I move: "That the Bill do now pass".
Finance Bill, 1986: Fifth Stage.
The Bill we are about to pass, unless something dramatic happens and the component Members of the Government parties get a belated change of mind, represents more of the same to the extent that the level of taxation is increased and the disincentive element which has been a feature of the disastrous economic experience in the last three years is more evident than ever. I regret that, as a consequence of the Bill, which has been put through the House in the most unsatisfactory manner of any Finance Bill in my four years as Opposition spokesman, our problems will be aggravated. I should like to refer to the way the Bill has been rushed through the House which is best exemplified by the fact that I had exactly one minute to move an amendment in relation to one of our most important industries, the construction industry. The Bill contains 108 sections and I have never witnessed an occasion where amendments were introduced by the Minister right up to the last minute. I have never witnessed a Minister moving Financial Resolutions on the last day of the debate on a Finance Bill. Previously all Financial Resolutions were moved at the commencement of the debate. If the Minister checks the record he will find I am correct.
Is this in order?
I am dealing with the Bill and it appears that what I am saying hurts.
The Deputy is supposed to deal with the contents of the Bill and not the procedure of the House. I am raising this just for the sake of avoiding boredom because the Deputy is repeating himself.
The Bill contains amendments introduced by the Minister at the last moment. In fact some of the amendments were introduced when the House was engaged in a debate on other issues. The Bill, as it leaves the House, is most unsatisfactory and shows all the signs of having been rushed through the House in a most outrageous fashion in total contempt for the role and purpose of the House. I should like to apologise to the public whom we represent for not having an opportunity of dealing with it in detail.
On Fifth Stage we discuss what is in the Bill and not what has been omitted.
I am referring to a number of amendments that are now in the Bill but were not discussed in the House.
That was because of the time table agreed by the Deputy.
At least ten of the amendments introduced by the Minister, now part of this Bill, were not even discussed in the House.
That is because of the Deputy's time wasting exercise.
Of course, that is nonsense. The House, any reasonable commentator and the public know that is all a consequence of the Government deliberately deciding to introduce this Bill three weeks later than they had promised in the person of the Taoiseach——
What about Deputy O'Kennedy when he was Minister for Finance? His Bill was not produced until 66 days after the budget.
Obviously this hurts too much. If we cannot rely on the commitment by the Taoiseach, given clearly not once but three times, to have this Bill before us in time, then we cannot rely on any commitment given by this Taoiseach or Government.
Deputy O'Kennedy was not too reliable in his time.
If the Minister checks he will find that the record was much better then and that amendments were not introduced at the last minute.
I have done so.
Perhaps some one would gag that Minister while I am saying my piece. Then he can say his piece because, God knows, he has had enough time to do something.
This Bill now gives legislative effect to the introduction of income tax at the highest possible level, representing an increase of 50 per cent on the income tax burden as it obtained before this Government came into office. This Bill and its provisions will add an extra £400 million to the income tax burden of the already over-burdened taxpayer. No matter how the Government and the Minister try to misrepresent that fact, it demonstrates once again that we are still being subjected to a regime determined to heap taxation on taxation, apparently to achieve a balancing of the books that have already run out of balance, even to the extent that no longer do we hear talk about elimination of the budget deficit; now we hear talk of its gradual reduction. We have seen an increase in our total national debt to £21 billion whereas, when this Government assumed office, that figure stood at £12.5 million. All of these consequences can be seen throughout every sector but, most of all, in the unemployment figures, emigration and the total lack of any incentive to invest which has been a feature of this Government over the past three years.
The only thing one can say about the Government is that at least they are evenhanded, that they have increased the level of taxation evenly across the board. As they have increased the level of income tax by 50 per cent in their term of office — as will be the case under the provisions of this Bill — not to be outdone, they have increased the level of VAT by the same amount, give or take 1 percentage point. I did not have an opportunity to develop the amendment I was going to propose in relation to VAT on the construction industry. However, it is quite clear that a Government who maintain in this Bill a level of VAT on that vital, labour-intensive sector of our economy have no intention of giving any relief to the really enterprising sectors of our economy.
Not to be outdone, the Minister has followed quite the same pattern, if not worse, in relation to excise duties. We spent some little time debating the question of tax on petroleum products. I want to record the fact that the Minister would not give the House figures for the level of taxation imposed on petroleum products in member states of the EC. He did not give the figures because he knew too well they would demonstrate that the level of taxation on petroleum products here is far and away the highest anywhere in the EC. That is a fact. He tried to get away from it by pointing to the actual retail price in the various member states——
Which is lower here than in three other European countries.
——in respect of which one or two countries are marginally dearer than us. The level of taxation being imposed by this Minister under the provisions of this Finance Bill puts us way above the league. It is having a most damaging effect on employment, not just in that industry — which was demonatrated in the course of this debate — but on the tourism industry and all of the other service sectors affected by the extraordinarily high excise duties imposed by this Government.
When one considers what the provisions of the Finance Bill might have done one might contend that they should have concentrated on certain things to cope with the major problems confronting the country: unemployment, lack of incentive to invest and emigration. Even where the Minister did make some moves we welcomed — particularly in relation to the research and development project — they were far too limited. If the Minister intends to promote a climate favourable to research and development, would he not learn from the mistakes of his predecessor, by not restricting the business expansion scheme in the same manner as his predecessor to such an extent that after two years £5 million has been invested in that scheme?
I was interested to note that the last amendment introduced here constituted a response, almost two years later, to what we had pleaded for with the Minister's predecessor. Had the Minister been here to witness the dismissive tones with which his predecessor responded to the case he has now accepted by way of amendment, then he might have learned something. Unfortunately the same response is evident in relation to the case we made in respect of research and development, the limitations the Minister has imposed, the fact that he has excluded research and development corporations, has limited the figure of £25,000 per person at a time when we should be encouraging people to invest millions, not thousands of pounds. All of that demonstrates that, even when this Government do move in the right direction, they take a faltering step only. Then they impose barriers to ensure that a worthwhile scheme will not succeed.
I might make two final observations. This Bill will be remembered in particular as the DIRT Bill, the Bill whose provisions introduced the DIRT tax. When all else about this Bill, perhaps even this Government and the Minister is forgotten, the Minister will be remembered as the Minister who introduced that DIRT tax, the tax that crushed every known principle of taxation. The Minister should know that one does not impose an income tax on people who have not a taxable income, or impose tax on deposit interest earned by old people trying to provide for themselves. Equally one does not impose an income tax on organisations doing so much to promote the wellbeing, health and activity of the community generally. All of this is being done by a Minister who does not even know how much it will yield or how much it would cost to exempt the categories hitherto exempted, all in the name of reducing the income tax burden on others who are liable. This Bill will be long remembered when all the other little amendments the Minister introduced are forgotten.
The Minister has presented himself as wanting to promote a new climate for investment and activity. The Minister has spoken as if he and his predecessor did not have collective responsibility for ensuring that the climate for investment reached the low level now being experienced in every sector. If the Minister is so determined to ensure that there is money available to the private sector for productive enterprise then why does he introduce a tax of this nature and exclude the Government themselves from its application? He should remember that, if one wants to make funds available to the private sector, the last thing a Government should do is introduce a new tax on financial institutions and their depositors while exempting Government gilts. The last thing any Government would do is advise individual citizens, the GAA and other voluntary organisations to invest in Government gilts — which is exactly what the Minister has said here today — to take their money out of the private banking sector and put it into Government gilts. Surely we have witnessed enough the effects of money being transferred to safe havens and the impact on our interest rates. There are too many people chasing too little money available for the private sector. This Bill, instead of making more money available for investment, lifting the penal levels of taxation which are a disincentive, recognising the importance of marketing, the construction industry, research and development, has gone the other way. We might have had some hope that with a change of face there would be a change of policy but, in the event, we have got much more of the same.
This Minister already has the doubtful distinction of being the only Minister in recent experience in Europe who failed to get his budget through his own Parliament. He is the only Minister for Finance who has not as yet put through a budget. My hope and expectation is that he will certainly not have the opportunity to break that unenviable record by putting a budget through next year. If it is like this one we will be witnessing more of the same. Please God, the Minister will retain his distinction in the Guinness Book of Records as being the only Minister who never put a budget through his own Parliament.
I want to make one brief comment.
Deputy O'Malley has offered. I will call Deputy O'Malley, Deputy Mac Giolla and Deputy Pat Cope Gallagher.
I will not have the opportunity to reply.
I have no control over that.
There is very little time left and it is regrettable that such a short period has been allocated for the Report and Final Stage of the biggest, most important and far-reaching Bill which comes before the House in any given year. This year we have only to look at the Bill to see how complicated it is and how much of it was not part of the Bill upon its introduction but was brought in in huge rafts of amendments at very short notice. It is a pity that those who agreed the time for this debate did not arrange that it should continue until 11.30 tonight. I understand the House is sitting until that hour in any case, dealing with matters which are a great deal less important than the provisions of this Bill. About a quarter of this Bill did not exist at Second Stage and it is very unsatisfactory to have to deal with it in this kind of way.
I wish to make a brief reference to the scheme for the encouragement of investment in research and development. We all agree it is a very good idea. It covers sections 16 to 29 inclusive. Effectively a scheme of encouragement for research and development could perhaps be introduced in a page. The positive element of this scheme is contained in a page and the many other pages consist of limitations, ways of cutting it down, ways to make it less attractive and less useful.
Ways of making it precise.
It will have the same effect as the business development scheme of some years ago. The entire alleged effect of that scheme was lost because in two years scarcely anything worthwhile had been invested under it, not because people did not want to but because they did not have the opportunity. It was so hedged around with myriad restrictions that it was quite impossible for them to do so.
There are many aspects of the Bill one would like to talk about in order to complain about the damage that is being done. The Bill reflects an attitude on the part of the Government which is doing absolutely nothing for our economy. Painfully the Minister for Finance talks about the benefits that might arise from certain schemes were there not all the restrictions placed on them. There are about ten individual sections throughout the Bill which wipe out straight away whatever benefits might derive from things so painfully decided and grudgingly given.
There are aspects of this DIRT tax which are particularly inequitable. I quoted on Second Stage and on Committee Stage the Minister's own words at the press conference on 4 April that if he were to exempt people who were not liable for income tax because their incomes were too low, then he would lose 60 per cent of the tax or £60 million in a full year.
The Minister has corrected that now. The figure is £25 million.
No.
I quoted the figure he used on 4 April. I invited him on Committee Stage to comment on whether it was right and he did not deny it. It seems to defy all rules of equity that anyone might contemplate imposing income taxation, 60 per cent of which would fall on people not liable for income tax because their incomes are too low. There are also many groups and bodies of different kinds who would not in the normal way pay tax but who deposit money in banks. The Minister has never explained away the aspect of gross inequity of that tax. It will be interesting to see how it works in practice. It may not work the way the Minister and the banks think it will. It may cause a sudden movement of money in all directions which may not be to the benefit of this country.
This is precisely the form of tax which gives people the excuse to feel there is nothing in any way reprehensible about avoiding tax. That is a common belief. It has now swung around so that it is commendable in some way to avoid tax because the tax rates, the methods of tax and the new forms of tax are all so onerous and penal that nobody can feel morally wrong in any sense in trying to avoid the payment of the last penny being screwed out of the taxpayers. This whole Bill and its provisions reflect the attitude of the Government and create that kind of attitude among the community. Constant penal provisions of this kind have turned our black economy into one of the more thriving aspects of our entire economy.
I want to make the point that the original thrust of the budget of the first Minister for Finance has been altered considerably by the second Minister for Finance. We are dealing with two budgets. I make that point because the original thrust of this Bill was to broaden the burden of taxation and to endeavour to reduce the PAYE content. For that reason, I welcomed the deposit interest retention tax section which was the major innovative section in the budget. The second Minister for Finance in other sections has reduced the burden on capital by reducing capital gains tax and the stamp duty on insurance companies from 15 per cent to 9 per cent.
The deposit interest retention tax which basically was a good thing has been, to my mind, implemented in this Bill in an extraordinary fashion. I agree with Deputy O'Malley with regard to evasion, but I still say the Minister has something to answer in regard to banks putting advertisements in the papers where they are saying that the details of interest paid on accounts subject to the new tax will no longer be disclosed to anybody but the account holder. I ask the Minister does he agree that a bank can make a statement such as that when he is trying to put a Bill through the Dáil to tax deposit interest. Banks at the same time are saying: "We defy the Minister to find out who has these deposits". The Minister has something to answer there and I ask him to endeavour to uncover why banks can do this sort of thing.
There is one other specific point I would like to make to the Minister which I did not have the opportunity of making in the course of the debate. Has the Minister taken into consideration the position of local authorities who have expressed to me grave concern about the deposit interest retention tax on their funds and on their ability to endeavour to raise money by proper use and proper financial arrangements of their funding. Local authorities feel they will be losing in this once again.
Will the Deputy let me have a minute?
I will give the Minister a minute and I ask him if he would refer to that in regard to local authorities in particular.
I want to take this opportunity to make a comment on the amendment which I had down on section 85 and also to make a little comment on the Minister's amendment to section 53. While the question about the levy on life assurance companies might be dry stuff it does change the ground rules substantially for life assurance companies. There is no doubt in the world about it that we are seeing the end of guaranteed income bonds and guaranteed growth bonds.
Is the Deputy sorry about that?
These traditional forms of bonds are going and I presume that investment bonds will be staying. They will be less attractive because the 1982 stamp duty levy will not now be allowable as a tax expense. The Minister talked a lot about the question of doing away with ring fencing, as it is known in the life assurance business, whereby management expenses can be written off against losses in one particular sector. The proposed levy as introduced by the Minister is retrospective, in effect, as it applies to investment income and realised gains which are required to fund the contractual commitments that already have been entered into by the life assurance companies over a long number of years. The Minister, in effect, is changing the fundamental ground rules in so far as the benefits attached to these things are concerned. It is estimated that it will bring in about £18 million but I reckon that only about £5 million of that——
It does not affect existing contracts.
——can be clawed back from policyholders and the rest will have to be taken out from the reserves of the company. In effect, the Minister is now making every single life assurance company less solvent. Not only will policyholders suffer, but there will be a reduction in the profits of the with profits policies. People will find it generally more difficult to meet their commitments.
In that regard I would like to put it on record that I reject this matter of the levy. It is an arbitrary tax and hopefully I will get an opportunity to put down my full objection to this arbitrary tax at some future date.
I want to refer to the VAT concession to touring coaches which was welcomed at the time until the final details became available in a ministerial order which referred to a specification of ten by 3.5 by 1.5 metres. This is not practical. I am merely asking the Minister to have a look at this.
I will consider it.
Question put.
The Dáil divided: Tá, 72; Níl, 64.
Tá
- Allen, Bernard.
- Barnes, Monica.
- Barrett, Seán.
- Barry, Myra.
- Begley, Michael.
- Bell, Michael.
- Bermingham, Joe.
- Boland, John.
- Bruton, John.
- Bruton, Richard.
- Carey, Donal.
- Cluskey, Frank.
- Conlon, John F.
- Connaughton, Paul.
- Coogan, Fintan.
- Cosgrave, Liam T.
- Cosgrave, Michael Joe.
- Coveney, Hugh.
- Creed, Donal.
- Crowley, Frank.
- D'Arcy, Michael.
- Deasy, Martin Austin.
- Desmond, Barry.
- Desmond, Eileen.
- Donnellan, John.
- Dowling, Dick.
- Doyle, Avril.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard J.
- Enright, Thomas W.
- Pattison, Séamus.
- Prendergast, Frank.
- Quinn, Ruairí.
- Ryan, John.
- Shatter, Alan.
- Sheehan, Patrick Joseph.
- Farrelly, John V.
- Fennell, Nuala.
- FitzGerald, Garret.
- Flaherty, Mary.
- Flanagan, Oliver J.
- Glenn, Alice.
- Griffin, Brendan.
- Hegarty, Paddy.
- Hussey, Gemma.
- Kavanagh, Liam.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerry.
- McGahon, Brendan.
- McGinley, Dinny.
- McLoughlin, Frank.
- Manning, Maurice.
- Mitchell, Gay.
- Mitchell, Jim.
- Molony, David.
- Moynihan, Michael.
- Naughten, Liam.
- Noonan, Michael. (Limerick East)
- O'Brien, Fergus.
- O'Brien, Willie.
- O'Keeffe, Jim.
- O'Leary, Michael.
- O'Sullivan, Toddy.
- O'Toole, Paddy.
- Owen, Nora.
- Skelly, Liam.
- Spring, Dick.
- Taylor, Mervyn.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Paudge.
- Browne, John.
- Burke, Raphael P.
- Byrne, Hugh.
- Byrne, Seán.
- Calleary, Seán.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Ger.
- Coughlan, Cathal Seán.
- Cowen, Brian.
- Daly, Brendan.
- De Rossa, Proinsias.
- Doherty, Seán.
- Fahey, Francis.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzgerald, Liam Joseph.
- Flynn, Pádraig.
- Foley, Denis.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Hilliard, Colm.
- Hyland, Liam.
- Keating, Michael.
- Kitt, Michael.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leonard, Tom.
- Leyden, Terry.
- Lyons, Denis.
- McCarthy, Seán.
- McEllistrim, Tom.
- Mac Giolla, Tomás.
- Morley, P.J.
- Moynihan, Donal.
- Nolan, M.J.
- Noonan, Michael J. (Limerick West)
- O'Connell, John.
- O'Dea, William.
- O'Hanlon, Rory.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond J.
- Ormonde, Donal.
- O'Rourke, Mary.
- 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.
This Bill is a certified Money Bill in accordance with Article 22 of the Constitution.