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Dáil Éireann debate -
Tuesday, 16 May 1989

Vol. 390 No. 1

Finance Bill, 1989: Report Stage.

I move amendment No. 1:

In page 11, to delete lines 8 to 11, and substitute the following:

"TABLE

PART I

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £6,100

31 per cent.

the standard rate

The next £3,100

47 per cent.

The remainder

55 per cent.

the higher rates

PART II

Part of taxable income

Rate of tax

Description of rate

(1)

(2)

(3)

The first £12,200

31 per cent.

the standard rate

The next £6,200

47 per cent.

The remainder

55 per cent.

the higher rates

".

There is a fair amount of business to be dispatched before the time limit is reached so I will not spend too much time on this amendment. In the course of his Second Stage speech on the Finance Bill, the Minister for Finance referred to the "phased programme of tax reform now underway at the behest of this Government." It struck me that he must have meant something by "a phased programme of tax reform", that there must be some elements in this reform which even in a very indefinite way have crystalised in the Minister's mind. The Minister on a number of occasions, and also the Taoiseach, have referred to the need to bring down taxes. I do not believe that a downward direction amounts to a "phased programme of reform." I thought it proper therefore to put down an amendment on Report Stage dealing with the question of tax rates, in order to give the Minister an opportunity to expand further on his own phased programme of tax reform and to see whether such a phased programme of tax reform does exist or whether phased means "fazed" rather than "phased", which I believe may be the case in this instance.

If the Minister has programme of tax reform, I believe he is under a duty to spell out to the Irish people not only the direction but the ultimate aims he has in the proximate and foreseeable future. I believe the Minister owes a duty to the taxpayer and to the unemployed to indicate in general form the overall aims and shape of the tax system he wants to build, and to give some indication of the changes he wants to make — the widening or narrowing of the tax base that he has in mind as part of this phased programme of reform. I think he owes it to the people of this country, both employed and unemployed, to tell them where the Government plan to bring our system of taxation and the marginal rates over a period of years and what they see as the appropriate top rate of income tax, how many bands they consider appropriate — at present we have three — and how they see the tax system interacting with the PRSI system. The Minister should say whether he is happy with the interaction of those two systems at present and whether it is just that PRSI is charged on all income, no matter how low, whereas taxation is not. For instance, in the English system lower incomes are exempted from the payment of social insurance and the levels of income at which workers become liable to pay such amounts are graduated. Does the Minister think that is appropriate to our case? In view of the fact that the Minister has again lifted the upper ceiling of PRSI in the Social Welfare Bill, which is part of the budgetary strategy, would he indicate whether the employer's contribution is whether the employer's contribution is to become unlimited? If the Minister seriously contends that the words used in the Second Stage debate, that the Government had a phased programme of tax reform, mean anything real and were meant to be other than a smoke screen or a bit of palaver to keep people happy or to give the whiff of tax reform without any substance, it is time for him to spell out in a general form what process of tax reform he has in mind for the next couple of years.

The amendment in my name seeks to elicit such information by way of suggesting that there should be a 1 per cent further reduction in each of the marginal rates of tax in the next year, both for married and single people. The purpose of so suggesting is not that I believe that this is the appropriate way to set about reforming the tax system, because I do not. I have spoken in this House on numerous occasions — probably too often — on the need for other more dramatic and radical reforms, including the introduction of tax credits in place of tax allowances. The amendment seeks to elicit from the Minister why he is going this far this year, where he intends bringing tax rates next year and his priorities for tax reductions, if that is his overall aim.

Before the words trip off the Minister's well prepared tongue, as doubtless they will, that my proposal would cost the Exchequer £70 million or £80 million or X hundred million pounds — I am sure the little machine which spits out these goodies has been working overtime in Merrion Street — and therefore to make a proposal in these circumstances is irresponsible, I can hear it all now, it has been word processed before and doubtless it will be said again, I want to say for the record of this House that someone in my position dealing with proposals to reform the tax system in the context of a Finance Bill is hemmed in, as you know well, a Leas-Cheann Comhairle, by the rules of this House. One of the most extraordinary rules of this House is that I can never suggest any bad news. I am confined to suggesting good news by ways of amendments.

The galling thing about this is that when one does suggest some good news one is accused of statutory irresponsibility by the Minister in the script supplied to him by his advisers. The sad fact is that one cannot win. One cannot propose any change in the tax system which would cost anything or any widening of the tax base or anything which would adversely affect any person in the community at large. Before I get the predictable reply I ask the Minister to avail of this opportunity to inform the House what he meant when he used the phrase "a phased programme of tax reform" in his Second Stage speech and to indicate to the House and the public, both working and non-working, what plans he has in the future to further reduce tax rates in the direction specified in the table which forms part of the amendment in my name.

(Limerick East): I think my views on the subject of tax reform are well known at this stage. They have been put on the record on several occasions and I do not intend to outline once again what they are. There is one point I would like to make and it is this: in the final analysis, what people are interested in is disposable income. Obviously, the amount deducted in PRSI and income tax has a major effect on disposable income but since the deductions are made from whatever wage or salary somebody is getting in the first instance the question of wages and salaries is also very important. In the absence of another way of dealing with this matter I would like the Minister to clarify what the scope and cost of the agreement on special pay awards which is now being entered into is. This is relevant in the context of Deputy McDowell's amendment——

(Limerick East): ——because what we are really talking about is the amount of disposable income which a wage or salary earner would have.

I think that what we are really talking about is not directly connected with Deputy McDowell's amendment. I would venture to say that Deputy Noonan knows that in his heart and good mind. Perhaps he will be satisfied with making a passing reference. So far shalt thou go.

(Limerick East): Under your most benign sceptre, a Leas-Cheann Comhairle, on occasions matters of extreme relevance and national importance have been raised even though fairly close to the line. There are matters which were not clarified in the public announcements. These are not matters I intend to make controversial. I know I am in order myself but I am asking you, a Leas-Cheann Comhairle, to be tolerant with the Minister who in the necessary explanation may drift out of order.

The Deputy says that he knows he is in order but I might venture to say that he is not. It would not be in order now. Having made a passing reference perhaps he has whetted the appetite of the Minister. The Minister might——

(Limerick East): I would like the Minister to respond because it seems that there are items which need to be clarified. If there is a heavy additional cost on public sector pay next year the Minister will be left with far less scope to reduce income tax rates or to increase allowances. The question of the reform of the tax system is certainly related in one way or another to the availability of resources. The same pound cannot be spent twice. If it is spent on pay it cannot be spent in paying for tax reductions.

Very clever.

(Limerick East): We cannot realistically discuss the question of tax reform and tax reductions — Deputy McDowell has raised this issue in his amendment — without having some idea of what resources will be available to the Minister in 1990, if talking about the 1990 budget. Deputy McDowell asked a specific question. He asked what are the Minister's intentions given that he stated he is committed to ongoing tax reform. I wish to ask a secondary question. In the light of the pay agreement which is now being entered into, what resources does the Minister think he will have at his disposal—

I am sure Deputy Noonan appreciates that even though Deputy McDowell asked a question this does not necessarily mean that it was in order. That may not be a good basis for Deputy Noonan to present another question to the Minister. In short I think Deputy Noonan knows that on Report Stage there are certain limitations. I might remind Deputies that they will be entitled to make one contribution only, save Deputy McDowell who will have the right to reply. I ask Deputy Noonan, in view of the great harmony which has existed to date, not to push the good fortune he has had much further.

(Limerick East): With all due respect, a Leas-Cheann Comhairle, it seems that it would be impossible to discuss the question of tax reform or tax reductions without also discussing the resources which will be available to bring these about. The Minister would be the first to remind us of that fact. I would like the Minister to take this opportunity or on Fifth Stage, which I do not think we will reach, to deal with this issue because it is one that is fundamental to the finances of the State. I am not trying to raise controversy. What I am looking for is more detailed information than what has been made available in the material published following the press announcement last night. This is very relevant. The scope of the agreement, if all the special pay awards are included, is also relevant.

Despite his innocence, Deputy Noonan knows quite well that I have no intention of writing the 1990 budget in May 1989. I am just trying to finish this year's one first. In relation to revenue, the trends were excellent in the first quarter of this year. I hope they will continue in the same way for the rest of the year. In relation to the question as to what impact the draft formula which will go before Congress tomorrow will have on the 1989 budget, this is within the parameters of the figure of £30 million as laid down in this year's budget.

(Limerick East): Plus the Finance Estimate and the increase in salaries.

I am not breaching any single budgetary figure for special pay awards or Defence pay or any other pay figures. The Deputy can rest assured that it falls within the parameters of the figures in the 1989 budget.

(Limerick East): It is £56 million rather than £30 million.

It is not.

Those vulgar fractions.

I do not know how the Deputy does his figures. I will not disappoint Deputy McDowell. I will give him the figures. I have said on a number of occasions in this House and I will say it again now that to most of the people I meet tax reform means reductions in their personal tax, not in anybody else's. Rather than just talk about it, as other parties have done, we have done something about it. We started the process this year. We have given a clear signal of the direction in which the Government and I propose to go in relation to reductions in personal rates of taxation. I had better give the figures to the Deputy now in case I forget to do so. Acceptance of the Deputy's amendment would result in a cost to the Exchequer of £41.1 million in 1989 and £68.8 million in a full year, and would benefit 790,000 taxpayers. I totally reject the amendment and I could not accept it in any circumstances. It would obviously upset the parameters of the budget and I have no intention of changing them at this stage.

Deputy McDowell asked where the Government stand in relation to restructuring and reform of the taxation system. Considerable restructuring and reform took place last year, despite the difficult budgetary situation, and very significant progress was made in the reduction of the personal burden of taxation. The measures in this year's Finance Bill covering the income tax rates structure and dealing with exemption from tax represent a continuation and strengthening of that process. The Government have pressed ahead this year and have provided substantial reliefs in the area of personal tax, costing over £200 million in a full year. In this context and bearing in mind the continuing need to control public expenditure, I could not accommodate the size of the measures proposed by Deputy McDowell.

I should also like to answer the question regarding where different parties stand in relation to personal taxation. I will give figures in case Deputies are under a misapprehension. In the 1989 budgetary context, the Fine Gael proposals would cost £530 million, the proposals of the Progressive Democrats would cost £236 million and the Labour Party's proposals, one including mortgage interest relief at 35 per cent, would cost £284 million and — looking at the alternative — the abolition of mortgage interest rate relief would cost £155 million.

The Government's position in relation to commitment in the whole taxation system was clearly set out and explicitly stated in section III of the Programme for National Recovery which has been agreed with the social partners. That section sets out the Government's objectives in relation to income tax, corporation tax, capital taxation, the problems of tax evasion, tax collection and enforcement. In a budgetary situation which requires that tight control of expenditure is maintained, the Government have not deviated from their objectives in the area of tax reform and the measures in the Bill which include a further reduction in the burden of personal taxation represent concrete evidence of a continuation of their commitment. This commitment is being implemented in three areas, viz: (i) reducing the burden of personal taxation, (ii) improving the administration of the tax system and (iii) simplifying the tax code.

We committed ourselves to a total of £225 million under the Programme for National Recovery in relief in personal taxation and, half way through the programme, it adds up to reliefs worth £700 million, not alone meeting our commitments under the programme but nearly multiplying them three times over. Notwithstanding this achievement, we have pressed ahead this year and will continue to do so in stating exactly where we stand in relation to the reform of taxation. As Deputy McDowell remarked, the last time we came very close to having two thirds of the taxpayers on the standard rate ——

They are now going in the other direction.

This year, the personal tax rate is down from 35 per cent to 32 per cent for the first time in 20 years. We have reduced the top rate from 58 per cent to 56 per cent and widened all the bands in between, which indeed was a very comprehensive package in relation to personal taxation. In 1988, there was a revamping of the corporation tax code with a restructuring of the capital allowances provisions to companies by a reduction in the rate of corporation tax. This is a major reform of the corporation tax code. Indeed, it runs parallel with developments in other countries and it is designed to move investment away from tax efficient investments in fixed assets to investment in jobs. No further changes in corporation tax are envisaged at present but the Government will review the position in the context of the 1990 budget.

Problems which have been built up over a long number of years cannot be solved overnight. However, the changes proposed in the Bill in relation to personal taxation are undeniably a further significant step in the area of the tax reform which is demanded from all sides and to which the Government are committed.

I would remind the House that it is because of the action taken by this Government that inroads have been made into tackling both of these problems. The improvement in the public finances over the past few years has been dramatic. The trends so far this year suggest that, yet again, the budget targets may well be bettered. However, the exceptional overlay of debt still constrains our economic progress and eats up large resources that could be put to much better use.

When we consider that the national debt represents £7,000 for every man, woman and child, it gives some idea of the size of the imposition. When you consider that it takes £40 per week out of the pay packet of everybody working to service that debt, it gives a clear picture of the importance of reducing that debt, not just stabilising it as we have done so far. It is against that background we have to consider what practical steps can be taken to further reduce the level of personal taxation.

Talk of tax reform could only be talk as long as the public finances were in such disarray. The actions taken by the Government over the past two years have created the opportunity to make a significant start on the process of reform. In availing of this opportunity the Government have pursued a steady course of tax reform without compromising the overall reduction in Exchequer borrowing which has been so crucial to our economic recovery. The introduction of self-assessment, the changes in the corporate tax code and our significant moves in relation to personal taxation speak louder than all the words from different sides about tax reform, which to the ordinary taxpayer means, as I said at the start, a tax reduction in his or her personal income.

My predictions were reasonably accurate, although I sincerely thank the Minister for tempering the acerbic answers which were doubtless prepared for him and for being polite.

It emerges from what the Minister said that the phased programme of tax reform does not exist, it is whatever it turns out to have been at any given stage. You find out what the programme is when it has happened. It is such a programme that it cannot be mentioned in prospect, nobody can say what it will contain next year in any respect. All you find out about its existence is that whatever happens is always claimed by the Minister to form part of his programme. That is fine, but the whole idea of the word "programme" is to plan ahead and if all the programmes which we were recently told about are now history, they are hardly up to much.

The history of tax reform under this Government has been very strange indeed. I have commended the Minister for abandoning the rather illusory and pointless aim of getting two-thirds of taxpayers on to the standard rate. As the Minister pointed out, that could have been achieved very easily in this budget but it would have accomplished absolutely nothing. I am half sorry that it was not achieved so that the people would have realised how foolish a commitment it was and how, although it sounded grand, it meant very little.

The Minister spoke about the extent of the tax reliefs given by the Government since they came to office. The simple fact is that income tax is going up and up and up in terms of yields and the Minister realises that as he described the buoyancy of the revenue and the happy situation in which he finds himself. I take his point that there is no use talking about tax reform if you do not intend to implement it. I also take his point that it is an absolutely redundant activity to speak about tax reform if the circumstances are not there to allow it to occur.

I am sure Deputy Noonan would agree that the implication of what the Minister is saying is that until there is further recovery there can be no further tax reform. I take the diametrically opposite view, that the process of economic recovery involves tax reform. It is not a fruit of economic recovery, it is part of the process. It will be a cause rather than a result of economic recovery.

If the Government or their successors, however that Government is composed, spell out a five year programme of tax reform to the people, say what they intend to do and how they intend to get there, there will be a public consensus in favour of tax reform. I do not agree, although I can see the practical and political aspect of what the Minister has said, that tax reform means tax reduction for the average man, and that to speak in terms of tax reform in any other context is by implication, the Minister suggests, idle. In terms of how one pays one's tax, as opposed to the amount of tax one pays, tax reform can be of huge significance. I instance in that regard the progressivity of the present tax system. If everybody paid exactly the same amount of tax but if at least the average £1 of overtime pay for a single person on slightly above the average industrial wage did not carry with it employer payroll costs of £3.30, then there would be some prospect for the improvement which the Minister spoke about.

In my view the absence of internal reform inside the tax system is a very significant factor. The Minister is being glib — I do not mean that offensively — when he says that tax reform means tax reduction. That may work bumping into people on the street or having a pint in a pub and leaning up against the bar with people. It has a superficial plausibility about it but as a statement of fact it is not correct. The way in which we structure our tax system, the size of our tax base, the way in which a tax is focused on work rather than capital or work rather than property are real issues which have a determining factor in the economic life of the country.

The glib statement that tax reform must equal tax reduction does not take into account what many serious economic commentators are saying to the Government, that they must look to the supply side, that they must look to the things which are inhibiting growth on the supply side, one of which is the employment tax wedge. A reduction in the overall tax burden is not the only way to tackle the serious problems on the supply side which the present structure of our tax system means. Therefore, the Minister should abandon his Main Street, Longford, view of tax reform, that it is tax reduction only. He should adopt a slightly more sophisticated approach and say that where the money comes from, the circumstances in which it is collected, the rate at which it is collected on overtime as opposed to ordinary pay, the size of allowances, the steepness with which bands progress, poverty traps and issues like that are serious issues in the economy.

There is more to tax reform than waiting until the budgetary system permits tax reduction. That is something we cannot afford to wait for. The Government have a duty to state a programme of tax reform as part of economic recovery so as to be a cause rather than a fruit of economic growth.

I take it the Deputy is not pressing his amendment.

That is correct.

May I respond to some of the points raised by the Deputy?

I should like to tell the House again so as to avoid difficulties arising later, that Standing Orders require that on Report Stage every Deputy, other than the Deputy who moves the amendment, is limited to one contribution. If the House agrees the Minister has some exceptional statement to make we can permit that.

Not really. I was asked where the money was coming from but the Deputy tabled amendments that would cost £68 million and he did not say where the money was coming from.

I am not allowed to do that. Those amendments were ruled out of order.

That was really glib.

I had about ten amendments ruled out of order on the grounds that they would cost somebody something.

(Limerick East): Constitutionally the Minister is the only person who can impose a charge.

The Deputy put down the amendment so that he would get an opportunity to talk about this issue. The reality is that 600,000 taxpayers will benefit from my scheme.

Amendment, by leave, withdrawn.

Amendment No. 2 is out of order.

(Limerick East): I wish to move that the House recommit the Bill to allow me discuss amendment No. 2. I should like to give the House my reasons. The amendment has been ruled out of order because the issue was not raised on Committee Stage.

(Limerick East): I want to bring to the attention of the Minister an anomaly that exists. It is a simple enough anomaly but the only way I can bring it to the attention of the Minister in an orderly fashion is to ask the House to recommit the Bill in respect of amendment No. 2. I understand the Minister intends recommitting the Bill at a later stage. I can assure the House that I need little more than a minute to explain what is involved here.

I should like to quote the relevant Standing Order.

98. (1) A motion may be made to recommit a Bill either wholly or in respect of certain sections or amendments. The motion may be made at any time before the order for the Fifth Stage shall have been made.

(2) If a motion to recommit a Bill be opposed the Ceann Comhairle shall permit an explanatory statement of the reasons for such recommital from the Member who moves and a statement from a Member who opposes the motion before he puts the question thereon.

(Limerick East): I move:

"That the Bill be recommitted in respect of amendment No. 2".

I am opposing this motion for the purposes of the exercise.

(Limerick East): I should like to make a short explanatory statement to bring this anomaly to the attention of the Minister. There is an anomaly in that a woman with children who is a taxpayer, who is separated and cohabiting with a man who is unemployed, for tax purposes is treated as a single person and will not be given the single person's allowance under the tax code. On the other hand, the unemployed man with whom she is cohabiting will be treated as a married man and because she is a wage earner, his social welfare will be reduced. This applies to a number of couples and I am afraid the scope of the anomaly is increasing.

I would like the Minister to look at the amendment between now and finishing time tonight to see what he can do. As far as I can see there are little or no cost implications involved and if there are they are of a nugatory nature. This is another one of those anomalies that is drawn to one's attention from time to time. I am sorry it was not drawn to the attention of our leader in time to permit us to table an amendment for Committee Stage. That is why I must seek the approval of the House to recommit the Bill in respect of the amendment. The Minister, as Minister, can move the amendment as the Bill proceeds between this stage and the Fifth Stage.

Is the motion to recommit the Bill in respect of the amendment in the name of Deputy Dukes agreed?

I should like to tell Deputy Noonan that there is no way I will be introducing an amendment before the end of the debate tonight. I have noted the point raised by the Deputy but I do not propose to deal with it today.

I indicated I was opposing Deputy Noonan to give him the opportunity to make his point.

Question put and declared lost.
Amendment No. 2 not moved.

I move amendment No. 3:

In page 12, to delete lines 21 to 26, and substitute the following:

"‘relevant expenditure', in relation to an individual, means the amount of the expenditure incurred, during the qualifying period, by the individual in respect of any work of repair or restoration, or maintenance in the nature of repair or restoration, which is consistent with the original character or fabric of the building and is carried out on a qualifying owner-occupied dwelling of the individual.".

This amendment results from an undertaking I gave in the course of the Committee Stage debate on what is now section 4 of the Bill. I promised to have another look at the measure in the light of concerns expressed by Deputies Bruton and McDowell that the section as originally drafted might have allowed relief for inappropriate expenditure.

Deputy Bruton was anxious to ensure that the expenditure which is to be relieved under section 4 should be confined to expenditure on work which is consistent with the original character of the building. Deputy McDowell considered that the word "maintenance", as it appears in the definition of "relevant expenditure", might be open to abuse. For example, he argued that the cost of hiring someone to clean the house could be claimed to be a "maintenance" cost under the measure as drafted. This, of course, was never the intention.

The redrafting of the definition of "relevant expenditure" will, in my view, confine relief to expenditure which it was intended should be relieved while also meeting the points made by the Deputies on the other side of the House by focusing the relief more closely on the restoration and conservation objective of the scheme.

Other aspects raised, such as the area of application of the relief, may be open to argument, but here too the scheme must be seen in its proper context as an attempt to focus relief so as to encourage not only the retention of the architectural heritage but also to improve the social fabric of the inner city. It is worth mentioning, too, that this is in the nature of a pilot or experimental project. The scheme as initiated is of a very temporary nature with an expiry date of May 1991. At that stage the question of its continuation will have to be reviewed and there will be an opportunity, if it is to be continued, to extend or restrict its provisions as experience dictates.

I recommend the amendment to the House.

(Limerick East): I welcome this amendment, and I am glad the Minister had introduced it. When this section was discussed on Committee Stage concerns were expressed by Deputy Bruton. This amendment is a move to allay those fears, and I accept it.

Amendment agreed to.

Amendment No. 4. Amendment No. 9 is an alternative and, therefore, amendment Nos. 4 and 9 can be taken together for the purposes of discussion.

I move amendment No. 4:

In page 14, between lines 11 and 12, to insert the following:

5.—Section 2 of the Finance Act, 1969, is hereby amended by the insertion after subsection (5) of the following subsections:

"(5A) (a) Where—

(i) an individual—

(I) has made due claim (hereafter in this subsection referred to as a "claim") to the Revenue Commissioners for a determination under clause (I) or (II) of subsection (2) (a) (ii) in relation to a work or works or to a particular work, as the case may be, that he has written, composed or executed, as the case may be, solely or jointly with another individual, and

(II) has, as respects the claim, complied with any request made to him under subsection (4) or (5) in the relevant period,

and

(ii) the Revenue Commissioners fail to make a determination under the said provisions in relation to the claim in the relevant period,

the individual may, by notice in writing given to the Revenue Commissioners within 30 days after the end of the relevant period, appeal to the Appeal Commissioners on the grounds that—

(A) the work or works is or are generally recognised as having cultural or artistic merit, or

(B) the particular work has cultural or artistic merit,

as the case may be.

(b) In this subsection "relevant period" means, as respects a claim in relation to a work or works or a particular work, the period of 6 months commencing with—

(i) the date which is 6 months before the date of the passing of the Finance Act, 1989, or

(ii) if later, the date on which a claim is first made in respect of that work or those works or the particular work, as the case may be.

(5B) The Appeal Commissioners shall hear and determine an appeal made to them under subsection (5A) as if it were an appeal against an assessment to income tax and, subject to subsection (5C), all the provisions of the Income Tax Act, 1967, relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(5C) (a) On the hearing of an appeal made under subsection (5A) the Appeal Commissioners may—

(i) after consideration of—

(I) any evidence in relation to the matter submitted to them by or on behalf of the individual concerned and by or on behalf of the Revenue Commissioners, and

(II) in relation to a work or works or a particular work, the work or works or the particular work,

and

(ii) after such consultation (if any) as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them,

determine that the individual concerned has written, composed or executed, as the case may be, either solely or jointly with another individual—

(A) a work or works generally recognised as having cultural or artistic merit, or

(B) a particular work which has cultural or artistic merit,

and, where the Appeal Commissioners so determine, the individual shall be entitled to relief under subsection (3) (a) as if the determination had been made by the Revenue Commissioners under clause (I) or (II) of subsection (2) (a) (ii), as the case may be.

(b) The provisions of this subsection shall, subject to any necessary modifications, apply to the rehearing of an appeal by a judge of the Circuit Court and, to the extent necessary, to the determination by the High Court of any question or questions of law arising on the statement of a case for the opinion of the High Court.

(5D) For the purposes of the hearing or rehearing of an appeal made under subsection (5A), the Revenue Commissioners may nominate any of their officers to act on their behalf.".

The amendment relates to section 2 of the Finance Act, 1969, which provides for the exemption from tax of certain earnings of writers, composers and artists. During the Committee Stage debate I promised to look again at the operation of section 2 as Deputies had expressed concern about the difficulties relating to rights of appeal being experienced by certain claimants who had not succeeded in qualifying for the exemption. Indeed, Deputy Noonan has brought forward a Report Stage amendment which attempts to deal with these difficulties.

Up to now, the Revenue Commissioners, when a claim for exemption was made, consulted with authoritative bodies in the field of culture and the arts for advice on the cultural or artistic merit of the work or works which were the subject of a claim. If the advice they received was that the work or works had cultural or artistic merit, the Revenue Commissioners made a determination in favour of the claimant and exemption was granted. Where the advisory bodies were unable to recommend in favour of a claimant, the Commissioners advised him or her that they were unable to make a determination. There was no appeal mechanism whereby a disappointed claimant could pursue his or her claim as to the artistic or cultural merit of his or her work. The present amendment is intended to introduce such an appeal provision into the 1969 legislation.

The amendment provides that, where a person has made a properly supported claim and the Revenue Commissioners have failed within a specified time to make a determination in his favour, the claimant may appeal to the Appeal Commissioners on the grounds that he or she has produced a work or works of cultural or artistic merit. It will then be a matter for the Appeal Commissioners to hear and decide the appeal by determining whether the claimant's work has cultural or artistic merit. It will also be open to the claimant to pursue the appeal to the Circuit Court and to the High Court on a point of law.

I recommend the amendment to the House.

(Limerick East): I moved an amendment on Committee Stage and the Minister said he would look at it and consider it on its merits. I have put down amendment No. 9, which is a repeat of the amendment I put down on Committee Stage, and I am glad that the Minister has introduced amendment No. 4 which has the same purpose as my amendment.

I am sure Deputy Noonan appreciates that even though we are discussing his amendment, if the Minister's amendment is agreed, his amendment will not be formally moved.

(Limerick East): I understand. The purpose of the Minister's amendment, which has the same purpose as the amendment I put down, is to provide a right of appeal against the Revenue Commissioners' refusal to grant a determination that a claimant's work meets the requirement of the section, that is, that it is original and creative as well as having cultural or artistic merit.

Section 2 of the Finance Act, 1969, operates along the following lines. A claim for the exemption from income tax on the profits of an artist's qualifying work can be made only where the individual is determined by the Revenue Commissioners to have produced original and creative work of cultural or artistic merit. A preliminary claim has first to be made for such a determination. On receipt of this preliminary claim the Revenue Commissioners consider the evidence provided by the claimant and can consult with such person or body of persons as in their opinion may be of assistance to them. I understand they consult with the Arts Council or appropriate members of the Arts Council. The Revenue Commissioners then either grant the determination or refuse it.

I understand from the Minister that a determination is granted if it is the opinion of the Arts Council, and the Revenue Commissioners on their advice, the work complies with the section and a determination is not given in circumstances where it is the opinion of the Revenue Commissioners, on the advice of the Arts Council, that the work is not of creative or artistic merit. The difficulty arises if the Revenue Commissioners were to refuse a tax relief in accordance with the section, there will be a right of appeal, but if no determination is given there is no right of appeal. The Minister has now moved to allow, in certain circumstances, a right of appeal in situations where a determination is not given. I welcome that provision and I thank the Minister for introducing it.

As I understand it, the mechanism will provide that the right of appeal will arise six months after the request for a determination has been presented to the Revenue Commissioners or, in circumstances where a request is already in the hands of the Revenue Commissioners, the right will arise six months before the date of the passing of the Finance Bill, 1989. If I understand the section correctly, the appeal from the Appeals Commissioners to the Circuit Court will still be in place in exactly the same circumstances as already provided for in the Act in situations where a request for tax relief was turned down and the appeal to the High Court on a point of law is still in place as it was in the other circumstances. This provision will be very helpful.

Some artists are temperamental and believe that their work is creative and worthy of merit. When they submit their work to the Revenue Commissioners for assessment, and while they are prepared to accept a decision which says that it is of artistic or creative merit and that it will benefit from tax relief, or that it is not and will not benefit but will give them the right of appeal, they are frustrated when they are put in a limbo where, because a determination has not been given, there is no right of appeal. The Minister has removed this problem by putting down this amendment. I will withdraw amendment No. 9 and I agree with the Minister's amendment.

Amendment agreed to.

(Limerick East): I move amendment No. 5:

In page 15, line 15, after "per cent.'." where it secondly occurs to insert "This section will not apply to loans where the annual interest rate exceeds 10 per cent.".

In section 6 the Minister seeks to continue a process initiated in the Finance Act 1987 which applies to relief on mortgage interest.

I can envisage circumstances arising in which, when mortgage interest rates go down and the monthly amount payable by any individual mortgagee is reduced in a fairly substantial way — interest rates have gone down by four percentage points in the last couple of years, for instance — there is an argument to be made that the tax relief applicable to mortgage interest should be reduced also. In a pattern of declining interest rates, if the tax philosophy is that tax relief such as this should be removed, it is better to do so when interest rates are going downwards rather than upwards. Of course, once removed, it is unlikely they would be put in place again even if interest rates rose.

The intent of this amendment is to tie in the level of mortgage interest relief available to mortgagees to the rate of interest obtaining. While one could make the case, as the Minister has, that the level of relief could justify it being reduced from 90 per cent to 80 per cent when interest rates are falling, I would argue that if interest rates rise again it should move upwards from 80 per cent back to 90 per cent and possibly 100 per cent.

My amendment proposes that if mortgage interest rates exceed 10 per cent the relief should rise from 80 per cent to 90 per cent. It is a reasonable amendment. The Minister may not be pleased with its manner of drafting but it should not be beyond the skill of the Ministers' Department and that of the Revenue Commissioners to take its intent on board, to draft it in a manner which will eliminate any wrinkles it may contain. Its intent is clear. Mortgage interest is one of the major household expenses, especially in the case of young couples. Many people are now committing themselves to very heavy mortgages indeed. They are doing their sums on the basis of current interest rates and existing mortgage relief. Therefore, any change either in mortgage interest relief or in interest rates will place them in a very bad position. For example, if the experience of those people who bought land in the late seventies was paralleled by that of the people now buying very expensive domestic property, undoubtedly within very few years many could find themselves in serious difficulty. There needs to be some kind of fail-safe mechanism which protects people. While it is most welcome that interest rates have come down I contend that if those rates should rise again there should be some trigger mechanism which would give the relief almost automatically at a certain level of interest rate.

The construction of this amendment is ambiguous. First, it is not clear from the wording whether the expression "this section" relates to section 6 of the Bill, the purpose of which is to reduce the existing percentage limitation on mortgage interest from 90 per cent to 80 per cent or whether it refers to section 6 of the Finance Act 1987 which provided for the 90 per cent restriction in the first place. It is assumed that the expression relates to the 1987 Act. Thus, the purpose of the amendment appears to be the complete removal of the percentage restrictions on relief for mortgage interest where the rate of interest is more than 10 per cent per annum. Second, it is not evident from the proposed amendment whether it is necessary for the 10 per cent rate to be in force for a full year or, what is more likely, for a part of the year to trigger the exemption from the proposed restriction. However, it is taken that the amendment envisages the latter interpretation.

The purpose of the additional restriction incorporated in the Bill is to withdraw a small amount of a very generous tax relief which, without the limitation, would cost the Exchequer £165 million in 1988-89. The additional restriction, which will yield £18.3 million in a full year and which was designed to have the heaviest impact on those who derive the greatest benefit from the relief, that is taxpayers in the 56 per cent bracket — incidentally the maximum cost to a 56 per cent rate taxpayer of implementation of this restriction will be £224 per annum or approximately £4.31 per week — must be seen in the context of the overall income tax package, which as I have said already, will cost over £200 million, as announced in the budget and now being given the effect under the provisions of this Bill. The proposals in the Finance Bill for changes in the rate band structure will result in 32,000 taxpayers, who would otherwise have been taxed at the 48 per cent rate, paying tax at 32 per cent, while a further 23,000 will move down from 58 per cent to 48 per cent and 144,000 will move down from 58 per cent to 56 per cent. The standard rate of income tax, which has remained unchanged at 35 per cent for more than 20 years, is being brought down to 32 per cent. As a consequence of these changes the marginal rate faced by over 600,000 taxpayers is being reduced.

Over the past year or so proponents of tax reform on the Opposition benches, elsewhere and outside commentators have hinted at or actively canvassed for an expansion of the tax base with the objective of securing a reduction in tax rates. Yet when rates are reduced, as I have just outlined, and a modest restriction is applied to a very generous relief in order to make some contribution to the cost of that process, the immediate response is seen in the terms of this amendment. The amendment would not only eliminate the small restriction imposed this year but also the restriction imposed in 1987 should interest rates rise above 10 per cent. Should interest rates rise above that figure the combined cost to the Exchequer could be at least £36.6 million in a full year.

Acceptance of the amendment could have severe operational consequences if individuals moved in and out of the restriction because of fluctuations in interest rates. Like Deputy Noonan, I would counsel those people now entering into very large borrowing commitments, because of the prevailing low level of interest rates, to be satisfied that they will be able to meet those commitments in future years if there are fluctuations in interest rates. This was precisely what happened to the farming community in the seventies when they got themselves into very deep trouble and found that, when interest rates moved upwards because of international movements, they were in serious difficulty.

In all the circumstances I must oppose this amendment.

(Limerick East): We have here an example of what Deputy McDowell referred to previously as some of the acerbic comment which frequently emanates from the briefing side when amendments are tabled.

I do not think it appropriate to lecture Opposition spokespersons on the quality of their drafting. We are not draftsmen, we are politicians. We have some expertise in the art of politics and some knowledge of finance but we are not draftsmen and do not purport to be such. Therefore, to be lectured on the quality of a draft I have always thought to be a bit offside and inappropriate.

Especially when the Minister has section 76 under his belt.

(Limerick East): It is far more appropriate for people on this side of the House to criticise the drafting ability of the professionals than for the professionals to seek to criticise the drafting ability of the amateurs. I always believed it was sufficient to state in clear prose the intent of an amendment. There has always been a tradition in this House that if an amendment finds favour with a Minister the Opposition do not press it, but rather withdraw it on the full understanding that the Minister, his officials and the draftsmen will bring in a form of words which is far more appropriate, effective and in accordance with the law to carry the intent of the amendment.

We have another option. We could camp in the Bills Office for days and nights until everything was absolutely in place. We could put that pressure on some of the staff of the House, as is our right, but we do not choose to do that. It seems to me that the intent is quite clear. It does not apply to the 1987 legislation. It applies to the section and is clearly an attempt to introduce a mechanism in circumstances where interest rates go over 10 per cent that the relief will go back up from 80 per cent to 90 per cent. That is what is in question here and I think that is clear. It is also clear that we are talking in terms of annual interest rates.

The mortgage interest relief, as I understand it, is given in the current year on the basis of mortgage interest paid in the previous year; it is a year in retrospect. It is not beyond the wit of the banking institutions and the building societies to certify that the average interest on a particular loan exceeded 10 per cent in the course of the years and that this can be produced as a certification to the Revenue Commissioners when they are applying the relief in the current year to the mortgage interest paid in the previous year. Again, I do not see any particular problem with it.

I appreciate that the relief in toto is now costing the Exchequer, in terms of tax foregone, £165 million a year. I also think that because of our system of allowances there is inequality in it, as in all allowances. The inequality in it is that if you are a taxpayer on a low marginal rate you are getting relief at the new lower rate of 32 per cent but if you are getting it at the higher rate it will be 56 per cent — that is an anomaly in the scheme. There must be some kind of mechanism which protects the taxpayer and the mortgage holder — that is the intent of the amendment.

I do not intend pressing the amendment. It was put up for the purpose of discussion. The Minister has replied and he has given me the figures involved at least but it is a topic I will be returning to again if interest rates go up in the autumn.

Amendment, by leave, withdrawn.

I move amendment No. 6:

In page 15, line 15, after "per cent.'." where it secondly occurs to insert the following:

"Provided that this section shall not have application in relation to taxpayers who in relation to their principal private residence have contracted with a local authority to make mortgage or other purchase payments calculated on a fixed interest basis, where such contracts were made prior to 1st January, 1987.".

This amendment is designed to deal with the circumstances of people who have entered into long term mortgages with local authorities and where the interest rates on their mortgage are fixed. A colleague of mine, Deputy P. O'Malley, brought to my attention the fact that those people are paying very heavy interest, at an almost penal rate, on their loans because the rates were fixed at a time long before the low interest rates which prevail at present. In that context I am not talking about the super-rich, because to obtain one of these loans a person must be of limited and modest means. I am talking about people who are paying interest at a rate well above the ordinary commercial rate despite the fact that they were supposed to be given preferential treatment and assistance in buying a house. I am talking about people who by any standard are the least able to finance their housing at an exorbitant rate and are most vulnerable to the amendment now tendered by the Minister to the regime, which is to reduce the amount of relief from 90 per cent to 80 per cent of the qualifying interest.

It seems to me the Minister likes to have his cake and eat it in this House. He comes in here and he criticises Opposition politicians, as he puts it, who in various documents propose widening the tax base and reducing mortgage interest relief, as I have done to a significant extent in the document which I prepared and which the Minister has, doubtless, scrutinised. He would be right in saying that the reductions proposed by me go much further than the reductions proposed in his amendment. I accept that but they are — and I have to ask him to bear this in mind — in the context of a proposal to reduce the standard rate of income tax to 25 per cent.

In the first amendment the Minister has refused yet again to spell out any global intent as to where he is bringing income tax or to say how this measure of reducing mortgage interest relief fits into an overall philosophy of taxation or a widening or contraction of the tax base. We are left entirely in the dark as to what his intentions are. By reducing this particular relief by another 10 per cent, the Minister is widening the tax base — I have to concede that — but he is doing so in circumstances where I do not know whether he is adding to the fairness of the tax base as he proposes.

I suggested, and I still believe it is the case, that there should be a tax credit rather than a tax allowance for mortgage interest. The Minister seems to imply he agrees with that at least as far as the remarks he has just made in relation to hitting people at the top rate of tax more severely than people at the lower rate of tax is concerned. If you ever reduce an allowance in the present state of affairs you cause more prejudice fiscally to those who are at the top rate of tax rather than those who are at a lower rate in terms of the value to them of the concession taken away. On the other hand, people on the lower rate need money a lot more than people at the top rate and, therefore, in terms of social justice it is not always something to be proud of. A person who is paying tax at the rate of 35 per cent — if he or she is single — is not a wealthy person by any manner or means. Although the actual amount of the relief may be less to them, the deprivation occasioned by curtailing the allowance may be all the more critical in their powerless financial circumstances than it would be to somebody for whom the mortgage interest relief is just a blessed relief from high marginal tax rates but who, on the other hand, has plenty of money in any event to take up the slack.

The Minister in a sense is the victim of his own rhetoric on this matter. Instead of saying: "I think now is the time to widen the tax base, to take more money from those who are availing of mortgage interest relief and I justify it because it is part of a programme of tax reform and because it is an allowance which benefits the rich more than the poor", he came in on the night of the budget, or perhaps on Second Stage or perhaps on both occasions, and announced that declining interest rates were one of the things he had chiefly in mind when he decided to reduce the qualifying interest allowance from 90 per cent to 80 per cent.

There are some people for whom that is a relevant consideration and there are some people for whom declining interest rates cushion the effect of the Minister's curtailment of the allowance. However, there are other people — those on fixed rates of interest — for whom it is entirely irrevelant and who have been paying over the odds for the finances they have obtained from local authorities for the last number of years, who have been paying far in excess of what the richer and more well-to-do people have been paying for their money in recent times and who find themselves now in the situation that they are paying over the odds in terms of interest and are getting less in terms of relief. I know it will be hard to justify what I am proposing in the context of a generalised tax reform document, but in the context of the present circumstance and the reasons given by the Minister for his changing the tax rate it seems that as a group they have been singled out for the worst treatment.

I am talking about people who have limited resources and because of the limitation on their resources obtained assistance for the purchase of their house from a local authority. I am talking about people who, because of the decline in interest rates, have found themselves marooned by fixed interest contracts above the commercial rate, people who by definition cannot afford these sums of money. I am talking about people for whom every last half ha'penny taken back by the Minister in the form of curtailment of this relief means something. I am talking about small income families, perhaps large in number. I am talking about people who find themselves now being lectured by the Minister through the forum of this House that he is giving them tax relief but find that on little things, such as this, what was apparently tax relief has been clawed back in different ways. In social justice there is a case to be made for making a special arrangement for people whose interest rates are above the commercial rate and whose means are inadequate and for giving them preferential treatment in regard to mortgage interest relief. They are a group whom the State, through the local authorities, have already sought to assist, so, by definition, they are reasonably worthy causes.

As far as the practicality of my suggestion is concerned, there should be no problem. All one would have to do is state that anybody who is on a fixed interest mortgage entered into before 1 January 1987 and who by definition is paying over the odds at the moment would get 90 per cent rather than 80 per cent remission. That should not be beyond the capacity of the Revenue Commissioners to calculate. It would be a fair qualification of the general movement which, I concede, is part of what anybody would rationally suggest to be a fair movement in tax reform, that is, to widen the tax base. This is fair temporary exception to make in the interests of social justice.

I shall resist the temptation of saying anything about the drafting of this amendment because I would expect the gentleman concerned to have a little more expertise.

Deputy McDowell misses some of the factors in taking into account the question of people who are on fixed rate mortgages. I shall try to put the whole situation in context for the Deputy. First, I do not accept the principle in the case made here that special treatment in respect of tax relief for mortgage interest rates paid should be provided for persons who pay interest on their home loans at a fixed rate. The general position at present is that loan interest qualifies for tax relief if the loan has been used for the purchase, repair, development or improvement of the borrower's principal private residence. The relief in recent years allowed a deduction from taxable income of 90 per cent, reduced by the present section to 80 per cent from 6 April 1989, of qualifying interest payments within ceilings of £2,000 for a single person, £2,900 for a widowed person and £4,000 for a married couple. Since the relief is granted by reference to the interest paid in each tax year, the person servicing a qualifying fixed rate loan already enjoys a greater measure of tax relief, subject to the overall ceilings and eligible interest, than the one who has borrowed a similar capital sum but has lower interest payments.

Many fixed rate loans were negotiated at lower interest rates than those payable on various rate loans at the time. However, there was no special tax treatment for variable rate borrowers. It must also be remembered that a borrower who negotiates a mortgage with a bank or a building society can pay off the sum outstanding on his fixed rate loan and many local authority fixed rate borrowers have done that. I might also mention that up to the time that mortgage subsidy was available it was another contribution by the State to this area. If one looks back over 15 years or more, the vast bulk of the fixed rate loans was provided by local authorities under the SDA scheme as it operated up to 1 December 1987. Participants in the local authority tenant purchase schemes pay at fixed rates in line with SDA rates, but these schemes were heavily subsidised by the State, even before the revamped scheme was introduced last year. For example, the old scheme offered a £2,000 reduction on a purchase valuation set at as little as 70 per cent of the market value and gave an exemption from stamp duty. The newer scheme is set as low as 40 per cent, so there were many benefits flowing to the fixed rate borrowers, the vast bulk of whom have fixed rate mortgage loans. Many other subsidies and reliefs passed on to these people who would have to be taken into account in trying to make comparisions.

Bearing these points in mind and given that the tax forgone under the existing scheme of relief would cost the Exchequer some £146.4 million in the 1989-90 tax year, I could not agree to alter the mortgage interest relief scheme for the special benefit of taxpayers on fixed rate loans for the very good reasons I have given. I do not think anybody should complain very bitterly about the £11 million contribution in 1989 made from this area into a total taxation package of over £200 million. As I said, this does not apply to Deputy McDowell as much as it applies to the Fine Gael Members. When you go to enlarge the tax base, as the Fine Gael Party keep on preaching, the very minute you do something like this in comes an amendment, such as the previous amendment, trying to change it.

For the reasons I have just given, and taking into consideration all the various other subsidies from Government in relation to fixed rate borrowers and the question of the discount rate at which they could buy their houses, always having the option of going into a bank or building society and taking those houses off fixed rate interest, on balance I cannot accept this amendment.

Briefly in reply, whereas I appreciate that those who purchased local authority dwellings did receive a number of hidden subsidies, there are others who got local authority assistance but did not receive such subsidies and used their loan to buy property on the open market, so to speak. I accept that my amendment may be too widely cast, but it was towards these people that I was addressing my concern, which is that they find themselves now paying over the odds. The cost of refinancing through a building society for many of these is prohibitive. Their employment circumstances are such that building societies will not offer them finance and their continuity of income and their resources are not sufficient to justify such a move. They are prisoners of their present loans. I accept that they took on a risk when they took on those loans, but the vast majority of them were never given any intimation at that time that it was Government policy to reduce qualifying mortgage interest relief and they assumed this would not happen. They are now in a position that they are paying well above the odds, over the commercial rate, they are the people in the worst position to be paying over the odds to start with, and they will find themselves further prejudiced by the withdrawal of another 10 per cent of the allowance given to them. They, again, are people who in the main would not be paying tax at the rate of 58 per cent because normally they are married couples whose incomes would not be anything like sufficient to bring them into that area. In these circumstances there is merit in my amendment and I regret that the Minister will not accept it. I regret that in the circumstances this group of people will suffer unduly and without any of the mitigating compensation of reduced interest rates which the Minister relied on firmly as one of his chief reasons for reducing the rate from 90 to 80 per cent. This was irrelevant to that group of people and they now find themselves doubly penalised. It is regrettable that the Minister will not accept my amendment.

That rate has been there since 1976.

Amendment, by leave, withdrawn.

We come to amendment No. 7 in the name of Deputy Noonan, Limerick East. I observe that amendment No. 8 in the name of the same Deputy is consequential. I suggest, therefore, that we discuss amendments Nos. 7 and 8 together.

(Limerick East): I move amendment No. 7:

In page 16, line 10, to delete "£2,500,000" and substitute "£5,000,000".

This, again, is an amendment which I put down on Committee Stage and which I withdrew to allow the Minister time to consider the situation. I am in general agreement with the restriction on the business expansion scheme introduced by the Minister in section 8. However, the limit of £2.5 million of capitalisation in any relevant company is too low. There are investments which are very appropriate to the business expansion scheme but which would involve an investment of greater than £2.5 million. This is particularly so in circumstances in which an initial investment is made and, two or three years after, the venture has been successful and the company wish to expand. There should be the possibility of going back to the business expansion scheme for phase 2 or phase 3 of a particular development.

I recall that the Minister gave up figures, that the average business expansion scheme involves an investment of about £0.5 million. He also pointed out that not all the investment required need necessarily come from the business expansion scheme. The BES scheme was intended to be only an element of the capitalisation. I still think that on its merits the level of £2.5 million is too low and £5 million or something in that area might be more appropriate.

The Minister, for example, in section 8 (a) has introduced a restriction specifying the circumstances in which BES money could be used for the purchase of a ship. It was the intent that the BES could be used for shipping. The Minister's amendment provides it would be used "by the company for the purpose of purchasing a ship for use by it in the course of a qualifying shipping trade carried on by it." Then there are certain circumstances where effectively it must be an "addition to the shipping fleet registered in the State under Part II of the Merchantile Marine Act, 1955". For the purchasing of ships £2.5 million would not go far if we are talking in terms of additional vessels to the fleet.

Another area where the Minister is, rightly, restricting the nature of the scheme is the operation of tourist accommodation facilities such as hotels and so on. He is talking about self-catering accommodation and he eliminates the county boroughs and all of County Dublin. Let us take the kind of scheme that has been in operation. It usually involves the construction of, say, ten holiday homes. They are usually of high quality, probably about £50,000 each by the time the site is included, the structure is put up, the central heating installed and so on. At £0.5 million we are talking about a scheme of ten holiday homes in the west. A company who would be involved in providing self-catering accommodation in a number of locations on the west coast would be limited here to approximately 50, five groups of ten. Perhaps that is the limit. Perhaps that is the intention, but when you break it down and try to match the level of investment against the limit being put on the fund, this is quite moderate. If we extend it to, say, hotel accommodation — which would be within the terms of the BES scheme in all parts of the country because the county borough restriction applies to self-catering accommodation — there are people who have tentative plans for purchasing provincial hotels and refurbishing them or constucting hotels in different parts of the country and, again, it seems a limit of £2.5 million is very low to put on a scheme such as this. I believe some of the Minister's colleagues would be of similar view.

Trading houses are a new concept introduced by this Government in the 1987 Finance Act. The operation of the trading house was deemed to be, in accordance with the Act, a manufacturing activity and subject to the 10 per cent tax regime. I do not know what level of activity was engendered. The Minister issued a number of licences to allow people to establish trading houses and the tax benefit would apply. When it comes to the funding of trading houses, in the nature of the business where effectively trading houses are wholesaling Irish goods and are the private marketing agencies to improve the export drive to sell Irish quality goods or Irish goods of all kinds abroad, a ceiling of £2.5 million seems quite low. I am not saying that £5 million is the appropriate ceiling, but I ask the Minister to raise the ceiling, or even make it a two part thing and provide that in the first issue a ceiling of £2.5 million will apply but allow for the possibility of a second tranche of BES money perhaps at £1.5 million or £2 million subsequently for the expansion of the same business.

I respect and appreciate what the Minister is doing here. There were BES schemes which were announced between 1 January and the end of the tax year which were outside the original intent of the scheme, to put it at its mildest. I agree with the scope and nature of the restriction the Minister has introduced, but this capital sum is a ceiling put on the total investment from BES funds which will be eligible to any company. I think it is too low. In the absence at least of indexation it is going to go out of date very quickly and four or five years down the line we will be going back to section 8 of the Finance Act, 1989 and saying the limit there has made the BES scheme an irrelevancy. I appeal to the Minister to take on board the points I am making and to raise the ceiling somewhat.

As I indicated on Committee Stage, the original purpose of the BES was to assist smaller developing companies in raising equity capital, thus reducing their dependence on loan financing. The £2.5 million limit on BES investment should now help to redirect investment funds towards such companies and away from large asset-rich projects where it was heading. In practice, this limit should be — and based on experience to date is — ample for the vast bulk of BES companies. An analysis of the scheme up to 30 October 1988 showed that only 12 out of the total of 300 companies raised amounts of over £0.5 million under the scheme. The £2.5 million limit does not, of course, prevent companies raising non-BES capital above that limit. In addition, there is nothing to stop a company coming together in partnership, or in a joint venture, with other companies with a view to undertaking projects which would require larger funding. In that case, the limit on BES investment will be £2.5 million per participating company. I hope that makes it abundantly clear to the House that we are not talking really about a limit of £2.5 million in the business arena. For every participating company it is £2.5 million, so for four participating companies, for instance, the limit can be £10 million.

Questions were raised by Deputy Noonan in relation to trading houses. The information available to me as at 5 April 1989 on the relief for investment in the different trades shows two trading houses with an average investment under BES of £490,000. It is quite clear that what we are talking about in relation to trading houses so far is quite ample for them and I have no representations to the contrary in relation to trading houses.

I have received certain complaints — and Deputy Noonan has raised them here today — about the likely impact on shipping companies of the £2.5 million overall limit on BES investment. It has been argued that shipping is very capital intensive, that ship prices are rising, that the restriction of BES eligibility to ships eligible for a grant which must be not more than seven years old, means Irish companies must purchase at the higher end of the market, that individual ships of suitable tonnage can cost up to £6 million and that imposition of the limit will result in a multiplicity of small companies, whereas shipping companies must operate on the basis of owning a fleet of ships rather than one or two. Most of the representations made to me requested abolition of the limit as far as shipping companies are concerned though some suggested that for shipping companies the £2.5 million limit should be an annual one.

There are, however, valid reasons for adhering to an overall £2.5 million limit for shipping companies. Shipping is asset-rich and represents a very secure investment by comparison with BES investments generally; if the company fails the ship can be sold. In addition, employment content is very low relative to the capital employed and much of the capital raised under the BES would be likely to be exported to buy ships in the first place.

Shipping enjoys the 10 per cent corporation tax rate and, between this and capital allowances, shipping companies are unlikely to pay much tax on their profits. Allowing shipping companies raise funds above the £2.5 million limit could lead to them "scooping the pool" of BES funds and, thus, divert funds from riskier and more labour-intensive sectors. The size of some proposals in the shipping area demonstrates the wide scope for tax loss and the necessity of, and strong justification for, the overall £2.5 million limit per company.

It has to be borne in mind that the BES should only be part of the financing of any business. The original purpose of the scheme was to assist high risk projects getting off the ground where traditional lending would not be available to them. In recent times we have seen asset-rich companies coming in, aided and abetted by financial institutions. Traditional lending should have been the order of the day but was being replaced by BES finance which, in turn, put a burden of funding on the taxpayers. That was never the intention of the BES scheme and the House will agree that we should get back to the original objective. There is not a limitless amount of money around to be taken under the BES scheme. It puts taxation on the back of the ordinary taxpayer.

People should remember that the scheme was established in the first place to help raise equity capital for companies in high risk sectors which otherwise would have found fundraising very difficult. It was never intended as a limitless resource of equity capital either for successful companies whose difficulties should be over or for lame duck companies. Companies are not prevented from getting funds elsewhere. There is justification for this limit on Exchequer funding in this regard. I am quite prepared to look at it again in the context of the 1990 budget in the light of experience throughout the year. I am satisfied that in all the circumstances, the limit is justifiable in that participating companies can have £2.5 million each.

Deputy Noonan raised a question about self-catering holiday accommodation. Any BES application can have 25 per cent of its income from non-qualifying activities; it does not all have to be specific. In heavy urban areas such as Dublin, Limerick and Cork, any application can be included in the BES scheme if it has 25 per cent of the activitity in that area. I am rejecting the amendment on the basis of the reasons put forward.

(Limerick East): I thank the Minister for his reply. I am glad of the clarification regarding accommodation within urban areas. I understand the Minister is saying that the BES could apply to the non-self-catering element of a scheme which would involve a development where less than 25 per cent would be self-catering. Is the Minister saying that the BES scheme could apply to the other 75 per cent?

The BES scheme already allows a company to obtain up to 25 per cent of its income from non-qualifying activities. In other words, a resort company may obtain up to 25 per cent of its income from non-qualifying activities, including self-catering accommodation in urban areas, provided the other conditions of the BES are met. Investment by individuals can qualify for relief under the scheme.

(Limerick East): That is a helpful clarification. I am still not convinced by the Minister's arguments in relation to my amendment and I am glad that he will look at it again in the context of the 1990 budget. I am not withdrawing the amendment.

Question: "That the figure proposed to be deleted stand" put and declared carried.
Amendment declared lost.
Amendment Nos. 8 and 9 not moved.

I move amendment No. 10:

In page 36, to delete lines 32 to 35, and substitute "State."

This amendment was designed to draw the Minister out further on the point that Deputy Noonan and I were asking about in relation to the IDA's role in designating companies which go down from 43 per cent to 10 per cent corporation profits tax. I have said everything I wanted to say about that already and I will not exhaust myself or the House by repeating it. Post-conference laryngitis is striking. Why has the Minister not put down any amendments to this effect?

As promised to Deputy Noonan on Committee Stage of the Bill, I have considered the points made by both himself and Deputy McDowell, and which give rise to this amendment, regarding the confining of the 10 per cent scheme of corporation tax to computer services which have received an employment grant from the IDA.

At the outset I would like to emphasise that apart from a limited extension to cover consultancy and technical computer services, the provisions in this year's Bill are merely a restatement of the provisions, including the IDA requirement, which have been the law since 1984. The intention in 1984 was to confine the extension of the 10 per cent scheme to internationally-oriented computer services.

In the drafting of the provision, difficulties arose in describing exactly the scope of the relief in terms of targeted business. It was not possible, for example, to refer in the legislation to "exported" services or there would have been EC objections to export aids such as led to the ending of export sales relief. Having considered the matter very carefully the then Government decided that the only reasonable course was to tie entitlement to the 10 per cent scheme to the receipt of an IDA employment grant under that body's international services programme. Criteria for eligibility under that programme included the requirement that the service had to be export-oriented or a substitute for imported services. This got over the difficulty of possible EC objections and it also ensured that unintended recipients such as banks and insurance companies could not manipulate entitlement to the relief.

Having considered the matter further, I have come to the conclusion that, bearing in mind the intent of the provision, there is no acceptable alternative to that adopted by the previous Government.

Acceptance of the amendment would remove the mechanism whereby the relief, in accordance with the policy of this Government as well as the previous Administration, is targeted to export-oriented services only. It would throw it wide open, possibly at a very considerable cost to the a Exchequer, to all computer services including, as mentioned by Deputy Noonan on Committee Stage, such services operated by banks and insurance companies. For these reasons I cannot accept the amendment. I hope I have clarified the purpose of the original drafting.

I accept that the Minister would have a drafting difficulty in particularising the relief to export business. I would say by way of rejoinder to the Minister that if somebody feels aggrieved by the failure to extend this rate of corporation tax to his or her business, it would be open to him or her to commence an action based on the fact that this is really an export relief and there could be an attempt in some way to get the provision struck down as invalid at a European level or whatever. Whereas I can see the Minister's practical difficulty, it is most unsatisfactory that we delegate to a body such as the IDA the function of determining who gets tax relief and who does not. I reiterate all my objections and stand by them.

Amendment, by leave, withdrawn.

I move amendment No. 11:

11. In page 48, between lines 19 and 20, to insert the following:

"(3) The increase in duty of excise provided for in subsection (1) of this section shall cease to have effect as and from 1st June, 1989.".

We are now coming to the mobility section of the Finance Bill. I noticed that on the last occasion the Minister kept saying that he agreed with my formulation that he was not a clairvoyant, had no crystal ball and could not work out what was to happen in relation to petrol prices and therefore expected the House to sympathise with him and agreed that what had happened was an unforeseen circumstance.

I was wondering why he kept emphasising that until I looked at the section of the Bill he was defending at the time which was to put in statutory form something which had effect from budget night. He was making the point that at that stage, from 26 January onwards, the extra excise duty was imposed by this somewhat doubtful procedure, by a resolution of this House and that it had to be confirmed by statute subsequently if it was to have effect. It would still continue to have effect even if we rejected the amendment here; I do not think we would actually lose money. What I proposed therefore, to get around the difficulty of the Minister's absence of foresight on the occasion by asking him to apply a bit of retrospection and now, with the benefit of experience, to take a look at the situation and realise that perhaps it was an error and that even if it was an innocent error, and even if Deputy Noonan's suggestion that the Minister should have known that there was an increase coming is correct, was to allow the Minister gracefully off the hook by saying that, in the interests of lowering petrol prices, he could surrender this benefit to the Exchequer as and from 1 June, 1989 having had the benefit from 26 January until then.

I thought that this would allow the Minister a dignified exit from the position he found himself in due to lack of foresight. I thought that in the circumstances the Minister would have explained to the House, if it did lapse on 1 June, how much money he would stand to lose, bearing in mind that he had had the benefit of it from 26 January to 31 May, and bearing in mind that petrol prices will be going up for other reasons. How much money would actually be lost to the Exchequer if he were to start from June by giving away that which he so fortunately and unnecessarily took on 1 January?

This amendment has the same effect as an amendment put down on Committee Stage opposing the increase in petrol duly provided for in section 39 and would, if accepted, cost the Exchequer £5 million in 1989, £10.5 million in the full year. At the time of imposition, the duty increase announced in the budget was designed to leave prices unaltered, taking up the slack resulting from a price fall. While the price of petrol has risen in the meantime to 12p a gallon approximately, the retail price of a gallon of petrol is £2.84, still lower than during the period 1984 to 1986 when the price ranged from £2.88 to £2.99. As I said then and on two previous occasions here, all the indications from the oil industry internationally are that in the second half of this year we will see oil prices coming back down again.

Petrol consumption has been declining in recent years mainly due to a switch to diesel cars. While petrol consumption fell by 0.12 million hectolitres between 1985 and 1988, auto diesel consumption increased by 1.2 hectolitres. Because of more fuel efficient cars the cost per mile of motoring has been decreasing notwithstanding duty increases. While the duty increase may be said to provide a greater incentive to smuggle petrol from Northern Ireland, an interest very strongly represented by Deputy McGahon on Committee Stage, the fact remains that the price difference between the gallon of petrol in the State and that in Northern Ireland has gone down since last year from 58p to 51p due to exchange rate movements. Also a number of measures have been adopted to deal with hydro-carbon oil smuggling. These include the licensing of petrol retailers' and distributors' premises in this Bill, giving more control to the Customs over such premises. Also, by regulations to be introduced very shortly a new marker dye will be prescribed for marked gas oil for use in the State making it easier for customs to detect smuggled supplies of such oil from Northern Ireland which will then be identifiable by colour or by simple test. In the meantime, the Customs are aware of the need for vigilance in the area of hydro-carbon oil smuggling. I will remain silent for the moment on new ideas in relation to tackling the petrol problem as well. I do not want to give the smugglers any advance notice of what I might have in mind to try to attack the petrol smuggling problem.

That relates to diesel only.

The present marker dye relates to diesel. There are certain difficulties in relation to petrol colourisation.

But the Minister is working on it?

I am working on it. If I get a bit of assistance from elsewhere I think I have a solution. It is not in my own hands. I need some help from elsewhere.

As the Deputy knows, the multi-regulations that could be used are no longer available to the Minister for Finance.

The Minister now thinks that the Imposition of Duties Act, 1957 is no longer available to him owing to a High Court decision.

It was struck down by the High Court.

I may be talking about something different from what the Minister is referring to.

I am glad that the Minister admits that perhaps he might not have made the decision he did if he had known what was going to happen to petrol prices. At least that is something. We are, however, in the position where an extra £5 million will be imposed on petrol costs between now and the end of the year as a result of this decision. This is now certainly seen as a step in the wrong direction whatever people thought on the night of the budget. When one looks at the state of the tourist industry, at the Irish cost of car hire, the things that foreign tourists face when they come to Ireland, one of the chief discouraging factors must certainly be the cost of transport here, and that is only in relation to tourism. There are so many costs for Irish industry arising out of the petrol price increase that I also believe there is good reason to say that this increase goes in the wrong direction.

The Minister should have surrendered in as dignified a manner as possible the unfortunate increase which he imposed on petrol. In the context of what he has recently announced to the House on a different section as the strong flow of revenues and strong budgetary position almost half way through the year, he would have been wise to surrender this matter.

(Limerick East): Higher inflation means a stronger flow.

Deputy Noonan makes a point the cynical might make and that I would never have thought of, that is, that if the Minister can boost inflation he will do even better out of taxation. That would occur to a cynical brain like that of Deputy Noonan but I, in whose mouth butter would never melt, would never accuse the Minister of such thoughts. I would ask the Chair to put the Motion.

Amendment put and declared lost.

The next amendment is amendment No. 12 in the names of Deputies Doyle and Noonan.

I would just ask Deputy Doyle to be reasonably speedy with this amendment before Deputy McCreevy comes into the House to lengthen the debate for many hours.

He has a good substitute in Deputy McGahon over there.

I thank the Minister, I will leave a brandy for him.

I move amendment No. 12:

In page 48, between lines 19 and 20, to insert the following:

40.—The duty on bets imposed by section 24 of the Finance Act, 1926, shall (subject and without prejudice to the provisions of section 20 of the Finance Act, 1931) be charged, levied and paid on bets entered into on or after the first day of January, 1990, at the rate of 7.5 per cent. of the amount of the bet in lieu of the rate of 10 per cent. mentioned in section 31 of the Finance Act, 1985.

I would ask the Minister to reconsider his Committee Stage response to this amendment. What Deputy Noonan and I are proposing is a reduction in off-course betting tax from 10 per cent to 7½ per cent. That is what the amendment deals with. As we explained on the previous occasion, I have resisted the temptation to put down a second amendment proposing a 1 per cent levy to be charged on off-course bookmakers because it would have been ruled out of order by the Ceann Comhairle and if that happened I would not be able to speak on it or explain what I have in mind.

Amendment No. 12 is but the first stage in a three-step process that would be necessary to ensure ultimately that a 1 per cent levy was charged on off-course bookmakers, to be directed to the Irish Racing Board through a subhead in the Agriculture Estimate. I find it hard to believe that the Minister and indeed some of his Cabinet colleagues, particularly the leader of the Government, the Taoiseach, Deputy Charles Haughey, would not support this amendment today. Some serious questions will have to be asked if we cannot get agreement on this. I am prepared to have the wording in the amendment corrected if the Minister feels there is a better way of phrasing it. Effectively what we want to do this afternoon is to ensure that a minimum of about £2 million per annum goes to the Irish Racing Board. Having guaranteed that there will be no Exchequer loss, I am quite happy to accept that the first £22 million of Exchequer receipts from off-course betting would still go directly to the Exchequer and we could cream off the money over and above that to go directly to the racing board.

What I am proposing is that we ensure a future for not only our racing industry but also the bloodstock industry. The Irish racing industry is a developing industry which needs finance to develop to its full potential. It needs action from us, the legislators, to preserve valuable employment and it needs investment to secure the long-term future of the Irish bloodstock industry, an industry which has the potential to contribute significantly to our economy in the years to come. I do not need to remind the Minister that in the agricultural arena generally, most areas of primary production are now controlled by production quotas. This is an area of alternative enterprise for farmers as well as farmer breeders throughout the country. I would urge the Minister to ensure that support is given to the racing industry and to ensure a healthy future for our bloodstock industry.

Many arguments have been made in relation to what I am saying, one of which is that it would be too complicated a collection method or that it would be very difficult to collect a 1 per cent levy plus a 7½ per cent off-course betting tax. It could be collected as 8½ per cent if that would rationalise proceedings. If the Minister has the will, there is a way for doing what we are proposing.

I would also point out to the Minister — he may not be aware of it — that a report which has been drawn up by the Irish Racing Board on acceptable minimum standards for our Irish race courses has gone to the printers. I do not know what is in that report as it has not yet been circulated but it deals with all aspects of the racing industry and race courses — safety, food and drink facilities and, I am sure, attention is given to the stakes. The 1 per cent levy on off-course bookmakers, which I am proposing should go straight to the Irish Racing Board, would be used for investment in the facilities in Irish race courses throughout the country and indeed for increased stakes, particularly the stakes for national hunt racing but we will not get down to the business of spending money which we have not yet agreed to raise.

Joint sovereignty deserves it.

That is a matter for another day.

Hopefully another day.

I am asking the Minister to consider what I am putting to him. He may phrase the amendment differently or have a different view as to how we can reach the same goal but I would put it to him that this opportunity cannot be lost today to achieve what members in all parties in this House feel should be done. In 1985 Deputy Alan Dukes, as Minister for Finance, took the first step. I presume the Minister remembers all I said on the last occasion because apparently he does not have to listen to me at all today. We were talking about clairvoyance and retrospection so he probably has it all in his mind anyway.

I can listen with one ear and talk at the same time.

He is a very intelligent man.

I hope the Minister is already convinced that I am wasting my time repeating this and, if so, I do not mind that he is not listening to what I am saying but if he is not accepting what I am saying I will be very irate at the fact that he has not listened to the case I have made, as will the Irish punters, the Irish racing industry, the bloodstock breeders and the thousands who are employed not only in racing but also in bloodstock breeding.

As I was saying, in 1985 Deputy Alan Dukes as Minister for Finance reduced off-course betting tax from 20 per cent to 10 per cent. At the risk of raising the hair again on the heads of the civil servants in the Department of Finance, I repeat that has proved to be a self-financing tax cut. It took a few years but the take for the Exchequer in off-course betting tax is now back to £22 million. I will debate it with the Minister any time.

And I will debate it with the Deputy any time. The figures speak for themselves.

I know the whole idea of self-financing tax cuts does not go down too easily and it sticks in the craw. All of us from time to time use that phrase too lightly but I am not using it too lightly today. In 1985 when the rate was reduced from 20 per cent to 10 per cent, legitimate — and I stress the word "legitimate"— betting turnover more than doubled in the space of four years. A further reduction from 10 per cent to 7½ per cent, with the imposition of a 1 per cent levy — a net reduction to 8½ per cent — would again reduce the evasion in off-course betting tax and again in a year or two we would be back to the Exchequer take we now have. With an 8½ per cent rate, or 7½ per cent depending on how it would be collected, our rate of off-course betting tax would be some points below the English rate and we would attract a considerable amount of off-course betting revenue from English punters visiting this country.

I reminded the Minister last week on Committee Stage that there would be enormous possibilities for the Financial Services Centre in relation to this matter if we get our rates right and attract overseas punters and their money. In addition, even if a punter decided to continue to devote the same amount to betting, turnover would increase because the punter would have more money left after each betting round to reinvest in later rounds of betting. Economic calculations show that, if one assumes an 85 per cent pay-out ratio, then with a reduction in the rate of tax from 10 per cent to 7½ per cent, a reduction of 25 per cent, tax revenue would fall by 16.75 per cent, while total betting turnover would rise by 11 per cent.

The Minister probably realises that the betting market in Ireland is experiencing a strong growth turnover at present — and this is expected to continue — which would give rise to further increases in betting tax receipts. The average rate of increase of betting turnover in Ireland in the past five years has been approximately 19.6 per cent per annum. This was influenced, as the Minister knows, by the positive effect of the change in the betting tax rates from 20 per cent to 10 per cent by Deputy Alan Dukes in the budget of February 1985. Normal increases in 1987 and 1988 ran at about 6.4 per cent for 1987 and 12.9 per cent for 1988. This reflects the more available cash and better economic situation that exists now. I would ask the Minister to seriously consider what I am saying. I do not have to give detailed figures in relation to the importance of employment. The Minister should know them and he should know the value to our economy of the bloodstock and racing industries and the importance of an alternative agricultural enterprise for our farmer breeders who are controlled in relation to primary agricultural production by production controls in Brussels. The Minister and some of his colleagues who are familiar with the racing scene must appreciate what I am saying as being the only way forward to ensure the future of the racing industry and of the bloodstock industry. I urge the Minister, after reflection over the weekend, to accept this amendment. It will be a lost opportunity if he fails to do so. The amendment which is supported by Fine Gael will have the support also of some of the Deputies on the Government side.

In supporting Deputy Doyle's amendment I note that her particular interest is possibly from a bloodstock angle. I want to give a bird's eye view from street level, the level of the unfortunate and hapless punter. I know that the Minister is sympathetic. I know that he has a deep and abiding interest in the turf. He usually graces the many racetracks with his presence, and, hopefully, in the near future will grace the winners' enslosure, along with myself and Deputy McCreevy.

(Interruptions.)

I think the Minister has put more horses into cans, than anywhere else.

(Interruptions.)

What a crime. I know the Minister is sympathetic, a man who understands the racing scene and although he may not say so tonight I am sure he accepts all the arguments put forward last week and now by Deputy Doyle.

The Minister will recognise that the racing industry is a very viable and worthwhile industry. It is an industry in which we are among the leaders in the world and that cannot be said for many industries associated with this country.

The Irish horse is known and appreciated all over the world. There is no doubt that in recent years the Irish racing industry has hit on very lean times. For proof of this, one has only to look at the dearth of success, the dearth of winners at Royal Ascot and more particularly at Cheltenham in recent years. In previous years Irish trainers were to the fore at the premier meetings, at Ascot, Epsom and Cheltenham. Sadly that has dropped almost completely away and the last classic success we had was with El Grand Senor in 1984. Part of the problem with the racing industry is that the prize money is derisory and that when a successful or promising young horse comes here he is immediately sold to England or France for a very large sum. That is understandable given the dearth of prize money available here.

That state of affairs leads on to another undesirable situation relating to whether Irish racing is clean. Indeed a very big question mark can be placed over our racing industry. I said last week that the form is so confused with horses choked for maybe a year or two, that the Holy Ghost would have difficulty in deciding what horse would win. The unfortunate punter in the bookmaker's office has resigned himself to the unpredictability of Irish racing and, consequently, does not bet on Irish racing. That is a matter of some concern. We have to concern ourselves with the viability of Irish racing and with the question of maintaining its level. While the man in the street has more confidence in English racing because it is cleaner, than he has in Irish racing, in some ways he resents making a contribution to it. We must look at racing as a worthwhile industry which has to be encouraged and preserved. That is why, although I prefer English racing, I have no difficulty in supporting the Fine Gael amendment. Deputy Doyle has a particular knowledge of the bloodstock and racing industry as she is a prominent breeder.

I commend the Minister for his initiative, announced today, in dealing with a problem that has been causing great concern among Irish bookmakers, that is the growing presence of English bookmaking giants who have been quietly coming in here over the last few years buying out small independent Irish bookmaking firms. They have been using a very subtle ploy to squeeze the Irish bookmaker out of existence. That is not good. It is not good to have an English presence here, because they can manipulate the market and will have no compunction about doing so. While they have been within the law, they amount to unfair competition and the smaller Irish bookmaker has been unable to compete. I congratulate the Minister for recognising that and taking steps to deal with it.

I would like the Minister to look at the 1931 betting law which is crying out for amendment, to upgrade it and initiate some type of charter for punters. That could be worked out with a national bookmakers' association. At the moment there is absolute chaos in betting, with one bookie paying "first past the post" while another across the street pays on the official result and another, 20 paces away, pays on both. It is crazy. There must be some regularity among book-makers. Also, varying limits are offered by bookmakers and there have been many cases of bookmakers refusing to pay out and when confronted with the occasional win imposing their own limitations.

Will Deputy McGahon accept that his little bird has left the ground and is flying over rather extensive fields at the moment?

So long as you do not describe my horse as being winged, I do not mind.

We are reducing to the vernacular now, a Leas-Cheann Comhairle.

While this might not be in the section it is something that has worried me for a long time and it is not totally removed from the section. I am asking for a fairer deal for the punters and for the 1931 betting Act to be amended and brought into the eighties.

I know the Deputy would wish to come under starter's orders.

That is a very appropriate sermon. Thank you very much. I would ask the Minister to accept our amendment and to continue to do what he can for the racing industry and for the punter.

I know Deputy McGahon would like to think that the bloodstock that he owns would become fliers. I am not sure whether they are in that category yet as I heard they were learning how to swim, and I did not know that race horses need swimming pools in order to train. I thought the Deputy was training them for racing rather than training them to swim. The Deputy referred to a charter for punters. Having published a charter for taxpayers in recent times, we can now start looking at a charter for punters. However I am not sure that I would agree with all the things the Deputy has said about the bookies paying out in different situations — first past the post etc. We are in the 1992 framework, and competition is what it is all about. I would not like to remove any element of competition from the bookmakers and the punter is far better off when there is an element of competition between bookmakers rather than their having a cartel arrangement.

However, I undertake to look at the 1931 Betting Act, but our objectives may be different from those of the Deputy. Because I know a little about the racing and bloodstock industry, I do not consider that the acceptance of this amendment is the answer to all their problems. Throwing money at the Irish Racing Board will not bring more punters to race meetings and this is a problem that they will have to address. The problem with prize money is certainly part and parcel of what we are talking about. Other aspects of the problem were referred to by Deputies today and during recent debates by Deputy McCreevy. They are not problems that I can solve or that can be solved by throwing money at them. The Irish Racing Board have problems to sort out.

Deputy Avril Doyle made a very eloquent presentation on behalf of the bloodstock industry, but at no stage did she mention the show jumpers and the big contribution they make to the industry. They are part and parcel of the bloodstock industry and they have their own problems.

Unfortunately, books are not kept on show jumping. In the context of this amendment to the Finance Bill, I thought I would be ruled out of order for extending my contribution on the amendment.

When we talk in general terms about the horse and what the horse industry means to Ireland, I fully appreciate that 24,000 people are employed in the industry and I recognise that it is not the Irish Racing Board that should only be looked after but that the whole industry should be looked after and for that reason I am not prepared to accept this amendment at this stage.

I want to put a few facts on the table relating to the amendment. First, I fully supported Deputy Dukes's reduction of tax from 20 per cent to 10 per cent when he was Minister for Finance. However, let us look at what happened as a result of this, and it is not exactly as was presented here today. The turnover did not double as Deputy Doyle seems to assert. The turnover in 1985 was £150 million and in 1988 it was £224 million, an increase of approximately 50 per cent. To say that the Exchequer lost no money as a result of this reduction is not accurate or correct because the excise receipts return in 1985, the year of the change, was £16 million approximately, while in the previous year it was £20.5 million. The Exchequer was £4 million down in the third year, £2 million down in the second year, £1 million down in the third year, making a total shortfall of £7 million. In 1988 the figure was £2 million up on what it was in 1984, so if we subtract the gain of £2 million from the loss of £7 million, the net loss to the Exchequer was £5 million. Therefore to assert that the reduction was self-financing is not true and we still have a bit of ground to make up to get back our own money.

Deputy Doyle suggested that of the expected £24 million return, £2 million should go to the Irish Racing Board. I do not know whether she has taken into account that if we were to adopt her amendment, we would have to reduce the tax from 10 per cent to 8.5 per cent or 7.5 per cent, whichever way you look at it. Is the Deputy seriously suggesting that we would take in £24 million after reducing tax in view of the experience over the past number of years? However, I still believe that the problems of the racing industry will not be solved by throwing money at it. I have given very careful thought to what Deputy Doyle and the many other Deputies who have contributed here have said about the allocation of a portion of the proceeds of off-course betting to the racing industry. The House will be aware that this Government made available £0.5 million to the Irish Racing Board this year in addition to making £0.5 million available in 1988 as well——

It went to Fairyhouse.

—for the improvement of facilities. Did the whole lot of money go to Fairyhouse? I know the money went to the Irish Racing Board and I presume they decided where to allocate it. However I repeat they got £0.5 million this year and £0.5 million in 1988 for improvement of facilities at race courses and for improving facilities for the general public and tourists. I accept that the facilities are very poor in quite a number of racecourses.

In addition to this direct assistance, the House will be aware of the favourable tax treatment of the bloodstock industry over the years, and I do not begrudge them that. For example the income from stallion fees is exempt from income tax and corporation tax. Bloodstock are excluded from capital gains tax. Exemption from VAT applies to the supply and importation of horses and also to stud fees. Racehorse trainers are liable to VAT only in relation to the training element of their fees, which is taken to be 10 per cent of the total fee. Admissions to race courses are not liable to VAT. It is not in anybody's interest to suggest that the industry is not getting favourable treatment. I think these measures are abundant evidence of the Government's commitment to the bloodstock and racing industries. I know that difficulties are being encountered but I believe it is most unlikely that the measure advocated in the amendment will deal comprehensively with these difficulties. It strikes me that there is a degree of complexity which is not amenable to any easy or instant solution and as I have said previously, throwing money will not solve the industry's problems but may conceal the need for other remedial action by the racing industry. Today, Deputy McGahon, and indeed Deputy McCreevy on a previous occasion, have suggested courses of action. For these reasons I must reject Deputy Doyle's amendment but I can say quite clearly that the industry's problems will be looked at in the round in advance of next year's budget. I recognise the problems that exist. In addition to the £0.5 million that the racing board will get this year I am aware that they will get additional moneys this year.

Between now and next year's budget I will give Deputy Doyle and the other Deputies a commitment that I will take a comprehensive look at the industry — in the round and not in isolation. It is not a good practice to accept an amendment that labels or identifies where a specific amount of money will go in advance of the budget. I do not think that is a good practice for me or for any other Minister for Finance to adopt.

On the last occasion I contributed to a somewhat lengthier version of this debate; I am still worried, but have had confirmed to me since then, that the amount of evasion of betting duty is still very substantial indeed. While the Minister has spoken about a loss to the Revenue Commissioners from adjusting the rate of duty payable from 10 per cent downwards, I am advised — I am not a puritan, it is not that I disapprove of betting but I do not bet often — that no serious punter, a category from which I am excluded, pays betting duty. If you are the kind of man who is into serious betting it is understood that you are outside the duty area.

I wish to reiterate that unless and until the Customs and Excise Investigation Branch are given adequate facilities and the ministerial direction to expose that kind of tax evasion, there is no prospect of getting in the betting tax. This is really a tax on the poor and on the amateur, whereas the big money punters do not pay at all. If there were a reduction in betting duty from 10 per cent to 5 per cent — that being the carrot — in addition to a few massive prosecutions for tax-free betting on the phone or whatever or a conspiracy to take tax-free bets on the phone — that being the stick — you would greatly increase the amount of duty. If we were to frighten some of the larger scale betting organisations we might make a lot more money. I suppose this applies in relation to a lot of taxation, but if it could be proved that someone earning over £30,000 never paid a halfpenny in income tax there would be an outcry. The same applies to betting. Anyone who is serious about betting simply does not pay a halfpenny to the State. Until the Customs and Excise or the special branch or the investigation branch do something about this we are wasting our time. I believe that the £160 million the Minister talks about is only a small fraction of the real amount and that the serious money is outside the tax system. Until the Customs and Excise do the kind of things which are being done in England to catch people we are wasting our time.

(Limerick East): I would just like to say a few words on the amendment in the names of Deputy Doyle and myself. I thank the Minister for giving a commitment to look at this matter in the round, as he put it, and to consider it in the context of next year's financial affairs. I had the pleasure recently of visiting Coolmore Stud. It is a most impressive place but what strikes one immediately is how much in harmony that industry is with the environment and the landscape. Frequently we give a high profile to multinational companies setting up industry here. In announcements this administration, and previous administrations, always nominate the number of jobs to be created — be it 300, 400 or 500. There is a downside to the influx of foreign capital or foreign personnel in that it does not always tune in with the environment.

There are 500 people employed by that development in County Tipperary, mostly male employees. This level of employment would have a huge impact on the economy of any part of rural Ireland. It seems that this industry is much in tune with our tradition, background and the preservation and improvement of the environment and landscape. It is an industry we should seek to develop. The bloodstock industry is in a favourable tax position already but in the final analysis it will not thrive and develop until its showcase, Irish racing, is also made attractive. The industry has only one purpose and that is to produce winners of high stakes on racecourses. What Deputy Doyle is advocating is a method whereby one end of the racing industry would finance another with the purpose of bringing Irish racing up to the best international standards, providing the best of facilities for those who participate and those who go to the races for the day to enjoy themselves. That is the showcase for the bloodstock industry.

Rather than thinking of it in terms of racing and punting, bookies and levies, we should think of it in terms of the amount of investment in the bloodstock industry and its value in terms of trade, foreign currency and employment. If we put it in that context we will see what Deputy Doyle is advocating, the provision of major incentives and doing so in a manner which does not cost the taxpayer. I take the Minister's point that quite frequently self-financing tax reductions do not pan out completely. Certainly in the inter-budgetary periods they do not but if we track them over 18 months to two years we will find that the return does come in and a reduction frequently leads to a better overall return because of increased activity in the white market rather than in the black market. The Minister should look at it in that context.

This is not a special lobby on behalf of those who own and train horses, who go to race meetings, who punt or who, indeed, are in the bookmaking business. What we are seeking is the putting in place of incentives to enable the racing industry to be the international showcase of the bloodstock industry. That is the economic justification for what we seek to do. I am glad the Minister has given a commitment to look at this matter. He has taken on board in a fair and open way many of the things we have suggested. Let me impose on his generosity once again. If he approaches this matter in the way he successfully approached the question of extending the scheme of tax rebates to disabled drivers and if, when the Finance Bill is behind him and he is less busy, he talks to the appropriate people in the different parties with a view to putting something in place early, which could be introduced in the Estimates for 1990 in the late autumn with the amount that is appropriate for expenditure to be indicated in the Finance Bill, this would be quite helpful.

I want to stress that our intention in advocating this approach is to provide a showcase for an industry we are proud of, which is a great industry for this country, which suits this country very well. There is a lot of expertise in the industry. If it could be developed more, this would be of enormous extra benefit and do more for rural areas than the attraction of highly publicised and high profiled assembly line projects which are of benefit but which may not be of as longlasting benefit as the type of activity we now see at Coolmore Stud and in other parts of the country.

Let me come back to a few of the points the Minister made. I laud his commitment to look at the problems in the round, as he said, in referring to the racing and bloodstock industry generally. That would be fine if he was being entirely consistent. The next amendment we will deal with relates to off-course bookmakers. The Bookmakers Act is so obsolete and so ante-diluvian that not one bookmaker is within the law at present. The Minister is fiddling around with one aspect which does need attention and quotes that he cannot take on board what I am saying as it deals with only one aspect of the problem. Where is the consistency? If the Minister is prepared to look at this matter in the round he should also be prepared to take a look at the Bookmakers Act in the round and try to solve the whole thing.

The Deputy has all the answers.

I put that to him. He will have my support when it comes to taking a look in the round at the problems in the racing industry but he worries me when he says the answer to the problem is not to throw money at the Irish Racing Board.

It is not.

As one who has not suggested throwing money at the Irish Racing Board, as one who has confidence in the Racing Board to manage racing and racecourses, I am worried about what is in the Minister's mind as he says that.

I attend very frequently and I know what I am talking about.

It worries me. I would have confidence in the Irish Racing Board to manage racing. I really think they have identified the problems in Irish racing and why Irish racecourses are not showcases for the bloodstock industry at the moment. I worry about the future of Thurles, Clonmel and Wexford if we do not take this opportunity to funnel money, through the Racing Board, to small provincial racecourses. If not, we will have none of them within a matter of months — not years — because their future hangs on a proper system of funding the racing board, to upgrade facilities and to improve the stakes. The Minister knows that and I think he accepts it.

I do not accept that they will be closed in two or three months as they are a long time around.

The future of the small racecourses is on the line unless everyone in this House puts in place a system of regular funding of the Irish Racing Board. There is no question of throwing money at anyone.

Will the Minister be there to implement the necessary system?

No, they will get some hatchet man to do it. Perhaps the Minister misunderstood a statement I made earlier, maybe I did not make myself clear. He suggested I said that the first £2 million of the £22 million collected would go to the racing board. In fact, it was the other way around, I said that we were prepared to guarantee the first £22 million to the Exchequer and that over and above that we would get into funding of the racing board on a regular basis.

The Minister referred to a projection of £24 million from off-course betting this year, that is on the presumption that we are talking about a 10 per cent betting tax. On my calculations that would be a turnover of £240 million. If the off-course betting take was 8.5 per cent — which is what we propose — and we attract even 10 per cent of English and overseas punters there is no knowing what the turnover might be this year. In the context of what I was proposing and requesting the Minister to take on board, his figures would need some adjustment. I know as well as the Minister, that the bloodstock industry is not just racing. The Minister asked about show jumping but he is a bit disingenuous in including this aspect of Irish bloodstock——

I am being realistic about the industry.

Not really. The debate is about off-course betting tax and its reduction to 7.5 per cent with the imposition of a 1 per cent levy. I am not aware of many off-course bookies who do a thriving business in taking bets on show jumping. Perhaps they do, I am not a punter and my perspective is the bloodstock perspective. My colleague, Deputy McGahon, has given a punter's perspective. Perhaps people take heavy bets on show jumping but I am not aware of it. I know it has been tried and was unsuccessful on the few occasions of which I am aware. The Minister may know more about it than I do. Show jumping does not come into the argument today because we are talking about off-course betting tax and bookmakers.

We are talking about the development of the horse industry.

The Ceann Comhairle has already pulled one of my colleagues to book for extending into greener or further pastures — if I can misquote him — on Report Stage yet the Minister wants me to extend my contribution to the problems and ailments of the show jumping industry. If he can bear with me for half the night I would be delighted to enlighten him.

I do not mind how long the Deputy talks as long as it is not about the knackers yard.

And the tin can in which the Minister might be more interested. That is what I am afraid of. I welcome what was said here about looking at this whole area before the next budget. The moving of the amendment in my name and in that of Deputy Noonan might have prompted the Government into some action in this most important area. The Minister will have ample support if he comes back in the near future to the House with proposals and suggestions to solve the problems we have underlined here today. It is a pity the Minister could not take my amendment on board as what I proposed would not commence until 1 January 1990. Will the Minister give a commitment that the necessary subhead through which the money can be channelled will be in the Estimate for the Department of Agriculture and Food and that he — or Deputy Noonan — will give a commitment to the House that they will put the necessary apparatus in place to ensure that money, equivalent to what we have been discussing here today, will be channelled to racing and bloodstock? I would prefer it to be channelled through the racing board, perhaps the Minister will suggest the abolition of the racing board as the abolition of boards has been in the air for some time. Perhaps the Minister has another vehicle in mind through which he can update the facilities, have our showcases and increase the stakes for Irish bred horses in this country?

The racing industry needs our support now, not manana. The Irish racing and bloodstock industries have my support and that of Fine Gael. It does not seem to have the support of the Minister or Fianna Fáil.

Play politics with it, then the Deputy will get the response she deserves.

The racing and bloodstock industries and the Irish Racing Board should take note that the Government have today lost an opportunity handed to them by Fine Gael to put in place a formula to resolve the problem of the racing and bloodstock industries. Above all, I am amazed that the Taoiseach has lost this opportunity and turned his back on the racing and bloodstock industries. We await his future proposals with interest.

As the Minister cannot respond to Deputy Doyle's remarks I take it that she is not pressing her amendment?

That is correct.

Amendment, by leave, withdrawn.
Bill recommitted in respect of amendment No. 13.

I move amendment No. 13:

In page 48, between lines 34 and 35, to insert the following:

"41.—(1) Without prejudice to the provisions of section 24 of the Finance Act, 1926, every bookmaker who makes, lays or otherwise enters into any bet, on or after the date of the passing of this Act, shall, at the time at which he receives payment of the amount of such bet from any person, require from such person an additional payment of an amount equal to the amount of the excise duty duly payable on the amount of that bet under subsection (1) (as amended by the Finance Act, 1985) of the said section 24.

(2) A bookmaker shall not accept payment of the amount of any bet unless he receives with that amount the additional payment referred to in subsection (1).

(3) A bookmaker making, laying or otherwise entering into a bet to which subsection (1) relates who—

(a) fails or neglects to require, or purports (expressly or otherwise) not to require, the payment of the additional payment concerned, or

(b) accepts, or purports (expressly or otherwise) to accept, payment of the amount of any bet in contravention of this section,

shall be guilty of an offence under this section and shall be liable on summary conviction thereof to an excise penalty of £1,000.".

This amendment is to deal with the practice of so called tax-free betting by a number of bookmakers. A practice has developed whereby some bookies in respect of certain types of bet or bets placed at certain times or all bets placed over a limited period do not charge the punters a 10 per cent off-course betting duty but cover their tax liability from their own resources.

Let me make clear to the House that in so far as can be established bookmakers who engage in so called tax-free betting are meeting in full their liability for the betting duty. The tax due is being paid to the Revenue Commissioners. However, this situation is most unsatisfactory in that the advertising of tax-free betting by certain bookmakers could lead to an impression that the tax laws were being flouted. Also it is not appropriate that a mechanism designed solely to raise revenue for the Exchequer should be used as a marketing device. The amendment now before the House requires bookmakers to ensure that punters pay over to them, with their bets, amounts equal to the excise duty payable by bookmakers. The liability to pay the duty remains, however, on the bookmaker. This is, in effect, to create a level playing pitch between our bookmaking industry and those who acquired large slices of the bookmaking industry from abroad. I commend the amendment to the House.

(Limerick East): It is an interesting procedure to recommit the Finance Bill at any stage but to recommit it on an issue of this kind is unprecedented. I appreciate the Minister's intent but I am sceptical about whether it will operate as the onus will still be on the bookie. I cannot see what system of records could apply in a bookie's office to ensure that the levy is paid simultaneously with the placing of the bet. If there are arrangements whereby a bookie in certain circumstances would waive the appropriate excise, I cannot see how — no pun intended — the bookie can be brought to book. I cannot see how it will operate in practice.

I do not have any objection to the spirit of the amendment but, unless there is something I am missing in the procedure, it seems to be strong on intent and short on practicality. I cannot see how it will improve the position very much. The threat will be there but the onus will not be on the punter. There will be no obligation on the punter who, in certain circumstances, may pressure the bookie and will not be inclined to pay the excise, to put it at its mildest. The onus then will be on the bookie. If the bookie is found in breach and guilty of an offence, the liability on summary conviction is an excise penalty of £1,000. I presume that is an absolute amount rather than a maximum fine, like a penalty in regard to red diesel. Will the Minister comment on how he envisages this procedure working in practice? I would hate to see it joining the list of well intended reforms which litter our Statute Book but have no practical application.

Since this is a Committee Stage debate I suggest it would be desirable to include an amendment to subsection (3) along the following lines:

or (c) causes or permits any advertisement to be published or displayed.

I was interrupted when I was preparing that amendment but the words "purports to accept" can only apply to an actual transaction whereas if one were to cause an advertisement to be published one would be doing all the damage.

That is illegal under the present betting Act but it is not enforced.

I do not know if "advertising" is covered by putting a notice in one's window.

It is. One is not allowed to display or entice a person to bet.

I accept that enticements are out and, therefore, one must keep one's premises looking grotty, as the old thought about that goes. In my view there is something to be said for putting a prohibition on causing or permitting any advertisement to be published or displayed. I should like to ask the Minister to consider this because he could before we conclude the debate tonight put forward an amendment that would make the provision slightly more effective.

The Minister, with a sombre face, has told the House that a practice has grown up of people putting on tax free bets but, as I said before, the practice for serious punters is never to have paid any duty to the State. I agree it is an unfair competition on the part of the English bookmakers who came over here to suggest that they would absorb the cost of the duty themselves. The Minister said that investigations tended to show that they were absorbing the cost of the duty out of their margin and that is fine but I go back to the point that serious betting in Ireland is not taxed at all. Those bookies would not absorb the tax if that were not the case. If the people who are putting on the hundreds and thousands of pounds were happy to pay tax, one could take it as an absolute certainty that no bookmaker would keep absorbing a 10 per cent betting duty levy out of his margin because the punter would not accept odds which were designed to give the bookmaker that kind of margin in the first place.

I should like to reiterate that although the Minister is right in this case to try to level the playing pitch, to prevent misleading advertising and obstruct the impression created in public that some-bookmakers on a large scale were effectively giving tax free betting when they were paying it themselves, it seems to me that the big problem is that no serious punter pays duty on bets. Deputy McGahon on one occasion admitted this.

A public sinner.

He may have been a public sinner but he certainly was not a solitary sinner. I did not mean that it was a solitary sin.

It was only a venial sin.

The other issue is just as serious because we are talking of a loss of duty of between £20 million and £30 million per annum. I would like the Minister to explain to the House if he is bringing forward a measure to prevent the impression being created in public that there is tax free betting going on, what he intends to do about the tax free betting that is going on in private, was going on before the English bookies came here and will continue to go on unless he does something about it. I would like to hear some proposals from Customs and Excise as to what they intend doing to stamp out tax free betting.

Deputy McDowell has identified a problem that I cannot deny exists but how can we eliminate it? For example, a grateful client may pay a member of the legal profession in notes rather than by cheque but how can we eliminate that?

Or in kind rather than by cash.

In some circumstances that will certainly happen but if the insurance companies paid cash and this was known one can be sure the Government would step in and do something about it.

Nevertheless, the problem that the Deputy has identified exists in his profession and is rampant throughout it. I am sure the Deputy will acknowledge that it is difficult to stamp it out, much as he would want to do so. That is a problem that the Minister has in this difficult area which I would describe as murky waters. I commend the Minister for trying to address this problem which was highlighted last week but I have doubts about how it will be implemented given the small number of investigators the Revenue Commissioners have and the hazards of their job. Perhaps in 1992 the Minister will be able to use some of the officers who will be made redundant to upgrade that service.

In my view the law of diminishing returns exists in the bookmaking business. There is no doubt that the decision to reduce the tax from the crazy figure of 20 per cent to 10 per cent proved successful and if it was reduced to 5 per cent it would be more successful. Earlier the Minister said that money will not cure the ills of the Irish racing industry and I agree with that statement, although Deputy Doyle may not. One way of making Irish racing more attractive is to make it straighter. More people will pay at the turnstiles to go racing if they know the horses will be racing to their ability. If they think, as many do — and I share this belief — that half of the horses are being strangled, choked or out for a "schooling gallop" they will stay away from race meetings. That is the real problem with Irish racing and money will not solve that problem.

Deputy Noonan put great emphasis on the value of the Irish bloodstock industry. That industry should be given all the State help it needs because we are the prime horse breeders in the world. Our climate is uniquely suited to the rearing of horses and indeed the Ceann Comhairle's county, County Tipperary, is world renowned for its association with horse racing and horse breeding. Irish horses have been a tremendous export earner and this can only be improved on and exploited further. Indeed one has only to look at stud farms which have been bought by various sheikhs, the Al Maktoum family and various offshoots of that immensely rich family to realise the great benefit they can be to the Irish bloodstock industry and the contribution they can make to employment and our export drive.

While I applaud the Minister for introducing this section, I believe it will be very difficult to implement. I should like to refer back to what the Minister said about money not curing the ills of Irish racing. Irish racing needs a thorough overhaul and it needs to be made straighter. If racing is made straighter the ordinary Joe soap will bring his family to meetings, in particular to Sunday meetings which have been hugely successful.

Last week Deputy Doyle adverted to the tremendous benefit which would accrue to the industry if the betting tax was reduced. This would attract plane loads of English people to Sunday racing in this country. At present they come in large numbers to meetings here, in particular to the Pacemaker Champion Stakes which is held in the Phoenix Park in October. Plane loads of English punters, high rollers, come to that meeting but we want more of them to come. Those high rollers also go to Sunday racing in France because of the obvious attractions there in the punting area. While I would not know much about that now, because I am redundant in that field, I still have the interests of the punter at heart. I should like the Irish racing industry to be preserved and upgraded. The opportunities in the bloodstock industry are tremendous and for the sake of the man in the street, the small punter, I would like to see Irish racing made into a healthier and straighter sport.

I appreciate what the Minister is trying to achieve with this amendment but I suggest that 7½ per cent would be far easier to collect than 10 per cent when he has to go after it. I should like to underline what both my colleagues have said. The Minister is trying to close a loophole in theory in relation to this amendment but how it will work out in practice and whether it will be enforceable is very questionable. I said a few moments ago in relation to the previous amendment that the Irish Betting Act is so out of date that not one of our bookmakers is operating within the law virtually in relation to any aspect of it, and certainly not in relation to the main thrust of it. The Minister committed himself to looking at the problems in the racing and bloodstock industry in the round but I suggest that he should extend that principle to what we are talking about now and the whole legislation concerning bookmakers and betting in this country.

The Minister also reflected the view, and so did my colleague, Deputy McGahon, that I had stated money would cure all the ills of the racing and bloodstock industry. I do not think anybody would be foolish enough to make that statement or to even imply it. However, I stand over very strongly the belief that money will go a long way towards resolving many of the ills in that industry both in terms of a lack of facilities and stakes, which to a large extent create an awful lot of the problems in the industry. Because the stakes are so low this creates another ill which my colleague referred to — the dishonesty in terms of horses not running true to form. Many owners, and to a lesser extent trainers, who are associated with particular horses now have to resort to the practice of stopping their horses and pulling horses in different races to increase the odds on the horse when it is off so as to get some financial return for their investment. If the stakes were increased, as I suggested in my previous amendment, that dishonesty could be decreased, as the reduction in off course betting tax would decrease the dishonesty in the evasion of off course betting tax. Money would be a large contributor towards resolving the ills and problems in the racing and bloodstock industry. It would not resolve the problems 100 per cent but to dismiss the suggestion of the last Fine Gael amendment as if it was irrelevant to the problems of racing and the bloodstock industry is totally unfair and the Minister is burying his head in the sand to some extent in relation to the problem.

This evening's papers — I am thinking in particular of the Evening Herald— carries the headline “Bet law to hit punter”. What we are talking about here will certainly suit the independent Irish bookmakers and will make the playing field level as far as they are concerned with the English multiple who has expressly or otherwise been accepting bets, both large and small, without tax from the punter. They have been absorbing that tax in their margins which must have affected the odds they offered the punter, as Deputy McDowell suggested. I hope that what we are doing here today will in the long run effectively be in the punters' interests in terms of a better return on the odds they will now get, as well as being in the interests of the Irish independent bookmakers.

Perhaps the Minister can explain to us how he intends enforcing the amendment we are talking to now. All the other points in relation to legislation in this area have proved unenforceable and I get the impression that because it is over 50 years since the legislation was updated little effort has been made to enforce it. Perhaps that is just as well because if we were to literally take to the present Bill and pursue it we would cause mayhem in the bookmaking industry generally, which gives much pleasure to many people. It causes many a headache and heartache as well but we are not here to stand on moral judgment in relation to punting generally; we are here to deal with the problem as it is before us. This industry is a great employer and there is not a small village in our country today which does not have one or two booking offices, or indeed many more.

I look forward to hearing the Minister's response. He is attempting to address a problem which has arisen since the advent of the English multiple. They appear to have been able to offer certain advantages which the independent Irish bookmaker could not or did not. Provided that what the Minister is suggesting will not be just more legislation which will prove unenforceable I think in the long run what we are doing today will be in the interests of the punter.

I should like to ask the Minister a question before he responds. Perhaps this shows how frequently I bet but I thought there was a differentiation and that a person could put £1 on a bookmaker's counter, he would take it in and somehow there would be a subtraction at the end out of the bet. That used to be the case but I do not know if it still is.

It is still available.

You have the option of paying in advance or on your winnings.

You will get the Finance portfolio, Michael.

You can do it still.

If one can still do that how will the Minister enforce this provision if somebody comes in with a £1? The fellows from the Customs and Excise special investigation branch whom I used meet down in the Four Courts used place test bets and had the proud record of never having won.

They should not be able to do that either.

Regardless of whether they are agents provocateurs the simple fact is that they put their £1 down and that was sufficient to prove whatever transaction they wanted. Now they would have to keep betting until they got a winning bet in order to ascertain what would be given back to them. That appears to me to be the weakness in the Minister's enforcement provision. Am I right?

Perhaps Deputy Doyle would like to move to report progress.

I would, and I should like to ask the Minister to include the matter of telephone bets when replying.

Progress reported; Committee to sit again.
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