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Dáil Éireann debate -
Wednesday, 19 Apr 1989

Vol. 388 No. 9

Finance Bill, 1989: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Just before lunchtime Deputy Mac Giolla had various things to say about the Finance Bill. I was surprised at some of what he had to say because on a number of occasions he complimented the Government and the Minister for Finance on some measures brought forward in this Bill, particularly the tax avoidance measures. They must be welcome by all in this House. He acknowledged that an effort had been made by the Government over the last two years to collect the outstanding tax.

Obviously we have much further to go down that road. He also said that the economy was growing and that the indications were very good but he went on to say that this was not affecting the general public very well.

I would not agree with what the Deputy had to say because a report issued last week proved that the differential between prices in Belfast and Dublin has now all but gone. As a Border Deputy from the town of Dundalk this was an issue that affected my town particularly in the early and mid eighties when there were huge differentials between prices in Dundalk and Newry. That has all but gone now and the overflow into Newry from the Dundalk area has, by and large, stopped. There are still one or two items for which people go to Newry, for example, petrol. The fact is that as a result of the economic measures taken by the Government since they came into office in February, 1987 the situation regarding the price differential where the public are going into shops and buying goods has all but evaporated. The Government should be completed on that.

The Deputy also referred to the outflow of profits from this country. The fact is that during the Coalition years, we had the black hole phenomenon. That is all but gone. Most commentators would say there is an in-flow of funds into this country as a result of the confidence that has been engendered by the economic measures that have been taken by the Government. I see that Deputy De Rossa is still here. We on this side of the House are often accused of doing U-turns. I compliment. The Workers' Party on embracing the European Community concept. I noted that at their last conference Deputy De Rossa took. The Workers' Party into the European concept. That is to be welcomed.

The Finance Bill is just another step in a number of steps taken by the Government since coming to power to put the economy on the right road. The major initial step was the Programme for National Recovery which had the idea of bringing the social partners along with the Government, as the social partners have a major role to play in bringing this economy back on an even keel. The Programme for National Recovery was followed most recently by the national plan which is one of the best documents to be put before the House in my time, and I understand that others are of the same opinion.

Our national debt is somewhere in the region of £24.6 billion. When one looks at the sum of over £9 billion that we are talking about in the national plan it is a very small amount in comparison with the national debt. The figures of our national debt and GNP ratio show that we are the worst in Europe. That situation will have to be addressed. As Minister Wilson said earlier, we have succeeded in stabilising the figure at 133 per cent but we have to get it down. It is the Government's intention as per the national plan to reduce that if possible by 1993 to 120 per cent. Most commentators agree that that is possible.

I did not get an opportunity to speak on the national plan because of some of the bleatings of Deputy Barrett on the day I was due to speak which resulted in a delay which lost me my opportunity, but I would recommend the national plan to the House as an excellent guide on how this economy has progressed over the last few years and how it is intended by this Government to advance the economy in the coming years. The national plan indicated in its initial pages that the income levels in Ireland are well below the EC average. That is something the national plan hopes to redress, but the fact is that from the time we came into Government inflation has dropped to 2.1 per cent although it is rising slightly now. In England the inflation rate is in the region of 8 per cent. That has a tremendous effect on our economy and on our ability to trade outside this country. We are 3.5 per cent below the average EC inflation rate.

The rationale behind the Programme for National Recovery was to get the social partners involved in negotiations in order to try to cool down the economy.

Pay increases have been held back to 2.5 per cent annually and that is something on which the general public ought to be complimented. By accepting those increases they have indicated their acceptance of the Programme for National Recovery.

Recently figures were produced to show that last year we lost far fewer days because of strikes than in any other year for the last 20 years. That is because this House and the general public are working to get the economy back on the rails. The average growth in GNP is 3 per cent; interest rates have fallen from 14 per cent to 8 per cent in the last two years. That is a phenomenal decrease in the rates.

Recently I was speaking to someone from just across the Border who was querying a bank bill from a bank in Newry. I was astounded to see the amount of interest this person was paying on his current account and when I checked with the bank they said it was correct and that basically the situation had been reversed from that which obtained two years ago when interest rates here were 15 per cent and 8 per cent across the Border. Now it is the exact opposite with our interest rates down to 8 per cent and interest rates at 14 to 15 per cent across the Border.

Deputies on the other side of the House referred to unemployment and there is no doubt that unemployment is probably the biggest problem this nation will have to face in the next ten to 20 years. The figures over the last two years prove that employment is on the increase. Employment last year increased by 6,000 and this should be acknowledged. It is a small start but hopefully it will improve. Once the general aspect of the economy is held and once there is general consensus, employment will rise. This can be seen on the ground as well as in the facts and figures produced.

Our debt/GNP ratio is somewhere in the region of four times the European average and because of that we are not in a position to compete properly with our European counterparts. From just looking at a number of other European countries, not necessarily in the EC, where the debt/GNP ratio is listed I note that the country at the very bottom is Norway who have a minus ratio. However, the average is about 33 per cent while we are at 133 per cent. Everyone in this House must work to ensure that we get that figure down.

Much play has been made about tax reform. An effort has been made in the three Finance Bills to reduce tax. Obviously we would all like to see tax reform. There is no doubt that major improvements have been made, although we would all like to see the tax base increased. One thing people tend to forget is that mortgage and loan repayments have come down dramatically in the last two years as a result of the interest rate decrease and that actually means money in the pockets of people who are buying houses. That is as good as extra tax relief and it happened very early in the life time of this Government, quite apart from any tax reliefs brought forward in any of the Finance Bills.

Deputy Tomás Mac Giolla found fault with the PAYE and PRSI changes mentioned in the Finance Bill. I would be totally on the opposite side. It is quite obvious that there are quite a number of very small businesses around the country who generally feel that they are working as tax collectors for the State, they quite rightly feel that they are doing this without any compensation from the State and that they have to set up a whole system within their small business to collect tax for the State without receiving any compensation. The fact that they are collecting tax on behalf of the State has lead many people into financial difficulties one way or the other, and they feel that they should be compensated for that.

The changes in the Finance Bill whereby these people will be allowed, subject to the consent of the Revenue Commissioners, to make annual returns rather than monthly returns are welcome and most people welcome them because they will relieve them of a lot of the paper work they are doing at the moment and allow them to get on with their business. Ultimately that will help any employees they may have. Deputy Mac Giolla was trying to say that perhaps the fact that these returns will be annual now rather than monthly may lead to a situation where those people will use the money for their own benefit. That is very unfair. Most people want to return that money. They are so tied up with paper work at the moment that this change would help them immeasurably.

Capital taxation is a much vaunted subject. Many speakers, particularly on what we call the left, say there is more scope there; perhaps there is. This is something that future Governments, and also this Government should look at. There may be one or two areas where capital taxes could be examined in order to bring in some extra taxation.

Self-assessment is now being made mandatory, which is to be welcomed. In my practice I have had occasion to use self-assessment for capital tax over the last year or so and it makes matters much easier for practitioners. Being made mandatory will help, although there may be teething problems in the changeover. This is something the Minister should examine.

There is an in-built surcharge for under-valuation which needs to be included in self-assessment. There is always the danger of under-valuing in property. This may not be found out by the Revenue Commissioners for years to come, which would lead to problems later.

Favourite nephew relief is being extended, which is a very good measure. This relief has been used on quite a number of occasions where a farmer who, perhaps through sickness or for some other reason, is not working his farm and has a nephew looking after it for him. Under previous rules, if the nephew got the farm later he had to pay a substantial inheritance tax. This relief has been invoked for the last number of years. Its extension will particularly benefit people in rural Ireland. There has been a great deal of correspondence with the Revenue Commissioners in regard to individual cases on the aspect of whether these people are substantially working on a full time basis on the farm. By and large, the Revenue Commissioners have been fairly realistic in dealing with these cases.

The maximum interest-free concession where an assessment is put in and the taxpayer has three months grace and then a further month, should be looked at. Four months is a very short period and perhaps the Minister could consider extending it slightly, because it causes some problems in very complicated estates where people may be living outside the country, for example. Having to return the assessment in this short time leads to interest being put on the outstanding tax, if there is such. This has caused hardship in the past and should be looked at with a view to extension.

The extension to both husband and wife of relief for insurance policies which take care of possible inheritance tax is a very good measure. On this whole idea of taking out an insurance policy to guard against possible inheritance tax there have been changing attitudes on the part of the Revenue Commissioners. Previously they were totally against it, but recently they have been for it.

I am pleased to read that there is a revised approach to the Commission's proposals on tax harmonisation. I implore the Government to tread very warily in this regard. I come from a Border constituency and we are in the firing line in this regard. While we all welcome harmonisation, there is no doubt that this country, because of its high rates, will lose substantial amounts of revenue if we reduce our taxes, unless we are compensated in some way. I am glad the Minister said there is a revised approach among the Ministers to the Commission's proposals. This country will probably lose most in Europe as a result of tax harmonisation.

Recently I met deputations from the customs and excise unions and also the customs clearance agents in my town of Dundalk in relation to the implications of tax harmonisation from 1992 on. These people wanted to know if they would have jobs by the end of 1992. I have no doubt that even with an element of tax harmonisation there will always be a need for customs clearance, or some check at borders but these people are genuinely worried. The customs clearance industry in Dundalk is one of the bigger industries. Between that and the customs posts, they are one of the biggest users of the telecommunications system in and around Dundalk. There is a proposal to decentralise a Government Department to Dundalk and it is felt that that Department should be decentralised as soon as possible, so that any adverse implications of 1992 for these people would be taken care of. I would agree with that. Decentralisation is to be welcomed and I know an effort is being made towards progress as quickly as possible. We are in the second phase of that programme and sites are being examined by the Office of Public Works at present.

The business expansion scheme has been a great success. Yet, there have been abuses in that area. Unfortunately, they have given the scheme a bad name. In recent months a figure in the region of £50 million has been invested in BES type schemes. This can only be of benefit to the country in the long term. In the Bill the Minister lays down the upper limit on money invested in the BES scheme as £2.5 million. I am slightly worried about that; in my constituency Ceimicí Teoranta went out of business and were succeeded by the Cooley alcohol factory which suffered quite a number of lay-offs a couple of years ago. That factory is now up and running again, and is called Cooley Distillery. It has been taken over and quite a few people are employed there. They are now planning to produce Irish whiskey. That has been financed more or less under the BES scheme. Before the publication of the Finance Bill, notice was issued saying that the business wanted £3 million investment. I do not know if this will be affected by the limit of £2.5 million; I hope it will not. Perhaps the Minister would clarify this.

With regard to the questions of a united Europe and the EMS, Minister Reynolds has stated that as far as we are concerned there must be a stronger attempt at achieving economic and social cohesion before we look at a monetary union. I feel that we will never have a united Europe unless we have a united currency. It is disquieting to hear the British Chancellor, Nigel Lawson, say that Britain is against this. Ultimately, the EC will have to face up to that whole question of monetary union. A report on that subject was tabled recently and it is planned to start discussions in July. Again, this is something that will have to be faced up to. The attitude of Mr. Nigel Lawson and Mrs. Thatcher goes against the grain of European unity. I think we will have to make it quite clear that we are in favour of monetary union. Because we are one of the less developed areas in Europe, we would, as the Minister has said, have to have some economic and social beefing up. That is where a document like the National Development Plan 1989-93 comes into its own.

The question of toll roads was referred to. This is something that is dear to my heart because phases 3 and 4 of the inner relief road have yet to be completed in the town of Dundalk. One problem is that the road has to cross the Castletown river. The provision in the Bill which will increase the capital allowance relief from 50 per cent to 100 per cent will obviously help someone who may be interested in putting a toll bridge across that river. One individual has let it be known that he would be willing to get involved in the project. I know the question of toll roads has featured in the National Development Plan and both the Minister for the Environment and the Taoiseach have encouraged their use. This is a follow on from that aspiration. There is a provision that a pretrading interest will qualify for relief also under this section.

Another area that is close to my heart and should be looked at is the question of advance factories. I fully appreciate that there are empty IDA factories around the country but a number of areas — including my own — are bereft of advance factories. In both Drogheda and Dundalk there are no advance factories. Proposals have been made under the EC Structural Funds to build advance factories and I ask the Minister for Finance to see if there is any assistance that can be given in that regard.

Last night I listened to Deputy Noonan comment on the Minister's phrase "steady as she goes". This made me smile, especially when I thought of the years of mismanagement under the Coalition. Is it not better to go at a steady pace than to meander as Deputy Wilson so aptly put it? The fact is that the economy has gone from strength to strength over the past two years and it ill behoves anyone to put a stop to that. Efforts have been made by the Opposition to help the situation, but unfortunately some people have been negative about anything that has been done.

The budget and the Finance Bill have been widely welcomed both by the people on the ground and by the financial institutions. Recently a friend of mine from England took a taxi from Dublin Airport and she wanted to know how the budget had been greeted by the people. To her surprise the taxi driver told her that it was an excellent budget — maybe you will say that he was a member of Fianna Fáil — and that the Government were making an excellent effort to bring the country back to its feet. Despite Deputy Mitchell's earlier comments — which Deputy Wilson referred to as his meandering speech — the economy has gone in a straight line upwards all the time, whereas when Deputy Mitchell and his party were in power, things were absolutely out of control; our debt-GNP ratio, our emigration and unemployment were out of control. Thankfully, things have come right and the Government should be congratulated.

The Bill is yet another small step on the road to recovery and I think it should be welcomed by all Members of the House.

I welcome the opportunity to make a contribution on the Finance Bill as it presents an opportunity to Deputies like myself to cover a number of items that are of importance to the economy. This is a very important Bill indeed.

When the Minister introduced the Bill he talked about "a milestone in economic development". When the Minister for Social Welfare was introducing the Social Welfare Bill, he referred to it as a "major step forward.". When we teased out the social welfare proposals we found that it was not a major step forward but I accept that it was a step forward. The point I want to make is that Fianna Fáil are never given to understatement. They always overstate and create a lot of ballyhoo about the proposals they are introducing — none more so that the recent £9 billion National Development Plan. I am not a preacher of doom and gloom and I believe in putting the best foot forward but if we are to be taken seriously, we must be factual. There is no point in saying that we are making major improvements and have reached a milestone in economic development when in fact the opposite is the truth. If it were otherwise why are the people still leaving the country? If we are moving so solidly in the direction in which we would all like to see ourselves going why are the alarm bells sounding and why had the Minister for Finance to refer to impending rises in inflation and tax rates? Why had somebody outside Government to come along to wield the big stick of curbing credit? If a big stick has to be wielded, it should be wielded by the Taoiseach. I think this is a sad reflection on the Government, and they are treating the people like children. People have their money taken from them by crippling taxation and when they try to borrow to carry out some realistic improvements, somebody tells them that they cannot have any more money and that credit will be restricted. I do not think that is the way to move forward. If such statements have to be made they should be made in this House.

We saw a similar exercise when the Minister for the Environment tried to bring in property tax by the back door. He had an organisation called LAMA make the proposals for him nationwide, but they were not accepted and were turned down by the councils, the majority of which are held by the Fianna Fáil party. If there are legislative proposals, they must come from this House. I am not in favour of the introduction of a property tax. There is far too much taxation and the people are crippled by it. We talk about reducing the tax bands from 58 per cent to 56 per cent and the lower rate to 32 per cent but that is not the real figure. There is no point in talking about the tax taken in the pay packet because when the worker leaves the office or factory he starts to pay tax again when he moves outside the door. When he puts petrol in his car, he is paying the highest rate of tax in Europe; if he decides on his way home that he deserves a pint after a hard week's work, he will pay the highest rate of tax on it in Europe. We are not only talking of the tax bands of 56 and 32 per cent, but whether, out of every £100 earned, a person has even £20 by the time he reaches home to the good wife to maintain the household for the week. They are the realities which are driving so many people out of the country. They have decided they have had enough, and until we face up to reforming our whole tax system people will not take any more.

It is sad to see emigration. In my constituency whole townlands are completely depopulated. If you go for a country walk on a Sunday afternoon there is an eerie silence. Households are closed down and gates are barred. Can we do anything about it? Of course we can, in a number of ways. There are a number of areas of development into which we are not putting sufficient resources. We are not going about this in a proper way.

I have a contribution to make on tourism, agriculture and small businesses. I had hoped the Minister, Deputy Wilson, would have been present. I have a high regard for him. He is a very capable man, doing a great job internationally for us as a country. The international promotion is second to none but it is wasted effort. People are leaving the country to go on holidays, and I see no national tourist organisations operating here to woo them to their venues for holidays. I take it people go into travel agencies and pick the places they wish to travel to. They hear the comments of people who have returned home and are attracted to the areas they hear about wherever they may be. There is nothing to beat a satisfied customer. One satisfied customer leaving our shores is better than £1,000 or maybe £10,000 spent on promotion in Britain, France, Germany or the US. In that regard we must look at what we have to offer in tourism. We have so much we take for granted and abuse. In regard to accommodation we are paying vast sums of money to people whose knowledge of the business I would question seriously. They may be high fliers but are they the people we need to do the job? If that money was spent in grants for people to upgrade and improve the accommodation they have to offer we would be doing well.

Fishing is a major tourist attraction here particularly in my constituency and in this regard gross abuses are being perpetrated by people coming to this country for a fishing holiday. They are taking away vast amounts of fish. People in the fishery field know this is happening and nothing is done about it. Continental fishermen are denuding our lakes and rivers of coarse fish, in particular pike. They will ask people providing them with accommodation if they have deep freeze facilities for them to store fish they catch here so that they can bring them home when they leave. It was brought to my attention that a group of fishermen came into this country and first they set about closing of a part of a stream at the bottom of the land adjacent to the house in which they were staying. Having done that they went off on their fishing expedition, as they were entitled to do. They brought their catch to the stream. The pike were trapped in this stream and could not get out of it. On the night before these people left they took the fish out, killed them, packed them in ice and brought them away with them. That is a unique, new development. It would be well nigh impossible to investigate every household where people are staying.

Deputy Boylan, let me make a small point. The Deputy indicated earlier he was going to refer to certain matters. The contribution to date made by the Deputy would be excellent but in respect of an Estimates debate. The Finance Bill requires him to relate all that to taxation. I know he has the capacity to do it. I ask him not to stray too far from taxation.

We can curb this abuse and generate income and taxation. At airports and seaports at point of departure persons should be appointed to search and if illegally caught fish are found a penalty can be imposed. I would have no hesitation in confiscating all the equipment plus maybe £1,000.

We hear much criticism of farmers and the contribution they are making. I have no doubt that the farmer is more than paying his fair share and has always done so. We should end once and for all the argument about the contribution farmers are making. All of them are now in the tax net. If they are not paying tax it is an indication that they have not got a taxable income. If that is so it ill behoves anybody to say farmers are not paying their fair share. If they had the income they would pay their fair share. Some farmers are doing exceptionally well. Some small farmers are finding it very hard to get by and to look after their families. The Government can bring about a major improvement in farm income by bringing into the severely handicapped areas all areas submitted by the previous Government and which were omitted. I heard unwarranted criticism from the previous speaker. The work done by the previous Government was the foundation on which the progress we are making now was built. What I say in relation to the severely handicapped areas is relevant to the Finance Bill because it would mean an improvement of income and would create activity in agriculture where major developments can still take place despite quotas and restrictions. Approval from the EC is easily obtained. There is great goodwill in the EC in relation to approval for including vast areas of the country, in particular my constituency of CavanMonaghan, in the severely handicapped areas. There is no criticism at all from the EC with regard to applications from those areas. An application was submitted; unfortunately it was not followed up.

A debate took place here last week in which I did not get time to contribute because of the eagerness of my colleagues to make their contribution to it. It was in reference to the £9 billion national development proposals. I cannot accept that at face value. There is a great deal of pie in the sky. Exactly five years ago on the eve of the last European elections——

Deputy Boylan, the fact that you did not succeed in getting in on a particular debate last week would not justify your using the Finance Bill as a mechanism to say something that would have been appropriate to that.

I want to refer to it because it is all part and parcel of economic development and it has been referred to by previous speakers.

As a passing reference.

I am going to make a passing reference in that I do not believe there is a plan. I cannot be expected to accept there is a plan. On the eve of the last European elections Seán Flanagan, MEP, announced a £500 million capital investment for the 12 western counties, and not as much as one penny of that came our way. He was questioned on numerous occasions. It was thought at first hand it might not have been factual when it was announced in Brussels, and when he arrived in this country he was questioned by reporters and economic correspondents and he said this plan was in place, that a major development was to take place, and not as much as one penny of it came. I take the £9 billion capital investment in the same frame of mind until I see benefits from it on the ground, and I will be the first to acknowledge them.

With regard to small businesses I have heard differing viewpoints expressed regarding the proposal that people could make a once-off lump sum tax payment at the end of the year. There are arguments for and against such a proposal. Nowadays people do not pay bills until they become due. It is easier to pay in small amounts rather than expend a large amount at the end of the year. Small business people have asked me if it is in their best interests to put on the long finger something which has to be paid. A bill of perhaps £200 or £300 per week could become £15,000 or £20,000 by the end of the year. Where is the money to be found? There is no point saying it will be put into a bank or a building society. It is human nature to use the money for some other purpose and I believe people will run into problems at the end of the year.

I will refer to registration for VAT, and I am subject to correction on the figures. I believe that a person must register for VAT if he or she has a turnover of under £500 per week or £25,000 per year. It has been suggested that those figures should be raised to £1,000 per week or £50,000 per year. Prices have risen over the past few years and a turnover of £500 three or four years ago would not have the same effect as £1,000 now. Small businesses cannot afford this kind of book-keeping and it would be of benefit to them if the Minister increased the threshold.

There is also a problem with regard to the rebate for handicapped persons. The Minister has stated his intention to deal with this problem in amendments to the Bill. Notwithstanding that undertaking, I read an article yesterday expressing the concern of the Irish Wheelchair Association about this proposal. I had understood there was agreement. The Taoiseach certainly indicated that he understood the problem and was prepared to meet the requests from the IWA and other organisations dealing with the handicapped, but it would seem now that the position is not so clear. It would be small minded and penny pinching not to meet the legitimate requests of these highly respected organisations on behalf of the people they work for and represent. We had the sad case of one young man whom I had the pleasure of meeting and to whom I would pay glowing tribute. Although he has no arms and only one leg he was debarred from a refund. This is an indication of a bigger problem in that people cannot apply common sense. They are tied up with red tape. Nobody would have questioned giving the grant to this young man. I hope the Taoiseach and the Minister will carry through their concern by amending the Bill and that excise duty and VAT refunds will be made available.

We in the Border area have a major difficulty with regard to the harmonisation of taxes. We looked to the budget for some movement in that direction in the lead up to 1992. We had hoped that the excise duty on petrol would be reduced but instead the Government increased it by 5p per gallon. They said there was no increase because it was absorbed at the pumps. That is a nonsense. It cannot be seen as anything other than a net increase of 5p per gallon. Further increases have taken place recently and apparently there are more increases in the pipeline. I cannot say whether these increases will apply in Northern Ireland but I am aware of a major loss to the economy in the whole Border region due to the price differential. There is an opportunity to be grasped and we should have the courage to do it. It has caused people in that area to wonder if anything other than lip service is paid to the problems of the Border region when it is politically favourable to do so.

The case has been made to me that grant aid for the installation of modern equipment and machinery — 100 per cent grants in some cases — should be dropped, as also should the practice by some local authorities of granting rate rebates to new industries for a period of ten years. These are props to businesses which, if they cannot stand on their own at the beginning, do not have much hope of success. Perhaps that is why so many businesses have fallen by the wayside in the past decade, and particularly in recent weeks. We should move our resources towards giving employment. There is no point talking about economic development and the various indicators pointing to improvement if the people are not there. Many townlands are totally depopulated and that trend will spread into our small towns and villages. People will not stay unless they have work. There should be more grants and more favourable taxation designed to encourage the creation of jobs rather than capital grants for the installation of machinery which in many cases can reduce employment.

It is necessary to be competitive but our people will respond to encouragement. They are the best workforce in the world and are acknowledged as such. Irish workers in health care and the building industry are more than welcome in England, France and Germany. Their skills are widely acclaimed. They do not suddenly develop these qualities when they leave this country and we must give them the opportunity through tax benefits to enable them to settle here and rear families.

These are a few of my comments. It is not good policy to overstate a case because if we are to be taken seriously we must be factual. The people will then respond. If doubtful statements are made, it will be very hard to discern fact from fiction and people will become very disillusioned. I pledge my support for any developments. There will be none of the nonsense which went on when Fianna Fáil were in Opposition, trying to bore holes in every Government proposal. A peculiar term was used for it this morning by the Minister for Tourism and Transport who was, I think, referring to his own party. We are prepared to support proposals that are worthy of support. If we find things that are not worthy of support, then our support will not be forthcoming.

Is áthas liom an deis seo a fháil chun labhairt ar an mBille seo.

The enactment of the Finance Bill, 1989, will represent another major step by the Government in the implementation of their policies for national recovery.

These policies were clearly charted in our pre-election programme; were consolidated with the social partners in the Programme for National Recovery and have now been amplified in a major way in the National Development Plan.

At the heart of our policies has been the remains the need to restore and improve the basic confidence in our economy both at home and abroad. Without that fundamental ingredient there is no sound basis for progress.

The restoration of confidence requires leadership and authority from Government. It requires disciplined management of the public finances and the national economy. It requires coherent economic policies which concentrate on improving competitiveness in all its facets as the only foundation for sustainable economic and employment growth and improved social provisions for all our people.

Central to the task of improving competitiveness is the restoration of budgetary stability. The progress that has been made since 1986 has indeed been remarkable and has exceeded most commentator's expectations. In 1986 the Exchequer borrowing requirement was almost 13 per cent of GNP. This year it is targeted to be less than half that figure. The Exchequer returns for the first quarter suggest that we are firmly on course to meet our fiscal objectives this year.

The debt-GNP ratio has been stabilised ahead of schedule on the foot of good economic growth and related revenue buoyancy as well as the major reductions made in Government expenditure. That reduction is the equivalent of 9 per cent of GNP since 1986.

But as we all know only too well and as has been highlighted in the National Development Plan, we are still saddled with an enormous burden of debt which leaves the public finances and the national economy severely exposed to any deterioration in the international economy or in domestic conditions.

The level of national debt as a proportion of GNP must be progressively reduced. This will require continued tight discipline in the public finances as well as improved growth in the economy. We are now in many ways at a most critical juncture. If expectations start rising unrealistically and if sectional interests are encouraged to press home their claims, our situation could rapidly deteriorate and the gains of recent years quickly evaporate. This situation cannot be allowed to develop.

It is, therefore, imperative that discipline be maintained in the public finances and in the economy at large. As debt is progressively reduced, increased resources will be released for productive purposes.

We see from the progress made in recent years that rapid gains can be made on many fronts with proper discipline and the correct policies. Interest rates have fallen dramatically. Price increases are at a low level. Costs have been contained and competitiveness improved. The balance of payments is in a sound position and the real economy is improving on many fronts. Employment prospects are gradually picking up.

We must continue with the policies that have brought this resurgence about. We can initiate a cumulative process which should put the economy reasonably quickly onto a higher growth path. With good labour relations, low inflation and interest rates, a stable rate of exchange and a continued major emphasis on competitiveness and development policies, along with the benefit of increased Structural Fund receipts, there is no reason the Irish growth rate should not exceed the EC average over the medium term.

These policies have opened and will continue to open the way for the changes in taxation that we would all like to see in the interest of both economic efficiency and equity.

We have already undertaken considerable restructuring and reform of the tax system. The administration and collection processes have been greatly improved. This year's budget marks a further significant stage in the improvement of the tax system. The Finance Bill 1989 puts these measures into effect. The Bill also provides for changes in certain tax incentive schemes, new development incentive measures, new anti-avoidance measures and some other mainly technical taxation items.

Deputy Boylan asked if we could do anything in regard to income tax reliefs? We would like the reliefs to be greater but we are in a difficult position. We must not forget that in the four years from 1982 to 1987 we doubled the national debt and one third of our income goes to serving that. Deputy Boylan cannot criticise because, while he may not have been a Member of the House at that time, he was a member of one of the Government parties. That did not make our problems any easier to solve. We stated in Opposition at that time that we would bring about a situation whereby two thirds of the taxpayers would be paying the standard rate of income tax which at that time was 35 per cent. Our Government have reduced that rate from 35 per cent to 32 per cent and the maximum rate from 58 per cent to 56 per cent. Deputy Boylan may say that this is not a lot, but it is an indication of our commitment to the many people who are hard pressed. With less pressure on the taxpayer there is the knock-on effect of more money available to be spent within the economy.

The Bill implements the income tax reliefs announced in the budget. The full year cost of these reliefs will come to over £200 million. This is a major programme of relief which benefits all taxpayers.

These reliefs include increases in the general and age exemption limits and the introduction of a child addition of £200 per child in conjunction with these. They include a reduction in the top rate of income tax to 56 per cent and in the standard rate to 32 per cent — the first reduction in the standard rate for more than 30 years. Provision is also included for the extension of the 48 per cent band by £200 for a single person and £400 for a married couple, and extension of the standard rate band by £400 for a single person and £800 for a married couple. These measures will significantly improve the position of low-paid taxpayers with children and will reduce the marginal tax rate faced by over 600,000 taxpayers.

As the Minister for Finance pointed out in his budget speech these changes mark a major improvement for many taxpayers. For example: a single person on PAYE with an income of £10,000 will gain up to £235; a married couple with an income of £16,000 will gain up to £324; and a married couple with an income of £20,000 will gain up to £470.

These major improvements result from the successful pursuit of the Government's overall economic and budgetary policies. These changes are consistent with those policies and reinforce their continued successful operation. They do this by supporting income moderation and improvements in cost competitiveness. They increase the reward for hard work and initiative and will increase the numbers at work.

The tax system must reward initiative and productive investment. It must encourage genuine investment and not distort the economy or the financial system through the undue support of purely artificial transactions where the loser is the general taxpayer and where there is no gain to the real economy. We have all been aware that the business expansion scheme has in certain of its applications been causing concern. This is an important investment incentive scheme and we must make sure on an ongoing basis that it is properly meeting its essential objectives. Following a review of the BES by the Department of Finance, I note that a number of significant changes are now proposed. These changes will ensure that genuine investments are fully safeguarded while non-genuine ones are excluded from the scope of the scheme.

The Bill gives effect to a decision previously announced to exempt from tax the income and capital gains of unit trusts and similar investment funds established in the International Financial Services Centre for the benefit of non-residents. The same arrangements are being introduced for funds in the Shannon Airport zone. This is a positive move which will improve Ireland's ability to attract these funds and related jobs to this country.

The tax system must be geared towards economic development through the use of carefully defined incentives for activities which will generate additional sustainable employment. In this context the film industry is deserving of special attention. I therefore particularly welcome the proposal in the Bill to encourage investment and job creation in film production in Ireland by increasing substantially the ceiling on investment; by extending the time limit for qualifying investment to mid-1992, and also by extending the concessionary capital gains tax relief.

As a further development measure the categories of computer services which qualify for the 10 per cent rate of corporation tax are being extended to include consultancy and technical services related to software and data processing. This is an imaginative proposal which will enhance our emerging status in this high technology sphere.

The development of our road infrastructure forms a central and major element of the National Development Plan. Our location as an island on the periphery of the Community places us at a major cost disadvantage vis-á-vis our European competitors. The most significant reason for the high transport costs is the poor state of the national roads and the access roads to our principal ports and airports. The plan proposes Exchequer expenditure of almost £1 billion over the five years on the development of our roads with £755 million on national roads.

Private funding will have a significant role to play. Proposals for possible private investment in key projects have been identified. Realistic investment proposals in relation to these projects will be welcome. This investment in toll roads will be used to accelerate the investment programmes in national roads. The Finance Bill includes provision which will encourage the further development of toll roads. The Bill enhances and renews for an additional period of three years the tax relief available for the development of toll road projects. It will now be possible to write off in full the capital expenditure on such projects against the toll income instead of the 50 per cent write off at present.

Last year saw dramatic improvements in tax administration and enforcement. The tax system must be seen to be effective and fully and fairly enforced. For too long, however, there was a widespread perception that the whole assessment and collection system was very ineffective. This perception did nothing to encourage the support that was, and remains, required from all the social partners and the general body of taxpayers for the implementation of tough but essential fiscal and economic policies.

After many years of tampering with the system, the problem had to be taken by the scruff of the neck and decisive action implemented. The two major actions taken in 1988 — the tax amnesty and self-assessment for self-employed taxpayers — proved to be dramatically successful. Substantial amounts of arrears have been cleared, the timeliness of payments has been significantly improved and the whole collection system has been put on a much sounder footing.

This process must and will be continued and developed. Those who try to exploit the rest of the community by defaulting on tax payments will be confronted with the full rigors of the stringent enforcement measures now available to the tax authorities. The honest taxpayer has nothing to fear.

This whole change in the tax collection and enforcement environment reflects again the Government's firm resolve to provide leadership and impose a sensible discipline on the management of the national economy. This approach embraces all facets of the State's activities. Public agencies must be efficiently staffed and effectively managed. Resources that are not aiding the national economy or justified on sound social grounds must be released to more productive uses or diverted to more pressing social needs.

We accept, or course, that this causes difficulties and pressures for many groups and individuals but these problems are the consequences of failed policies in the past. The measures that the Government are now implementing are unavoidable and are in the national interest. We have all learned a hard lesson from the experience of the last two decades. There must be a national commitment never again to relax financial and economic discipline. On the contrary, such policies and discipline must become the hallmark of policies in this country right into the next century. It is only through that route that our debt levels can be reduced and the long-term growth and solvency of the economy assured. That is the only road to ending emigration and providing jobs in this country for all who require them.

On the question of indirect taxation, I welcome the Minister for Finance's statement in his opening speech on this Stage of the Bill in relation to the implications for tax reform of the 1992 indirect tax harmonisation proposals. The Minister indicated that there are now clear indications which were confirmed by the proceedings at the EC Finance Minister's meeting earlier this week that the earlier set of proposals put forward by the Commission will be revised. This, as the Minister said, confirms the wisdom of the Government's approach in not rushing to implement the earlier proposals. At the same time, of course, the prospect of some harmonisation cannot be ignored in our management and development of the tax system. We must at a minimum avoid exacerbating any problems or gaps that exist.

We and the public at large must continue to have a sense of reality and proportion about the early prospect of substantial tax harmonisation. The process of harmonisation will involve a huge tax revenue loss for the country. It would involve substantial reductions in the level of indirect taxation on what are in some cases highly import intensive goods.

If this loss was to be made up by other tax increases then it could only fall on direct taxes such as income tax, corporate tax or PRSI. The consequences for employment and economic activity would not be favourable and could, depending on the reaction of economic agents, be extremely serious. The Government have, therefore, made it quite clear to the Community that the revenue and other implications must be fully taken into account in any firm proposals that may emerge.

The budget measures have attracted widespread acceptance. The proposals have been welcomed as fair and balanced while giving priority to the needs of the public finances and the national economy.

As the Minister for Finance has already emphasised, developments since the budget suggest that the strategy on which it is based is firmly on course. The Exchequer returns for the March quarter are very promising. The revenue returns suggest that the pick-up in economic activity which was projected earlier is coming through. Retail sales are strong. The level of unemployment over the first three months was substantially down on the first quarter of 1988. Manufacturing employment is up for the first time since 1980. The building industry is also showing significant evidence of recovery. Employment is some 7 per cent higher and there is an increase of 20 per cent in housing starts.

We can confidently expect a further substantial balance of payments surplus. Exports value is growing by some 24 per cent reflecting continued growth in export markets and the continued improvement in competitiveness. Imports of capital goods are up by 20 per cent signalling an upturn in investment and output potential. The Minister has said, and I note that his view is shared by most independent commentators, that real GDP may grow by 3.5 per cent this year and, indeed, this projection may be bettered.

As I said earlier substantial progress is now being made on many fronts. Most of this is due to our own efforts but some of it is due to the fair winds that are blowing in the international economy. There are no grounds for complacency. We must knuckle down to the task of continually pruning the public finances while at the same time actively seeking out development opportunities where the State can play a positive role in removing constraints and in better mobilising both human and financial resources.

The Government have shown by their imaginative development policies combined with sound overall fiscal and economic management that substantial progress can be achieved quickly and in a dramatic fashion with the proper leadership and discipline at Government level. We intend to continue with this process. We will accept support from any quarter in pursuing this task of national recovery. But, as has already been stressed on a number of occasions, we will not accept tactics from the parties opposite that are designed to undermine our budgetary strategy, by giving aid to discordant sectional groups or which seek by personal attack or innuendo to dent the Government's credibility and authority.

Of course, we have elections for the European Parliament to fight in June and I have no difficulty in fighting them with gusto. But let us fight them within the parameters of the real issues and not jeopardise all that has been achieved by throwing the broad measure of consensus that has been reached in this House aside for the sake of a few votes here and there. The issues at stake in our national recovery programme are too important for that and I have no doubt that public opinion will not tolerate the use of spoiling tactics in that context by the Opposition.

In conclusion let me emphasise again the importance of this Bill as a further major step in the implementation of our policies for a national recovery. These policies are working and are working well. The National Development Plan has set a clear and positive framework. I do not think it is necessary to refer to it because I do not think it can be compared with any previous plan. I am satisfied that in the next four or five years it will achieve all its targets and I have no doubt that it will be welcomed and approved by the Commission.

The fiscal and economic indicators are positive. The task ahead, however, remains enormous. With leadership and discipline, and the continuation of our policies, we could look forward with confidence to the future. This is the only way in which our pressing employment needs will be properly met. The Finance Bill advances our policies in a realistic and practical way.

The Finance Bill is lengthy, running to 94 pages. It is full of all kinds of detail but within it there is nothing radical with the exception of one section, section 76, about which I will speak later and which is, perhaps, a bit too radical for what it sets out to do. Otherwise, the Bill is a whole series of minor amendments from a legislative or accounting point of view of the existing law with slight modifications in one direction or another that are of little real consequence. It is very hard to believe that the Bill is being introduced in the context of unemployment of 240,000 people and of emigration from here of somewhere between 40,000 and 50,000 people per annum. Not all of those people are unemployed before they leave and a great many of them leave good employment by Irish standards because of the taxation system. Instead of having a radical look at our taxation system, which is the most penal in the western world and which does more to harm employment than the taxation system of any other country, we do nothing with it except make minor adjustments one way or the other. The Government try to suggest that in some way those adjustments, or the Bill before us, are significant. Unfortunately, they are not and they will not do anything to change the context in which we speak of 240,000 unemployed and of the incredible emigration that is sapping the best people from our country leaving vast parts of rural areas almost denuded of young people in particular.

The one radical provision that I referred to is quite new and different to anything that was tried before in legislative terms. In my view we will hear a lot about section 76 which runs to eight pages, is extremely detailed and is not easy to read. It will be contested almost continuously in the courts if it is passed in its present form. I should like to ask the Minister to have a serious look at it because what I am afraid of in relation to this omnibus anti-avoidance measure is that it will benefit the very people whom it was intended to catch. The reason is that it is so global that they will immediately challenge it. They are well equipped to do so because they have the best lawyers and accountants. In fact, I understand that some of them are getting ready to do so on the basis that this provision, or something close to it, will be enacted. If they do so it is hard to imagine how the courts will uphold all eight pages or 13 subsections of the section. It seems to me to be very regretable that we are not introducing anti-avoidance measures that are likely to stand up but we are going so far that we are introducing anti-avoidance measures that are likely to fall down. The result will be that we will have no new legislation of the kind we should have in this regard. We will have no new enforceable legislation because there is not much point in introducing legislation if it is found, as a result of examination by the courts, that it will not be enforceable.

There is an attempt to make this retrospective in particular, to anything that was done after budget day of this year, which was 26 January. I can quite sympathise with the anxiety of the Minister and indeed of the Revenue Commissioners to make these retrospective but I am afraid they will not stand up in law and I am advised accordingly. There is the case of Doyle v. The Taoiseach and Others reported in the 1986Irish Law Reports Monthly which deals with the efforts of section 79 of the Finance Act, 1980, to make a two per cent levy on cattle retrospective. That was found to contravene Article 15.5 of the Constitution. It was made quite clear that that article applies not just to retrospective penal legislation but also to retrospective taxation legislation, that one cannot make an activity subject to taxation subsequently if, at the time it was carried out, it was not subject to taxation.

There is an interesting provision in section 76 of this Finance Bill that I think will stand up properly, that is in respect of things which were put in place before the passing of this legislation, it proposes that they should not retain the exemption from taxation that they would have otherwise in respect of income or profits arising after the passing of this Act. That is all right because that is not retrospective in that sense. The action in setting up the scheme was taken before the passing of the Act but the actual period in respect of which the taxation is collected is subsequent to it. That is perfectly all right because anybody who engages in business or other financial activity in this country has to operate on the basis that the law may be changed by the Oireachtas from time to time. But they should be allowed to operate on the basis also that the law will not be changed retrospectively by the Oireachtas, and the Constitution seems to bear them out on that.

I am not making the case for these people. On the contrary, I am making the case against them because it is my belief that it is wrong to give them an "out" which I believe they will have if they challenged some of the many detailed provisions of this lengthy, complex section.

I have referred already to the Doyle case where it was sought to impose a levy retrospectively and which the courts struck down. There are other examples one could give where the same principles apply. They do not all necessarily consist of taxation cases, but the same principle applies. There was another case decided in 1982, that of Hamilton v. Hamilton, where the court decided that one cannot apply the provisions of the Family Home (Protection) Act retrospectively. It seems to me that these kinds of provisions are far more penal or onerous than anything contained in the Family Home (Protection) Act. In the case of The State (McEldowney) v. Kelleher in 1983 the courts held that if there is an appeal to the courts and there is a justifiable issue before them, the Oireachtas cannot, by statute, take away the right of the courts to pronounce on issues of law and of fact. That case related to the Street and House to House Collections Act, 1962, where there was an appeal to the District Court against the refusal of a superintendent but where one was not allowed, in the District Court hearing, to question the superintendent's opinion.

There are very definite parallels between that and what is here because, in section 76, the Revenue Commissioners are allowed to form an opinion and the courts are not allowed to interfere with that opinion unless the formation of that opinion on the part of the Revenue Commissioners was unreasonable, in other words, unless they had no grounds on which they could come to the conclusion they did. It seems to be similar in that respect to the Act of 1962 except that, in many respects of course, it relates to much more important matters. It is perhaps much more open to challenge even than was the 1962 Act.

There was a further recent case decided only last month by Mr. Justice Barron in the High Court — called Cashman v. Clifford under the legislation relating to bookmakers' licences and their renewal, where there is a provision in the relevant Act which says that, on an appeal to the District Court arising from a refusal of a licence by a superintendent the Revenue Commissioners and the gardaí only may be heard by the court as witnesses or as parties and that other interested parties are excluded. The High Court found against that Act and did so without any great difficulty on the grounds that it was quite improper not to allow people the right to argue their case before the court and that legislation that purported to prevent them having the various issues of fact and law considered by the court was not acceptable under our Constitution. I believe there are more cases to the same effect. I am picking out one or two only to which to refer briefly. This might be done more fully on Committee Stage.

I am referring at some length to section 76 for the very simple reason that I regard it as one that will give rise to an enormous amount of litigation unless amended fairly significantly from the way it stands now. I predict that if the litigation, or any part of it, is successful it will mean that the very people whom this House would legitimately want to prevent evading tax will be allowed to continue in their activity. Therefore, it is in the overall interests of this House and of the public at large that we get this section right and that we would not approach the problem in such an extraordinary global fashion that the chances of the courts upholding it were slim.

To give an example of what is entailed, in subsection (8), where it deals with the question of appeals, it is said:

Provided that on the hearing or rehearing of the appeal—

(a) it shall not be lawful to go into any grounds of appeal other than those specified in subsection (7) and ....

I find it very hard to believe that the courts will accept that the four grounds of appeal set out in subsection (7) are to be only ones that can be considered by the courts. A number of the cases I have already cited seem to suggest that the courts will not allow themselves to be tied down in that way, that they will insist on the facts being argued before them, that they will insist on the right of a citizen to bring forward whatever arguments he or she thinks are relevant and which the court are prepared to accept as relevant and not have themselves confined in that way.

It is interesting then, having read pages of all the provisions contained here which give the Revenue Commissioners almost carte blanche as to what they can do provided they have some colour of reason for doing it, the courts are to be excluded from interfering with them. But if, by any chance, the courts were to set aside their opinion in relation to something being a tax avoidance measure, one comes to subsection (10) which says:

The Revenue Commissioners may, at any time, amend, add to or withdraw any matter specified or described in a notice of opinion by giving notice... in writing of the amendment, addition or withdrawal to each and every person affected thereby, in so far as the person is so affected, and the foregoing provisions of this section shall apply in all respects as if the notice of amendment were a notice of opinion and any matter specified or described in the notice of amendment were specified or described in a notice of opinion:

If I could take the analogy of a football match. Let us say that at half time the Revenue Commissioners are losing as against the taxpayer — and there will not be many cases of that because of the powers they have, but if we assume that they are losing — they will go into a huddle at half time and come out before the second half and inform the referee "We lost the first half but we do not want to lose the match, so now we are changing the rules and the following are the rules for the second half, so kindly administer them as follows". I do not think the courts are going to stand over that. One of the many points of having a written Constitution is that we have certain guarantees. The only people who are there in the last resort to enforce those guarantees of rights for the citizen are the courts. If own supremacy to interpret and declare the law and if they do not uphold the sole prerogative of this House and the Seanad to make the law then we are in difficulties as a nation and individual citizens. The courts know that and that is why I think they will be keen to ensure that that is upheld.

What this is saying in essence, when you try to distill down the eight pages of text in this one section, is that the law in relation to tax shall no longer be what the Oireachtas declares it to be but shall be whatever the Revenue Commissioners wish it to be. If the Revenue Commissioners make a mistake in agreeing to a particular thing they can always change their minds and declare the law in effect for that particular citizen to be what they now want it to be. That is not law; that is an arbitrary decision. It is one thing to say that this is only designed for Paddy McGrath and others who are supposed to be regarded as somehow slightly less than desirable. I have the highest regard for Paddy McGrath and other people like him——

I would prefer if names were not mentioned.

So would I, Sir. The argument will be made that it is only for certain people, that we need not worry about them and so on. That is entirely wrong. Every citizen is entitled to the protection of the law and if we are to accept this principle that somebody other than this House, as the law making authority, or the superior courts, as the interpreting and determining authority about the effect of that law, is to make the law, where is it going to stop? As I said, some people will suggest that because this section is about tax, tax avoidance and so on, the rights of citizens do not matter, but if we are going to extend this principle to other things like, for example, the right to personal liberty and people being deprived of their liberty by the decision of groups other than this House and the courts acting together — one making the law and the other interpreting it — then where do we stop? Are the Garda going to be given the right to declare people guilty of offences without any determination by the courts? Where will personal liberty stand?

The principle of what is happening in this section, therefore, deserves to be considered. While its basic objective may be commendable and one we will all agree with I have to ask the Minister, the Department of Finance, the Government and the Revenue Commissioners to think again about it and to appreciate in particular that if they bring in something which is as wide-ranging as this and which contains such a relatively high degree of likelihood of being challenged and set aside in the courts, then they do not achieve anything because it means that all the people who have engaged in these practices which are disapproved of will have carte blanche until some other method is worked out of trying to overcome these problems.

This Bill is strange in the sense that where it tries to give tax reliefs and control some of them and goes on at some length about it, it picks out things like, for example, the business enterprise scheme which we all know has been widely abused, particularly in the past 12 months, and used for all kinds of purposes which I think this House never foresaw it being used for. A lot of time is given in this Bill to changing the arrangements in relation to that. I welcome all these changes of arrangement so far as they go but I question whether or not they are adequate.

One of the most flagrant abuses of the scheme, of course, has been the building of large numbers of houses all over the country, particularly in cities, in the past 12 months under the guise that somehow or other they are supposed to contribute to the development of tourism. In fact all they are doing is enabling people to use this scheme to build houses in a way which probably costs them, in net terms, about half of what they would otherwise have to pay if this scheme was not available. By all means it is a good thing to wipe that out but it is only wiped out so far as the cities are concerned.

If you tried to build a scheme of houses in Cork or Limerick of the kind of which has been built in Donnybrook, Ballsbridge and everywhere else, the probability is that you would not be building them within the city boundaries of Cork or Limerick anyway because there would not be sufficient space or suitable locations in which to build them. You would be building them in the suburbs outside the city boundaries. So far as those cities are concerned the proposal in this Bill to do away with the county boroughs, so far as this scheme is concerned, is absolutely useless because it will not affect people at all. It is more extensive in Dublin because it includes the county as well as the city but again all one has to do is go to somewhere like Bray, Leixlip or somewhere else which is just marginally outside County Dublin and one will still retain all these extraordinarily generous incentives simply to build ordinary houses. It seems to me incredible that at a time when we have appallingly penal taxation — and Deputy McDowell drew attention to this yesterday — ordinary people who are on PAYE and paying two-thirds of their income in many cases on their marginal earnings should be let stew because they are genuine people who are genuinely working and trying to increase productivity, but people who are purely speculators are given all these sorts of incentives to go away and build houses or do other things that really contribute only in a very limited way to the economy here.

I thought when the business incentive scheme was introduced first that it was a good idea. It was extraordinarily restrictive at the time but the present Government decided to do away with most of the restrictions and we have gone from one extreme where it could hardly be used at all to the other extreme where it is used by all kinds of speculators for noneconomic and non-productive purposes, which I believe is just as bad. The scheme should be abolished so far as the building of houses or any other property of that type is concerned and it should be confined to genuinely productive activity such as manufacturing where genuine risk is involved. It seems incredible that for the last year, up to the publication of this Bill you had to take no risk at all because you could get your risk under the scheme guaranteed by a bank or some other institution and you were taking no risk. It seems mad to have allowed that situation at all.

I welcome the changes which are being made in relation to that section but they should go further. The building of houses under this scheme which could never have been envisaged as a business expansion scheme or anything that would properly be used under it should be abolished altogether and not simply abolished in relation to county boroughs and County Dublin, which seems to be pointless.

I heard a number of speakers, particularly the last speaker, Minister of State Gallagher, speak about great changes for toll roads because there would now be a 100 per cent write off instead of a 50 per cent write off. That is typical of the sort of illusion which can be created in these things. I am afraid toll roads have almost been finished by the provision in this Bill, if this section on toll roads is allowed go through. The write off is increased to 100 per cent but what Deputy Gallagher and the Minister for Finance, in his speech yesterday, forgot to tell us was that the write off is now confined to income from the tolls and not to any other income. I do not see much point in having a 100 per cent write off in respect of income from the tolls if it is going to be many years before there is any sort of return from those tolls. If that is persisted in, it is a great opportunity missed. It should be made more attractive because the existing scheme of a 50 per cent write off generally is far more attractive than a 100 per cent write off from the tolls only, which seems to me to be a pointless exercise. I say this not in aid of those who might build roads but in aid of trying to get roads built which, God knows, we certainly need. I suppose in all our most recent history — and by that I mean in the last 30 or 40 years — the roads have never been in the state in which they are now and, in particular, our arterial roads are not able to cope with the demands that are put on them.

I see references to major roads being proposed under the plan which was debated here last week radiating out from Dublin. I would have thought the only realistic way of getting those built, within the foreseeable future, would be to make them toll roads. I think all of them should be toll roads and it is extraordinary that in the entirety of this country I can only think of one toll that is chargeable, that is the toll on a bridge over the Liffey in Dublin, and no other. I would much prefer to see these roads provided within the next few years and subject to tolls rather than wait ten, 15 or 20 years to see a proper road built to Portlaoise, Kinnegad and such places and have them free of toll. Every other country is glad to have roads built on the basis that they will be subject to tolls.

One of the important developments that seems to be taking place in the last few months and, in particular, in the last few weeks, is in relation to the level of the availability of credit here. The Government finally — against their own promises but as a result, I think, of the directly opposite views which were put forward in the last general election by the Progressive Democrats — decided to abandon their own principles and to adopt the policy on the cutting of public expenditure, a policy we put forward in 1986 and 1987 and for which they derided us, saying it was impossible. Because they have now adopted that policy and because they have happily and beneficially reduced the amount of Government spending and, therefore, the amount of Government borrowing, there is a great deal more credit around. One of the consequences is that interest rates are very much lower and it gives us some advantage now that they are very much lower. The disappointment about the availability of these low interest rates is that the major beneficiaries appear to be, in practice at any rate, people who are are wishing to engage in productive economic activity. For some reason which I can never totally fathom, it has always been a feature of the approach in this country that if people perceive things as going a little better than they were, the first criterion by which they judge it or what they regard as a reliable barometer is the price of housing. If the price of houses is going up things are supposed to be looking promising, if the price of housing is low then things are supposed to be bad. I would say we are the only country in the world that applies that criterion or principle to judge our economic activity. Perhaps, that is why we have frequently got it wrong. In other countries, particularly within Europe, if interest rates are low, the people who will rush to avail of them are those who are engaged in productive activity, particularly people in manufacturing. That is not happening here.

I can recall, only a few years ago that if you were holding a clinic as a TD, one of the frequent requests you got was from people who were trying to buy houses asking if you would get in touch with building societies, insurance companies or banks to see if there was some possibility that sometime within the following 12 months the person concerned would be able to get a mortgage. You were treated with disdain by the building societies and told they had all kinds of rules, that money had to be deposited with them for 12 months, two years or whatever else.

Two years.

Now, as I walk down the street — apart from the building societies — even the banks who were giving no money have such notices up as: "Home Loans available here, please call in". As the Central Bank, and as recently as yesterday Mr. Connellan of the CII, pointed out, there is unfortunately nothing more inflationary than that particularly so far as secondhand housing is concerned. It reminds us all, as it should, of what happened when we had something like that in respect of at least one sector of activity here in the late seventies when the banks chose to fall over themselves in trying to lend money to farmers, when they were telling farmers, for example, that they were mad not to pay £3,500 or £4,000 for a statute acre of land. They were offering them huge sums of money — hundreds of thousands of pounds — to buy more land. The fate of many of those farmers is that quite a number of them are bankrupt and others have literally worried themselves into the grave because of the obligations they undertook and are now unable to meet.

The price of land came down to one-third and at times even to a quarter of what they were prepared to pay with the assistance of the banks only a few years earlier. What was the effect of all that except inflation?

At least in regard to farming it was a productive activity, though perhaps not as productive for many farmers as it should be put, nonetheless, it was essentially an economic activity. This pouring out of money into the purchase of houses today is in no way a productive activity. We had an example which I read in the newspapers the other day — and I heard it referred to by many people in many parts of the country — of somebody paying more than £200,000 for a one-bedroom gate lodge somewhere in County Dublin. I hope that is the peak of how ridiculous this is going to be and that sense will be garnered from now on.

When the British had this kind of problem to some extent a few years ago, even though it was by no means all involving property, there was a tremendous amount of retail buying, the Chancellor of the Exchequer decided that the way to attack the problem, when he recognised the inherent difficulties, was to increase interest rates. So far as their Exchequer finances are concerned they are in a different situation from us; they are actually many billions of pounds in surplus on their current budget which is extraordinary. They had to increase interest rates, or at least the Chancellor felt he had to. Even he, possibly, would now agree that the results have not been advantageous to the British economy as a whole. That is why I hope we will avoid that situation. We need far more than the British do to avoid it. That is why I hope that the suggestion made yesterday by Mr. Connellan and that made a month ago by the Governor of the Central Bank will be adopted as the solution to the problem. In their monetary statement published about a month ago the Central Bank said as reported in The Irish Times of today's date:

Some aspects of credit growth — in particular the rapid expansion of mortgage credit — could become a cause for concern if they resulted in a bidding up of the prices of existing assets, rather than an increase in real economic activity.

The Governor went on to say that these trends could not be ignored indefinitely. Mr. Connellan's suggestion of yesterday is that the banks be instructed to stop lending a vast amount of money, as should the building societies who will shortly be coming under the control of the Central Bank, a move with which I agree and which makes sense. One of the paradoxes in this country is that we are short of capital, but those who have money to lend have very few places to lend it for productive activity. The traditional place to lend surplus cash has always been the property area and then we get this ridiculous cycle of property being grossly inflated in value with inflationary effects, and genuine productive activity is handicapped and penalised.

The Central Bank laying down guidelines will not necessarily put money where it should be put, but at least it can prevent money going where it should not go. It should not go into the property market in the volume and readiness with which it has been over the last six months, or there will be serious consequences for us.

I noticed in today's paper an article on the appointment of a receiver to an economic productive activity in County Mayo. That productive activity has been carried on over the last three or four years, in a bit of a struggle against all the odds, by a former Member of this House who should be commended for his work. Yesterday, he had to succumb to the appointment of a receiver. I know this has been imminent for a long time.

I would like to contrast his enterprise with the Dublin property speculator type enterprise and underline how much more useful is the man in County Mayo to this country than the kind of people who extract by foul means or fair £2 million from the taxpayers of County Dublin because they are not allowed to do something that the planning laws of County Dublin do not allow them to do anyway. We see the useful County Mayo man go under and we are seeing these developer type parasites living as millionares and flaunting themselves as if they were great and valued members of society. It is a pity that our mentality allows that sort of thing to happen.

That mentality is reflected in this legislation. This Bill in some way perpetuates the situation where it is fair game for the fellows who engage in strokes and deals, while they may be caught in three or four years time, to engage in highly profitable non-productive activities while we penalise either with personal taxation or by putting them into receivership those who make a genuine effort to improve the lot of this country. That is why the Bill is such a disappointment.

If there was the political will to do what needs to be done in relation to taxation, so much could be transformed. Two and half years ago when this party talked about the necessity for severely controlling public expenditure and for taking a radical and fundamental look at personal taxation, we were told it could not be done. It has been done because there was determination to control public expenditure. It is no more difficult to do the same to taxation, particularly personal taxation. The will and determination is not there at the moment but I hope a time will come when the people on the Government benches will be prepared to do it.

I do not talk about this now nor did I talk about it three years ago, as some kind of attractive electoral package, which is sometimes suggested. I speak about the necessity for having sensible rates of taxation because it is necessary not just for the prosperity of the country but for the very survival of the country. We should ask ourselves if this country will survive if it loses 40,000 of its best young people each year as it has been doing for the last couple of years, and as it is doing this year. I have grave doubts whether it will if that trend continues. Within 70 miles of this House there is a jurisdiction where there are two rates of taxation, 25 per cent and 40 per cent. It is very relevant to us that those should be the British rates of taxation, and the United States rates of taxation are lower. Our young people are not held down with enormous bolts to prevent them from moving. They are free to move, they move and will continue to move. In their assessment of where they will stay, they have no particular commitment to this country and they will look to see what is the most attractive and rewarding environment for them. Up to now they have been voting with their feet and have decided that London, New York and various other cities in Britain and America as well as Australia, Canada, France and Germany are the most attractive environments for them. They will continue in that way until such time as we make the necessary changes.

There are some fiddling little changes of 1 per cent and 2 per cent in tax rates that are of very little significance. The best one can say is that there is some sort of vague move in the right direction but it is so slight that it will have no influence whatever on whether people will stay or leave. Unfortunately, all the indications are that people are leaving in just as great numbers this year as last year. That is the ultimate tragedy, combined with the unemployment problems which has never before been parallelled in this country and hopefully we will never again have nearly 250,000 unemployed. That saps the morale of an entire nation. That is very noticeable as one travels around the country. That is the kind of challenge that should be tackled in this Finance Bill, not the minor fiddling changes that are there. It is regrettable that this Bill is simply some kind of tidying up measure by the Revenue Commissioners and that it is of no basic political consequences. That is a measure of its failure.

Ba mhaith liom cuidiú leis an díospóireacht.

This Finance Bill is part of the annual budgetary process. It gives effect to the taxation and other changes announced in the budget statement by the Minister for Finance. While a Finance Bill for a particular year is at the heart of the economic strategy for that year, this Government have clearly set out their long term economic and development strategy in the Programme for National Recovery, published in October 1987. The programme set out the four main objectives of Government economic policy for the period to the end of 1990, including the creation of a fiscal exchange rate and monetary climate conducive to economic growth and the move towards greater equity and fairness in the tax system.

Two years of good economic management by the Government have created the conditions for the achievement of these objectives. We have only to look at the outturn for last year to see how well the Government have re-established control over the public finances. The Exchequer borrowing requirement was reduced from nearly 13 per cent of gross national product in 1986 to 3½ per cent of GNP in 1988. This is an enormous achievement and one which the main Opposition Party look at with envy because they were unable to achieve such a reduction when in Government. Again if we look at the Exchequer returns for the first quarter of this year, we are on target to achieve the 1989 budgetary targets and perhaps even improve upon them. The first quarter results confirm that the increase in economic activities projected at budget time is occurring.

We will continue to monitor carefully the controls established on public expenditure to ensure that for the third year in succession our targets will be met.

The encouraging results for the first quarter will maintain confidence in the Government's ability to successfully manage the economy. The results provide a guide to the financial markets which, in turn, leads to retention of low interest rates despite the recent increases in the UK. We must continue to take measures which will enable us to keep interest rates as low as possible. These measures include keeping our costs from rising at a rate higher than our European partners.

The Government have given a lead in controlling public expenditure and the private sector must now do their part by controlling price increases and keeping costs, especially pay costs, in line with those set out in the Programme for National Recovery which was agreed with the social partners.

The economic indicators are going in the right direction. Inflation and interest rates are still at a low level compared with some of our competitors and we must keep them that way. Real GNP is expected to increase this year. The indicators augur well for achieving sustainable growth, increased employment opportunities and improved living standards in the short-term.

However, these objectives could be rendered unattainable unless the progress achieved in the last two years is built upon. There is a continuing need for consensus by the social partners. The Government will continue to do their part as indicated in the National Development Plan 1989-1993 debated in the House last week. We have reaffirmed our commitment to the maintenance of a fiscal exchange rate and cost climate conducive to sustained economic growth. We intend to pursue a further reduction in Exchequer borrowing over the medium term. Fiscal policy will be conducted with a view to securing an Exchequer borrowing requirement of the order of 3 per cent of GNP in 1993. This will represent close to a halving of the overall rate of borrowing compared with the budget target for this year.

One of the Government's objectives is to reform taxation, especially personal taxation and to make it more equitable. Reform measures featured in the 1987 and 1988 Finance Acts, and further measures are included in the Bill before the House. There is general agreement both within the House and outside it that the level of income tax is acting as a major disincentive to initiative and hindering the objective of increasing employment. Some commentators claim that it contributes to some of the emigration of our young well educated people who, if they did not choose to go abroad, might act as a driving force to the creation of jobs in this country. The Government would like to move faster on giving greater relief to personal income tax payers but we must be realistic. We cannot undo overnight the gross mismanagement of the public finances by the Coalition Government. The Government improved the position in 1987 and in 1988 and for this year the Finance Bill, when enacted, will give legislative effect to the budgetary announcements, which people are now enjoying in their pay packets since the beginning of this month. The main improvements are raising of the general exemption limits for single and widowed persons, for people over certain ages, for married persons and for qualifying children and restructuring of income tax rate bands providing for reductions in the 35 per cent and 58 per cent rates to 32 per cent and 56 per cent respectively.

These changes benefit all income tax payers. The reduction in the standard income rate is the first in more than 20 years. The Government will continue to reform the personal income rates as circumstances permit to make the amounts payable by the majority of taxpayers more equitable.

In addition to improving the position of income tax payers, the Government are also committed to ending inequities in the system. Further measures are included in the Finance Bill to counteract certain transactions which have little or no commercial reality but are carried out primarily to create an artificial tax deduction or to avoid or reduce a tax charge. These anti-avoidance measures are contained in Part VI of the Bill — sections 76 to 79. It is important that people, whether wealthy or otherwise, should pay their fair share of taxation. The Government are committed to reforming the tax system so that the burden of meeting the cost of Government and the debt repayments is spread in an equitable manner. We saw last year that the tax amnesty brought in some £500 million in additional revenue. The effects of this additional revenue on the Exchequer borrowing requirement was clear. Improvements in the EBR help everybody as they reduce the overall revenue requirement and provide scope for reducing income taxes. It is important, therefore, that loopholes identified should be rectified as early as possible.

Another area which was giving cause for concern in recent months has been the use of the business expansion scheme for investments which run counter to the risk capital nature of the scheme. The Bill addresses the problem of a number of investments which conflict with the thrust of the business expansion scheme as an incentive to invest in high risk start-up firms.

Section 7 contains the proposed amendments to the existing scheme of relief for investment in corporate trades and the amendments will take effect as respects eligible shares issued on or after 12 April 1989. BES relief amendments are where BES funds are used to purchase a ship, the ship concerned must be an addition to the Irish register; the introduction of an upper limit of £2.5 million on the amount of shares issued by a qualifying company in respect of which relief can be claimed; certain leasing, etc. activities will no longer be qualifying trading operations; relief will no longer be available where certain options are held over BES shares; and holiday houses and apartments in certain urban areas are being excluded from the BES relief.

The latter amendment does not have any major implications for housing policy. The urban areas affected are the county boroughs of Dublin, Cork, Limerick, Galway, Waterford and the administrative county of Dublin. The use of BES schemes for investment in holiday houses and apartments was a misuse of the scheme as such investment is effectively risk free. The location of these houses and apartments in the major urban areas virtually guarantees that the investments would maintain their value and, indeed, would appreciate substantially in the five years for which BES shares must be held. There would be little difficulty in selling the properties after five years, which would give the investors a substantial benefit at the expense of taxpayers, while the accommodation would no longer be available for tourists. Availability of the BES relief in such circumstances is clearly not justified and section 7 of the Bill closes off this possibility.

Nowhere is the success of the Government's policy of financial retrenchment, allied to highly targeted and selective incentives, more apparent than in the construction industry. Since taking office we have aimed at generating the right climate to stimulate activity and investment in all sectors of the economy. Our efforts have been directed towards reducing foreign borrowing, stabilising the national debt and reducing inflation and interest rates. This involved hard and unpopular decisions affecting the construction industry, including the abolition of some grants schemes and reductions in allocations.

The result is a noticeable increase in new housing output, in commercial development and in major refurbishment work — much of it on sites that have lain dormant for many years. Cement sales increased in 1988 — up by over 4 per cent — and there was a 17 per cent rise in registrations under the national house building guarantee scheme. These trends look set to accelerate with cement sales up by over 30 per cent and guarantee scheme registrations up 25 per cent for the first two months of this year. The resumption of activity in Ireland by major building concerns which had been concentrating their efforts abroad in recent times is a further indicator of the new confidence abounding in the industry.

As a result of measures announced in the budget, public investment affecting the industry will amount to £826 million this year. Private investment in the industry will increase significantly in 1989, particularly in the industrial, commercial and retail sectors and about 3,000 extra jobs will be provided in the construction industry. For the first time since 1981, overall output for the industry is forecast to increase. Commentators are putting that increase at about 4 per cent, present indications are that it will be higher than that.

The industry will also benefit from the increased investment set out in the National Development Plan. I gave details of the roads and sanitary services expenditure under the plan in my contribution to last week's debate. I would like, however, to take this opportunity to refer to private investment in toll roads as section 15 of the Bill provides substantial incentives for private or corporate investments in toll roads. The section provides that capital expenditure incurred on the provision of a toll road, including all interest on moneys borrowed to finance construction, can be written off in full against toll income from the project over a period of six years, that is 50 per cent in year one and 10 per cent in each of the succeeding five years. This is a significant improvement on the existing legislation which provides for a capital allowance of 50 per cent only.

This provision will benefit the toll bridge under construction by West Link Toll Bridge Limited and the relief will be available for all similar toll projects, including any toll franchises for other sections of the Dublin Ring Road which result from my Department's recent public invitations to the private sector to submit suitable proposals. The increase in the tax reliefs for toll roads will help to attract the private sector investment of £50-£100 million referred to in the National Development Plan— this would of course be additional to the Government's own investment programme for national roads in the period up to 1993. Apart from the Dublin Ring Road, I have identified three other projects which have potential for private toll based investment. These are the Newbridge-Kilcullen By-Pass, the Lucan-Kilcock Road and the Cork Downstream Crossing. The Government have provided the incentive and now it is time for the private sector to respond positively. I am looking forward to a satisfactory response.

Another section of the Bill provides for the introduction of a ten year driving licence. In tandem with the introduction of the new European model driving licence later this year, I have agreed to introduce a ten year licence for persons under 60 in order to bring Ireland more into line with practice in Europe. The ten year licence will cost £20, that is the equivalent of £2 per year. The new arrangement will facilitate the public and reduce administrative costs.

I should like to point out that a three year licence will continue to be available at the present rate of £12 or £4 per year. Furthermore, this change in the law will not affect the position of persons over 70 years, who can still obtain a one year licence for £4 if they cannot get a certificate of fitness to drive for a period greater than one year.

Before leaving the construction industry, I would like to refer to mortgage interest relief. This Government's firm resolve to break the cycle of increased Government borrowing and increased taxation showed results earlier than many economic commentators would have thought possible. As we reduce Government borrowing and the size of the tax take from the economy we leave room for real economic growth. For many years the burden of income tax increased year in year our and for ordinary households the most effective way of reducing this burden was through tax relief on mortgage interest. The mortgage interest relief is by far the biggest element of Government support for the private housing sector. It costs over £165 million a year in revenue foregone and has become a significant factor in the income tax structure.

Now that the Government are reducing income tax we can also move to reduce the reliefs which people previously had to avail of in order to manage their income tax affairs to their own best advantage. Obviously the complete elimination of mortgage interest relief would represent a serious blow to many households. However, the combination of low mortgage interest rates, the lowest in fact for 20 years, and the income tax reliefs announced in the budget provide scope for a further reduction in mortage interest relief.

The reduction from 90 per cent to 80 per cent in section 5 of the Bill of the proportion of interest on which tax relief is allowed will help to counteract inflationary pressures on house prices which, if unchecked, could have implications for the wider economy and ultimately push up interest rates. I am satisfied that this change will not have an adverse effect on the recovery in the overall private housing market and, indeed, that it could have beneficial results.

As I indicated in my contribution to the budget debate last January, I have been concerned about trends in house prices in certain areas which manifested themselves towards the end of last year and appear to have accelerated since then. I am not talking here about the housing market in general and, indeed, there is still a plentiful supply of suitable starter type houses available at very reasonable prices. My concern primarily relates to much publicised developments in certain segments of the market in the larger urban areas, such as Dublin, Galway and Cork. Some of the prices recently reported for houses in these areas are startling and whether such price rises will be sustained is highly debatable.

The reports of prices being paid for sites in some of these areas are even more startling and one would have to question whether indeed these prices would be viable by the time the houses are built. Both builders and their financiers would be well advised to bear this in mind.

It is clear that the current house price inflation is to a very large extent being driven by trading up. We must not forget that the underlying demographic picture does not lead one to believe that this can be sustained in the long term and in the overall there is no evidence that the supply of housing is or will be, in the foreseeable future, seriously out of line with demand. However, my fear at this stage is that these trends would spread throughout the housing market with serious consequences for families looking for first time houses or that they would promote an inflationary psychology in the economy at large.

The mortgage market as it has developed over the past two years has many welcome features: it has provided an adequate supply of mortgage funds at reasonable cost and has featured for the first time a healthy degree of competition between different lenders. However, there is danger that this competition can be carried to extremes and there is some evidence that it is a major factor in the bidding up of the price of certain types of existing property. Such cutthroat competition may well in the long term be to the detriment of lenders and borrowers alike and could undermine the development of an orderly mortgage market in the future. A noticeable feature of the present situation is the "hard selling" of endowment type mortgages. Indiscriminate selling of this type of mortgage product frequently involves overstating the potential benefits and does not have sufficient regard to the suitability of these products for individual house purchasers.

I also have to say that certain vested interests have been engaged in what looks like deliberate hyping of the housing market and up beat reports of individual house sales have added a dimension of unreality in the whole area.

Certain of the tax changes announced in the budget and now included in this Bill, for example, the curtailment of mortgage interest relief and the reduction in the relief on insurance premiums and endowment mortgages, were aimed in part at dampening down inflationary trends in the housing area. It is to be hoped that these changes which are now coming into effect, will act as a moderating influence. I am continuing to keep the overall position under active review. However, I would take this opportunity to ask all lending agencies to adopt a more restrained approach with a view to ensuring the long term stability of the mortgage and housing markets.

Section 58 of the Bill grants stamp duty exemption on property being acquired by the Custom House Docks Development Authority. The Authority already enjoy exemption from stamp duty where it acquires land from another statutory body by transfer order under the Urban Renewal Act, 1987. This exemption did not, however, apply where the land to be acquired was not owned by a statutory body.

The Authority are now acting as development agent on behalf of the Minister for Education for the National Sports Centre which involves acquiring land, some of it from non-statutory bodies. As the Authority are acting for the Minister for Education, it is appropriate that they should be exempt from stamp duty. However, the present amendment does not extend stamp duty exemptions to the disposal of land by the Authority.

I welcome the provisions in section 16 and 23 of the Bill which will assist in the development of the International Financial Services Centre at the Custom House Docks site. Section 16 introduces a new basis for taxing collective investment undertakings such as unit trusts and any other such undertaking which may be set up in the State. It will bring the Irish taxation treatment of collective investment undertakings into line with that prevailing in the majority of the member states of the Community. Non-resident investors will be free from the withholding tax provisions. Section 23 benefits a company in the International Financial Services Centre holding shares on behalf of non-resident investors.

The urban renewal scheme, apart from the Custom House Docks Development, which is designed to encourage private investment in selected locations, continues to gather momentum and has proved a marked success in many of the centres designated under the scheme. The scheme has prompted developments which would not otherwise take place in particular areas. In Dublin, for example, there were no new developments along the quays between 1975 and 1986. Since the introduction of the scheme development of the order of £30 million to £40 million is now nearing completion, in progress or about to start along the quays. Considerable progress has also been made of the designated areas in provincial towns and cities. Section 59 of the Bill provides stamp duty exemption for instruments which secure the advancement of moneys by the Housing Finance Agency to local authorities. Since late 1986 the Housing Finance agency have advanced funds to housing authorities to enable them to make house purchase loans. These funds are advanced on foot of agreements between the agency and individual local authorities. Section 59 exempts these agreements from stamp duty.

A clean, unpolluted environment is vital for our future economic development. Care for the environment is an insurance policy which will underwrite our economic development as well as providing a pay-off in terms of a greatly improved quality of life.

The powers of local authorities in the area of environmental control have been or are being strengthened in recent years. Comprehensive legislation is in place for the effective control of air pollution and waste disposal. There are proposals before the Oireachtas to amend and improve the legislation relating to water pollution, dereliction an restrictions on the payment of compensation under the planning and development code. We have participated in many international agreements designed to protect the ozone layer and to control emissions which give rise to transboundary pollution of the atmosphere and the marine environment.

The importance of a quality environment for sustained economic growth, particularly in the tourism, agricultural, horticultural, acquaculture and recreational sectors, is fully recognised in the National Development Plan prepared recently in the context of the European Structural Funds.

The January budget provided additional resources for expenditure on environmental projects such as environmental works at selective beaches, urban improvement works in designated areas, waste recycling grants and an excise concession for use of unleaded petrol.

My Department are conducting a campaign to promote the wider use and availability of unleaded petrol in the interests of public health and a cleaner environment. The oil companies and the motor trade are playing their part in expanding the network of outlets retailing unleaded. We must get the lead out of petrol because it is poisonous and, at certain concentrations in the blood, has been found to be injurious to health, especially the health of young children. Up to 90 per cent of atmospheric lead pollution in areas of heavy traffic is attributable to vehicle exhausts emissions. But despite the health effects and the publicity campaigns, sales of unleaded are still less than 1 per cent of total petrol sales.

Section 36 of the Bill provides for the further excise duty concession announced in the 1989 budget — this will enable unleaded to retail at five pence less per gallon than the top grades of leaded petrol. This favourable price differential, combined with the availability of unleaded petrol at more than 200 outlets, should greatly assist the promotional efforts of my Department and encourage more motorists to change over to unleaded. Remember, unleaded is not only environmentally-friendly, it is good economic sense.

Apart from the normal annual budgetary process of which this Finance Bill is an important part, there are other developments taking place which are of major significance to the economy's performance. I refer in particular to the national development plan submitted to the European Commission in March with the objectives of remedying the severe structural deficiencies in the Irish economy. These deficiencies restrict our economic efficiency and competitiveness and hinder the process of achieving our full potential for faster economic growth and social progress. We must develop the skills of our people, our natural resources, our capacity to master the technologies of modern industry and, most importantly, improve marketing abilities to sell our products and services in world markets.

The plan is not just a set of spending programmes. It is a comprehensive, integrated national plan covering every region and into which each economic sector is linked. It sets the agenda for economic and social activity over the next five years. It provides opportunities for individuals, local communities, co-operatives and corporations to promote worthwhile, viable projects at local and regional level. At national level it will involve all the State agencies, the EC Commission and the private sector nationally and internationally. All in all it should usher in a period of major economic expansion in our country.

I listened with interest to the Minister for the Environment. Let me say while he is in the House that there is a major problem in his Department in that we are not building too many local authority houses these days. I have seen and heard him say on many occasions that we have these empty houses in Dublin and so on for which there are no tenants. I assure him that in County Wexford anyway we have over 900 applicants for rehousing. I hope that, while he is attending to so many different matters in relation to his responsibilities as Minister for the Environment as he has outlined in his speech, he will attend to that area and particularly the needs of Enniscorthy.

I wish to plead especially on behalf of the disabled. We pay much lip service to those who are not in their full health and those who have not the ability to get around like the rest of us. Therefore, I would like to single out three areas in relation to this Finance Bill which need special attention. The first is an area in which the Minister has promised a Committee Stage amendment, and I would like to put forward what my party's amendment will be, why and the detailed wording involved. That relates to disabled drivers and car tax relief for them.

Secondly, I would like to deal with the appalling situation whereby lifesaving hospital equipment is subject to VAT. The third area in relation to the health field I would like to deal with is the way we give no proper consideration or regard to the 70,000 carers who are minding chronically infirm or ill people who happen to be their relatives in the home setting at far less cost than the State would incur in any residential setting.

The area of disabled drivers has been one of some controversy in recent years. In last year's budget the Minister for Finance promised to abolish disabled drivers car tax relief and replace it by a scheme the health boards would operate. Between the Budget Statement of the Minister for Finance and the publication of the Finance Bill it was found, in conjunction with the Irish Wheelchair Association and the Disabled Drivers' Association, that it was not possible to reach agreement and the present scheme stayed in operation. The present legislation relating to this car tax relief dates back to 1968 when the present Taoiseach was Minister for Finance. It is important that we try to ensure that people with disabilities are given every opportunity to overcome their handicap so they can live full lives in terms of employment and mobility and the resultant independence that gives them. For them to achieve those goals — fairly standard, normal goals that able people take for granted — they have a certain cost problem. It can cost up to £7,000 or £8,000 to convert a car to be driven by a disabled driver. Therefore, the way we treat this issue is an indication of our respect for the disabled. We must have real action instead of mere lip service in dealing with the cost impediments in this regard. My party will be proposing that section 43 of the 1968 Finance Act should be amended by the deletion of subsection (1) and the substitution of the following words for that section:

Where a person shows to the satisfaction of the licensing authority that he is unable or virtually unable to walk due to permanent impairment of one or both of the lower limbs in consequence of injury, disease or defect, the duty imposed by section 1 of the Finance (Excise Duties) (Vehicles) Act, 1952 shall not be levied in respect of a vehicle specially constructed or adapted for use by the person or used by him either as a driver or passenger.

That involves two very significant changes. We have the appalling position that the existing 1968 Finance Act states that in order to qualify for the car tax relief the disabled driver has to be "without the use of each of his legs". That means that if he has one normal leg and one prosthesis or no second leg he is considered to be able. That is patently unjust. It was most unfortunate that it took the highlighting of an individual case through the media to bring this home to the public and to the Government. Mr. Gerry O'Brien, whose case is now well publicised, was being refused car tax relief by the former Minister for Finance, Mr. MacSharry, and by the present Minister for Finance. Not only has he just one normal leg but he has no upper limbs — no upper arms whatsoever. It is a congenital deformity from birth. I have received many letters from people in similar circumstances.

Mr. O'Brien is a secondary school teacher and in 1988 he purchased a car at a cost of £13,500. It cost a further £7,000 sterling to convert the car for his use. Disabled people must have automatic cars because in some cases they have no hands to change the gears. Secondly they have to work the ignition and so on with their one good foot. Gerry O'Brien has to steer the car with a shoulder pad with special electronic controls. Having been a passenger with him I am amazed at his ability. It is something we should all admire greatly. He had to borrow £21,000 in total to get his car on the road, in the expectation that he would get a VAT and excise duty refund. Further to the highlighting of the case the Taoiseach and the Minister for Finance were involved and Mr. Gerry O'Brien was very pleased, further to phone calls from the Taoiseach and so on, that he was to get his just deserts and would be able to repay the bank. Yesterday I had a Dáil question down about his case inquiring if the money would be paid and unfortunately it still transpires, despite all the publicity, the good will and the sentimentality, that this man will not be able to put his car back on the road due to the heartlessness of the Revenue Commissioners and the Minister for Finance.

It was stated yesterday that the question of a refund of excise duty in the case in question will be sympathetically reviewed in the context of any resulting amendment to the disabled drivers' scheme. I have no doubt that there is no intention in the legislation to make it retrospective as regards disabled drivers. I have yet to hear from the Minister that it will be retrospective. By any definition this man is disabled and should be paid his money. The way this case has been conducted is disgraceful. People are congratulating him in the street on having got his money but he still cannot drive the car. He told me this morning on the telephone that he has been advised by a solicitor that under a particular statutory instrument the Minister has the power to grant relief. There have been complaints from the Disabled Drivers' Association regarding abuses of the car tax relief scheme that in some cases it was the decisions of the Minister for Finance of the day overturning decisions of the Revenue Commissioners which allowed such abuse to take place. I would appeal to the mandarins in the Department of Finance and to all concerned to issue a refund to Mr. O'Brien. It is a disgraceful situation.

The first amendment we will be proposing is the deletion of the reference to each of the legs and the substitution of the term "unable to walk or virtually unable to walk". This whole area is difficult. It is not a simple matter of drawing up a form of words which will deal with every situation. I have put forward this choice of words because they are taken directly from the scheme which operates in the United Kingdom and Northern Ireland and I should like to put on record what the term "unable to walk or virtually unable to walk" means in Northern Ireland. First, a person must be likely to continue to meet the medical conditions for at least one year. In other words, that person would not be likely to improve within a year and annual certification would be required. Secondly, the person must be able to make use of the benefit of going out from time to time. A person can be treated as virtually unable to walk if the effort needed to walk would endanger life or would be likely to lead to a serious deterioration of health. The following factors are taken into account in dealing with whether a person is accounted virtually unable to walk — either the distance, the speed, the length of time or the manner in which a person can walk without severe discomfort. They have no difficulties in the the United Kingdom or Northern Ireland in determining what is severe discomfort. It would include pain and breathlessness. There are special difficulties for mentally handicapped people in deciding what is meant by severe discomfort so there is a further definition under that heading in terms of the operating guidelines. What is an artificial aid? It would, for example, be a caliper, orthopaedic shoes or an artifical limb such as prosthesis. Ability to walk would take into account those walking aids. If somebody was able to walk only when the prosthesis was fitted he would still qualify.

Would the Deputy kindly elaborate on the source of the document from which he is quoting?

Certainly. These are the regulations in the United Kingdom and Northern Ireland covering their interpretation of the phrase "unable to walk or virtually unable to walk". It is an extract from the terms of the mobility allowance scheme of Northern Ireland administered by the Department of Health and Social Security.

The second amendment I am proposing relates to a person who is so severely disabled that he cannot drive at all and has to be a passenger. I have seen a particular car, a Datsun Patrol, where the whole back opens up and the person gets in by electronic wheelchair. It is like a livestock vehicle and it is then closed up at the back. That requires quite extensive conversion. In some areas there has been a lack of uniformity in terms of the interpretation by the licensing authority as to whether such people qualify. We are proposing to delete the words "as driver" in the last part of section 43 of the 1968 Finance Act to ensure that there is no ambiguity in that area.

The Minister has said he will consider looking at other amendments from Opposition parties in relation to disabled drivers. As it is likely that this area will not be reviewed again for some time once this year's Finance Bill is enacted, perhaps the Minister would also take this opportunity to look at the position of people who are clearly disabled in relation to their upper limbs, for example, amputees who cannot steer properly or change gear. There should be some mention in the Minister's amendment of the permanent impairment of the upper limbs.

Similarly there is the case of an individual who is a dwarf and who has been in touch with me. Having applied for exemption from VAT and excise duty he was refused because he had all his limbs even though they are only a fraction of the size of what we would consider a normal limb for an adult. This person's limbs were so small that he was unable to drive.

I would hope for a reasonable, humane, Christian interpretation of these regulations because I have come across the most appalling cases. Yet again the Minister for Finance pushed the whole question out into the future instead of saying that it is clearly unfair that a man with no arms and only one leg should be considered as anything but disabled. We are not just talking about car tax reliefs but about the whole question of facilities for disabled drivers, such as special parking berths, special concessions from B & I, Sea Link and other travel arrangements. All these things are related to the definition of disabled drivers as laid down under the Finance Act. There is a lot more at issue than the pure tax case. It is a question of allowing these people to have full independence.

In relation to abuses the whole difficulty so far as the Department of Finance and the Revenue Commissioners are concerned is that people are driving huge Mercedes, Jaguars and Rolls Royces under this scheme, and it is an abuse. If the Department feel there is an abuse they should limit the scheme to cars up to 2000 cc. That would cut out any nonsense. Disabled people need a car of a certain size because of the need for automatic drive. We are only talking about 450 people here so far. We are not talking about thousands of people or opening flood gates. We are talking about a little bit of compassion, a little bit of respect for the disabled to allow them the same opportunity to compete with able bodied people.

I hope the Minister's sentiment and goodwill will be turned into action to the extent that this week his Minister of State, Deputy Treacy, will ask him to consider issuing to the Department of Finance and the Revenue Commissioners this excise duty refund so that Mr. O'Brien can get his car back on the road in line with the commitment publicly given — he had people ringing him up from the Evening Herald and The Evening Press congratulating him on having been awarded this money. Yesterday after Dáil questions he still will not be paid this excise duty refund at this stage and this is very unfair.

In recent months I have visited a large number of acute general hospitals. I have, for some time, been aware of the costly nature of equipment for hospitals. In some cases we are talking about very important equipment that is vital in terms of diagnostics and treatment and, in relation to many illnesses, the earlier the diagnosis the better the chance of a full recovery. I have in mind diagnostic equipment such as CAT scanners which are very expensive, and mammography equipment for the scrutiny and treatment of breast cancer. It has come to my attention that a significant proportion of the equipment in our general hospitals was provided as a result of voluntary fund raising activity on the part of, for example, the Lions Club, the Rotary Club, the Chamber of Commerce and other voluntary organisations. I have met other people who are in the process of fund raising for such important equipment. There are also national organisations providing national facilities in the area of AIDS and so on. Different funding has been set up to provide specialised equipment. It is a real kick in the teeth to these people, to put it at its mildest, that the heartless people in the Department of Finance see fit to profit from the virtue of this voluntary work by charging 25 per cent VAT on this life saving equipment. It is disgraceful to profiteer in this way. It is unbelievable. We must remember, given that there is a public demand for this equipment and that everyone here wants the optimum level of health care, that this equipment would, sooner or later, have to be provided by the Health from their capital funding each year. What people are trying to do is expedite the process and provide services in their regions. Invariably, indeed exclusively, these are for public patients. They are not for the Mater Private Clinic or the Blackrock Clinic. This fund raising is for public patients in public facilities and therefore is of benefit to all taxpayers in the wider community. The piece of equipment that brought it to my mind in the first instance was mammography equipment in Ennis General Hospital which was brought as a result of local fund raising, and on which 25 per cent VAT had to be paid. I am aware of another case in relation to Galway Regional Hospital where some years ago there was a difficulty in relation to a CAT scanner and the subsequent difficulty of there not being adequate staff available to man the equipment. I understand the need to control staffing and operational levels in hospitals. Therefore I would propose to the Minister for Finance that he would give a discretionary VAT exemption for equipment provided it had the prior approval of the health board so that there would be no duplicating of facilities which are available in a hospital five or ten miles away. That compromise would ensure that the present stifling of initiative on the part of voluntary organisations would cease and there would also be an incentive to people to get more involved in their health services and form a closer relationship with their hospitals.

The third area I would like to deal with has a wider application than the two areas I have dealt with already and is at the core of something we will have to plan for here. It relates primarily to the elderly. There are about 330,000 people here over the age of 65, about 11 per cent of our population. With increasing life expectancy, which is a good thing, there will be more such elderly people. With our high levels of emigration a higher proportion of our population will be in the elderly category. Between now and the turn of the century there will be an increase of at least 7 per cent in our elderly population. It is important that we get our priorities right and have a clear policy for the care of the aged. Hopefully we will all live long lives and be able to enjoy in the future the benefits of such a progressive policy.

There are three categories of elderly persons: those who live alone in the community, those who require residential care and those who are minded in the family environment at home by relatives or friends. Interestingly enough, of the elderly category only 4 per cent or 5 per cent are in residential care, long-stay geriatric care, psycho-geriatric care or private nursing homes. Three and a half times that number are minded in the family setting, invariably by women, either daughters or daughters-in-law.

The National Council for the Aged have carried out very extensive surveys into the needs of carers. I will give a brief summary of some of the figures. We are talking about 70,000 such carers in this country. Fifty per cent of carers devote four to seven hours a day caring for the elderly person; 35 per cent spend more than seven hours a day; 53 per cent require to be on call 24 hours a day, always or almost always. Over 50 per cent of carers help the elderly person in and out of bed. Eighty-one per cent have responsibility for the administration and supervision of the elderly person's medication. Over 90 per cent prepare meals for the elderly person. Sixty-five per cent of carers give some help in washing and bathing the elderly persons daily and tasks relating to toileting are carried out by 22 per cent of carers.

Carers are very busy people. If persons are incontinent and bed ridden it is a very large task for carers to mind them. It must be pointed out that they do so at less than 10 per cent of the cost of residential care, which at minimum is about £250 a week. That is good value and it is a good investment by the State to make sure that more people are minded in the family home. Not only is it more cost effective to ensure that the elderly are minded at home but it is also much better for the elderly person because what they want is to live out their lives with dignity and independence.

When we look at the problems of carers we see, from studies carried out by the National Council for the Aged, that 35 per cent of carers experience financial strain all or some of the time as a result of loss of income in giving up work and the extra cost incurred through caring; 71 per cent of carers feel confined all or some of the time; 58 per cent believe caring places constraints on their social lives and 57 per cent feel overwhelmed by caring some or all of the time. Carers cannot get unemployment benefit because they are not available for work and they cannot get disability benefit because they have to be in the full of their health and they cannot be incapacitated.

What is to be done with these 70,000 persons? They are to be left languishing with the prescribed relative's allowance. That allowance is the most rigid and mean scheme operated by any State Department in this country. It gives about £27 or £28 to carers provided they do not claim any social welfare, provided they have no outside income, provided they have no employment and, believe it or not, given that most of them are women, provided they are not adult dependants. In other words, if you happen to be married and are providing this care, if you are typically a daughter-in-law, you will get nothing from the State in recognition of the hours, days and nights of valuable service you provide in minding elderly persons.

When reflecting on this matter and developing a policy on care of the aged one of the things we have to recognise is that there has been and still is a tax free allowance for persons who mind dependent relatives who require constant care and attention and who are incapacitated. I remember when we were in Government, over four long years on those benches——

Not long enough.

——every year we had the ritual of Deputy Michael O'Kennedy, the present beleagured Minister for Agriculture, coming into this House and proposing Committee Stage amendments to the Finance Bill to increase the allowance for the minding of such incapacitated persons and such old folk as I am referring to. Yet since this Government have taken up office they have done absolutely nothing in this area to assist these people.

I would call on the Minister for Finance seriously to consider putting in place some meaningful tax credit or tax allowance to ensure that more elderly persons are not pushed into nursing homes, seeking long-stay geriatric beds. What is most important is that within a fortnight of their being in a geriatric institution they become totally dependent and want to know what time their meals will arrive on a tray. The secret to longer life expectancy is to ensure proper rehabilitation and that elderly persons live out their lives to the full level of activity. I do not believe that the excellent budgetary submission made by the National Council for the Aged has been given adequate hearing. I very much regret that because it advocates an investment in the real community and a structure that we need, namely, the family.

I realise there is a limited time for this debate and I do not wish to delay the House but, in conclusion, I wish to repeat my three appeals to the Minister for Finance. First, in relation to disabled drivers, I would ask him to accept the Fine Gael amendment to change the farcical position whereby someone has to have both legs abnormal in order to get the concession and also that "unable to walk" or "virtually unable to walk" would be taken as a definition. I would ask him to consider some amendment to cover the upper limbs, where people have no arms, where they are hand amputees or where they are dwarfs.

The second area of concern is where a health board or the Department of Health give prior approval for voluntary fund raising for vital medical equipment in hospitals, life-saving equipment and vital diagnostic equipment, the people concerned should not be penalised and given a kick in the teeth with 25 per cent VAT on the money they raise.

Thirdly, I would ask the Minister to provide a realistic tax free allowance for taxpayers, not to speak of a change in terms of a proper social welfare allowance for carers, that would ensure that there is no financial disincentive to minding elderly relatives at home. It must be remembered in the latter context that a good deal of medical expenditure in relation to bills from nursing homes is tax allowable and therefore the tax system gives an incentive to push elderly relatives into institutional care rather than to mind them in the home.

I hope the sentimentality and the lip service of the Minister for Finance towards the disabled will be put into concrete action and that there will be some proper results from the enactment of this Finance Bill.

I want to take this opportunity on Second Stage of the Finance Bill, 1989, to congratulate the Minister, Deputy Reynolds, on his promotion to the position of Minister for Finance. Deputy Reynolds served with distinction in a number of ministries and his promotion to what is generally recognised as the senior ministry in Government was well merited. My view is that, because of the economic circumstances prevailing at present, the Department of Finance will present Deputy Reynolds with his greatest challenge to date. Personally I have no doubt about his capacity and ability to fulfil that role with his usual distinction and effectively to deal with the challenges with which he will be presented. It is in the interests of all of us and of the country as a whole that he should succeed.

I want to comment very briefly on the last point made by Deputy Yates. The arguments he made are familiar to me because, as well as Deputy Michael O'Kennedy, on several occasions during Committee Stage debates on various Finance Bills between 1982 and 1987, I looked for the particular relief for dependent relatives that Deputy Yates has just adverted to. What Deputy Yates did not give us was the response we got from the then Minister for Finance. I recall addressing my plea to Deputy Dukes when he was Minister for Finance. Deputy Bruton was appointed to that position later and he did not have an opportunity of presenting a budget. Deputy Yates did not advert to the fact that Deputy Dukes greeted our pleas with derision and contempt. We made those pleas at a time when taxation was higher than it is now and rising. Taxation now is lower than it was then and is falling.

I understand that the Minister for Social Welfare during the debate on Committee Stage of the Social Welfare Bill provided a mechanism whereby the prescribed relative's allowance could be paid directly to the person looking after the prescribed relative rather than paying that allowance to the elderly relative. The carer up to now had to depend on the elderly relative paying over the allowance. I agree with Deputy Yates that institutional care for elderly relatives has proved very expensive. There are many social reasons why people should be encouraged to look after their elderly relatives at home. The vast majority of elderly persons who are in institutions would prefer to live out their last years in the comfort and security of their own home or the home of a son or daughter. That is a major social problem to which the Government will give attention in the years ahead as the economy improves. Any politician who is active in constituency work will be conscious of that problem. Those who have any type of interest in humanity will be aware of it.

If elderly relatives were being cared for at home rather than in institutions there would be a great saving to the Exchequer. However, during the transition period economic difficulties could arise. There could be an increase in the net cost to the State during that period and that would present difficulties.

I should like to refer to some of the sections of the Bill because of a tendency that has developed in the House since I was first elected. Debate on Committee Stage is limited and Deputies from all sides tend to give all the available time to the first ten or 11 sections. They repeat the same arguments over and over again on those sections while the important sections tucked away at the back of the Finance Bill are not debated.

Hear, hear.

Some of those sections have a profound impact on the lives of ordinary citizens but they go through on the nod. We never get an opportunity to tease out the details of them. The Revenue Commissioners can draft them as they wish in the hope, or in the knowledge, that they will be at the back of the Bill and are unlikely to be debated. I deplore that tendency and I hope to get round it this year by referring in detail to some of the later sections in the course of my Second Stage speech. I hope the Minister will reply to the points I will raise on those sections.

It is strange that the debate on the budget is allowed to drag on for weeks when the provisions in it have taken effect. There is little that can be done about them after budget day but some of the technical sections in Finance Bills, which get down to the nitty gritty of how revenue laws will operate, are never debated at any length. Section 1, which has been welcomed by all sides of the House, deals with the general exemption and age exemption limits. Under it the general exemption limits are being increased by a little more than 9 per cent. We may have arguments across the floor of the House about what the rate of inflation for the full tax year will be but I think all sides will agree that 9 per cent is more than three times what the rate of inflation was when the Minister introduced his budget. In my view it will be far off what the rate of inflation will be for the income tax year 1989-90.

The exemption limits for those between the ages of 65 to 75 and for those of 75 years and over have been increased by more than 5 per cent. That will prove to be an increase in real terms because it will not be caught up by inflation. It is in the interests of us all that that should be the case. I welcome the provision which allows an exemption of £200 for each dependent child. The argument has been advanced by another Deputy that marginal relief will not apply in those cases. It is clear from the wording of the section that such relief will apply. In the basic legislation marginal relief applies above the specified income and it is clear that the specified income in the case of a person claiming the exemption limit, plus £200 for each child, will be his income plus £200 for each child. It is crystal clear from this section that marginal relief will continue to operate.

I welcome a practice adopted by the Revenue Commissioners in relation to marginal relief. They are now inclined to adopt the practice of giving a general exemption certificate of tax free allowances at the beginning of the tax year, provided they receive a return of income. They will make any adjustments that need to be made in the last month or two of the tax year. Marginal relief is applied throughout the tax year rather than being given as a refund at the end of the tax year. That is a favourable development and I congratulate the Revenue Commissioners on it.

Section 2 deals with the tax bands and the rates of tax. I welcome the reduction in the standard rate of income tax from 35 per cent to 32 per cent. This is the first time in many years that the standard rate of tax has been reduced by a Minister for Finance. The tax bands have been widened for those paying the standard rate and at the rate of 48 per cent, according to my calculations, by more than 7 per cent which is well ahead of the rate of inflation. The net result is that the Government have now virtually achieved their target of bringing two-thirds of taxpayers on to the standard rate of income tax. It should be remembered that we are now talking about a lower standard rate of tax. Therefore, the target set by the Government for themselves two years ago, which we were told at the time could not be achieved, has been achieved in that short time and on a lower standard rate of taxation.

Debate adjourned.
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