Amendment No. 12 falls on the decision on amendment No. 11.
Finance Bill, 1986: Committee Stage (Resumed).
SECTION 2.
Amendment No. 12 not moved.
I move amendment No. 13:
In page 10, in the Table, Part I, column (1), to delete "£2,800" and substitute "£2,996".
Question: "That the figure proposed to be deleted stand" put and declared carried.
Amendment declared lost.
Amendments Nos. 14 to 16, inclusive, not moved.
I move amendment No. 17:
In page 10, after Part II of the Table, to insert the following:
"Notwithstanding anything contained in the Tax Acts, Part II of the Table to section 8 of the Finance Act, 1980 (inserted by this section) shall apply to persons with dependants who are widows, widowers or single parents."
The effect of this amendment would be to ensure that widows, widowers and single parents get the same tax allowance as married persons and would be regarded as married persons for the purposes of the Finance Bill. Widows, widowers and single parents with dependants have the same problems, responsibilities and expenditure as married persons. They may have one mouth fewer to feed but they have the same problems with regard to housing, mortgages or rents depending on accommodation, expenditure on education of children, clothing, fuel, medical care, and so on, for their dependants and themselves. The case of deserted husbands is probably even more anomalous than that of any others because deserted wives and single parents have a special provision not made for deserted husbands.
Single parent families, whether widows, widowers or single parents for some other reason, have enormous problems. Indeed, it could be said that they have even greater problems than two parent families because they have to try to get a job to provide for their dependants and, in many cases, they must also provide care for their children which must be paid for. This can be very costly or it can mean they they can only work in the home or in a part time capacity. Therefore, they have greater problems than two parent families and should be regarded under the tax laws as having similar expenditure to two parent families and should get similar treatment. We are asking the Minister to consider the very difficult position of single parent families and if he could agree to having them treated in the same way as two parent families in regard to tax.
The amendment proposes to extend the double rate bands, applicable to married persons, to single and widowed people. One of the consequences of increasing the rate bands for single or widowed parents would be that married couples with children, where each spouse has an income, would find it vastly to their advantage to be assessed for tax purposes as if they were single which is possible under section 193 of the Income Tax Act, 1967. If each spouse accepted responsibility for one or more of the children, they would be able, under Deputy Mac Giolla's amendment, to get the benefit of two sets of increased rate bands compared with a married couple with only one source of income who would only have one set of rate bands or, if assessed on joint income, would be taxed on a less favourable basis than that proposed in the amendment. If the wording of the amendment were to be revised in such a way that married couples would be prevented from availing of it under section 193 of the Income Tax Act and thereby claiming two sets of increased rate bands by splitting themselves into two single people for tax purposes, then the measure would be regarded legally and constitutionally as repugnant to the Constitution following the decision of the Supreme Court in the Murphy case. For example, if a widow and a widower, both with children, wished to marry, under the proposed change they would be discouraged from doing so by the fact that as a married couple they would be entitled to only one set of doubled rate bands whereas if they remained unmarried, notwithstanding the fact that they might be living together, they would be able to claim, under Deputy Mac Giolla's amendment, two sets of doubled rate bands. A man and woman living together who have care of children would, under the proposals in the amendment, be accorded two sets of increased rate bands instead of two sets of single rate bands which apply at present.
In the light of the advantages that would be conferred on people living together, so to speak, other than being married, I would have to conclude — and I think the court would also have to conclude — in the case of a constitutional action that the amendment would be contrary to Article 41 of the Constitution in that it would provide a disincentive to marriage. For these reasons, apart from the cost involved, I reject Deputy Mac Giolla's amendment. The cost of giving double rate bands to single parents would be £2 million in 1986 and £3 million in a full year. However, it would not be sustainable anyway because it is repugnant to the Constitution and even if it were not, it would be bad policy as it would create an artificial discrimination against married people.
The Minister's reply was extraordinary from the point of view of single parents. He did not deny the justice of the measure. I thought his argument might have been that there was no just reason why they should be allowed these tax bands but he did not argue that line at all. The Minister's argument is that the amendment would give an unfair advantage to married couples because they could fiddle the books. The second part of his argument was that it would be unconstitutional to give a fair deal to widowers, widows and single parents. The Minister referred to the Murphy case and said that it would discourage people from marrying and that it would be better for them to live together under the present laws. In other words, the Minister's laws are so framed that if you give a fair deal to widows, widowers and single parents, it would be unconstitutional because it would discourage them from marrying at a future date. It is an extraordinary argument and the Minister did not even develop it in relation to costs——
It would cost £2 million this year.
The Minister said that there were cost factors involved but the basis of his argument is a legal and constitutional one. They are extraordinary laws if they prevent us from giving justice to people in regard to tax laws. The reason I thought it was only fair was that such people must face extra costs and the same responsibilities. Therefore, it is only fair that they should have the same benefits in our tax laws and the Minister did not deny that. Perhaps the wording I have suggested is not the best, but the Minister for Finance is the person who can put forward wording that would be constitutional, legal and give justice in the taxation system. It is his job to do that.
There is no case that I know of where a Minister who wanted to give a benefit to a person, group of people or company did not do so. He has been able to do that in all cases within the Constitution and within our laws but I wonder why he says that in this case it is not within the Constitution or our laws to give just and fair treatment to widows who have dependants, may be six children, and extraordinary expenses. If they get a job to build up their income, they do not have the same tax allowances as they would had their husbands been alive. The same applies in regard to single parent families. The justice of my case is so obvious that the Minister has no argument against it. Will the Minister tell the House if it is possible to produce wording that will allow the benefit to go to such people without constitutional or legal problems arising?
I do not wish to go on at great length about this matter but I wonder what concept of justice Deputy Mac Giolla is advocating. In the case of two people who are living together, have children but are not married they would, in line with the amendment, be able to get double tax bands but, if they got married, would lose them. That is not just to them or the children.
That is a separate problem.
That is the problem that would be caused by Deputy Mac Giolla's amendment. Under Deputy Mac Giolla's amendment as long as they did not get married a widow and widower who had children by their first marriages would have two sets of double rate bands but if they got married they would lose them. That runs contrary to the Constitution and to a good concept of public policy. I do not think we should build into our tax code any arrangements that make marriage something that is fiscally onerous for people. I accept that is not Deputy Mac Giolla's intention but I am not concerned, nor are the courts, with people's intentions but with what the law says. What the law says has the meaning which I described. Deputy Mac Giolla may say it is up to me to draft the amendment so that it will not have the problems that are contained in what he is proposing, but I must say to him that it is his job because he is the person who is making the proposal. I am not making a proposal. Essentially, it is a matter for him to devise a method which would enable one to help people who are single parents in a manner that would not be negative towards their interests in the event of their getting married.
The tax laws as they exist are immoral, in the Minister's term, because they apply to all single people. Will an unmarried mother who is living with somebody else lose her unmarried mother's allowance? Why is there not a special provision to the effect that once an unmarried mother is living with somebody she is not an unmarried mother even if she does not get married? The same system could apply in the case of a widow who is living with somebody else, if the Minister wants to retain the moral stance he is making on our tax system. It is easy to avoid that by defining "widow", "widower", "unmarried mother", "deserted wife" or "deserted husband". Will a deserted wife who is living with somebody who is not her husband be regarded as a deserted wife any more? Are they entitled to the tax benefits or not? I could produce different wording for Report Stage if the Minister suggested that it might be worth my while.
The burden of my argument does not have anything to do with the morality of the tax system or whether people get married or not, but whether a widow who genuinely remains unmarried or unattached, or whether deserted wives or deserted husbands, are entitled to benefits under our tax laws as they were when their spouse was alive or before the desertion. The cost and the problems are the same. The only difference is that there is one less mouth to feed. Everything else in regard to housing, accommodation, clothes, food, education and health is the same, if not greater. If the Minister says he sees justice in the case I am making I will consider tabling an amendment for Report Stage which would eliminate the possibility of benefit being gained by remaining unmarried but living with somebody else, the main burden of the point the Minister is making. If the Minister does not accept the justice of the case I would be wasting my time trying to produce a wording which would eliminate what the Minister has said in regard to illegality, unconstitutionality and immorality.
I did not use the word "immorality" at any point and I do not want that word to be put in my mouth. I never use that word. I am not making any judgment because it is not my place to do so. The point made by the Deputy relates to the additional expenses on people who are single parents. They are recognised in the tax code already by the fact that single parents get double tax allowances. The granting of a double tax allowance to a single parent has never been tested in the courts. Although it has never been tested in the courts it is considered that the granting of a double tax allowance to a single parent is not inconsistent, although if a single parent were to get married, if they were both single parents before they got married, so to speak, they would lose one set of those double allowances. But it is considered that the granting of allowances which relate to actual expenses incurred and are supposed to provide a tax cushion against actual expenses incurred, is not inconsistent with the Murphy case and is already being done. The tax code already recognises that widowed persons and single parents, by virtue of their having separate establishments to maintain, incur extra expenses. On the other hand, what Deputy Mac Giolla is proposing is that rate bands as well should be doubled right up to almost any level of income regardless of expenses, in other words, that two people with very substantial incomes would be enjoying right up their tax ladder, so to speak, double bands——
One single person.
——by virtue of their situation. The view being taken is that to give not only the allowances which are, if you like, a recognition of actual expenses which are common to all, but also separate and special treatment to single parents in the form of double rate bands would be contrary to Article 41 of the Constitution which would be considered, for the reasons I have already set forth, discriminatory against marriage. Obviously if they were to marry and live in the same establishment, they would save some of the expenses. That saving, if you like, could justify the removal of the allowances which would follow on their getting married. If, in addition to that, they were to lose the double rate bands, which Deputy Mac Giolla's amendment would grant them but which they would lose if they were to get married, it is the considered view that that would be repugnant to Article 41 of the Constitution, as interpreted by the Supreme Court in the Murphy case.
It is also to be recollected that in the Government White Paper accompanying the proposed amendment of the Constitution, which is to be considered here shortly, the Government did make reference to the need to conduct a review of the situation in regard to various aspects of our law which might be argued to be inimical to marriage or creating artificially disadvantageous situations for people who get married relative to others whose circumstances are otherwise similar. That is the context in which the entire case made by Deputy Mac Giolla and others can be considered. It is an extremely complex matter. Nonetheless it is important that legislation should be framed within the spirit of the Constitution and, in particular, Article 41 — I am not able to quote it exactly from memory although I suppose I should — which says that laws shall not be introduced which are inimical to marriage.
We appear to be covering the same ground and not getting anywhere. I still cannot understand why the Minister keeps talking about when people are living together. Surely the Minister can understand that that possibility can be eliminated? What we are talking about are people who are widows, widowers or deserted wives and husbands, not living with anybody else except their dependants. Surely that status could be seen to cease by the insertion of a simple phrase agreeing that when that status would cease the benefits would cease. Can the Minister not see that special provision can be made simply for those who are single parents and remain single parents?
The Deputy appears to be looking at this solely from the point of view of the benefit that would be given. He must also look at it from the point of view of the benefit that would be lost, if it were first given, to those people if they got married. It is that that is the concern of Article 41 of the Constitution. One could maintain that allowances are to cover expenses and there are larger expenses incurred if one is a single parent. If, in addition, to that there were to be double rate bands right up the tax code which would bear no necessary relationship to expenses at all, but simply to the fact that the two people concerned had large incomes, if then they were to get married and would lose all of that, that would be considered to be creating a fiscal disadvantage from the point of view of those people getting married.
It may be argued by Deputy Mac Giolla and others that these are all slightly unlikely circumstances, that they would not happen in the generality of cases. That is probably all true. But I listened to the Attorney General recently discussing some other matter ——
We do not want to get into constitutional argument.
Deputy O'Kennedy might recognise that each Deputy must make his contribution in his own way. Deputy O'Kennedy is not the master of ceremonies here on this occasion. If he has something to say about this amendment, it might be better that he say so. If not, perhaps he would keep his peace and allow me to reply to Deputy Mac Giolla.
On a point of order, and I can appreciate that the Minister may be a little impatient at my comment but I still insist that this is not a place for argument on constitutional law. I insist also that the Minister is not particularly qualified to engage in that argument.
I know Deputy O'Kennedy was being rather testy about personal qualifications early in the day when Deputy G. Mitchell sought to impugn him. I am surprised that he should introduce a personal note into this discussion. I am not aware of what Deputy O'Kennedy's qualifications are in this area either.
The blunt fact is that the Minister does not want to pay it. Why can he not be honest enough to say so, because hiding behind the Constitution is too much?
The position is that, in this case, the Constitution has been interpreted by the Supreme Court in the Murphy case in a particular way which caused a specific problem. There are questions of public policy involved as well. What I was about to say before Deputy O'Kennedy wasted the time of the House with his personal interruption was that even though cases may seem to be unlikely the law must be framed to take them into account. There is one thing certain, that is that the unlikely will happen in areas of application of this type of legislation. It is the unlikely that becomes the basis of court cases in almost all instances.
I would simply press my amendment.
Amendment put and declared lost.
On section 2, amendment No. 18 in the names of Deputies Mac Giolla and De Rossa has been ruled out of order because it would involve a charge on the people.
My amendment deals with tax credits promised in the Joint Programme for Government by both Fine Gael and Labour Parties ——
Just as with the Deputies' amendment No. 10, this amendment, No. 18 has been ruled out of order because it involves a charge on the people.
Then the Joint Programme for Government is ruled out of order in the House here.
Amendment No. 18 not moved.
Question put: "That section 2 stand part of the Bill."
The Committee divided: Tá, 65; Níl, 58.
Tá
- Barnes, Monica.
- Barry, Myra.
- Bermingham, Joe.
- Birmingham, George Martin.
- Boland, John.
- Bruton, John.
- Bruton, Richard.
- Burke, Liam.
- Carey, Donal.
- Collins, Edward.
- Conlon, John F.
- Coogan, Fintan.
- Cooney, Patrick Mark.
- Cosgrave, Liam T.
- Cosgrave, Michael Joe.
- Coveney, Hugh.
- Creed, Donal.
- Crotty, Kieran.
- Deasy, Martin Austin.
- Desmond, Barry.
- Desmond, Eileen.
- Dowling, Dick.
- Doyle, Avril.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Farrelly, John V.
- Fennell, Nuala.
- Flaherty, Mary.
- Flanagan, Oliver J.
- Glenn, Alice.
- Harte, Patrick D.
- Begley, Michael.
- Bell, Michael.
- Hegarty, Paddy.
- Hussey, Gemma.
- Kavanagh, Liam.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerry.
- McGinley, Dinny.
- McLoughlin, Frank.
- Mitchell, Jim.
- Moynihan, Michael.
- Naughten, Liam.
- Nealon, Ted.
- Noonan, Michael. (Limerick East)
- O'Brien, Fergus.
- O'Brien, Willie.
- O'Keeffe, Jim.
- O'Leary, Michael.
- O'Sullivan, Toddy.
- Pattison, Séamus.
- Prendergast, Frank.
- Quinn, Ruairí.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick Joseph.
- Skelly, Liam.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madelne.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Michael.
- Andrews, David.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John.
- Burke, Raphael P.
- Byrne, Seán.
- Calleary, Seán.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Brian.
- Daly, Brendan.
- De Rossa, Proinsias.
- Doherty, Seán.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzgerald, Liam Joseph.
- Flynn, Pádraig.
- Foley, Denis.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Harney, Mary.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Keating, Michael.
- Kirk, Séamus.
- Kitt, Michael.
- Lenihan, Brian.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McEllistrim, Tom.
- Mac Giolla, Tomás.
- Moynihan, Donal.
- Noonan, Michael J. (Limerick West)
- O'Dea, William.
- O'Hanlon, Rory.
- O'Keeffe, Edmond.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond J.
- Power, Paddy.
- Reynolds, Albert.
- Treacy, Noel.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Tellers: Tá, Deputies F. O'Brien and Taylor; Níl, Deputies V. Brady and Browne.
Question declared carried.
SECTION 3.
I move amendment No. 19:
In page 10, after line 17, before the Table, to insert the following subsection:
"(2) For the purposes of section 138B of the Income Tax Act, 1967, the child of a self-employed person or partnership shall be regarded as an employee for purposes of qualification for the £700 allowance as provided in the Table following."
This amendment seeks to restore the PAYE allowance of £700 to the children of the self-employed. The Government deliberately decided to exclude these children from this benefit. This decision is both unsustainable and particularly inappropriate at this stage. No case can be made in fact or on the basis of reasonable justice to support that decision. If a family business proprietor has two employees, one outside the family and another a member of the family, being paid at the same rate, is there any justification, in a country which purports to put the family in a special position under the Constitution, for denying to the family member the same PAYE allowance as applies to the employee who is outside the family? Perhaps this decision could be sustained in countries which do not have a provision in their Constitution proclaiming the fundamental position of the family as being the essential unit in our society upon which all our laws and social order are based, but that is the proclaimed position in our Constitution. There is a certain amount of apprehension these days that that proclaimed constitutional position may not be vindicated in every sense in further actions proposed by the Government.
If the Minister can give me reasons, in terms of equity, constitutional justice, or on any other ground, why he should not apply the PAYE allowance to children employed by the self-employed, I am prepared to be persuaded. I suspect what is on the Minister's mind is that, while the vast bulk of the self-employed are not in any way abusing the allowances available to their children, or their children are not abusing such allowances, the Minister and his advisers have found that in the nature of things there is a minority, as there will be in every category of taxpayers, who are perhaps engaging in some avoidance or evasion measures through this allowance. Some may pretend that they are paying what they are not paying; some may pretend they are paying more than they are; some may pretend they have employed someone in the family who is not so employed. There may be some such cases but, if there are, that is no justification at all for withholding the allowance from the vast bulk of bona fide genuinely employed children of either self-employed people or partners.
In addition, when one considers that the manufacturing industry is not able to generate extra employment to use the growing labour force and sees the increasing growth of unemployment and the constant drain of emigration, is it not outrageous to suggest that where there is one element accounting for over 30 per cent of total employment, namely, the self-employed, they should be penalised in this way? Incidentally, this is including the secure public service. If they employ their children in their family business they are being victimised by this Government for so doing. The only consequence of this is that it is better to disengage from employment with one's parents or for parents to ensure that their children will not be employed by them and to take on somebody else instead or, more than likely, not take on anybody. I cannot see any justice or validity in the Governments approach. I am proposing that the Minister should do what all Governments have acknowledged for a long while, restore the £700 PAYE allowance and also restore some degree of support for what is, or has been claimed to be, the fundamental unit in our society, the family. If the Government persist with this proposal they will be ensuring the further undermining of the family and of employment generally.
Can the Minister say how many children are involved in this respect as employees and how much this amendment would cost? The policy of the Government for some time has been to encourage the growth of small industry. I can recall many of the Minister's speeches along those lines. Would he not regard the philosophy he is pursuing as making it necessary for him to agree to this amendment because that philosophy is on the lines that we should encourage the greatest number possible of small firms and the greatest number of families being involved in their own businesses? What better way is there of doing that than by encouraging people to work in their family firms?
Apart from that important argument about the philosophical side of this provision, there is the agrument of equity because people who do not work in family firms can avail of this allowance while it does not apply in the case of people working for family firms. Perhaps the Minister could give us some indication of the administration cost of excluding these people and sorting out the differences?
While we must all live with our past, it is interesting to recollect that Deputy O'Kennedy, as Minister for Finance, introduced this discrimination against the self-employed in 1980. Now he is trying to make political capital by endeavouring to undo that damage. He may be entitled to do that but it is only right to remind him that he was responsible for introducing the measure. In the Seanad on 24 June 1980, by way of reply to the late Senator Alexis FitzGerald, he undertook to find some way around the problem. Though he was Minister for Finance for some time he did not produce any solution in that respect.
The Minister should check the facts. There were problems then.
It is surprising that the Deputy should be trying to make political mileage out of undoing damage for which he was responsible. It is interesting to recall also what we spent 15 minutes doing a short while ago, namely, voting against section 2. If Fianna Fáil and the Progressive Democrats had their way in defeating section 2, the allowance for those in the 35 per cent band would have been reduced by £200 and people in the 58p band would have reverted to the previous higher bands.
The Minister should speak to the section.
When they voted against the section, those two parties voted for higher taxation and that is something they will be reminded of. It was not the most intelligent course of action.
We have dealt with section 2. Chair, please.
The Minister should return to the section. We have concluded on section 2.
Obviously, we have touched a nerve.
In some instances where the self-employed have their children working for them there is a reasonable case to be made for applying the same tax treatment as applies to other employees but there are opportunities for abuse. The question was examined in depth when the provision was introduced in 1980 but no satisfactory means were found either then or in the meantime of identifying cases to which the allowance should be extended and distinguishing them from abuse situations.
We are talking about the children of self-employed persons.
The diversion of revenue resources to such work would be quite difficult. However, I am prepared to consider this matter between now and the 1987 budget with a view to ascertaining whether anything can be done in this area, but I am making no promises nor am I offering any prospect in that regard. I will examine the question, not because of the urgings of Deputy O'Kennedy who, after all, was the person who introduced the measure, but because I appreciate that in some cases there is a genuine and justified sense of grievance about the way in which employees who happen to be children of self-employed are treated for tax purposes. I know of some such cases in my constituency. On the other hand, there is a genuine fear on the part of the Revenue that by making the concession sought there would be considerable abuse. Assuming that 25,000 or more people would benefit if the PAYE allowance was extended in the way proposed, it is estimated that the cost would be £3.6 million in 1986 and £6 million in a full year. That is the answer to Deputy Brennan's case. I can only promise to examine the matter between now and the 1987 budget.
The Minister knows very well that he will not be in charge of the 1987 budget.
Is there not something strange about the Revenue assuming that there is a very high level of abuse in this area?
The Revenue assume that a considerable number of people would be declared employees for the benefit of this allowance though that would not be the case. Obviously this is a matter of some difficulty. The danger is that in finding a solution we might complicate further an already complicated tax code.
Perhaps it is an advance to hear the Minister say he will examine the matter. However, I must not let the occasion pass without referring to his outrageous statement that the Revenue are assuming that people would claim tax allowances in respect of children who would not be employed. If that is the way the Revenue Commissioners operate, it is a serious indictment of the general assumption of guilt they attribute to the public generally.
The Revenue Commissioners are realists and they know that sometimes people make use of tax allowances when they are not entitled to do so.
The Minister said that the Revenue Commissioners assumed there would be abuse of the allowances.
They are a group of idealists but if they assumed that people behaved always in a virtuous fashion they would be unlikely to be able to do their job.
It is interesting to note that when people who were employed formerly by the Revenue Commissioners embark on acting as consultants outside they seem to change their general view as to whether people are bona fide. In other words, it is a matter of which side of the fence one sits on.
Regarding the Minister's statement about the Revenue Commissioners being realistic, would it not be proper for them to go after people who are abusing the regulations instead of penalising those who are operating legally and lawfully?
The problem with any proposal which is restrictive generally on the basis of the consideration that a substantial number of people might abuse the provision is that it affects adversely some people who would be operating legitimately. I presume that is what was in Deputy O'Kennedy's mind when he introduced the provision in 1980.
Amendment put and declared lost.
I move amendment No. 20:
(2) The dependent relative allowance shall be increased to £500.
This amendment is in relation to an increase in the dependent relative allowance in respect of people being maintained by their children at home. These are mostly aged parents or grandparents. I am not going to take advantage of Deputy Yates. I know he genuinely meant what he said.
The Deputy was not here for it.
I equally know that he is genuinely not in a position to vote in accordance with what he knows to be the case. The reality is that if we win the argument, there may be some progress. On the basis that I can assure Deputy Yates that he will not have a vote on this issue I would enlist his support for the argument that he has already made.
A £500 tax allowance would not be adequate to cover the cost of maintaining a dependent relative at home, a parent or grandparent. In net terms of enhanced income it would probably represent for the person contributing an extra £130 to £150 per annum, perhaps up to £200, which works out at a sum of between £3 and £4 a week. That would be the effect on the person maintaining the dependent relative. The consequence of not having a dependent relative allowance of this nature is very obvious. Many young married couples who are obviously suffering the consequences of the recession, are encouraged — it is regrettable to have to state this — to try to find another place for their parents or grandparents outside of the home. They are not encouraged to look after them at home under our taxation system.
The truth is that the older people who have been the mainstay of the family feel either unwelcome or unwanted in their own homes. The only alternative for them — and incidentally it is an alternative which will come to all of us in our time — is to depend on an institution, hospital or geriatric centre. Some of these are very comfortable and well serviced in terms of nursing and medical facilities; some are not so well serviced and not so comfortable, and some are overcrowded.
It is regrettable that many of them are now being closed.
What are we trying to achieve? In the interests of dependent relatives, particularly old people about whom we are concerned here, we are trying to ensure that they have stability and security in their own homes where they belong. Apart from tax collection there is another element in the Minister's responsibility to which he referred this morning, which is to save public expenditure. The more people we can maintain in their own homes the less will be the burden on the Exchequer. It makes great sense economically and socially, that the dependent relative allowance be increased to £500. I could argue this for days on end but I want to allow Deputy Yates the oportunity to add his voice in support of the amendment. If the Minister tells him that he will look at it in 1987, he is talking about me and not himself.
I mentioned this matter this morning because I felt when Deputy O'Kennedy was arguing for an increase in the age exemption allowance and drawing in the geriatric institutional care argument it was not relevant, but it is relevant here. This debate took place on the Finance Bill last year and the Department of Finance and the Minister's predecessor had strong views against it. The argument goes beyond what Deputy O'Kennedy argued because if I send my father-in-law or father to a nursing home or hospital I can claim tax relief, whereas if I keep him at home I cannot. That strikes me as anomalous. Whatever about the £120 to £400 a week which it may cost for State geriatric care for someone with a hospital services card, it is more simple than that in terms of cost effectiveness, because of the choice people have in putting someone into a private nursing home and the tax relief they can claim.
The nature of the prescribed relative allowance and the home help schemes from the Department of Health are restrictive for these types of family situations. I ask the Minister to look at this in the future in a sympathetic light. What we are trying to do here is more than to talk about tax and money. We are talking about the evolvement of community family solidarity. In other countries they do not have a need for State geriatric care or tax incentives. The Department of Finance have a rigid view that some people are kept at home anyway and therefore, this is going to cost money. That is a negative attitude to take. There is a positive attitude. How many people could we keep at home if we extended this? I am not saying it should or can be done this year as the budget arrangement is set. From the point of view of policy, helping families and elderly people to have some comfort in the last few days, I feel this would be a much better way of dealing with it than talking about age exemption allowances.
I remember making all these arguments in favour of an increase in the dependent relative allowance when I was on the Opposition benches. I have a great deal of understanding of the case which is being made. Since then the incapacitated relative allowance has been increased substantially. This allowance is concerned with the worst type of case about which the Deputy is concerned, situations where the relatives are so incapacitated that somebody has to be full time employed to look after them. There is a considerable allowance of £2,500 against tax for such a case. That is addressing the worst type of case and this is an important provision. Of course, substantial additional benefits have been given to older people in our community through the social welfare code, free travel, free electricity and so forth.
They have had them for years.
Deputy Yates rightly referred to the cost of the concession as being a constraint this year.
Progress reported; Committee to sit again.