First, I would like to compliment the Minister on bringing this Bill before the House. The Finance Bill is part of the annual budgetary process. The budget successfully promoted the recovery of the economy while at the same time providing for the needs of the low paid, the under-privileged and the disadvantaged in our community. The consensus between the social partners and the Government has been central to the success of our economic and social objectives. The consensus has ensured advances in areas of employment, debt reduction, social equity and tax reform. The broad economic strategy of the Government was set out in the Programme for National Recovery. The Programme for Economic and Social Progress continues that strategy and underpins the Programme for National Recovery.
The Government's economic strategy in the last few years has been based on the reduction of the national debt and the associated debt servicing cost, the firm linking of the Irish exchange rate to the European monetary system, the achievement and maintenance of a low domestic inflation rate to ensure competitiveness among our exporters and a reform of the tax system to encourage growth and the creation of employment. The provisions of the budget, taken with those of the Finance Bill, represent major changes towards gearing our tax system to the needs of our economy and fulfilling our objectives following the completion of the single European market.
This Bill not only provides for tax rate reduction but also ensures that our main taxes, such as capital gains, stamp duty and capital acquisitions, are all based on self-assessment. The tax concessions in this year's budget, combined with the pay increases agreed in the programme and our relatively low rate of inflation of 3 per cent, provide the basis for a further increase in take home pay. Income tax reliefs announced in the budget will benefit nearly 700,000 taxpayers who will see their marginal income tax rates reduced as a result of these changes.
In a little more than a year we have achieved a great deal, a reduction of 3 per cent in the standard and top rates of tax, a cut of 4 per cent in the standard rate of VAT, a narrowing of the difference between excise duties in this country and the UK, a reduction in the standard rate of corporation tax of 40 per cent from 1 April and significant reductions in the top rate of capital taxes.
The increase in the exemption limits by £150 for a single person and £300 for a married couple — and the age exemptions going up by a similar amount —will be of benefit to the low paid. This year's measures will exempt about 18,000 taxpayers from having to pay tax and a further 26,500 taxpayers will be given marginal relief. The reduction of 1 per cent of both the standard top rates of tax brings them down to 29 per cent and 52 per cent, respectively. Before the 1989 budget they were 35 per cent and 58 per cent.
Chapter VIII of the Bill deals with the urban renewal measures, in particular the special package of investment for the Temple Bar area. Under the new urban renewal programme a generous package of incentives is available to encourage investors to participate in the physical development of our towns and cities. The incentives consist of tax concessions and rates relief for development in designated areas and in 23 specified urban areas. This scheme has been a major success; national projects costing £600 million will be completed in the near future in addition to the development work of £400 million at the Custom House Dock site and the new incentives package for the development of the Temple Bar area of Dublin.
The renewal scheme involves a partnership between public and private sectors; with a combination of tax concessions and the right climate private enterprise is investing in the development of our towns and cities. Local authorities are playing their part by initiating modern planning laws. They have now become development operations in the true sense of the word. Last week in Wexford we had a visit from the Minister of State at the Department of the Environment, Deputy Connolly, who formally opened a £10 million urban renewal project in Wexford town. This project has revitalised the town and given the people there confidence and an incentive to invest in their town. It has also given them a belief that they are one of the best towns in the country.
I ask the Minister for Finance to give serious consideration to extend this incentive scheme to places like Enniscorthy, New Ross and Gorey. In Wexford we have the expertise, developers, finance, know-how and confidence and I have no doubt that if the Minister extended the urban renewal scheme to Enniscorthy, New Ross and Gorey, he would see the same results that we have successfully achieved in Wexford town which is now the flagship of urban renewal. I ask the Minister to give serious consideration to the extension of the scheme to those towns.
Co-operation between the social partners and the Government is of central importance to economic progress. Tax reform and social equity are of equal importance in the Government's overall strategy. Low interest rates are also of paramount importance; I believe that the Central Bank misread the market before Christmas when they, unnecessarily, raised interest rates. The rates of interest charged for mortgages obviously affect the demand for house building and, indeed, have a crippling effect on low paid workers. I cannot understand the present position which exist between building societies were there is such a variance between rates charged and hidden costs.
It is estimated that on a £25,000 mortgage there can be as much as £5,000 of a difference in repayments over a 20 year period. I call on the Minister to ask the building societies to publish each month a comparative list showing the interest rates charged and any hidden costs involved in taking out a mortgage.
The Government's economic strategy in the last two years has been based on low public borrowing, improved competitiveness and an adherence to our obligations within the EMS. Investment in major projects is of particular importance to the development of our economy. I should like to acknowledge the £2 million granted by Bord Fáilte for the development of major projects in 11 locations. I am delighted that one of these is in County Wexford, in the Kilrahan area; I have no doubt that this will make a major contribution in providing temporary and permanent employment and will be a great tourist attraction for the south-east region.
I welcome the commitment of the Minister for Finance to reduce VAT and to have harmonisation in all areas of tax. The Customs and Excise personnel in Rosslare Harbour are unsure of their position; they have been guaranteed their jobs up to December 1992 but, because of tax harmonisation, they do not know what their position will be after that date. There are a number of options open to the Minister, the allocation of new work to existing staff, redeployment to other public service Departments in the local area, redeployment involving relocation to customs and excise or other public departments elsewhere or early retirement. I hope that, in the not too distant future, the Minister will clarify the position as there is a great deal of anxiety at the moment among the staff and their families.
The Finance Bill introduces a new allowance to help widowed parents which will apply for three years following the year in which a spouse dies. There will be a grant of £1,500 in the first year, £1,000 in the second year and £500 in the third year. I very much welcome this, as not alone is there great sadness and anxiety when a spouse dies, there is often a great deal of financial hardship. I would like to compliment the Minister on recognising this by making this provision in the budget.
Section 114 provides for a reduction in the level of conversion required from 30 per cent to 20 per cent of tax-exclusive costs of the vehicle for qualification under the disabled drivers scheme. I welcome this, as many genuinely handicapped people have been excluded from the advantages of this scheme because of this stipulation. Under the 1989 disabled driver's tax concessions regulations repayment of excise duty on motor vehicles imported for use by severely and permanently disabled passengers is limited to vehicles with an engine capacity of 4,000 cc. An anomaly exists in this area. In my own town we have a handicap association which transports seven or eight handicapped persons. Their bus is under 4,000cc. and they are entitled to a refund of excise duty. However, another association that transports 17 or 18 handicapped persons are not entitled to a refund of excise duty because their bus is over 4,000cc. I would ask the Minister to address this problem.
I would like to thank the Minister for introducing this Bill. It reflects sound Government policy, encouraging investment, while at the same time ensuring that those who are less fortunate, those who are underprivileged, those who are disadvantaged, are looked after in our community.
