asked the Minister for Finance the total estimated cost of the measure announced in the budget which will enable a parent to covenant part of his or her income in favour of a child aged 18 years or over.
Ceisteanna—Questions. Oral Answers. - Cost of Covenants.
3.
The measure referred to by the Deputy is intended to bring the appropriate provisions of tax legislation into line with the provisions of the Age of Majority Act, 1985 which reduced the age of majority from 21 to 18. The cost of the measure in terms of tax foregone will depend on the extent to which taxpayers will avail of the extended tax relief. It is expected, however, that the cost in 1986 will be negligible. The annual cost in subsequent years could amount to £5 million but it is not possible to provide an estimate at this stage.
In view of the fact that the value of grants to students is now 40 per cent less than in 1981 and that the means test is 45 per cent harsher, would this £5 million not be better spent in grants to students to enable those parents who are not in the income tax bracket, either on low wages or on social welfare, to provide their children with a third level education?
This provision for the making of covenants is not directly related to higher education. It is a simple facility whereby people can covenant income over to another person who is an adult. It would clearly be seen as very one-sided of the Government if they reduced the age of majority from 21 to 18, except in respect of the right to be the recipient of a covenant. That would be seen as a blatant attempt to negative the value of the Government's policy of reducing the age of majority by picking and choosing within that policy the things that did not suit the Government. That is what it is all about. I am surprised that Deputy Mac Giolla is attacking this measure and surprised that he would be in favour of discriminating in this way in regard to the age of majority by preserving the older age of majority for one purpose only.
I understand that this covenanting measure applies over the age of majority and not only in respect of educational matters. In light of the fact that parents will use it to aid their children's education, it will affect mainly people earning about £20,000 per annum. therefore it directly discriminates against parents with lower incomes. Would the Minister see a way, in conjunction with his colleague, the Minister for Education, of working out a system whereby the amount of money which would go on educational covenants could be transferred directly into the State Subvention to third level grants to assist the pupils who would not come into the covenant tax net?
Do I take it that the Deputy is against the position in regard to covenants? Does the Deputy want to withdraw this concession? My impression is that this is what the Deputy is saying. It will be of interest to many electors to hear that this is the Deputy's policy.
Despite the Minister's snide answer, I would ask him to answer me directly without making an assertion about a statement I did not make. Does the Minister consider that the amount of money which would go to the covenanting system for third level students could be put directly to students who would be eligible for grants? Will the Minister answer that question?
The only way it could be done would be by withdrawing this concession and by acting in a discriminatory fashion against people who for other purposes are benefiting from the reduction in the age of majority from 21 to 18. One would be withdrawing a benefit which people were getting. In other words, the Deputy is advocating that we should withdraw this tax concession. I do not think that would be welcomed either by students or parents.
The Minister will not cow me one bit by all his macho stuff. Does the Minister not seek to give direct help to students who cannot afford to get into third level education? Is he aware that the eligibility income limits for parents are quite impossible to achieve and that more and more this Government are discriminating against equality of access to third level education?
One cannot use the funds that would be available from the withdrawal of this tax concession without withdrawing the tax concession. If the Deputy is urging that these funds be used for another purpose, then she must be advocating the withdrawal of this tax concession. I note that is what the Deputy is saying.
I note that the Minister is dodging the question.
The Minister is not performing the duty he is required to perform at Question Time, namely, to reply to questions. Apart from the discrimination against lower income groups in regard to opportunities for their children to get third level education, is the Minister aware that there is a discriminatory factor against those over 18 who are in continuing education in that there are no social welfare benefits available for them? This is discrimination against those over 18 and under 21. By all means end the discriminations against those between 18 and 21 but end all such discriminations at the same time. In regard to education, would the Minister not accept that any action he takes should be designed to end discrimination which already exists? This was referred to by Deputy O'Rourke. The Minister is not yet sure about the loss to the Exchequer but it could amount to £5 million and this will be creating further discrimination in favour of the higher income groups, those who are in the income tax bracket as against those who are not.
Every single tax allowance in the tax code is of more value to people the higher their income. That is in the nature of a tax allowance. This is yet another tax allowance. One could make the same objection to the personal tax allowance, the housekeeper's allowance or to a widow's tax allowance. All these allowances are more beneficial to people the higher the income they have. If Deputy Mac Giolla and Deputy O'Rourke are advocating that we do away with tax allowances generally, that is another issue we can debate. In this case I am simply allowing a situation where a tax allowance that existed in the past for people over 21 will now be available to people over 18 because we have reduced the age of majority. To start taking that away, just because we have reduced the age of majority, from those who are between 18 and 21, leaving it with those who are over 21, would be discriminatory. If the Deputy wants to do away with tax allowances altogether on the grounds that they are discriminatory in favour of those on higher incomes, we could debate that as a separate question. We could move over to tax credits. The Deputy will be aware that in the 1982 budget I introduced tax credits and when the party opposite came into office they scrapped that system and went for tax allowances instead. They reverted to the older system.
On a point of order, I am disappointed at the refusal of the Chair to allow my Private Notice Question which relates to the urgency in regard to the present educational chaos. I strongly protest at the Chair's ruling. The Chair's secretary explained that the same criteria applied today as applied on Tuesday, that the Government did not consider the matter urgent. I asked for this question on Tuesday and was refused and was refused again today. I now wish the matter to be raised on the Adjournment.
I will communicate with the Deputy.