Deputy Callely was in possession and he has approximately 25 minutes.
Private Members' Business. - Finance Bill, 1990: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time".
Before Private Members Business I painted a picture of the country's finances. I said that in 1986 the Exchequer borrowing requirement was £2,145 million but that in 1990 it would be £449 million.
Given the financial position over the last number of years, the great reduction in the Exchequer borrowing requirement is like music to the ears of some people, as they feel now that we have it under control and that we should reduce the level of taxation. While acknowledging that our Exchequer borrowing requirement is under control we cannot forget that, last year, Government borrowing was the lowest in 40 years. However, debt service costs were in the region of £2 billion which is far too high for a small country and, therefore, has implications for all of us.
The exemption limits and vast package of income tax reliefs in the first section shows the Government's commitment to reduce the unacceptably high levels of taxation. There will be no empty promises from this side of the House if that reduction is to continue. It is the Government's intention that two-thirds of all taxpayers will eventually be on a standard rate of tax. However, this will mean that tax cuts will have to come out of a strong economy and that tax will be at levels which we can maintain.
The exemption levels and limits take more people in the lower income groups out of the tax net, and with the reduction of the top rate of tax to 53 per cent, the low rate at 30 per cent and the standard rate remaining at 48 per cent, we are going in the right direction. Some people think that rates should be reduced faster but let us look at the experience across the water. Four years ago the UK dropped their rate of tax from 55 per cent to 35 per cent. This caused a consumer boom but it also caused high inflation. The steady-as-she-goes policy may be the right approach and I would like to see two tax bands, a standard rate of 25 per cent and a higher rate of no more than 48 per cent. However, this can only be achieved as a result of economic recovery rather than by borrowing. We have learnt from our past experience in this regard.
I appreciate that when the Minister addressed this year's budget and the vast amount of income tax reliefs costing in excess of £200 million in the present tax year, he had to seek clawbacks in certain areas. The restriction on life assurance relief from 80 per cent to 50 per cent will yield some £13 million in the current year but, if this restrictive trend is to continue, life assurance relief will be too expensive. This relief has been abolished in the United Kingdom. I accept that this relief may not really affect the higher income groups but I ask the Minister to look at premium payments and income brackets, particularly so that the lower income groups may avail of tax relief, as life insurance is an important source of life cover and of savings for this income group.
Notwithstanding the effect on the economy, the stock market and social dependency on the State, it is recognised that life assurance and pension funds are two primary sources of long-term savings in this country with a high level of investment in Government stocks. The life companies operating in this field lay down criteria to encourage policyholders to continue their savings and to provide stability for long-term savings managed by these companies.
Perhaps the Minister will take on board my suggestion in relation to income brackets and premium payments to encourage lower income groups to avail of life assurance relief and to provide a means of life cover and long-term savings.
I appreciate the cost to the Exchequer of mortgage interest relief, which is estimated at over £220 million in the current year. This figure is up on that of last year by approximately £50 million, mainly due to international factors in regard to interest rates. Of course mortgage holders have also experienced similar increases in interest rates and I am pleased at the Minister's reference to the level of ongoing Government support for mortgage holders. I am aware of the Government's determination to ensure that interest rates will be held as low as possible.
The Minister has made it clear that he will not tolerate abuses of the business expansion scheme. Last July he referred to some of these abuses as Disneyland schemes. Sections 7 and 29 of the Bill should ensure that BES moneys are invested in risk type projects as originally intended. It is vital that our industry and economy get the maximum benefit from business expansion schemes. Funds available for investment in risk projects should not dry up as a result of arrangements which guarantee returns to the investors regardless. Business expansion schemes must remain risk capital projects.
The changes in assessment for the self-employed to a current year basis is reducing the divide between the self-employed and the PAYE worker. It has always been said that this could not be done, for one reason or another. Chapter II — sections 10 to 23 — paves the way to dispelling that myth.
The Minister is also providing for transitional arrangements to assist in the change to the new assessment of all income on a current year basis. These arrangements will safeguard the Revenue Commissioners against abuses while at the same time prevent the over-payment of tax by taxpayers. I welcome in particular the provision which will allow a taxpayer to pay not less than 90 per cent of the current year ultimate liability or not less than 100 per cent of the preceding year's actual tax liability. This will be very beneficial to taxpayers who for one reason or another may not be in a position to estimate their liabilities by 1 November of the tax year. This is a very welcome change.
Many of the other technical alterations in this section meet the issues raised by the Institute of Taxation. I have no doubt that they will warmly welcome these changes. All of these changes, particularly those of a technical nature, will result in greater efficiency in the whole tax system, prevent abuses, relieve the burden of work on tax practitioners and cut down on administration for both the taxpayers and the Revenue Commissioners, which will also result in cost savings for both parties. The direction in which we are heading, of one year, one return and one payment, is the way forward. I wholeheartedly support the Minister in his continuing reform of the tax system. I do not think anybody doubts the need to simplify the system even further.
Sections 59 to 70 provide for the removal of capital allowances. This is in line with the reduction in the rate of corporation tax. I welcome the provision for new industrial projects which are in the pipeline as many of these projects may not be completed by April 1992. The Minister has made arrangements for such projects.
I wish to refer to the continued incentives for designated areas, such as the Custom House Docks site. I very much favour the incentives contained in sections 25 and 26 and welcome the moves made by the Minister in sections 27 and 28 to avoid unintended uses of the double rent allowances and the lease arrangements for commercial property. Certain abuses in this area had come to light, especially in relation to the double rent allowance.
It has been suggested that some of these provisions may not assist business houses to expand and develop, particcularly with the abolition of capital allowances. Major concern will now centre on the year to year arrangements for granting fair relief under section 241 (8) of the Income Tax Act, 1967, for wear and tear of plant and machinery through writing down allowances.
I want to refer to the financial services market which may focus on these writing down allowances. We have witnessed a growth in the financial services in recent years. With the elimination of capital allowances, the financial and leasing housing section of the financial services market will focus on writing down allowances. Rates of either 10 or 12 per cent per annum for plant and machinery on a reducing balance basis were allowed by tax authorities in respect of wear and tear. These WDA rates are now out of line with the life of some plant and machinery. The average computer life is now put at three to four years. Yet the writing down allowance, if applicable at the 10 or 12.5 per cent per annum rate, would write down the life of a computer in excess of eight years. This highlights the need to address the area of WDA.
I understand WDA rates were formulated to reflect physical depreciation of assets but against the background of the elimination of capital allowances — as I said earlier I am particularly concerned about the area of leasing — and the failure to address and increase the writing down allowances to fair levels, finance houses and industry will be faced with major problems. If we do not have realistic WDA rates — writing down allowances should be provided for in legislation rather than giving discretionary powers to the Revenue Commissioners — lease rental levels may exceed market loan rates and there may be an increase in the cost of leasing, which will have its own implications for inflation. In addition, the UK leasing markets may have an unfair advantage over Irish finance and leasing houses.
The Minister referred to the important source of new jobs in the financial services market and the need to develop this new market. If we want to assist in further job creation and the development of such a market while at the same time clearing the deck with the removal of capital allowances, we should put all our cards on the table and set realistic writing down allowances of between 20 and 25 per cent.
The Minister is amending many sections of the Capital Gains Tax Act, 1975. In particular, section 73 extends the relieving provisions regarding the disposal of assets in a family business to a holding company. This is a practical measure which will be welcomed by the business community. He is also making a positive move in reducing the top rate of capital gains tax to 50 per cent. However, I believe this is still too high and should be reduced further. It is an impediment to investment and will reduce the potential overall yield from this tax.
The introduction of legislation to restrict manufacturing relief to genuine manufacturing companies is further evidence of the Government's policy to combat the use of legislation for unintended purposes. The definition of manufacturing industries which could avail of the 10 per cent corporation tax rate had to be addressed as there were blatant abuses in the system. Manufacturing should relate to changing the form of a raw material and manufacturing a product and not just breaking down bulk. I am particularly worried about section 33 (1) (b) (iii) which reads:
(iii) cooking, baking or otherwise preparing food or drink for human consumption which is intended to be consumed, at or about the time it is prepared, whether or not in the building or structure in which it is prepared or whether or not in the building to which it is delivered after being prepared, ...
I intervene to advise the Deputy that there are now five minutes remaining of the time available to him.
I am worried by the use of the word "baking" in that subsection. I assume it is not the Minister's intention that the conventional baker be caught by that reference. Perhaps the Minister would clarify that matter when replying.
Since the introduction of the special low tax rate for manufacturing industry by the then Fianna Fáil Minister for Industry and Commerce, Deputy O'Malley in 1978 it has proved to be a very important element in the development, investment and expansion of that industry. I wholeheartedly support and welcome the extension of the 10 per cent rate of corporation tax to the year 2010.
Sections 51 to 58 inclusive, Chapter VII, in relation to offshore funds should promote a more even keel between offshore and Irish funds. It was wrong that offshore funds had a competitive advantage heretofore as investors in certain foreign funds were able to convert certain taxable income from the funds into tax-free income and pay capital gains tax only if they disposed of such units. Here again the Minister is showing his commitment to introducing legislation to prevent such abuses.
The many changes proposed in customs and excise duties in Part II of the Bill constitute a welcome change. I will be monitoring the position carefully to ensure consumers benefit from these vast changes. Of course the major change comprises the reduction from the high rate of VAT of 25 per cent to 23 per cent. Bearing in mind the large array of products affected by this tax everybody should benefit and it should also have an impact on lowering the rate of inflation.
I welcome also the restoration of child relief in the residential property tax code. I am interested in the use of the index of house prices. Here I should like to refer to particular areas of Dublin where the new house price index has reached an all-time high. I am concerned that many householders who purchased houses some years ago prior to the introduction of the residential property tax or the boom in the house market will now find their family home has become an unexpected tax burden. They may not have made provision for this tax and, if they have purchased their homes over a long number of years, may find themselves on restricted incomes, retirement pensions or whatever. Indeed, the residential property tax code makes no allowance for mortgage holders.
Let us take the example of two houses side by side. The residential property tax is based on the value of one's assets. If we take each house value at, say, £120,000, one purchaser may own his property outright while the other may have a large mortgage on the property. Yet they must both pay the same amount of residential property tax. This is one area in which some amendments are necessary to accommodate the two categories to which I have referred, people who find themselves within that tax net who, because of restricted income or whatever, cannot afford to pay or, as in the other case, somebody who purchased their house before the introduction of the residential property tax or the increase in new house prices, finds themselves caught in the trap.
This Bill is a very lengthy one. Nobody doubts that we are going in the right direction. As I did not have an opportunity to speak on the budget I should like to avail of this opportunity to congratulate the Minister for Finance on what was recognised as the first budget he prepared along with his departmental staff. I know it is the second budget he introduced in this House but it is the first containing his policies throughout. I congratulate him on the way he has got our national finances on the right rail and commend the Bill to the House.
If it is agreeable to the House I should like to share my time with Deputies Fennell and Mac Giolla.
Is that satisfactory? Agreed.
Of necessity I will be brief. First, I compliment the Minister on this Bill. Its provisions benefit most sectors of the community to some degree. Needless to say, there are also some sectors who would like to have been more favourably treated. Unfortunately the Minister does not have access to bottomless funds when drawing up his budget.
I should like to refer to one sector this evening, the farming community. There appears to be some anomaly in the method by which they are being taxed compared with the method employed with regard to most other workers. For example, in preceding years PAYE workers received a tax-free allowance of the order of £800 to which they were entitled. The farming community did not benefit from any such tax-free allowance. The reason given was that farmers were taxed not on the current year's but on the preceding year's production. That was the excuse given which was generally accepted. In addition to that £800 tax-free allowance most workers received there was also a PRSI allowance which, this year, amounts to £286. In the past the farming community were not granted that allowance, for the same reason they were not given the £800 allowance.
From and including the year 1990 farmers will be taxed on their current year's production. Consequently I do not see any valid reason they should not be given the benefit of that £800 tax-free and the £286 tax-free allowances — which would amount to £1,086 — to which I honestly believe farmers and the self-employed are genuinely entitled. Farmers are honest to goodness, hard working, God-fearing people who like to pay their bills and do not like others owing them anything; they like to receive their proper entitlements. Consequently, they are anxious that that anomaly of £1,086 be rectified. Perhaps the Minister would so ensure before this Bill is passed.
I should like to refer to another small sector, that of farmer's wives. Normally the farmer's wife comprises part and parcel of the workforce on the farm. On a 500 acre farm — of which we have not many — the wife may not be part and parcel of the workforce as she is on the ordinary sized farm with which most of us are familiar, where she rears calves, lambs and fowl. Her contribution to the family farm income is sizeable. When the Revenue Commissioners come to estimate the farmer's tax bill they take the contribution which his wife has made into account and rightly so, as in many cases this is sizeable. Unfortunately, when they estimate what tax-free allowances the farmer should receive they fail to acknowledge the presence of the farmer's wife. The farmer's wife should be entitled to receive all the allowances PAYE taxpayers receive. Taking the farmer and his wife together, we can see that there is a difference of £2,172 in the tax-free allowances they are given and the allowances which PAYE taxpayers receive. I ask the Minister to look at this matter and try to rectify it.
City dwellers tend to forget what life down on the farm is like. They sometimes think in romantic terms, of people basking in the sunshine in green fields, but between the months of October and April they do not do much basking in the fields. Anyone who visited a mart or a factory during the past few weeks would have received sad news, sad from the point of view of the farmer. The price of lamb today as compared with last year is down by between £10 and £20 per head. I will not dwell too long on this point but last year the price of lamb per pound was £1.20 but now it is around £1.08 per pound. Some of our economists have pointed out that before the end of the year it will be as low as £1.05 per pound.
Up to about November or December last farmers with dry stock, cattle and sheep, had negative income. One may well ask, if that was the case what did they live on? They got by selling their assets, their stock, and not replacing them, the reason being that because of the low level of profit in that line of business they had to sell off some of their assets. They now find themselves in the same position. I ask the Minister, given this fact, to bear in mind the anomalies that exist in the taxation system.
In speaking about farmers we should remember that they are not a separate group from ourselves. We all form part of the same conglomerate. The statistics indicate that 24.5 per cent of our exports are agriculture-related while 18.8 per cent of the workforce are employed in agriculture-related industries. Therefore we cannot argue that we are a separate group. We form part of the one outfit. I ask the Minister to approach the question of taxation in a more realistic manner. All that is required is plain, ordinary commonsense and the Minister has his fair share of this.
I thank Deputy Foxe for sharing his time with me. My contribution will be brief as I realise others wish to contribute.
The purpose of this Bill is to give legislative effect to the measures announced in the budget. It is brought in against the background of a misplaced belief that our economic problems are at an end, that the hairshirt days are nearly over, if not over, and that Ireland is at last the master of its own destiny, but we know that sadly this is not the case, even though it tends to be the impresson given by the Government party and their supporters.
The reality is that we still have a massive foreign debt of £25 billion, twice the European average. It costs well over £2 billion or virtually all the expected income tax yield from PAYE workers to service this debt per annum. This means that there is no surplus from that source for necessary social and economic development. That national debt is the monster hindering our real advancement, any meaningful development or serious challenge to poverty in our urban communities. This debt leaves us vulnerable to international trends, rising interest rates and inflation abroad which can increase the burden even more.
It is not common nowadays to stress the enormity of the national debt or to place emphasis on what it costs to service it. We all want to be optimistic, lift morale and encourage people who are sorely taxed and plagued by cuts in every area. I can see that it makes very little sense to preach economic gloom ad infinitum, but we must remember how the debt accumulated and how easy it was to get to the precipice as we did just before the Coalition Government came to power in 1982. Fianna Fáil's major contribution to the profligate days of spending between 1979 and 1982 puts a heavy moral obligation on that party to steer a course out of the economic bog, but this must be done in a humane and sensitive way, a way which will not bludgeon or hammer the less well off, the disadvantaged and those merely struggling for existence. I am afraid that a humane and sensitive touch has not been evident during the past three years. Indeed I recall several Ministers challenging a report of the Combat Poverty Agency and the Conference of the Major Religious Superiors of Ireland about the figures they quoted for the poverty plateau here.
For the fortunate ranks of the better off including those of us in this House, who are very concerned with the issue of tax it is not possible for them to know the hardship suffered by families on the dole, in receipt of social welfare or in low paid jobs. Of course no one is starving in the true sense but people are badly nourished, poorly dressed, in debt, and suffering as a result, and unable to cope with unexpected costs. Can anyone who does the weekly shopping for groceries for a family, easily spending £80 or more on food for four, not have qualms of conscience about families of six or seven living on less than that for their total needs? One can witness the stress caused by poverty in Dublin every day. As legislators, we have to take responsibility and this means making hard decisions on policy, favouring the poor in an affirmative manner right across the spectrum of public spending. While I am aware that there is poverty in other European cities I believe the number of our population who are poor, at around one million, is proportionately higher with little hope of changing this cycle in succeeding generations. Indeed one often witnesses a depressing passive acceptance of disadvantage and deprivation.
Third level education, which is acknowledged as being the key to better living standards, is denied to the majority of our young people. They cannot afford to go to college and grants which are provided to the children of those on higher income levels are of absolutely no use to them. This is discriminatory and unjust and blocks off careers, particularly those in the professional sector, as people cannot afford to pay for education for their children.
Poor people also know the real effects of the health cuts. They know of the long delays experienced in awaiting surgery and treatment, know they cannot buy their way to comfort and, worse still, feel they do not have any power or influence to bring about change in these and other areas. They, too, are the group who, once again, will feel the effects of the new housing shortage in Dublin city and county. During the past two years the housing waiting list has dramatically increased and unless measures are taken to extend the public housing stock we will experience a housing crisis as great as the one experienced in the late sixties and early seventies. Only 50 local authority houses are being built in Dublin this year and there are now 1,500 applicants on the housing list. We are back to the lottery system when it is a matter of how many children a person can produce, what infectious diseases a person can claim or how great is the overcrowding. Of course there has to be a qualifying scale and decisions have to be made on the basis of need, but the present system seems to favour those who can collude and conspire and therefore excludes many genuine cases who are not good at duplicity.
Other speakers in this debate have referred to problems with housing but I am surprised at just how often the issue of housing has come up, with particular reference to the Eastern Health Board area. Deputies expressed frustration at their inability to help constituents with chronic accommodation needs. Unfortunately the system operates by grinding applicants down despite the care and well meaning nature of those officials trying to operate that system.
I am afraid there is nothing in this Bill for that group. One situation in my own constituency I would like to put on record illustrates what I am talking about. A 53 year old woman who is separated from her husband and has £48 a week in maintenance from him lives with her 21 year old unmarried daughter, who is on £57 per week allowance, and a six months old baby. When this woman's marriage broke up the sale of the house was forced and the two women had to rent in the private sector at £300 a month. They did not qualify then for local authority housing and cheaper rented accommodation was unavailable because of the baby. They are getting no rent subsidy. Their sin was that they had a few pounds out of the house sale and were therefore deemed ineligible for public housing. No small family group could have been more in need but despite my best efforts there is nothing I can do for them. In two months time that small family will have nothing left, all their money will have gone on exorbitant rent. The mother is already in bad health and utterly depressed and distressed with a hopeless situation but the county council, under their system, can only help this small group when they are destitute, out on the street, most likely ill from stress. I find this a very short sighted policy, one which indicates that the individual background of each applicant is not considered on its merits.
We have a housing problem in Dublin and it is due to cutbacks in the local authority house building programme. I wonder where the Government envisaged people like the woman whose case I have outlined being accommodated when these cutbacks were being decided? Only more new homes, or the purchase of homes by the county council — which I believe is happening — will alleviate the problem. Some interim relief in the meantime might be considered for people like my constituent. For instance, could there be tax reliefs or other financial incentives for householders living alone to rent rooms?
Finally I would like to make a few new points. I welcome the initiative of the Revenue Commissioners to include with the certificate of tax free allowances a notice to people that they have a right, in certain circumstances, to claim family income supplement. This is clearly the most sensible of decisions and the most obvious way to ensure that those who are entitled to the payment can claim it. We know 3,000 people are eligible for family income supplement but less than half this number have taken it up.
On a less ideal note is the procedure under which the Revenue Commissioners operate the joint assessment of married couples. This has long been an area of grievance to some couples and it could and should be resolved. The practice which causes the problem is that when a married couple opt for joint assessment after marriage the allowances are all allocated to the husband. This is not a problem where the wife works in the home and not outside it. Where both husband and wife are opting for joint assessment which does result in a saving of tax it means that the wife no longer gets correspondence on tax matters in her own name, the PRSI number allocated to them is the husband's number, it is with him that the Revenue Commissioners correspond and it is to him that they send any rebates also. In effect the wives in these instances feel as if they cease to exist for purposes of tax collection. The question I would like to ask is if the procedure could be looked at and if it would be possible for each of the spouses to have correspondence sent to them so that each may keep their own individual records. I know it is a small matter in overall terms but it is an irritant and relevant to many working wives. They want to be consulted and involved in their own right and also feel that this could be an area for conflict in a relationship that is not completely trusting and stable.
I want to thank Deputy Foxe for allowing me to share his time. Ten minutes is fine for anybody. It sharpens the mind. I doubt if I will get as much said as Deputy Fennell did in the time available to her.
There is a number of points I wish to make. I am disappointed with this Finance Bill. There was a major hype before the budget in regard to what would take place. There was to be a major change to assist the PAYE sector and the Minister was to raise the tax levels for corporation taxes etc. This was widely speculated on beforehand. It was very disappointing then to find that not only was the Minister not trying to get up to the general European levels of corporation tax but that he actually reduced corporation tax from 43 per cent to 40 per cent. In fact in 1988 corporation tax was 50 per cent so it is being progressively reduced. The main point about corporation taxes is that they are only nominal taxes in any case because there are so many allowances and methods of avoiding taxation that the effective tax levels are way below that; in many cases there is no tax paid at all.
It would have been a good thing if the Minister had begun the process of eliminating the various allowances by tackling the complexities of the tax system thus saving a lot of time for the Revenue Commissioners, accountants and everybody else and producing a very simple taxation system of corporation tax on companies. For example, in the case of non-manufacturing companies the Minister could eliminate all the allowances and simply put a 20 per cent tax on their profit. That would eliminate all the messing with accountants and there would be a decent return. If the banks were paying 20 per cent tax on their £400 million the Minister would have £80 million which is way above what he gets with his 40 or 43 per cent tax at the moment with all the anomalies and methods of avoiding paying tax that are available to people at present. I hoped that the Minister would begin to tackle the maze of tax exemptions and allowances which are a bonanza for accountants and tax officers who are leaving the Civil Service and the Revenue Commissioners at such a rate to go into the private sector as tax advisers in order to show big business and big farmers or high earners among the self employed how to deprive the Exchequer of its rightful share of tax. They show these people the various methods by which this can be done and, of course, make fortunes out of it.
As well as that it makes it very difficult for anybody to fill in a tax form. Even the PAYE workers who have much less areas of allowances find it difficult to complete a tax form but for the self-employed and farmers it is a very complicated business and it should be simplified.
The Commission on Taxation produced five reports. The Workers' Party would disagree with many of the points they made but we recognise the main thrust of them as the foundations on which an equitable tax system could be built which would encourage industry and encourage the creation of jobs. Unfortunately, a few points from here and there are being introduced by Ministers but there is no pattern of the development of tax reform.
I want to tackle one particular point in regard to PAYE. It is dreadful that a widowed person who has lost his or her spouse is treated as a single person at a time when they have enormous difficulties, reduced income and, in many cases, increased outgoings because if they get a job they have to employ somebody to look after the home, etc. In any case the tax on single and widowed persons on anything over £63 a week cannot be justified. I do not know how any Minister for Finance can tax poverty. People on these incomes are in the lowest depths of poverty when they are on earnings of that nature, yet they are being taxed. The Minister for Social Welfare then has to look for methods to try to assist them in their poverty so that they can get money for food.
On the other hand section 8 in this Bill is, I think, a dirty trick. It is an attempt to take the last lump from a person who has worked all his life and who is going out on pension and getting a lump sum. The Minister has now raised the threshold to ensure that he will take a bigger slice from the person going out on pension, who will need a nest egg, and from the person who has been made redundant and receives a redundancy payment which will only cover him for a couple of years. It is an absolute disgrace that in section 8 the Minister for Finance is making provision to take a further amount from these people. We will certainly be tabling an amendment to the section on Committee Stage although the Minister has made noises about adjusting it.
I must refer to the reluctance of the Minister for the Environment to grant designated area status to the essential new town centres in Blanchardstown and Ronanstown. It is relevant to refer to the Minister for the Environment now because I am talking about the designated area status. The developers of the Blanchardstown town centre have been ready and waiting to commence work for over six months but they await the Minister's decision to give them the designated status that was given to the developers of the Tallaght town centre. Indeed, the proposed Blanchardstown town centre is superior to the Tallaght town centre because it includes amenities such as theatres, skating rinks, etc. which are not included in the purely shopping centre at Tallaght.
There is a suspicion, which I hope has no basis in fact, that another developer who wishes to construct a huge shopping centre in Palmerston at the junction of the new Galway road and the new Western Parkway, and who I believe is an old friend of the Minister, is opposed to the development in Blanchardstown because it would be in direct competition with his development which is only a couple of miles away. I understand that the Tánaiste, Deputy Lenihan, fully supports the Blanchardstown town centre getting designated area status and that the Minister for Finance has no objection either. It simply stands with the Minister for the Environment. I hope the Minister, Deputy Flynn, will ensure that the tens of thousands of people who were sent out to develop this new town in Blanchardstown, which has been planned for 20 years, will not be abandoned in the desert of Blanchardstown without a town centre because that is precisely what appears to be happening at present.
The last point I wish to raise in the few minutes remaining is the issue of smog during our "Green" Presidency. The Air Pollution Act, 1987, which we put through this House was expected to eliminate smoke and smog but the Minister appears to have totally abandoned it and announced simply that he will ban coal. I understand that only £3 million has been made available for the elimination of smog. I had hoped it would be made clear in this Bill what procedures and funding would be available to eliminate smoke in the city. Coal is to be banned and £3 million have been set aside for the whole country to subsidise those who will obviously need help to meet the higher cost of substituting smokeless solid fuel.
That is for the Dublin area.
However, no grants are being made available for the conversion to other smoke free systems such as electricity, gas, etc. I had hoped that this Bill would have shown the Government's plans for the elimination of smog during this year of our "Green Presidency".
I am tempted to say how much I miss the scripts by Eoghan Harris.
That is a sick joke which turns my stomach.
The Finance Bill which we are now considering is one of the most complex that has come before the House in many a long year. The Bill deals comprehensively with the Government's tax strategy for the present year and continues to implement the highly successful economic policies which have been implemented by Fianna Fáil since our return to power in 1987. The policies which this Government have continued to operate since 1987 have returned the country to economic stability and have laid the foundations for further economic progress.
Because Fine Gael revisionists have been so active of late, as they have often been in the past, it is now worth while reminding ourselves where we stood in 1987 and how much has been achieved in the short period since then. The most striking achievement has been the reduction in the Exchequer borrowing requirement. The last Fine Gael speaker to raise the matter touched on this issue, so let us put the record straight. In the years 1981-82, the peak years of the Exchequer borrowing, Exchequer borrowing reached the staggering sum of 16 per cent of GNP. Between 1982 and 1986, for which the second FitzGerald Coalition Government can take credit, and must accept blame, our borrowing continued apace. Indeed in this period the national debt increased from just over £12.5 billion to just close on £25 billion. By 1986, in spite of the higher amount of cash borrowed, only a modest improvement in the Exchequer borrowing requirement was achieved. It is just as well to remind Fine Gael that the end year figure for the 1986 Exchequer borrowing requirement stood at a modest 13 per cent, in other words, in four years, despite all that had been claimed, there was a drop of 3 per cent in the Exchequer borrowing requirement. That is hardly what we could call massive progress from a party that now claim to have redressed the balance of the economic life of this nation. In fact, they are claiming credit where no credit is due.
Given the consensus that existed as to the need to curb borrowing from the early eighties onward, the Government who were in power from 1982-86 stand rightly condemned in this regard. Real progress commenced in 1987 and by the end of that year the Exchequer borrowing requirement as a proportion of GNP had been forced down by the courageous Fianna Fáil policies to 10 per cent. The downward trend has been continued ever since and last year the end of year figure for Exchequer borrowing was at a 40 year low at less than 3 per cent. That is what you call progress, or economic achievement. While there was a modest cut in the Exchequer borrowing requirement and GNP ratio between 1982 and the end of 1986, the same could not be said about the current budget deficit which reached an all time record at the end of 1986 when it peaked at 8.5 per cent of GNP. How do Fine Gael Deputies square that with their comments on moral responsibility? I do not know and I would be delighted to hear from them.
There was intriguing correspondence in one of our national newspapers recently and in spite of the fact that it went on to tedious length, it certainly did not answer that fundamental question. This deficit on the current account budget added to the deficit of preceding years meant that the debt-GNP ratio grew from 94 per cent in 1982, when that party's Minister for Finance took up office, to a staggering 130 per cent in 1986, an extraordinary figure by any standard in any country at any time. This fact is worth recording because it is conveniently avoided by those who would revise our economic history in a Lewis Carroll fashion and who seem to find a place in Fine Gael's front bench at this time. Their success in controlling the nation's debt and public expenditure is not the only policy area in the Finance Bill.
At the end of 1987 Ireland faced the seeds of disaster in terms of our national debt but we were also facing punishing levels of personal taxation. It is worth recording that in 1982 a Fine Gael Minister for Finance promised that there would be massive changes in the levels of personal taxation. This was no lie, because there were massive changes, massive disimprovements. In spite of the promises made in the early eighties to reduce the level of personal taxation, Fine Gael in office did the opposite. The 25 per cent tax rate on low incomes was abolished by the stroke of a pen and the top rate of personal tax was jacked up to a remarkable 65 per cent. This party is now seeking to con the Irish people into believing that they have some way of reducing personal taxation. It is worth recording that while they were in power far from reducing personal taxation, it was increased to the highest level ever suffered in this over-taxed State.
It is again worth reminding ourselves of these facts. Fine Gael revisionists have recently been claiming that they took the first steps in the present round of tax reform when, having realised their mistake, they reduced the top rate from 65 per cent to 58 per cent. Big deal. That is about the equivalent of the hangman who looked after Sam Hall handing his widow the rope and saying how kind he was.
Since 1987 there have been major improvements in the tax system and they have been costly to the State. Much in this Bill is about further improving the tax system. The Bill has been recognised as progressive legislation. We should give credit where it is due. Deputy Michael Noonan paid tribute at the outset of his speech to the incisiveness of the Minister's approach and his dealing with this extremely complex legislation. Some credit is due in that regard. In this Bill the standard rate of income tax will come down to 30 per cent, 5 per cent lower than the rate two years ago. Of course, 30 per cent is still too high but at least the inexorable trend is now in the right direction. The top rate of tax will come down from 58 per cent to 53 per cent, again 5 percentage points below the 1987 rate and a staggering 12 percentage points below the ludicrous level reached when a Fine Gael Minister was in office. That is an extraordinary turnabout and one for which the present Minister and his immediate predecessor are due great credit.
The reduction in the rate of tax is just one aspect of the tax reforms achieved in the three short years since Fianna Fáil took over the Finance portfolio. The scandal of unpaid taxes has been addressed first of all by the carrot of the highly successful tax amnesty which, it must be recalled, was much derided by Opposition parties at the time. There were hoots of laughter when the Minister suggested relatively modest targets for this but of course the cynics were confounded when the money began to roll in in hundreds of millions. This tax amnesty, one of the most imaginative and courageous things done by any Minister for Finance, began to redress the imbalance and the scandal that was to the discredit of all of us. Since the tax amnesty there has been effective use of revenue sheriffs. With the establishment of the tax task force the position with regard to avoidance and the criminal level of outstanding taxes has started to be redressed but the scandal of tax fraud has not been resolved completely. I am not saying it has been resolved completely and I think no Fianna Fáil member has said that but at least it is being tackled. The resolution of the Government in this regard has under-pinned the good work done by the Revenue staff to the point where the taxpayers can be assured that there exists not just the political will but also the political willingness to resolve the scandal and the shame of outstanding tax figures.
Another major step has been the introduction of self assessment. When this concept was mooted by the Minister's predecesser, there were some scoffing, cynical remarks. The suggestion was made that self assessment would not work and a lot of cold water was poured on the Minister's claim for such a system assessment at that time. Allied to the general self assessment system there is the decision in principle that tax on income as opposed to tax on some imputed income should apply to all. That was the second major tax achievement to establish the principle that whether you are a PAYE worker, a farmer or other self-employed person, you should pay tax on the same basis as everyone else.
There were probably two sides to the argument about matters such as land tax but the principle which has become enshrined in Finance Bills for the last few years, that income is the basis of all tax, is a very good principle and one which all politicians in this House should support and continue to underwrite. Self assessment, when fully operational, will be one of the most fundamental long-term improvements in the tax system in this State. When you take self assessment on a current year basis with the principle that income is the basis of all tax, you begin to put the tax affairs of this nation onto a level playing field. It is worthwhile reminding ourselves that when the Government first announced the move to self assessment the cynics, not just on the Opposition benches but also in the media, chortled and suggested that there would be no real effect. How wrong they have all been proven. An additional £70 million has been received from those who are now in the self assessment system. This is an extraordinary change in events and represents the biggest uptake in taxation from those sectors in the history of the State. It is something that is obviously to be welcomed. It shows what has been done so far and what can be done on the coming into operation of a full self assessment scheme.
The Finance Bill follows on the three years of progress I have summarised. As the Minister for Finance has said, it aims to build on those three years of achievement. In this regard I would suggest that it is a Bill which recommends itself to all right-thinking people in this House. I have listened to other contributions here and to the carping of Deputy Mac Giolla a few minutes ago. I listened to the same Deputy and to his cohorts from the RDS last weekened and I wonder that anybody has time to listen to them at all. They are so imprecise, unfocused and concerned only with the creation of mayhem and the conjuring up of smoke screens I wonder how any intelligent person can adopt the sort of approach they have adopted.
Three years of achievement underpins this Bill. Significant improvements are provided for in the Bill in so far as the PAYE payer is concerned. The provisions on personal taxation bring us further along the road to meeting the Government's target of a 25 per cent standard rate of tax by 1993. We recognise that PAYE payers wish they were on the 25 per cent rate now. I wish, as a PAYE payer, that that were the case. In this Bill there is a further set of steps which are achieveable to bring us to that ultimate point. This is surely welcome to all parties. How can anybody object to this or suggest, given the record in recent times, of Finance Ministers from other parties, that they would do better?
The cut in the top rate moves us towards the point where we will have a single top rate of tax and at a lower level than is currently the case. I have no doubts that the people who argue that our tax system is a major disincentive to work are arguing from a position of strength. The Minister and the Government implicitly accept this. The movement towards a lower and a single upper rate of tax is very welcome indeed and should be supported by all parties who have a capacity to honestly analyse the position.
Progress is also achieved in the Bill by the Government's measures towards the target of having two-thirds of PAYE payers on the standard rate. Additional reliefs introduced this year will cost the State £200 million and it will mean that 63 per cent of PAYE payers are on the standard rate by the year's end. Again, this is surely good news and can hardly be reasonably opposed by any serious political party. In addition to introducing reliefs, the Minister is exempting 31,000 taxpayers from the tax system altogether and providing additional marginal relief for a further 65,000. That is surely very welcome news.
Improvements in the tax system in any area costs money and those costs must be born by additional taxes, by spreading the tax net, by cutting expenditure or by borrowing but most of those alternatives are simply unattractive. The Minister is finding some of the money he needs by reducing life assurance relief from 80 to 50 per cent. While I understand the reasoning here I cannot say in all honesty I welcome this change. In recent years there has been a great deal of academic attack on measures such as the relief on life assurance, the mortgage tax relief and now on VHI relief. Some financial journalists and a few politicians have been urging reductions in these reliefs also. I suggest this is an area where we should tread warily. The reliefs are of most benefit to the middle income groups. Understandably they are regarded by people in these groups as the only perk they can get. While in a sense this perception is a self-delusion in that every perk must be paid for, I would urge, nonetheless, caution were we to proceed any further down this road.
In relation to mortgage tax relief I am pleased that the Minister has resisted the pressure to cut again. The reductions in 1988 and 1989 could be tolerated at a time when interest rates were falling rapidly. The unwelcome and, I hope, temporary reversal in the trend of interest rates meant that a cut here was not desirable this year. The Minister was correct to resist the advice which had been proffered to him by some new friends in this regard. I, as a member of our parliamentary party, am very pleased that the Minister resisted the political pressures put on him to move against this. Predictably Opposition spokespersons have been sounding alarms about the need for steps to alleviate the undoubted problems being felt by mortgage holders because of the rise in interest rates.
The Minister would want to watch himself.
The same Opposition spokesmen are ignoring the fact that our rates are still well below the historically high rates achieved when they were in office and when they did nothing.
I like to be lectured.
The view taken by the Minister——
Fairyland.
——that the best the State can do for the mortgage holder is to ensure that it does nothing to increase interest rates is, of course the right decision. This is not to say that the position should not be kept under close scrutiny. If towards the end of this year interest rates are forced up by external factors, then we would have to consider this area very carefully indeed.
I have already mentioned the success of the self-assessment system. The changes in Chapter II of the Bill bringing self-assessment to a current year basis represent a logical move and one which I welcome. If we are to have a proper system of self assessment it should be on the basis of current year income. The Minister is absolutely correct when he says this would bring greater certainity and efficiency to the system. It would undoubtedly have advantages for the tax collector but it would also have advantages for those of us who pay taxes. Lower compliance costs in the long term will assist those paying tax on the self assessment system. I am and I have always been a believer in a common system of tax for all based on income. The self assessment system based on current year incomes brings us very close to that objective. When the system is operational it will be necessary to ensure that there is equality in terms of the remissions and allowances. In this regard submissions being made on behalf of those who are being brought into the self assessment system demand careful consideration. Arguments being put forward by the self-employed and by some farmer organisations at present have a great deal of logic in them and they must be looked at.
Deputy Callely referred to inequalities in the residential property tax system. The failure of the residential property tax system to discriminate in favour of the person who is in the process of buying a house is a serious anomaly and one that will now have to be addressed. It is exacerbated by the rising market trend in house prices in the greater Dublin area. For example, in my own town of Bray, the price of houses has escalated dramatically in recent times, yet the income in those households has not increased dramatically. In some cases, because of the artificial increase in house prices, people have been tripped over and are now in the residential property tax net. Those people who are paying increased mortgages and who find themselves in this circumstances have a right to feel poorly done by. It will be necessary to introduce some amendment to the residential property tax system to take account of the mortgage holder. That is a point that has been made by a number of speakers and it is one which I emphasise.
There are a number of other areas which demand some comment. The announcement made by the Minister that the 10 per cent tax concession on manufacturing is to be extended to the year 2010 is very good news. I am at a loss as to how The Workers' Party can make objection to this initiative. I do not think any serious politician who is interested in progress, development and jobs could possibly object to it, particularly when we take into account that the Minister has begun to address the obvious anomalies in this aspect of our tax system. The Minister's decision to get rid of what he has in his own inimitable style classified as the Disneyland schemes is welcome. I was a little dismayed by the suggestion of Deputy Noonan of Fine Gael that this decision would inevitably lead to an increase in costs in items such as bottled gas and coal. That is surely suggesting to those people who produce bottled gas and to those who distribute coal that they should increase their costs. I felt it was uncharacteristic of Deputy Noonan.
I am sure they will listen to Deputy Noonan.
When he has had the opportunity to consider the matter further I am sure he will have the same regrets about his indiscretion as I have. The extension of the urban renewal taxation benefits to 31 May 1990 is welcome. Today, in a hotel not far from here, many of us had good news that the end of years of lobbying has finally borne fruit. If Deputy Mac Giolla has not been successful in crying in the wilderness for his pet area, at least I was successful in crying in the wilderness for Bray. I welcome the extension of the urban renewal scheme to Bray. It has been one of the schemes introduced in the past few years that has been remarkably successful. It has been successful because the confidence that underpins that type of development has been created by Fianna Fáil in office. It has been successful because we have imaginative Ministers in Government. I have no doubt that within 12 months I will be knocking on the doors of my friends the Minister for the Environment and the Minister for Finance — those farsighted people — and I will be saying to them: "We have now exhausted all the land in the town of Bray, please could we have some more." There is no doubt, looking around the country, one finds that the urban renewal scheme has been a remarkable success. The jobs done at the West Gate in Wexford, at Merchant's Road in Galway, the work being done in Limerick and, of course, in the Christ Church area in Dublin is praiseworthy. This is an inspired scheme. I believe the scheme is well focused. My belief in the scheme has been reinforced today by the decision of the Minister for the Environment with the support of his colleague, the Minister for Finance, Deputy Reynolds, and the rest of his colleagues in Government, to extend this very worthwhile scheme to the town of Bray. This comes at a time when the Government have made another inspired decision regarding the town of Bray, which was to extend the higher rate of industrial grant to the entirety of County Wicklow, making Bray the best place in Ireland — north east Wicklow — for any investor.
Other changes have been made in the Finance Bill which are welcome. Another change which commends itself was the Minister's decision to intervene in the operation of the BES. The BES is worthwhile and I am prepared to give credit, as has been suggested to me from time to time, for those occasional successes to Fine Gael Ministers. The BES was a successful scheme, of course made more successful when Fianna Fáil came into office and extended and focused it properly.
The Deputy's focus is not too good tonight. It needs attention.
My focus never needs attention. It is always precise.
He needs bifocals.
The decision to change the operation of the BES is very welcome. The schme had begun to fall into an element of disrepute. The way it had been operated to effectively give its benefits to non-risk capital clearly was not intended when the scheme was established and was undermining the benefits coming from the scheme. Therefore, the Minister is to be congratulated on his decision to get rid of the anomaly and to focus on risk bearing schemes.
Deputy Dempsey discussed the extraordinary situation where some local authorities were facing taxation charges before the courts at the hands of the Revenue Commissioners. The Minister's decision was very sensible and was made in a situation where one public authority would sue another in the High Court at the expense of the taxpayer. That is to be done away with. This is in line with a tidying up procedure which has been undertaken over the last two or three years and is one of the highest success areas operated not just by this Minister but by his predecessor and by the Minister for the Environment to effectively stop circular transfers where we have anomalies that cost the taxpayer and achieve nothing.
As I said, this Finance Bill marks, to my mind and I think to the minds of many fair minded persons, a watershed. It is unique in its complexity, and is extraordinarily complex. The Bill runs to 130 pages in toto. It is undoubtedly one of the longest Finance Bills introduced in this House in my memory——
That is not long.
With due respect to the Deputy, I worked a long number of years in the Department of Finance——
In this House.
——generating this sort of stuff and I have never seen another Finance Bill which was so well drafted and focused. It has been identified as such by others, including Fine Gael Deputies who have contributed here. I have every confidence that in the last three years a Fianna Fáil Government — Fianna Fáil led Government in this case — have put this country back on the road to economic recovery. I have no doubt that the Finance Bill which has been introduced by Deputy Albert Reynolds, Minister for Finance, will continue that good work. I have no doubt that secretly, in spite of the fact that Opposition Deputies have conjured up artificial claims against this Bill, they are in admiration of what the Minister for Finance has done.
The Minister for Finance has done us all a great benefit on the taxation side. There is an incisiveness here which has been missing on the taxation debate for a long number of years. I accept that, because of the changing political climate or the change to a more mature political climate, it is easier to effect these changes, but we are now in sight of our ultimate aim, and not just our aim but the aim shared by the sensible parties — not by some of the nonsensical parties — of the type of equitable tax system we all desire. The change to a current year basis for self-assessment and the consequential provisions are very welcome changes indeed.
There is no doubt that these taxation changes will in the years ahead be seen as a turning point. In spite of what Deputy Mac Giolla said, the changes in corporation tax and capital gains tax are inspirational, and well focused and they have been accepted by Opposition spokespersons as such. The changes in the whole process of tax administration are very welcome. This is an excellent Bill which has a great deal to commend it to the House.
Deputy Hogan can give us his Kilkenny comments in five minutes.
It is galling to listen to Deputy Roche lecturing Fine Gael on fiscal rectitude. I want to remind him of a few economic facts to the Fianna Fáil record. Maybe he is suffering from the same complaint as the Taoiseach was during the last election campaign when the health issues were raised, and I want to jog his memory a little.
The last time Fianna Fáil had a majority Government Deputy Roche was not a member, and he was not a Member of the Parliamentary Party at the time; he was advising——
I was a civil servant.
The expenditure and Exchequer borrowing requirement when Fine Gael came into Government in 1981 would have been 23 per cent of GNP and when we left office in 1987 it was down to 10 per cent; inflation was 20 per cent in 1981 and it was down to 3 per cent in 1987; domestic private consumption which had fallen by 7 per cent when Fianna Fáil were last in office had risen by a total of 12 per cent over the period of our Government; growth rates were at 5 per cent per annum when we were in Government rather than 2 per cent the last time Fianna Fáil had a majority. Perhaps we can say definitively that their partners in Government are having some influence over the glowing statistics the Deputy trotted out here tonight.
That is not correct. It was zero. Growth was zero while the Deputy's party were in Government.
Gabh mo leath scéal, if Deputy Hogan would address the Chair and not look endearingly at Deputy Roche he would not be getting interruptions.
(Interruptions.)
I was looking endearingly at Deputy Roche when he was going off line for the last 30 minutes. Statistics look very well——
Growth was not 5 per cent; it was zero and the lowest rate in the OECD.
The national debt has gone up by £500 million in the last 12 months whether the Deputy likes it or not. He can quote statistics selectively all over the place.
(Interruptions.)
In spite of all the glowing statistics Deputy Roche trotted out in this House tonight, unemployment is still not being significantly reduced; interest rates which Deputy Roche has thanked the Minister for increasing have risen four times in the last 12 months; and mortgage holders in Kilkenny and in Bray are suffering from £120 a month extra repayments on a £30,000 loan. Where are the employment prospects for those people? What about the evictions that will take place if present increases in interest rates on mortgages continue, as Deputy Roche has advocated and thanked the Minister for doing tonight?
I welcome the fact that there is a move in this finance Bill towards reforming the tax system. Reform does not mean a reduction in taxation. It means a change in the focus of taxation. We need to create a greater incentive to work, and that is not there at the moment. Not enough employment is being created, and we must consider all the costs employers have to meet. At the moment the employers are the Government's whipping boys. They are being whipped every minute of the day for not creating more private sector employment under the Programme for National Recovery, and I am very surprised the Minister for Finance did not rap his Cabinet colleagues and backbenchers on the knuckles for saying very nasty things about private sector employers not getting their act together to create employment. I know the Minister does not like what I have to say but because of his collective responsibility he can say nothing about it.
He will want to do more than rap them on the knuckles.
We do not do that in this party.
(Interruptions.)
I look at this Finance Bill to see how it will create jobs for the young people who are emigrating from Kilkenny and from other areas in my constituency. I want to look at it to see what I can do to protect viable industries like Mahon and McPhillips because of the competitive forces acting in this economy and the high costs in terms of interest rates and of labour, energy and transport costs. It is because of our position on the periphery of Europe that we must be addressing the uncompetitive forces in our economy to make our industries more competitive abroad.
Agriculture is a very important contributor to our economy and it was galling to see the Minister for Finance when we are expecting farm incomes to be down by £350 million in 1990, coming home with £87 million from Europe and claiming that he had done a great day's work. I am not surprised that there are splinter groups in the farming organisations. They are not happy with the leadership of the farm organisations and Deputies opposite know that.
I should like to appeal to the Minister for Finance to consider an amendment that will be tabled on inheritance tax. That issue is causing great difficulties for the farming community. It was never intended that milk quotas should be treated as a capital asset for the purpose of calculating that tax and the Minister is aware of that. It is my hope that he will address that problem.
I have addressed it more than anybody else in the last 15 years. I am surprised at Deputy Hogan. I would like to thank all the Deputies who have contributed to the debate and to respond as comprehensively as I can in the time available to the major issues which were raised. Other points relating to individual sections of the Bill can be discussed in greater detail on Committee Stage.
Deputy Noonan in his opening contribution dwelt strongly on his contention that, as he put it, "the budget is going off the rails" and asserted that there would be a significant budget overrun in 1990. In the light of current trends, there is no basis for this view. While the end-March Exchequer returns showed that borrowing for the first quarter was higher than expected, this was due in the main to a number of once-off timing factors affecting both expenditure and tax receipts — which should correct themselves as the year progresses. The underlying figures are running broadly in line with the budget forecast. The tax revenue picture is satisfactory and does not support Deputy Noonan's argument that the budget arithmetic was based on an over-optimistic estimate of tax buoyancy. Indeed, some outside commentators said at the time that my Department had been over-cautious in their revenue forecasts.
However, I accept that there is no room for complacency in regard to the public finances. I said at the time of the publication of the first quarter Exchequer returns that the Government will be monitoring trends closely over the remainder of the year, in the light of developments at home and abroad, so as to ensure that the budget targets are achieved again this year.
The Bill to establish the debt management office is at a very advanced stage of preparation and I expect to be able to introduce it shortly. I do not see any difficulty in setting up the office within the general timescale I indicated in my budget speech and in staying within the estimate for debt servicing costs this year.
The same Deputy questioned with "anecdotal evidence" whether the pace of economic activity is faltering. In relation to 1990 of course, few statistics are yet available. However, some of the few available are worth mentioning. Registrations of new cars in Dublin, which are a useful pointer to the overall position, are performing satisfactorily and are well in line with the forecast level of sales for the year as a whole. Leaving cars aside, the value of retail sales countrywide to end-February was close to 7 per cent up on the corresponding period of 1989. These figures suggest an overall volume increase of about 2.5 per cent. One must take into account also that anticipation of the reduction of VAT from 1 March may have temporarily altered underlying trends.
As to the Deputy's remarks about the building sector, the monthly index of employment in private firms for February last — the latest available — shows an increase of 10 per cent in employment in the first two months of this year compared with 1989. While exports are not moving ahead as rapidly as in recent years, trade data to the end of February confirm solid volume growth more or less in line with expectations at budget time, and industrial output data for January underpin the trade data.
Overall, there is no reason at this stage to alter the Department of Finance's post-budget forecast for the economy. We will of course be monitoring the position closely as the year develops, as I have already indicated.
A key point in Deputy Noonan's comments related to the direction of fiscal policy over the next few years. He advocated revising and strengthening the objective which I announced in my budget speech of reducing the debt ratio towards 100 per cent of GNP in the period to 1993. I agree with his desire to make substantial progress on this front, but I believe in targets which, while ambitious, are realistically so. They are the only ones worth setting. When targets are clearly unachievable, the will to try to attain them evaporates, and, as clearly happened in the past, no progress is made.
Does the Deputy genuinely want to aim for an end-1993 debt-ratio of 75 per cent of GNP? To achieve such a target would require progressive improvement so as to have a negative Exchequer borrowing requirement, that is a surplus, of more than 10 per cent of GNP by 1993. This would require an unsustainable adjustment. It would require from next year, by comparison with 1990 policies, an average net reduction in annual expenditure of some £2 billion or an increase in taxation of the same order each year for the next three years. The Deputy conveniently avoids addressing how this would be done or how, at the same time, we would accommodate further reductions in income tax rates and the requirements for approximation of our taxes with EC levels.
It is all too easy to set targets but they have meaning only if they are part of a coherent overall financial and economic strategy. The new objectives we have set are by no means unambitious. On the contrary, as I pointed out in my budget speech, they will be difficult to achieve while at the same time addressing the other problems we are facing. Success will depend on continuing tight control of expenditure and, in part, on the continuation of a reasonably favourable international climate. If conditions should enable us to do better we will of course do so, as we have done in the past three years.
Given the huge progress made since 1986 in improving the public finances, there should be no doubt about the Government's determination to continue the process. Having said this, I do not want to appear to be at odds with Deputy Noonan in his underlying proposition in which he is absolutely correct. The national debt has not disappeared. It is still increasing in absolute terms and there is a major overhang of debt which is burdening the economy. The only way we can achieve our economic and social objectives is to reduce that burden further. As I said when I was opening this debate there is no room for relaxation in our efforts to improve the public finances.
Contrary to what Deputies Taylor and Rabbitte have suggested, we do have a successful policy approach which is achieving results and is leading to more jobs and lower emigration. We would all like to see more rapid growth in employment to match the very rapid growth in the potential labour force. The fact that employment is not growing as fast as one might wish does not mean that we are not making good progress on the employment front or that there is some alternative magical formula to transform the jobs situation overnight. The challenge to translate economic growth into more jobs is the challenge facing the Government and we accept that challenge but there is no magic formula. Let us look at the facts.
Under the Programme for National Recovery over 60,000 jobs have been created in 1988 and 1989. With the dramatic fall in jobs losses — notified redundancies fell by 42 per cent last year — an increasing number of these new jobs are translating into net employment growth. Last year non-agricultural employment is estimated to have increased by 1.5 per cent and this year we expect an increase of 1.75 per cent. This is better than the annual average growth in the decade from 1960 to 1970. In the last two years, the average live register has fallen by some 16,000 and a further large fall is expected this year.
The 1989 Labour Force Survey gave the number out of work as 203,000. Taking account of the subsequent increase in employment and of the associated decline in the live register, at present there must be fewer than 200,000 without jobs on this basis. This is, of course, far too many but, unlike the situation prior to the programme, unemployment is now falling, as I have said.
Some Deputies need to catch up with these facts. During the debate I heard some formulae for employment creation being trotted out — tired old formulae — which have been abject failures here and elsewhere and which are now being discarded all over Europe. We should all have learnt by now that sustainable job creation with improved living standards in any economy, but particularly in a small open economy such as ours, is vitally concerned with costs and competitiveness. It entails a whole range of policies including those aimed at developing our economic infrastructure, reducing the discentives in our tax system and improving productivity of labour and capital. This is the kind of comprehensive strategy being pursued under the Programme for National Recovery. It has succeeded in turning around the situation on jobs and I am convinced that it is the kind of strategy which we must continue to follow if we are to to build on the progress to date.
During the debate reference was made particularly by Deputy Rabbitte to the lack of improvement in real take-home pay in the past ten years. We should probe this further to see what has really been happening. The real take-home pay of a married worker with two children, earning the average manufacturing wage, fell by over 8 per cent in the period 1980 to 1987. In the three years 1988 to 1990, real take-home pay of this worker will have increased by almost 4 per cent. In an environment of high inflation and mushrooming national debt, such as we had well into the 1980's, workers' real take-home pay suffered. It suffered first because of inflation and second because of the rising tax burden associated with servicing the national debt. In the period 1980 to 1985 inflation averaged about 13¼ per cent per annum while in the three years 1988 to 1990 it will average about 3 per cent.
The moderate pay increases under the Programme for National Recovery, coupled with income tax reliefs of well over £800 million, as well as low inflation, have been putting real money and purchasing power in workers' pockets in contrast with the situation for much of the 1980s. Anyone who contends that the policies implemented under the programme have not been favourable to workers is ignoring the facts.
I agree wholeheartedly with Deputy Noonan when he says that the benefits of a strong currency should be automatically passed on to the consumer through price reductions. We must achieve our objectives for lower inflation this year. I am watching prices closely in consultation with my colleague, the Minister for Industry and Commerce.
(Limerick East): When will the Minister, Deputy O'Malley, introduce the Bill in the Dáil?
Ask the Minister. I do not deal with two Departments.
Deputy Noonan is not entitled to interrupt the Minister and he knows that.
(Limerick East): There is a tradition that the Minister co-operates when he is asked a question.
What? At this stage?
(Limerick East): You are being very harsh with me, a Leas-Cheann Comhairle.
The Minister for Finance, Deputy Reynolds, certainly disregarded the Minister for Industry and Commerce.
I should now like to deal with the points made by Deputy Noonan on interest rates. First, there is no upward pressure on Irish interest rates at present and I do not accept that there is widespread speculation among informed commentators that such pressure is about to develop.
(Limerick East): The Taoiseach agreed——
Secondly, I would like to assure the Deputy that, as I stated in my budget spech, the Government's objective is to pursue a strong currency policy within the European Monetary System and to implement whatever monetary and other measures may be necessary at any time to secure this position. Sometimes it is necessary to maintain a level of domestic interest rates higher than we would wish in order to achieve the vital exchange rate objective.
Let me make it clear again that the level of interest rates is primarily a matter for the Central Bank. In arriving at its decisions the Central Bank will carefully weigh such matters as the position of the external reserves, currency movements, credit growth and other factors which impact on the conduct of monetary policy and on the welfare of the people as a whole.
Movements in interest rates are usually influenced in the first instance, of course, by developments in the markets. As we are a small and open economy, international trends will always have a big impact on our situation. The markets are strongly influenced also by the general conduct of economic policy here.
There is no doubt that the fiscal and economic policies pursued since 1987 by the Government have exerted a major positive influence on interest rates. The Exchequer borrowing requirement has fallen from £2,145 million in 1986 to a projected £449 million in 1990. The ratios of our national debt to GNP fell from 129 per cent in 1986 to 121 per cent in 1989 and it will fall again this year. The current account of the balance of payments is in surplus and inflation is low. As a result of these developments the differentials between Irish interest rates and rates abroad have improved dramatically since March 1987. For example, in March 1987 UK interest rates were more than 3 per cent below corresponding Irish rates; they are now more than 3 per cent above them. This is an improvement of over 6 per cent. During the same period the differential with German rates improved by over 5 per cent. This is a dramatic improvement in competitiveness and is the true measure of the interest rate gains arising from the policies being pursued by this Government.
Deputy Noonan also made repeated reference to a credit squeeze. In this connection, I would like to draw the Deputy's attention to the most recent banking statistics issued by the Central Bank of Ireland. These show that in the period mid-February 1989 to end-February 1990 bank lending to the private sector increased by almost 16.5 per cent. This is over twice the growth rate projected for nominal GNP this year and does not provide evidence which would support the view that the economy is suffering because of a shortage of credit. At end-February licensed banks had, on aggregate, more secondary liquid assets then they were required to hold. The financial markets are available to assist in ironing out imbalances between one bank and another. The level of liquidity ratios will, of course, continue to be kept under constant review in my Department.
Deputy Noonan alleged that I do not have an overall plan for tax reform. Where did I hear that before? This time last year. I totally reject this assertion. Very tangible progress has been made in the past few years, as I outlined in my opening statement. Our plans for ongoing tax reform are set out clearly in the Programme for Government and we have made a very good start on meeting our commitments in this Finance Bill. The key elements of our approach on tax reform are: reductions in the level of personal income tax so as to achieve a standard rate of 25 per cent by 1993 and movement towards a single higher rate; expansion of the tax base through, for example, the curbing of abuses and the payment of more tax by the corporate sector; and achievement of a more efficient tax assessment, collection and enforcement system. The Finance Bill makes significant advances under all these headings.
By contrast, we heard little or nothing from Deputy Noonan on his general approach to tax reform except to suggest the re-establishment of the Commission on Taxation. I see no need to reconstitute the commission, because the thrust of the Government's policy is very much in sympathy with the principles set down by the commission in their reports. There has been adequate debate already. The Government must take responsibility for decisions and implementation of reforms. This is what we are doing. While on this point, it is worth noting that when Deputy Noonan was last in office the Government of which he was part failed to act to any significant degree on the commission's recommendations. In the circumstances, his call for the reconstitution of the commission rings very hollow indeed.
Deputy Rabbitte spoke at length about alleged inaction in relation to tax evasion. Nothing could be further from the truth. The last few years have seen the most concerted drive ever to achieve better collection and enforcement and to curb tax avoidance. The key measures taken were as follows:
—Self-assessment procedures for the self-employed and companies were introduced; as I indicated in my opening address these procedures have been very successful leading to a significant increase in the yield from the self-employed. The provision in the Bill for a current year basis of assessment for the self-employed will greatly facilitate the further development of self-assessment. The result will be a lower compliance burden on taxpayers and more resources freed for the pursuit of tax evasion.
—Tax enforcement has been considerably strengthened, following the successful tax amnesty, by the granting to the Revenue Commissioners of a power to attach the financial assets of tax defaulters. This measure has been successfully used by the Revenue and, in tandem with the activities of the Revenue sheriffs, has resulted in a much tougher tax enforcement regime than was the case a few years ago.
—The tax clearance procedures for public sector contracts have been extended to publicly-funded grants. The principle behind this is that tax defaulters and evaders should not be able to benefit from State-financed grants and I am sure that this is a principle with which Deputies on all sides of the House would concur.
—A completely new general anti-avoidance provision and various specific provisions have been introduced.
The cumulative effect of these measures has been that the war against tax evasion has been stepped up considerably in the last three years. The success of this campaign has been reflected in increased tax yields and, therefore, in greater equity in the tax system.
A number of Deputies sought an elaboration of the situation in regard to progress towards indirect tax harmonisation within the Community. The main item settled by EC Finance Ministers during the French Presidency in the second half of last year was the outline of arrangements for payment and receipt of VAT in intracommunity trade after 1992. Under the consensus reached, exports will continue to be zero-rated VAT purposes during a traditional period and VAT will be charged in the country where consumption of goods takes place. The Commission is now close to completing the detailed proposals to give effect to these arrangements in a situation where border controls would not apply. The Irish Presidency has been pressing for the production of these proposals and will have them considered in the appropriate working groups as soon as they become available.
While agreement on VAT rates has not yet been reached, it was agreed last December that member states whose standard rate already falls within the range 14 to 20 per cent should not move out of that range between now and 1 January 1993; and that member states whose standard rate is outside that range should not diverge further. Timetables were set last December for the further decisions necessary on the format and level of the proposed standard VAT rate, on the scope and levels of the reduced rates and on the products which may continue to be zero-rated from 1 January 1993.
In order to maintain this mountain of progress, the Irish Presidency initiated an examination by a Council ad hoc group of the important issue of classification of items for the different VAT rates. At the meeting on 23 April, the ECOFIN Council took note of the useful progress achieved to date by this group and authorised the necessary definitional work to be undertaken in regard to those categories where there is general agreement that reduced rating should apply. The acceptance by the Council of the progress made under the Irish Presidency is a further significant contribution towards completing the post-1992 picture.
(Limerick East): God help us.
Progress in regard to excises has been slower than in the case of VAT. In an effort to advance matters the Irish Presidency has initiated an examination of the minimum rates approach put forward by the Commission last year for alcohols, tobacco and mineral oils. We are still awaiting promised Commission proposals on the structure of the various excises and the controls to apply to movement of excisable goods. All these proposals are interrelated and firm positions are unlikely to be taken until member states see the entire package.
I would accept that there is still a long way to go and many hard decisions needed to be taken before the process is complete. As part of this the budgetary problems facing Ireland, which, as I said earlier in the debate, are being examined by the Commission, must be resolved. Nevertheless, I believe that, with sufficient commitment from all sides, the target date of 1 January 1993 remains attainable.
Deputy Taylor was critical of the level of social welfare payments and accused the Government of being uncaring. The 1990 budget welfare package was in fact unprecedented in its cost and scope. The full year cost of the package, including the special tax and PRSI changes for those on low incomes, will be almost £200 million. This reflects the priority accorded to the achievement of greater social equity by this Government. Unemployment is at the root of poverty and we are determined to continue the progress we are now making in reducing it.
I would now like to turn to some general points made by Deputies or various provisions of the Bill. I am very heartened by the general welcome which most Deputies who spoke gave to my proposals for a current year basis of assessment for all income. There was general recognition that this change should simplify and improve the administration of the tax system with benefits for self-employed taxpayers, their agents and the Revenue Commissioners.
Some Deputies held the view that, with the change to a current year basis of assessment for self-employed taxpayers, these taxpayers should not gain entitlement to the PAYE and PRSI allowances. However, as I stated in my opening address, notwithstanding the change, important differences will still remain between the tax regime for PAYE and self-employed taxpayers. The key differences are as follows. Even under the current year basis the self-employed will, in general, still not be taxed on a current tax year basis, unlike taxpayers on PAYE. They will be taxed on the profits of their accounts ending in the current tax year. Those who have accounting periods ending early in the tax year will, in effect, remain on a preceding year basis. Overall, therefore, the basis of assessment will remain more favourable than that for PAYE taxpayers.
Secondly, the tax payment arrangements will continue to be different. Persons on PAYE will satisfy their full tax liability of the year by the end of the tax year. By contrast, under the new arrangements, self-employed taxpayers need only pay by the end of the tax year either 90 per cent of their current liability or the full amount of their liability for the previous year. The balance will not be due until close to the end of the following tax year. Thus, the self-employed are more favourably treated in this regard.
Thirdly, the self-employed have the advantage of a considerably more liberal system in relation to the deductions they can claim for business-related expenses and loan interest than is available to PAYE taxpayers. This facility enables them to significantly reduce their income tax liability.
As regards the PRSI allowance, I would point out that the switch to a current year basis does not affect the PRSI rate levied on the self-employed, the employee element of which is well below that paid by full-rate PAYE workers. Thus, the question of extension of the PRSI allowance does not arise.
In the specific case of farmers they have further advantages, including the right to average their incomes over three years and the right to stock relief, which are not available to the PAYE sector.
There is also the question of cost. Extension of the PAYE and PRSI allowances could not be confined to the self-employed but would have to be granted to others such as proprietary directors, who although on PAYE are not entitled to the allowances. The full year cost to the Exchequer would be almost £120 million. The overall effect would be a major reduction in the tax burden on the self-employed and farmers. In this regard, I should point out to Deputies that the breakdown of the total expected income tax yield for 1990 under the existing system is as follows: PAYE, £2,298 million or 88.8 per cent; farmers £50 million or 1.9 per cent and other self-employed £240 million or 9.3 per cent.
Deputies Taylor and Rabbitte expressed concern that some self-employed taxpayers might abuse the changeover to a current year basis by switching their income to the 1989-90 year which will not form the basis for an assessment. I can assure the Deputies that this will not be the case.
The proposals for the current year basis were not published until after 5 April 1990, the last possible day on which expenditure decisions could have been made with manipulation in mind. It is possible, nevertheless, that some taxpayers may have taken a chance and made expenditure decisions for the purposes of taking advantage of the changeover. For this reason the Revenue Commissioners and their inspectors of taxes will be monitoring the situation closely. It was partly with this in mind that I included in section 19 of the Bill a requirement for the interim return dealing with the income of the period falling out of reckoning — the 1990 income tax return.
I would also remind Deputies that the income chargeable for 1990-91 will not be returned until after 5 April 1991 — the final return filling date is 31 January 1992. Accordingly, I will have an opportunity in next year's Finance Bill to bring forward measures to counteract any abuses found and I can assure Deputies that I will not hesitate to do so if necessary. One possible option in this regard would be to allow the inspector of taxes, subject to necessary safeguards and conditions, to base the assessment for 1990-91 on the return for 1989-90, that is on the interim return rather than that for 1990-91. It is my earnest hope and indeed my expectation that such action will not in fact be necessary.
Some Deputies asked for more clarification of the scope and application of section 33, which aims at narrowing the definition of manufacturing for the purpose of the 10 per cent rate of corporation tax. I would like at the outset to assure the House that the vast bulk of activities which now qualify for the 10 per cent rate for manufacturing will not be affected by the exclusions in section 33.
When the special 10 per cent rate for manufacturing was introduced in 1980, the term manufacturing was not defined and it was intended that the concept should be interpreted in its normal everyday meaning. Thus the intention was that it would apply to those companies which were subjecting raw materials to a process of manufacture which resulted in a new product and to companies carrying out other similar activities. What has happened since 1980 is that this normal meaning of manufacturing has been considerably extended as a result of actions pursued by companies before the appeal commissioners and the courts to have their operations considered as coming within the ambit of manufacturing and thereby benefiting from the low 10 per cent rate of tax.
Section 33 counteracts these developments by specifying particular categories as falling outside the scope of manufacturing. No genuine manufacturing is excluded under this approach. The 10 per cent rate will accordingly continue to apply to what would commonly be held to be manufacturing. That is the processing of basic raw materials into a new finished commodity. The excluded categories of activities are broadly those which either obtained the 10 per cent as a direct or indirect result of decisions of the appeal commissioners or the courts in particular cases, or which are the subject of appeal proceedings at this present juncture or which are analogous to these types of cases. A process will not be regarded as manufacturing if it consists primarily of one of these excluded categories.
Section 33, therefore, narrows the scope of manufacturing relief in a coherent and organised way. However, there will inevitably be borderline cases. This will always be the situation as long as manufacturing is not positively defined in the legislation. By a positive definition I mean specified criteria which all firms would have to meet before they would get the 10 per cent rate. My Department and the Revenue Commissioners have examined the question of such a definition but have concluded that it would mean the creation of a complex piece of legislation which would generate a much greater degree of uncertainty and inevitably lead to far more appeals to the courts. On the other hand, a listing of more specific excluded activities, which would be very narrowly defined, rather than categories, would also be most unsuitable. It would mean producing an initial detailed list this year which would have to be added to in every subsequent Finance Bill as a result, for example, of decisions of the appeal commissioners and the courts made in the interval between each Finance Bill. This would also place the courts in a very difficult position.
The approach in section 33 is, therefore, the most appropriate way to tackle the problem. The section will be interpreted by Revenue so that the relief will continue to apply to all proper manufacturing activities. If companies feel they have been unfairly excluded they will continue to have the option of taking the matter up with the appeal commissioners and the courts.
The fact that meat processing, the repair and maintenance of aircraft and the production of films are specially regarded as manufacturing in the section does not imply that all other non-specified activities will lose the 10 per cent rate. This is done for technical drafting reasons. The general rule will continue to be that genuine manufacturing activities will retain this rate.
Finally, Deputy Noonan raised specifically the question of food processing. I can assure him that the vast majority of food processing activities will continue to qualify for the 10 per cent rate. I will be glad to go into greater detail on Committee Stage. I have made our intention quite clear and will be happy to discuss the precise wording at greater length.
Deputy Noonan claimed that the decision to extend the 10 per cent corporation tax rate beyond the year 2000 was a premature one and that the question was not considered in any proper fashion. This was certainly not the case. It was, in fact, indicated on a number of occasions last year that the matter was being considered. The CII and other organisations had sought an early decision because the time horizon for international business planning is such that industrial location plans are now being made for the period extending far beyond the year 2000. The IDA were being pressed by foreign investors about the post-2000 position. The question was examined in the first instance by an international specialist consultancy group which compared Ireland's international competitiveness for internationally mobile investment with that of other regions in the EC. The Government decision was arrived at following the consideration of these and other relevant factors.
Deputy Noonan also asked if EC permission was needed for the extension. The position is that such permission is not needed in the case of manufacturing industry. EC clearance is, however, needed in the case of non-manufacturing activities. My Department and the Department of Industry and Commerce have already been in touch with the Commission on this question.
The extension of the 10 per cent rate is not affected by any EC proposals for harmonisation of corporation tax rates. There are, in fact, no such proposals at present — earlier proposals have been overtaken by events — and the Commission have recently withdrawn them. The emphasis now is on tax measures to facilitate cross-Border mergers and co-operation arrangements between companies.
Deputy Noonan claimed that, as a result of corporation tax concessions in the Bill, no additional corporation tax revenue would now be forthcoming to help finance the necessary reduction in income tax over the next few years. This is not correct.
I must advise the Minister that the House has already decided that the Chair should now put the question.
(Limerick East): We will take the Minister's script as read.
It has been well distributed but, for those who have not got it we will let them have a copy.
I should like section 8 to be put on the record.
(Limerick East): It is on the record as distributed.
No, I do not think so. If the House agrees I will put section 8 on the record.
The House may decide that the Minister may conclude but I must advise the House of what has already been agreed.
(Limerick East): On the one hand I would like the Minister to conclude and put all of his script on the record; it is very interesting and he replies adequately to the points raised. On the other hand, I should like assurances from you, Sir, that somebody who has had the agreement of the Ceann Comhairle to raise a matter on the Adjournment will not be short-changed.
I can give no such assurance. The House now, in its wisdom, may decide that the Minister can conclude his speech. If not, we proceed in accordance with the order of the House, to put the question as has already been indicated.
(Limerick East): If the House has an order before it then we do not have discretion. The information is contained in the script which has been distributed. I am not prepared to take away the rights of a Deputy who has already been permitted to raise an issue on the Adjournment. Therefore, I contend the question should be put now.
All right.
The question is: "That the Bill is hereby read a Second Time and that the Motion for Financial Resolution No. 9 moved by the Taoiseach on 1 February 1990 is hereby agreed to."
The Dáil divided: Tá, 69; Níl, 63.
Tá
- Ahern, Dermot.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Vincent.
- Brennan, Mattie.
- Briscoe, Ben.
- Browne, John (Wexford).
- Calleary, Seán.
- Callely, Ivor.
- Clohessy, Peadar.
- Collins, Gerard.
- Coughlan, Mary Theresa.
- Cowen, Brian.
- Cullimore, Séamus.
- Daly, Brendan.
- Davern, Noel.
- Dempsey, Noel.
- Dennehy, John.
- de Valera, Síle.
- Ellis, John.
- Fahey, Frank.
- Fahey, Jackie.
- Fitzgerald, Liam Joseph.
- Fitzpatrick, Dermot.
- Flood, Chris.
- Flynn, Pádraig.
- Gallagher, Pat the Cope.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Hillery, Brian.
- Hilliard, Colm.
- Jacob, Joe.
- Kelly, Laurence.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Leonard, Jimmy.
- Lyons, Denis.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, Jim.
- McEllistrim, Tom.
- Molloy, Robert.
- Morley, P. J.
- Nolan, M. J.
- Noonan, Michael J.
- (Limerick West)
- O'Connell, John.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Ned.
- O'Leary, John.
- O'Malley, Desmond J.
- O'Rourke, Mary.
- O'Toole, Martin Joe.
- Power, Seán.
- Quill, Máirín.
- Reynolds, Albert.
- Roche, Dick.
- Stafford, John.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Wallace, Mary.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Níl
- Ahearn, Therese.
- Barnes, Monica.
- Barry, Peter.
- Belton, Louis J.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Bruton, John.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard.
- Enright, Thomas W.
- Fennell, Nuala.
- Ferris, Michael.
- Finucane, Michael.
- FitzGerald, Garret.
- Flanagan, Charles.
- Garland, Roger.
- Gilmore, Eamon.
- Gregory, Tony.
- Harte, Paddy.
- Higgins, Jim.
- Higgins, Michael D.
- Hogan, Philip.
- Howlin, Brendan.
- Kenny, Enda.
- Lee, Pat.
- Lowry, Michael.
- McCartan, Pat.
- McCormack, Pádraic.
- McGinley, Dinny.
- Bruton, Richard.
- Byrne, Eric.
- Carey, Donal.
- Cotter, Bill.
- Crowley, Frank.
- Currie, Austin.
- D'Arcy, Michael.
- Mac Giolla, Tomás.
- McGrath, Paul.
- Moynihan, Michael.
- Nealon, Ted.
- Noonan, Michael.
- (Limerick East.)
- O'Brien, Fergus.
- O'Keeffe, Jim.
- O'Shea, Brian.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Owen, Nora.
- Pattison, Séamus.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Reynolds, Gerry.
- Ryan, Seán.
- Shatter, Alan.
- Sherlock, Joe.
- Spring, Dick.
- Stagg, Emmet.
- Taylor, Mervyn.
- Taylor-Quinn, Madeleine
- Timmins, Godfrey.
- Yates, Ivan.
Tellers: Tá, Deputies V. Brady and Clohessy; Níl, Deputies J. Higgins and Howlin.
Question declared carried.
When is it proposed to take Committee Stage?
Tuesday, 15 May, by agreement with the Whips.
Committee Stage ordered for Tuesday, 15 May 1990.