline to get capital and make sure they are efficient and have the latest technology, I do not see why Aer Lingus could not do that.
The third formula would be a straight joint venture. I understand discussions are taking place between ICI and NET. I totally endorse that. NET's problem is that they are making a profit but they cannot pay off all the debts they ran up over the past decade. We must inject £50 million of equity in the hope that we will get a return on the equity through a dividend instead of paying premium interest rates on loans. I suggest a straight joint venture deal bringing a competitor into your business.
The third area would be a direct sale of ancillary services. An example, although not necessarily a correct one, would be to sell the Aer Lingus hotels to get money into the company. We have a number of formulae. I am not suggesting we should just flog off our semi-State sector but strengthen our semi-State sector which is grossly under-capitalised to give it a chance to make a profit, to secure the employment in it, and to give it a viable future. That can only be done through a third sector of partnership between the private and the public sectors.
The third area about which I have great concern relates to the National Development Corporation. We have the sterile argument about the ideological conflict between the public and private sectors. We should bear in mind that we are giving grants which amount to £96,000 per job in certain factories. I am not condemning it — there was an example of it in Greystones in the last month. However, this must be examined because it is an enormous amount of money. It is a non-repayable present. In relation to larger industries, surely there is a question that must be asked on behalf of the taxpayer: is it better to give a non-repayable present than to take an equity stake in the company? I specifically request that when the NDC are being established the State should arrange to take a substantial stake, a minority one, in companies being established, and that the IDA when dealing with larger industries which they are trying to attract would draw up a formula whereby the State would take accumulative redeemable participating preference shares in those companies.
The State would deal with multinationals and say it would put in 40 per cent of the equity: if the project was costing £100 million the State would put up £40 million — of course, the grant-in-aid is 45 per cent. A moratorium would then be put on dividends so that for the first five or seven years dividends would not be taken by the State but after that, because the shares would be cumulative and preference, the owner of the private sector involved would have to pay preference dividends to the State. That would be attractive to many companies and it would generate employment in certain crucial growth sectors that we so greatly desire. It would give better quality projects, and this formula, which has been agreed by the CII and is before the Government, has not been tried in any other country. If we want to compete for foreign investment and if we find other countries have caught up with us and our development agencies, we have got to try to go one step ahead.
I should like to speak about job losses in our traditional industries and I will give the typical reasons for job losses in many sectors. In the sixties there were voluntary quotas and we can take the flour industry as a simple example. There were agreed percentage quotas, everything was nice and cosy, there were no imports and everyone got on fine. We joined the EC in the early seventies, the competition started and imports began. In the first 18 months the native producers cut their prices to compete with imports. They started to trade at a loss and they sustained losses for two years. Then the losses became unsustainable and the industries went bankrupt. That applied repeatedly in traditional industries. There was nothing wrong with the companies which were perfectly efficient, but they could not compete.
It is in the national interest at this stage that we look at our traditional industries which have surplus capacity. When they are in competition with imports, whatever price our industries sell at the price of imports will drop by 5 per cent or whatever because they are on marginal cost production. In England they just put on a third shift but it takes us our total prime production costs to produce the goods.
What will we do? I suggest that we make a case to the EC whereby we, Belgium and the Greeks look for modest selective tariffs. Since we joined the EC the rich countries have got richer and the poor have got poorer according to GNP and spending per capita. Therefore, we must ask that there be selective tariffs on imported goods which we do not export and in which we have a genuine national interest.
The best example I can give is our farming industry. UK farmers have said that they can sell flour at a price 15 per cent lower than Irish farmers can produce it at. They are selling flour at less than the price they charged two years ago. We do not export any flour and therefore there must be a case, particularly when it is appreciated that we have the second highest unemployment rate in the EC, for saying to the EC: "Your highly industrialised economies have gained on the backs of our poorer economies." We are not suggesting that free trade is not good or that the principles of the EC are not what we agreed to, but selective medium tariffs should be introduced to protect our traditional industries. It would not conflict with EC free trade policy, it would not conflict with our stated policy in relation to competition and of trying to obtain extra access in spite of technical trade barriers put up by the French and others, but it would take account of the fact that we are facing a damn bad year for agriculture and that the gloss has gone off the EC for Ireland. The benefits which we thought would accrue have dried up considerably in real terms.
We must tell the EC there are breaking points as far as Irish industry is concerned, particularly traditional industries which need to be protected, not by rewriting the Treaty of Rome but by putting up very selective, modest trade tariffs. The EC has population one and a half times the population of the US, yet the US GNP is more than one and a half times that of the EC. We saw that the EC was not very clever in dealing with the oil crisis during the recession. My suggestion would provide a way for small countires like Ireland, the Belgians and the Greeks to do something modest to help ourselves.
I should like to make some points in relation to employment vis-à-vis the budget. The budget will create jobs in the retail electronics industry. I understand 5,000 jobs have been lost in relation to the sale of hi-fi equipment, televisions and so on and that 1,500 other jobs were in danger. That position will be reversed because of the budget. The provincial press were badly hit. The Wexford People in my constituency had its employees on a three day week. I should like to see the reduction in newspaper VAT extended to newspaper advertising. Those involved in the production of toys, detergents and so on will all benefit by the VAT reduction and this will create jobs. I understand there will be a particularly interesting provision in the Finance Bill in relation to multi-residential development which will benefit the construction industry. The £980 million provided in the budget for the construction industry will help employment there. I understand that the business expansion scheme will be amended in the Finance Bill which will assist capital development in small companies. The unit trust legislation is to be amended so that the trusts can advertise for designated funds.
Tourism receipts this year should hit the £1 billion mark and with the strength of the dollar the North American market looks very promising. I hope tour operators and handlers will produce a package to get the optimum benefit from the changes in the budget, thereby ensuring that tourism earnings hit the £1 billion mark. The Joint Committee on Small Businesses are preparing a report on tourism and, as chairman of that joint committee, I am aware of the difficulties of those involved in car rental, caravan and boat hiring businesses. Car stocks have dropped to 5,500. Boat hiring on the Shannon has run into enormous difficulties becase the German market has dried up. The reduction to 10 per cent in the VAT rate will benefit those operators.
The provision of £30 million for the social employment scheme and the creation of 10,000 part time jobs will help. Growth in manufacturing industry of the order of 3,000 to 5,000 extra jobs this year is another positive factor arising out of the budget.
I should like to pinpoint some areas where more can be done about jobs and discuss the whole area of pay-related social insurance. Employers' contributions under PRSI costs approximately 13 per cent. That works out at 10 per cent of their operating surplus or profits. However, if one looks at the labour intensive industries such as textiles or the construction sector, one will see that because they employ more people the employers' share of PRSI payment amounts to 40 per cent of their operating surplus. The simple and logical conclusion that one can gain from that is the more one employs the more one pays. That amounts to a tax on employment, a disincentive to employ more people. Before a worker does a tap of work for an employer on a Monday morning he costs the employer £11.50 on average industrial earnings. That is one of the inhibiting factors to job creation.
I realise that what goes out on unemployment, disability and pay-related benefits is greater than what is collected under PRSI. Genuinely there is a problem there for the Government but I should like to suggest some ways around this. The Commission on Taxation recommended that there should be a percentage social security tax on everybody and that it would not be paid only by those good enough to recruit employees. They suggested that it be paid by everybody who is earning. The suggestion was that those earning pay a 5 per cent social security tax, as happens in other countries such as the US, based on one's income. It may be said that 5 per cent is too low and that the figure should be 7 per cent but irrespective of the figure decided on it would not have the same effect on employment that PRSI has. Where there are proven labour intensive industries there should be a halving to a figure in the region of 7½ per cent employer's PRSI. Surely it is wrong that 40 per cent of an employer's profits go on PRSI simply because he takes on more people.
I suggest that PRSI be waived where apprentices are recruited. They suffer enough in terms of labour market policies.
I should like to see a number of selected measures taken to create jobs. I should like to deal with the service sector first. That sector is seen as a revenue earner and is penalised as such. There is one benefit I should like to see passed on to the service sector which is directly related to job creation. A manufacturing employer who takes on an extra worker gets relief of £10 per week for every extra employee taken on or £500 per year. For every worker taken on in that sector the employer writes of his corporation tax bill a total of £500. Why not extend that to the service sector which pays the higher rate of corporation tax? In order to stimulate jobs I suggest that if there are base levels of employment statistics within a firm, like those that exist for the employment incentive scheme, the Government say to employers that for every extra person taken on their tax bill will be cut by £500. That is a simple and effective method.
The second area I should like to refer to — it does not have anything to do with employers — relates to job sharing. We have spoken about the social employment scheme and have seen the developments for part time work, 40 hours work per fortnight, but I suggest that where people are prepared to consider splitting a job that the Government introduce a tax break. I am thinking of the many people whom part time work would suit. I suggest that there be an increase in tax free allowances of 50 per cent for all those who split their jobs in an official job sharing programme. The employer could submit to the tax authority a note to the effect that he had a job which he was permitting two employees to share. The PRSI contribution class could be adjusted. In return for that the take home pay of the person involved could be increased by increasing their tax free allowance by 50 per cent.
The third measure I should like to suggest relates to early retirement. It is true to say that if on a once off basis the pension age is reduced from 66 years to 60 years at the stroke of a pen, but at great cost to the Department of Finance who may shudder at the thought, the Government would create 10,000 jobs. I accept that it would be a once off gain. However, if people were given an inducement to retire early without having to cough up the pension such a suggestion would become more viable. I understand that the Department of Finance have been saying that the reason the retirement age cannot be reduced to generate jobs is because it would be too costly in relation to pensions. However, there are many people in good employment who have private insurance and pension plans within their companies. I suggest that the age exemption tax limit which now stands at £3,000 for a single person and £6,000 for a married couple, be given to those who opt for early retirement after 55 years of age and do not obtain a pension. Such a worker having given 30 years service to the company may have an indexed linked pension of £180 per week but as things stand that pension would be taxable. The reason why many people with such conditions do not retire is because they may be entitled to a contributory pension from the Department of Social Welfare also but may lose it if they retire early. I suggest that the age exemption limits that now apply to those over 65 years of age apply to those over 55 if they opt for early retirement. That would stimulate jobs in the economy. The remaining income of those involved could be treated in the same way as those in part time jobs or the self-employed.
With regard to the 15,000 school leavers who seek jobs annually there is a fundamental need that they be taught self-help, entrepreneurship and enterprise. Career guidance teachers hand out pamphlets on how to get into the bank, sit interviews or pass examinations, but what about the most obvious opportunity that exists in a free society such as we have, the opportunity for self-employment? We need a once off stimulus to encourage people when they are young to think about being self-employed, being their own bosses. The enterprise allowance scheme, and other schemes, are moving in this direction and why is it that the tax system does not move in that direction also? I recommend that young people who leave school between 16 and 24 years and who become self-employed be exempt from schedule D income tax. Under that schedule the self-employed pay income tax on the current year's assessment. I suggest that such young people go to their local friendly inspector of taxes and register as a self-employed person. After that they would not pay tax until they reached 25. From then on the tax authorities could catch up with them whether they are chimney sweeps, are operating creche facilities, a garage repair shop or in manufacturing industry. The important point is that the State recognises the value of people who look after themselves not by pushing them into the black economy but by exempting them from income tax. This would be very cost effective and very reasonable.
We see Ministers, members of the IDA and everybody else going abroad on trade missions, junkets or whatever to drum up business because we depend on a market led policy. The crucial people involved are not rewarded. There are double taxation agreements between all the economies with which these marketing executives work. I suggest that marketing executives, tour operators and people who are trying to drum up business for this country who spend more than 90 days abroad on what is officially audited as market business would get a special once off free allowance of £2,000. This is not a perk for people who go abroad; it is simply a recognition of the crucial role these people play. Because of the orders they obtain and the income they generate there will be a job spinoff in the manufacturing industries and the service sector.
If we want to solve our balance of payments problems all we have to do is sell as much to West Germany as we do to the Dutch. We sell £11per capita of exports to the West Germans and £29 per capita to the Dutch. If we sold as much to the Germans as we do to the Dutch we would generate an extra £1.1 billion. From Waterford Glass to the most basic textile product this is a very attainable possibility.
This budget is very good for my constituency. Wexford is in the sunny southeast and tourism will benefit. County Wexford has been selected as the pilot area for the social employment scheme and we are hoping to create 400 to 500 part time jobs in the near future. Rosslare has received £632,000 in this budget — £500,000 for the development of the port for which we have been asking for a long time and £132,000 for lifeboat facilities. Payments to Rosslare this year and last year come to £1.017 million. That is indicative of this Government's commitment to County Wexford.
From the Government's perspective the Coalition budgets of July 1981 and January 1983 caught the Fianna Fáil runaway horse. Some people said to me that this was a Fianna Fáil budget and I laughed. It was alleged that because this budget was not hard on the people it was like a Fianna Fáil budget; but if we look at their last three budgets we see that their figures for the current budget deficits overran from 45 per cent, their best effort, to 80 per cent, their worst effort. It would be very wrong to compare this budget with a Fianna Fáil budget because in terms of accuracy alone such comparison would be incredible. The Coalition budgets of July 1981 and January 1983 caught the Fianna Fáil runaway horse but their 1984 budget was broadly neutral. It was negative in relation to disposable incomes and increasing tax consumption in the economy. This budget is the first step towards reforming the tax system and it will give a modest reflationary boost to income and volume sales at retail level. If one were on the Continent looking at the Irish economy one would have to say that every economy indicator is going in the right direction. Output and exports are up, inflation is down and heading for the lowest level since the sixties——
