Finance Bill, 1995: Second Stage (Resumed).

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

Perhaps I may be permitted at the beginning of my remarks to say how wrong it is that in the name of Dáil reform Members of this House are restricted in speaking on Bills of this kind. This Bill contains 159 sections. It covers a very wide range of taxation measures and a great many Members have an interest that goes beyond three or four of those. To require us, in the name of Dáil reform, to compress all that into half an hour on Second Stage is wrong. It is not an answer to say we can come back on Committee Stage, because Dáil reform means that Committee Stage is held properly in select committees. That means a great many Members of the House do not have the opportunity to be as involved on Committee Stage as they would like. It is a view I held while in Opposition and I hold it still on this side of the House. Some aspects of reform are driven by a certain kind of pandering to the media and are ill judged.

This Bill suffers from the same faults as every Finance Bill I have seen since coming into this House, including a number that I proposed. It is a fault in our budgetary process that we try to include too many things in the budget.

In this budget and the Finance Bill there are 12 measures in relief of personal income tax, two measures that increase taxes on persons and, as far as I can count, nine taxation measures aimed at improving the situation in relation to enterprise. All those relieving measures are, in themselves, useful. I have no doubt that they will have beneficial effects even if, as inevitably happens, one or two of them turn out, in a couple of years' time, to have a googly hidden in them which will result in us having to rewrite the legislation. I would go so far as to say that perhaps the odd measure that increases taxation has a good deal to be said for it. However, the fact that there are so many of these measures and that they are all contained within what is, in all conscience, a relatively limited financial envelope means that none will have an enormous effect.

There is no single measure of tax relief that will in itself make a major difference to the shape, burden or effects of our tax system. I would like to see Governments, and Ministers for Finance in particular, make a determined effort to try to direct their budget strategy, their budget actions and, therefore, their Finance Bills towards a much more concentrated set of measures that would have a real effect on how the tax system affects our people — I tried to do it with only limited success. The 12 relieving measures in the Finance Bill are useful but not all are of the same importance, and not all had to be implemented this year. For far too long we have been following this rather silly policy of blunting the edge of what we try to do — with very good will; this Government is very well motivated — by being utterly unable to resist the temptation always to do a few more little things that will look good, have a beneficial effect and add to the "feel good" factor for the Minister for Finance on budget day and the Government for a few weeks after. It is not good tax planning to have so many diverse elements in a Finance Bill.

Because of time limitations, I cannot speak on all these issues, although I hope to mention some in the relatively brief amount of time available to me. There is one issue about which I want to raise a question. I genuinely raise this question because section 153 of this Bill provides for something new in our tax system. It is what I will call the "snitching" section, the one that requires auditors to tell the Revenue Commissioners if they suspect their client is engaging in some questionable practice. This is the first provision of its kind that we have had in our tax system. I have to say quite honestly, and with all respect to the person who originally made that recommendation, our current Chief Justice, President of the High Court at the time he made the recommendation, that I do not think it is good enough to proceed with a tax measure that has the effects this might well have on the say so of a judge who, eminent as he may be on the Bench, is not necessarily best qualified to make proposals about tax law.

I listened last evening to what the Opposition have been saying about this. Deputy McCreevy in particular was scathing and I smiled wryly as I listened to him doing his usual act. He said he did not believe this section was necessary and that all the powers the Revenue Commissioners require are contained in the 1983 Finance Act. The reason for my smiling wryly was my memory of Deputy McCreevy and his party colleagues opposing, tooth and nail, everything I put into the 1983 Act to improve the collection of taxes. They opposed every measure that I put forward in 1983, 1984, 1985 and 1986 to improve taxation on the grounds that it was oppressive. Now, at last, they have come to realise that what I put before them in 1983 was a reasonable set of measures to provide for the collection of taxation. I listened to Deputy McCreevy with another slightly funny feeling in the pit of my stomach because here we were listening to Deputy McCreevy of Fianna Fáil opposing this measure in the Bill because it is so intrusive and giving out about a measure designed to help in the collection of taxes, when his party, in Government with the Labour Party not so long ago, produced in an enormous tax amnesty the most immoral giveaway of taxes ever invented. Those two things do not sit too well together.

I listened to Deputy McDowell complaining about this measure last night, and I agree with many of his reservations. However, I found it strange to listen to Deputy McDowell, a member of a party whose leader is the most enthusiastic and committed disciple of political correctness in this House — the Progressive Democrats are politically correct to the point of nauseation. Deputy McDowell's party leader, Deputy Harney, is the very one who was running around this country only a couple of months ago telling all and sundry that we needed more whistle blowers in various areas of public life. Now they are objecting to a whistle blower provision in this Bill. I am not known for being politically correct; there is a blandness in that that robs politics of any colour, but I do not like this kind of provision and I ask the Minister for Finance to reflect on it. If my memory serves me well, one of the abuses that came to light during the work of the beef tribunal was something spotted by an auditor who simply thought he needed a little more evidence to accept that a company for which he was working at the time spent as much as it claimed on transport. He did a simple thing; he looked at the various documents justifying the expenditure and decided to telephone the companies in question to find out if they had done the work. On making inquiries he found that a number of the companies did not exist.

This procedure is open to the Revenue Commissioners. Under the provisions of the 1983 Act and other provisions inserted in subsequent Finance Acts they have the power to require access to documentation. A simple systematic approach, similar to the one adopted by the accountant in the case examined by the beef tribunal, will very often show that companies may well be burying income or profits which should be taxed.

We would not need a provision such as this if we took the proper approach to the implementation and use of the powers available to the Revenue Commissioners. I therefore question the need for this measure and, with all respect, I question the propriety of inserting it in our tax code on the recommendation of a judge sitting in a tribunal which had a different focus and motivation.

A number of other provisions in the Bill worry me because of the way they will bring other Minister into the tax system. Section 6 provides for relief from income tax in respect of tuition fees paid to private colleges for approved courses. I have not thought through the full implications and how this fits with what the Government is doing about the payment of fees for third level education. That may be a matter for another day but when I inspect section 6 I find that the courses which will benefit have to be approved by the Minister for Education. The section does not state that all courses approved will qualify for relief from income tax; certain conditions are laid down but it will be left to the Minister for Education to designate the approved courses. For the first time the Minister for Education is being given a direct role in part of the taxation system. I am not saying that the Minister for Education is not a fit person to express a view on this, but it is not a good procedure in tax law to give another Minister a direct handle in the tax system.

The same problem arises in the section dealing with the provision of various tax incentives for film making, under which the Minister for Arts Culture and the Gaeltacht is being given a direct say in deciding who should receive tax relief. I am sure the Minister, who is a cultured person, is qualified to judge the merits of films but it should not be part of his job to operate directly in the tax system. I have never believed that other Ministers should have arbitrary, discretionary powers in granting certain people reliefs. There used to be an enormous row about whether the Revenue Commissioners were fit to decide on the literary merit of works to benefit from a tax exemption. In the case of tax relief in respect of tuition fees and film making it seems that the Minister for Education and the Minister for Arts, Culture and the Gaeltacht are being given arbitrary and ill-defined powers in granting tax reliefs. That does not seem to be a sensible way of operating part of the tax system.

The Bill contains a provision under which tax relief will be provided in respect of local service charges. This has been a controversial issue both within the Government and between the Government and the Opposition. I will not be impressed by what the Fianna Fáil Party will have to say about this——

People living in Dublin do not have to pay them.

——because it has faced in every possible way on this issue ever since service charges were introduced. I am not alone in saying that I have the privilege of paying water and refuse charges in respect of my residence in Kildare. Kildare County Council has taken the view that these charges should be made and I support them. I will not pretend that I pay them gladly but in all conscience they are not excessive. Kildare County Council operates a well tailored waiver scheme and I have never had the slightest difficulty in persuading——

The Deputy should have stayed in Drimnagh.

If I had, a more enlightened approach might well have been adopted in Dublin but I was born in Dublin county, not city. I do not object to paying the charges and the waiver scheme in County Kildare works extremely well. I am quite prepared to believe that Kildare is better run than most other counties but not all that much.

Having paid all my charges, borne all the pain and not grumbled, as I believe I have to pay for what I get, I find it nonsensical that the Government is going to offer me a tax rebate, free gratis and for nothing. Why does the Government not say to Kildare County Council that it will give it more money so that it can reduce its charges? That would be too straightforward and might give the county council the option of deciding how it should use the money.

That may happen in the future.

That would not suit the mandarins in the Custom House who do not like to see the local authorities getting above themselves and making their own decisions. Now that we have a well established system of local charges in place I find it nonsensical that, for some cosmetic reason best known to people other than myself, free gratis and for nothing people will be given a tax rebate although they have paid the charges without grumbling.

It would require a great deal of study and imagination to find out what exactly the Government is doing about covenants and why. Deputy McCreevy mentioned one case last night. Deputy McDowell mentioned another and I would like to refer to yet another. All three are so different they must be representative of something bigger in the population. I am not going to make a special case but I am very familiar with it. It involves a family where the parents covenant part of their income to a child who is seriously physically handicapped so that he can pursue his studies at third level where he is doing a great job. They also covenant a substantial amount of income to the husband's parents who are elderly and have no income. The provisions of this Bill will bring about a fundamental change in the circumstances of that family in terms of what it will be able to do in respect of tax relief in assisting the son and the husband's parents. I am not sure that what the Government wants to do about the funding of third level education is a justification for interfering in the arrangements made by this family and the families Deputies McCreevy and McDowell spoke about last night.

He will have free or half fees.

By the time that is put into operation it will be irrelevant as some of these children will be finished. The fact that there are three different cases indicates that the problem is probably bigger than many of us realise.

There is a provision in the Bill to give a kind of tax relief in regard to donations to Third World charities. This is not a tax relief in the hands of the donor; it is an addition of the amount of tax that would otherwise be payable in the hands of the donee, and in that sense it is a clever proposal to increase the amount of money to Third World donors. Like every Member, I have received many approaches, letters and telephone calls from people involved in charities in this country who, while they do not wish any ill or lack of success to Third World charities, cannot understand what makes Third World charities deserving of this kind of treatment and what makes domestic charities undeserving of such treatment.

There is a case for giving tax relief to charities. It was my experience in nearly four years as Minister for Finance that charities made a case for tax relief, but we did not have room to introduce that measure at the time for either domestic or Third World charities. The Minister did not explain what specifically makes Third World charities proper cases for this kind of approach that is not present in regard to domestic charities. I am aware that Third World charities sometimes deal with issues and areas that command more immediate attention than domestic charities. Unfortunately we have all become used to seeing pictures on our screens of, for example, the horrors of Rwanda, famine in various parts of Africa and flooding in Bangladesh, but we should not become inured by that fact to the equally dramatic problems that exist on our doorsteps, in every corner of this country where there is poverty and deprivation that need the intervention of domestic charities who do their job with great commitment and dedication and who justly feel that because they are not in as glamorous, needy and sensitive an area they do not get the attention which this Bill gives to Third World charities.

Section 35 deals with the various tax measures regarding urban renewal. The urban renewal scheme is well established, operating in a number of towns. There are several kinds of urban renewal schemes. There are schemes in the five county boroughs of Dublin, Cork, Limerick, Galway and Waterford and there are other schemes operating outside those areas. There are schemes operating at the Custom House docks, in Temple Bar and in parts of the north side of the city of Dublin. I learned recently that there is an anomaly in the operation of some of the urban renewal schemes in towns outside Dublin. The Department of the Environment, under the impulsion of the Department of Finance and with the assistance of local authorities, set out the boundaries of the areas to which these schemes would apply. With the best will in the world, people in Departments and local authorities will not necessarily get it right the first time, and I will give one such example. In the case that came to my attention the boundary is drawn in such a way that a development that would be desirable in the context of the use of the street in the town in question is hindered. The boundary line is drawn in such a way that it is nearly impossible to carry out the only street widening required in that area to make the back street a desirable street in which to live.

This Bill provides that office buildings in such areas would qualify under the scheme. I believed that if the Minister of State at the Department of the Environment. Deputy McManus, was contacted about this matter she would probably be able to sort it out, but imagine my surprise when I was told there is a problem because there is no provision written into the scheme for a revision or adjustment.

The line set in the maps circulated the day the Minister arrived in Newbridge to announce the scheme is fixed and immutable and there is no provision by which it can be adjusted, whether in the interests of good planning or to facilitate development. The Minister of State — I give her due credit for this — said the Department must carry out a study and examine what needs to be done and that it will take about nine months to come up with a system to provide for an adjustment, by which time it will be nearly too late because there are only two years left in the scheme. That is not the way to write tax law and it makes life difficult for the people involved.

There is in operation and absolutely astonishing variety of schemes to assist development. There are different tiers of the tax incentive scheme including the Financial Services Centre, Temple Bar and other areas in north Dublin, the five county boroughs and all the towns that have been designated in part as having urban renewal status. Schemes were recently announced for urban and village renewal. There is a plethora of schemes dealing with rural development, partnership companies, ADM, Leader Programmes and schemes operated through FÁS and its various offshoots.

There is now a new scheme.

A new one is announced every day. When I spoke recently to a person who is heavily involved in rural development he said a little ruefully — he was not complaining — that he is now at the point where he has to organise concerted meetings of various groups so that they can decide which part of their week fits into which project. I read a recent report issued by the Department of Agriculture, Food and Forestry about the Leader Programme, a report which is very diplomatically written and which does not call a spade a spade, but reading between the lines it means there is now a serious problem because of the bewildering array and complexity of schemes that exist for development.

If we were to invite another one of the burgeoning profession of consultants we have to take our tax law, Leader schemes, the operations of the Department of the Environment, FÁS schemes and so on and to consider what scheme could replace them to favour the types of development targeted, I am sure that any half-baked consultant would come up with something much simpler with fewer parts that would probably cost less to run and might even be more effective than the whole complex of schemes we have there.

Will the Government examine all those schemes and by the time another Finance Bill is introduced next year, presented by the same Minister for Finance, could we have some sense and reordering of the system? Instead of adding new complexities to our system we should remove some of the complications that need teasing out in 159 section Finance Bills. Let us stop creating problems. We should get out of the hair of people who want to carry out the development and give them something simpler to work with.

(Wexford): The Minister's speech yesterday outlined the benefits and advantages that will accrue to the people during the coming year. In many ways the Finance Bill adds to the confusion among the public as to what the Minister intends to do during the year. We hear much talk of transparency, accountability and openness and it is time consideration was given to the manner in which we deal with the budget and the Finance Bill. As Deputy Dukes pointed out, there are 159 sections in the Bill, all of them dealing differently with expenditure and, I hope, the advantages that will accrue to the public during the coming year. Many measures have been taken to deal with the issues in the Bill, but how effective will those measures be? Serious consideration must be given to how the Finance Bill and the Budget Statement are drafted.

When I was on the other side of the House I had many discussions with people in the Department of Finance and Ministers about how we do not appear to be in a position during the year to respond to good ideas, but have to wait until budget day or until the Finance Bill is introduced to implement some of the ideas put forward by pressure groups. I do not agree that every idea put forward by a pressure group should be taken up by the Minister, but we do not appear to be in a position to respond to some worthwhile suggestions to assist job creation and help people secure a better standard of living. We wait and hope that the Minister for Finance will implement some of those ideas when he announces the budget or introduces the Finance Bill. The Minister for Finance of the day has a difficult task and it is not possible for him to cave in to the demands of every pressure group unless he intends to dramatically increase taxation.

I understand 12 or 14 new measures are included in the Bill and at the end of the year I would like an audit carried out on how effective and advantageous those new measures are for the public. It might be more beneficial if three or four worthwhile measures rather than a large number were introduced.

The manner in which the budget and the Finance Bill are presented causes confusion among the public and in this House and perhaps a more open, transparent and simplified way of debating and implementing the Finance Bill might be considered in future. I am aware the Minister has said on different occasions that he wants to move away from long-winded speeches on budget day and when introducing the Finance Bill. In some respects he achieved that this year as his budget speech was shorter than the usual speech delivered by a Minister for Finance. The Minister's budget speech was available to Members long before budget day and that caused difficulties for the Minister.

Some of the measures introduced are welcome and will be beneficial. Taxation is one area every Minister for Finance tries to address and every year we hear of an increase in tax free allowances, but they never appear to have a real impact in terms of substantially increasing people's take home pay and we still have the problem of a lack of incentive to work. People get little encouragement to take up employment and prefer to remain unemployed and work the odd day. The previous Minister for Finance, Deputy Ahern and the present Minister, Deputy Quinn, tried to redress that problem by increasing tax free allowances taking certain categories of people out of the tax net. I, as I am sure many other Deputies, have been contacted by people in the past few days whose tax free allowances have been adjusted under the new allowances which apply for the 1995-96 tax year, but at the end of the day there is no difference in their take home pay. In the past week people who have been taken out of the 48 per cent tax bracket and now pay 27 per cent tax have told me the amount they are allowed earn before tax has been dramatically reduced. Those people, who are on a relatively low income, are no better off in the lower tax bracket than they were in the higher bracket. Major changes must be made in tax reform to ensure that people will have an incentive to continue to work or to take up employment. The former Government and this one tried to do something about that, but the tax reform is moving too slowly. We need to seriously consider how we can take many more lower income families out of the tax net. When people in the middle income bracket take into account the amount of tax they pay and their transport costs to and from work, they find very little encouragement to continue working because generally they do not qualify for a medical card or any other benefits. I urge the Minister for Finance to increase tax free allowances for the lower paid and, where possible, take many of them out of the tax net. I welcome the increases in tax free allowances, but we are moving too slowly.

The number of incentives introduced to encourage people to create jobs and to take up employment must be welcomed. I had many discussions with Ministers in the previous Government about creating new bureaucracies to assist job creation and like Deputy Dukes, I am concerned about them. There are, for example, the Leader and Partnership programmes, county enterprise boards, county development boards, FÁS and other schemes, all welcome. However, I sometimes wonder whether there is a need of an office to administer these various programmes and schemes, providing well protected jobs for their administrators. One must question ultimately how valuable are such officers. Would it not be preferable to have a one-stop shop where people could avail of those services, talk to those administering them and obtain all the information they need?

As the Minister of State, Deputy Avril Doyle, will be aware, in County Wexford there is the administration office of the Leader programme located in Johnstown, another for the county development board team located in the Wexford County Council office premises as well as the county enterprise board across the corridor. Why are both needed? In addition, the Partnership programme is being extended across the county, with new offices being established. This means that if the provisions of the Leader or Partnership programmes do not suit one's purposes, one may have to drive from, say, Enniscorthy or Gorey to Johnstown Castle to obtain the requisite advice whereas one office where people could avail of such advice would be infinitely preferable.

These schemes are vital to the continuance of economic life in rural areas. The Leader programme in County Wexford has achieved considerable success, as has the South-West Partnership Board. I hope that others coming on stream will be equally successful in helping people to reintegrate into the overall working environment. Many such people have very good ideas but lack of finance has prevented them from establishing their own businesses.

I have been the subject of much criticism by the administrators of the Wexford Leader programme because of my views on this matter. I have said I do not want to see 30 per cent or 40 per cent of the available funds tied up in the administration of offices, in recruiting development officers and the like, each doing his own thing. There must be overall co-ordination within that area to provide jobs for the people for whom these schemes were devised. We have too many long term unemployed. Tax incentives must continue to be given to employers to encourage them to recruit people once trained. Certain provisions of this Bill should deal effectively with that matter.

I welcome the tax relief for tenants in private rented accommodation, something with which the previous Government endeavoured to grapple through the stipulation that such tenants retain rent books. Much rented accommodation in our towns is of questionable standard. Many tenants are ripped off by exorbitant rents, particularly in smaller towns such as my own, of £60 or £70 weekly for one and two-bedroomed flats of questionable standard. This overall issue needs to be seriously examined by the Department and relevant local authorities to ensure that accommodation of appropriate standard is available to tenanats paying high rents. This problem arises whenever there are insufficient local authority houses in an area and people must resort to rented accommodation. Many of them are exploited by unscrupulous landlords who do little or nothing to maintain their properties to the requisite standard.

The tax relief on fees for third-level private colleges could lead to some confusion. While welcome in one sense, it is questionable whether any Minister for Education should have power to designate courses for tax relief purposes in private colleges. I question why any Minister for Education should decide who should or should not receive a tax break for education purposes. It could lead to abuse and to wholesale lobbying for the inclusion of certain courses for tax breaks, while others without lobbying power but perhaps in greater need of such courses would be excluded. I hope the Minister will inform us how he proposes to implement this relief. While the principle is good I have considerable reservations about any Minister for Education having a say in which courses should qualify for tax relief.

I am sure all Members will have received numerous representations from people administering charities on the domestic front. While I have no problem with tax relief on donations to designated Third World charities — all of us witnessing the horrendous events occurring from time to time, such as the wholesale massacre in Rwanda last weekend — charities at home are doing excellent work, dealing with real poverty and the many social problems. I cannot see any reason donations to such charities should be excluded from the same tax relief. The Minister should seriously examine this matter to ascertain how both can be accommodated.

There is total confusion on the matter of covenants for educational purposes. Perhaps the Minister for Finance will inform us when his colleague, the Minister for Education, will decide who will be eligible for free third level fees. The total elimination of covenants will cause many families severe hardship. The Minister for Finance should be much more selective when deciding which covenants will no longer qualify for tax relief. This matter will be further examined on Committee Stage when my party will be tabling a number of amendments. The free fees for third-level purposes will not be of much advantage to some families not eligible for maintenance fees who had been availing of such covenants to maintain one, two or, in some cases, three or four children at university simultaneously.

I have serious reservations about the new proposal requiring accountants to squeal or provide information about client's finances. I do not think accountants should be placed in that position. The provision would appear to emanate from the recommendations of the sole member of the beef tribunal. The Revenue Commissioners are capable of carrying out this task. However, I do not agree with some of their tactics, for example, putting pressure on small businesses and people to be up front in regard to their taxes. It is not acceptable to the business community that in future accountants will be able to put additional pressure on them and I hope the Minister will re-examine this proposal. Deputy Dukes, a former Minister for Finance, also has serious reservations about this measure. Accountants who have always played their part in this area are up in arms, so to speak, about this measure. There might be a question mark over a few accountants but 95 per cent of them are honourable and decent and they should not be forced, through a Finance Bill, to enforce measures which are contrary to everything they do.

What about the beef tribunal?

It goes way beyond the beef tribunal. Has the Deputy read the Bill or the papers?

Deputy Browne without interruption, please.

(Wexford): I welcome the measures for seaside resorts. While I welcome the inclusion of Courtown, the Minister of State, Deputy Doyle, and I would have liked to have seen Rosslare included. There was no reference to Courtown in the budget and following representations by us and the Minister of State, Deputy Doyle, it was included. In recent days people have contacted me about the decision to exclude Seaview, a densely populated area in Courtown. Much of the beach has been included and perhaps there could be a trade off in this area. I will make representation to the Minister for Finance today and I am sure the Minister of State will also take this issue on board. This scheme is a major incentive for the development of seaside resorts. Courtown is adjacent to Dublin and many people from the city spend their holidays there. I would like Courtown to be developed as an attractive holiday destination for people from cities who more than likely will visit other areas in the county while on holidays.

The urban renewal scheme has been of benefit in the counties where it has been implemented. There is a lack of urgency in some areas in getting urban renewal projects up and running and I am concerned at the Minister's adamant statement that three years is the maximum term and that there will be no extension. I hope that towns which have been included in the scheme during the past year and have had launches since Christmas will ensure that projects are started as quickly as possible to gain the maximum advantage from the scheme. There is enormous job potential in many of these projects. In some cases up to 500 jobs can be created in the building and development stages and other jobs are created when the project is completed. There should be no undue delays in starting projects and pressure should be put on local authorities to ensure that projects get underway as quickly as possible.

The local service charges are a major bone of contention in every county. As Deputy Broughan said, people in Dublin who do not pay charges will not be able to benefit from the new tax relief.

We are very efficient in Dublin.

(Wexford): That is questionable and we will have to wait and see. While I welcome this new tax relief, as other speakers said the money could have been paid directly to the councils to reduce the service charges. This new relief will give rise to much bureaucracy and red tape in the Revenue Commissioners which could have been avoided if the money had been paid directly to local authorities. I welcome the relief but its implementation could give rise to problems. We will keep this issue under review to see how it develops.

Local service charges have given rise to much controversy and successive Governments have tried to implement a system which is fair and equitable. The waiver system is reasonably fair and equitable but no one likes to pay charges and perhaps the time has come to introduce one charge to replace the multiplicity of charges and to either give a tax free allowance to those people who pay charges or pay the money direct to local authorities so that they can reduce the charge.

Will the Deputy be returning to Wexford County Council to implement his propopsals?

(Wexford): I am not sure what I will do and I might wait so that we can go back to Wexford County Council together at some stage in the future.

Will the Deputy wait that long?

(Wexford): I might not have to wait that long. I am sure the Fianna Fáil members on Wexford County Council will deal with the problems which arise. I will keep the Deputy informed of my intentions.

Some of them might not like to see the Deputy return.

(Wexford): Some of them might not like to see me back on Wexford County Council but I am sure the majority of them will be pleased to see me.

I wish to refer to the 2.5 per cent increase for social welfare recipients. IBEC is concerned about the level of Government spending and the increases in interest rates in recent months. The increase of 2.5 per cent — the lowest given by any Minister in recent years — has probably been offset by the increases in inflation and interest rates. The Minister should consider giving a further increase of 2 per cent or 2.5 per cent to the most vulnerable and less well off people in our society to make up for the extra charges which have arisen in recent weeks.

The time has come to give serious consideration to the way in which the budget and Finance Bill are presented in the House. We should have a more simplified, more open and transparent system. The Minister shortened the Budget Statement by approximately half an hour and this is welcome as the general public are not very impressed by lengthy speeches. We will have to wait until Fianna Fáil returns to Government to have major changes implemented, and I am sure that will be sooner rather than later.

The Deputy did not perform any miracles when he was in Government. I wish to share my time with Deputy Broughan.

Acting Chairman

Is that agreed? Agreed.

I congratulate the Minister, Deputy Quinn, on introducing the Finance Bill which is his first effort and indeed the first effort of a Labour Minister for Finance.

The Bill is a positive step towards creating an atmosphere for business entrepreneurs to proceed in playing their part in the revival of our economy. While it caters for the underprivileged sections of our community, it also caters for business entrepreneurs and gives them an opportunity to benefit from any investment they undertake to promote business activity in the country. While I compliment the Minister on the introduction of a number of new and specifically focused reliefs to assist people in rented accommodation, to provide tax relief on local authority service charges and to encourage donations to Third World charities, I emphasise the necessity to extend tax relief to national charitable institutions similar to that which he outlined for Third World charities. Charity begins at home and while there may be pressing demands on Third World charities there is also a huge demand on national charities. An individual or firm which contributes to a recognised national charity should receive similar concessions to a person or firm which subscribes to the Third World charities. While I accept the degree of poverty here is not as great as in many Third World countries, it must be recognised that it is a problem in our community. I appeal to the Minister to be generous in meeting my demand and that of others to include national charities in the same category as Third World charities.

We are all aware that the beef tribunal report pinpointed the necessity to increase the powers of the Revenue Commissioners to counter tax evasion and to secure their traditional powers in the excise area. However, the Minister has gone a little overboard by placing a duty on auditors and tax advisers generally to report tax evasion. This is a null and void proposal because tax evaders will not confide in their auditors or tax advisers if they intend evading tax payment. The duty of auditors and tax advisers is to adjudicate on the figures supplied to them and I fail to understand the role auditors and tax advisers can play in any procedure to counter tax evasion. A computer is only as good as what it is fed and the same applies to an auditor or tax adviser. I appeal to the Minister not to make it mandatory on those professions to get involved in the question of tax evasion. All reputable auditors and tax advisers carry out their duties in an exemplary fashion and under no circumstances should additional pressure be put on those professions to counter tax evasion.

I welcome the refocusing, on the other hand, of certain anti-evasion measures such as the VAT monthly control statement and the easing of penalties for late filing under self-assessment. This is a step in the right direction. I also welcome the introduction of the new VAT rules for dealing in secondhand goods agreed by the European Union and the removal of competitive distortions in the application of VAT to certain sporting facilities.

While I welcome the increase in the personal allowance by £300 for a married couple and £150 for a single person, it is very harsh for a Minister for Finance to subject to income tax a pensioner with a gross pension of only £79 per week. A pensioner whose pension is £100 or less per week should not be subject to income tax. The Minister should realise that such pensioners probably enjoy a packet or two of cigarettes, a pint or two or a glass of whiskey per week, all of which are taxed directly. In his wisdom, surely the Minister should see fit to exempt such people from income tax.

I welcome the introduction of rent relief for tenants in private rented accommodation, which will be a welcome boost for people in that category. The Minister introduced tax relief on fees in certain private colleges. This will have a dramatic effect on hard pressed parents in the middle income group who are trying to give their children a third level education, to which they should be entitled.

The tax allowance on service charges operated by county councils is a major breakthrough. I congratulate the Minister on providing this tax allowance at the standard rate up to a maximum of £150 per year which will be credited to every individual who qualifies for the allowance. I also welcome the introduction of relief from income and corporation tax on heritage buildings operating as bed and breakfast facilities. Those buildings would have no hope of being preserved or becoming a viable proposition if they could not avail of income from facilities such as bed and breakfast.

I welcome the Minister's decision to continue stock relief for farmers at 25 per cent for a further two years to 5 April 1997. I also welcome the provision for stock relief at a rate of 100 per cent for four years for young farmers who first become chargeable to income tax in respect of profits or gains from farming for the year 1993-94 or any subsequent year of assessment up to 1997-98. This is a tremendous breakthrough for the agricultural community and I am sure farming bodies will welcome it. I welcome the clause in section 22 which provides for particular tax treatment for farmers in respect of profits arising where cattle herds must be disposed of because of statutory disease eradication measures. The Minister was wise to allow deferral of the profits for tax purposes over two years and the application of 100 per cent stock relief to the profits so deferred. This is an outstanding achievement by the Minister and I hope it will be welcomed by the farming bodies.

While I welcome the pilot renewal scheme for traditional seaside resorts. I would be pleased if it were extended to areas other than those mentioned. I understand the Minister has taken into consideration the needs of Achill, Ballybunion, Bundoran, Courtown, Kilkee, Lahinch, Tramore, Westport and Youghal, but similar needs exist in towns in my constituency such as Kinsale, Clonakilty, Bandon, Rosscarbery, Skibbereen, Baltimore, Timoleague, Courtmacsherry, Castletownsend, Union Hall, Glandore, Ballydehob, Schull, Goleen, Crookhaven, Durrus, Kilcrohane, Bantry, Dunmanway, Drimoleague, Drinagh, Glengarriff, Adrigole, Castletownbere, Allihies, Eyeries and Ardgroom. The people living in those areas of my constituency rely on the tourism industry for their principal incomes.

Did the Deputy leave any out?

Not very many.

We can always depend on the Deputy.

Those areas are crying out for development similar to that taking place in districts now benefiting under the scheme. I hope the Minister will see fit to extend this scheme which is so valuable to rural Ireland, particularly the tourist areas of the country.

While I am a little dubious about the phasing out of the bank levies from £36 million in 1994, to £24 million in 1995, £12 million in 1996 and to nil in 1997. I cautiously welcome the decision of the banks to agree to a compensatory cash flow arrangement whereby in 1995 they will make an earlier payment of corporation tax of £12 million in order to recover the £12 million reduction this year, thus the Exchequer will not be at a loss.

It is well known, however, that banking institutions here have enjoyed immense profits in the past three decades. While they are very conservative in their business they seem to forget that rural Ireland exists. Some of the major banking institutions have closed their sub-offices in rural areas in order to concentrate their operations on areas of high population. We cannot all live in an urban area and the Minister should compel those banking institutions to provide the same service in rural areas as they do in our major towns.

The banks should play a greater role in facilitating the industrial revolution here. I understand that in the United States a business entrepreneur who produces a business proposition is vetted by a board operated by a financial authority. If that business proposition is considered viable the money is advanced to the entrepreneur to set up a new business or extend an existing one. The United States Treasury acts as security for that entrepreneur. The banks do not lose any money on such a proposition. In the ten years that this system has been in operation in the US there has been a considerable increase in the number of new industries established and the rate of default is less than 2 per cent. If such a system can work in the United States it is worth trying it here.

I commend the Minister for introducing the £1,000 vehicle registration tax relief scheme. This will be an incentive for people to get rid of their old "bangers" and buy a new car. I welcome the concession in regard to road tax whereby if a vehicle is registered within the last seven working days of a month, and where an application for road tax is made the following month, the tax disc will be effective from the beginning of the month of licensing rather than from the month of registration, which is currently the case. Also, where there is a prolonged delay between the first registration of a vehicle the subsequent road tax will be effective from the month of licensing on a payment of the sum of £20. That major concession was urgently required because many people found themselves in difficulty in that they had registered their vehicles but were not in a position to tax them until several months later due to repair costs, etc. This is a step in the right direction.

While there are anomalies in the budget it represents a good effort and I congratulate the Minister on it.

I welcome the Bill which is a good expression of the Minister's ambitions in this first budget introduced by a Labour Minister for Finance. He stated he wanted to reward people at work, promote enterprise in every conceivable way and, most important, strengthen social solidarity among those dependent on the economy. He has succeeded largely in doing that both in the budget and in the Finance Bill which implements so many budgetary provisions. The Minister described the budget as a growth dividend for the nation and the Finance Bill carries that through.

Last night we had to listen to a fantastic dissertation from Deputy Michael McDowell on the cost of the White Paper on Education and other outstanding costs of Government. It is fair to say that this Minister for Finance is ruthlessly determined to keep public spending under control. There is no conceivable way that the Government will breach the Maastricht guidelines on the expansion of debt and to fantasise about developments in education over the next 15 to 20 years — which are welcome and for which my colleague. Deputy Bhreathnach, deserves great credit for bringing them forward so speedily — is quite ludicrous. That is an indication of the real aim of the Progressive Democrats which is to viciously slash current public spending in such a way as to cause real social hardship.

I welcome the moves to reform the tax system, particularly in relation to abuses. A leaflet issued by the Department of Finance recently indicates that of every £1 of income tax collected 84.5p comes from the PAYE sector, 3p comes from DIRT, 9p comes from the self employed, 2p comes from withholding tax and only 1.5p comes from farmers. That clearly indicates that the greatest personal taxation burden continues to rest on the shoulders of the PAYE sector.

Unlike Deputy O'Dea, I welcome section 153 in which the Minister implements the recommendations of the Hamilton inquiry which seemed to findprima facie evidence of huge irregularities and evasion of tax. Lest any aspersions be cast on the integrity of the auditing and accounting professions. I believe it is appropriate to have such a section in the Bill. I note the Minister has granted a major concession where the amount involved is less than 5 per cent of the tax liability and he has also allowed the auditor or accountant who discovers tax evasion the facility of first notifying the company concerned. In many respects, the Minister has tried to address the understandable concerns of the auditing and accountancy professions.

I welcome also the tax reliefs to tenants in private rented accommodation. It was an extraodinary anomaly that landlords could get major reliefs under our urban renewal schemes while their tenants had no such relief. The Minister has tried to deal with major abuses that crept in recent years. He has attempted to close loopholes by requesting public bodies such as health boards to make returns on rent subsidies to ensure the Revenue Commissioners are informed of the names of landlords. He implemented provisions in section 70 to deal with weaknesses identified in the Glackin Inquiry into the sale of the Johnston Mooney & O'Brien site. All Deputies are aware that workers in the building industry, in particular, have been dissatisfied for a very long time with the way the C45 system operates.

People who effectively are PAYE employees were employed on a contractual basis which the majority of them did not want and under which they had no rights to sickness benefit or any of the other normal rights of workers.

Section 18 provides for making declarations so that at least workers will realise from the start that the C45 system is applicable and we may find that young building workers, particularly plasterers and bricklayers, will not be driven from their trade by the ruthless harshness of a minority of building contractors.

The Minister for Finance has rewarded work by increasing the standard rate tax band and increasing significantly the thresholds at which people enter the top tax rate. I agree with Deputy Browne's contribution and I would have liked if the Minister had significantly increased the basic tax allowances. The Irish National Association for the Unemployed identified this as the most significant way to lift people from the tax net, encourage people to work and a means to get away from the low paid syndrome. I ask the Minister to look at this again.

Tax relief on service charges is welcome. Dublin, in common with Limerick city, does not have service charges but obviously local government funding is not satisfactory. These two great cities need more significant funding to do the things we want to do. Theultra vires rule has been removed and local authorities could become development corporations. We cannot do that now because we are just balancing the books. The reason people objected so vehemently to service charges is that they regarded them as double taxation and they were aware of the figures I read out from the Department of Finance.

The Minister has granted relief for those on unemployment and disability benefits. I am opposed to taxation of those benefits as people who pay social insurance should have the satisfaction of knowing that there will be provision for them and that each member of the family has an independent economic existence. We should look at this again.

Section 16 significantly increases the existing limit on the value of shares which can be allocated each year to employees under approved profit sharing schemes. This is a very worth-while development. The Minister, in his former role as Minister for Enterprise and Employment, showed a tremendous understanding of small and mediumsized businesses. He has brought this to bear in the budget and in the Finance Bill, for example, in the seed capital scheme. He has increased the level of investment that qualifies for relief from £75,000 to £125,000 by extending the "look back" period to five years. The Dublin exchange facility will benefit from the seed capital scheme.

In trying to root out abuses in the tax system the Minister has used the carrot and stick approach. The Minister recognises the great strides made by business in recent years in voluntary compliance and has introduced more gently compliance requirements such as the direct debit facility, the fixed date of 30 April and lower surcharges. The Minister has tried to assist business to comply with its obligations.

One of the great success stories of recent years has been the dramatic development in Irish film-making. Everyone in the former and present Government associated with this deserves great credit, none more so than the Minister for Arts, Culture and the Gaeltacht and I certainly have great confidence in his certification procedures. I have no doubt that he and his advisers are aware of the basic investment that is necessary.

The urban renewal and enterprise areas relief are welcome. The Minister extended the period of relief for the Custom House Docks site to January 1999 and for Temple Bar to April 1998. I am unhappy that Dublin Corporation does not have total control over the redevelopment of those areas but it will have control over the area being designated on the northside. The tax reliefs for urban renewal since the mid 1980s have been very successful and one only has to walk half a mile in the city to realise that this has brought about much needed renewal. However, I ask the Minister to ensure that Dublin north-side and the Dublin Airport zone, where we are trying to create a new enterprise zone modelled on the development in Shannon be included to a greater extent under the newly designated enterprise areas. We have always had a fear that some of the new apartment blocks in the urban renewal areas will become the slums of the future because the apartments are so small and tend to be rented out. Our fears have been allayed somewhat because the Minister having listened to representations from all sides of the House, made provision to increase the floor space from 90 to 125 square metres.

The Minister is also introducing an amendment to support the work of his colleague, the Minister of State, Deputy Rabbitte, to increase research and development. He has also reduced corporation tax from 40 per cent to 38 per cent which is a great encouragement for business. In reply to my parliamentary question on corporation tax, the Minister told me the banks were paying net corporation tax of £102 million. With the phasing out of the bank levy over a two and a half year period the banks will contribute increasingly to corporation tax. However, I strongly support further competition in the banking sector and am still in favour of a third banking force.

I congratulate my colleague, Deputy Bhreathnach on phasing in the abolition of third level fees and I welcome the moves she has taken to translate this into action by changes in covenants. I think the cost will not be as great as Deputy McDowell said last night but it will have a huge psychological impact. The late great Donogh O'Malley opened up second level education, we will now see this in third level education.

The previous Minister made a big mistake in changing the residential property tax. This was basically a Dublin tax. It was outrageously unfair and as a Deputy in one of the Government parties at the time I told Deputy Ahern that he should change it as soon as possible. Many houses in the Dublin area are worth a fair amount of money but they are still people's homes. I am glad the Minister for Finance rectified the mistake made by Deputy Ahern and that a market value of £94,000, income exemption of £29,500 and a flat rate of 1.5 per cent now apply.

The tradition in my party is one of social solidarity and the Minister endorsed this in all the measures he took particularly those relating to education. He has tried to encourage people to get back to work. In the last two years 60,000 new jobs were created. He is a Minister deeply sympathetic to business and has provided it with a more even playing field in the Finance Bill. Over the next two years he will do more.

We are debating the Finance Bill, 1995 which seeks to implement the tax changes announced by the Minister in the budget. Unfortunately the budget must rank as one of the most reckless, aimless, confused and disorientated budgets ever introduced. For hundreds of thousands of people and the weakest and the most vulnerable in society — old age pensioners without child dependants — it was a callous and cruel budget, perhaps the worst since the infamous budget of the late Ernest Blythe.

Some provisions in the Bill are welcome. There are some improvements. infinitesimal though the space they occupy in the total budgetary landscape may be, and I acknowledge them in the interest of fairness and balance. The limit for relief on the value of shares which can be allocated to employees under an improved profit sharing scheme has been raised from £2,000 to £10,000. I welcome that as I believe in the expansion of industrial democracy.

It will have tremendous economic benefits as it has in other economies throughout the civilised world. The limit has been increased fivefold and I unashamedly welcome it.

I welcome the increase in business and agricultural relief for capital acquisitions tax purposes and heartily welcome the introduction of an instalment system for capital acquisitions tax at the sensible 9 per cent interest rate. There are some improvements in the roll-over and retirement relief for capital gains tax purposes. Though they may represent a minimalist approach I welcome them in so far as they are an improvement on the present system and are proenterprise.

As regards the change in the seed capital scheme, the amount qualifying for relief has been increased from £75,000 to £125,000 and I welcome that. However, we should not remain unaware of the fact that only 30 entities have availed of this scheme since its introduction two years ago. It is a good, imaginative scheme designed to encourage people to invest money to create jobs. It enables people to claim substantial tax relief yet only 30 applications have been received under the scheme. Why? Perhaps it is because when the Revenue Commissioners assist in the drafting of a Finance Bill they are inclined to regard every tax allowance, incentive and attempt by Government to direct investment into an area of activity which could create employment as a potential vehicle for tax avoidance.

When a scheme is introduced, the Revenue Commissioners say it could be used as a vehicle for tax avoidance and so many rules, regulations and restrictions apply to it that the scheme is practically unworkable. This is a continual feature of tax incentives which successive Governments and Ministers have given in Finance Bills over the years, imaginative and well thought out though the original idea may be. I do not blame the Revenue Commissioners exclusively for this. The accountancy and tax advisory professions must also bear some responsibility. We all recall the business expansion scheme and the ludicrous uses to which it was put by some tax advisers and accountants to write off taxes — uses which were never dreamt of in their wildest flights of imagination by those who drafted the legislation. The tax advisory profession have much to answer for but the Revenue Commissioners are unduly cautious.

Some attempt is made to simplify the scheme and I wholeheartedly endorse that but the approach is far too minimalist. There is room for much greater simplification of the scheme and I hope our spokesperson will bring that to the attention of the Minister on Committee Stage. This is a good, imaginative scheme and people should be allowed avail of it. There is no point in having complicated schemes. Too many rules and restrictions apply to this scheme and there is no logic behind them. I hope the Minister will be amenable to any suggestions made to further simplify the scheme.

I note that from 1 May the requirements to issue a VAT control monthly statement to VAT registered customers is being abolished. I welcome that. It was unnecessarily bureaucratic, expensive and time wasting. As a result of the success of the Revenue Commissioners' audit procedures in certain areas of the economy their fears have been allayed and they have allowed the Minister to make this change.

I scrutinised the Finance Bill from beginning to end in an effort to find things to welcome in the interests of being constructive. However, there is little else I can welcome. I thought I might be able to welcome section 29 but the more I read it the more intriguing I find it. If my interpretation of the section is correct, it proposes to exempt from corporation tax and capital gains tax the profits of a foreign branch of an Irish registered company which creates substantial new employment and capital investment here. There is a strong rumour, which I have every reason to believe is correct, that it was introduced to attract a particular investor to the International Financial Services Centre in Dublin. Perhaps the Minister will clarify if that rumour is correct. It is bad in principle to introduce specific legislation to cover one project or investor regardless of how valuable the investment. It might be of immense value to the economy and, if so, let the Minister state that and give the reason for bringing in legislation to accommodate one project.

Second, I imagine if any Government introduced something similar it would operate in the normal way but there is one vital difference. The people in question would have to satisfy the authorities that they would make the requisite capital investment and create the requisite employment in the State. The Revenue Commissioners would be the people who should be satisfied. However, the section states that the person who gives the certificate and who is to be satisfied is the Minister for Finance, who is a political figure. I cast no aspersions whatever on the Minister for Finance, Deputy Quinn, whose integrity is above reproach. Nevertheless, we must bear in mind the considerable controversy not long ago about the passports for investment scheme. The cry from the Opposition — now the Government — was that there was no transparency or accountability and that a person who was well heeled was lodging a huge sum of money and gaining a substantial economic benefit in return. A politician makes a decision in secret with no transparency, no openness and no accountability to anybody.

The people who caused that outcry are supporting a provision which will enable any Minister for Finance in the future to make a decision in secret without accountability, openness or transparency which could be worth hundreds of millions of pounds to an Irish resident company. Is that correct? Is that consistent? Is it consistent with the outrage about the passports for investment scheme when a passport was given in return for investment in a particular company? I appreciate that the Minister proposes to draw up guidelines but these guidelines could be changed unilaterally by the Minister. There is no provision to debate them in the Dáil or for the Dáil to be consulted about any amendments. A Minister for Finance could be tipped off in advance about a potential proposition and he could change the rules unilaterally. Where is the openness and the transparency? A politician will, in secret, without accountability to anybody make a decision — if this section goes through unamended — which could be worth any amount of money to any potential investor. The money which will be foregone as a result is taxpayers' money. At least in the passports for investment scheme, the taxpayers did not lose money. I grant that an Irish passport was given out, which I do not regard as an inconsiderable thing. Here, literally tens of millions of pounds which would normally come into the coffers of the Irish taxpayers can be foregone by a decision taken in secret by a Minister for Finance. That should be looked at.

Deputy Broughan and other welcomed the rent allowance scheme. I have looked at that scheme and I welcome it as far as it goes, which is not very far. It is designed to bring landlords into the tax net rather than to benefit tenants in any way. It is infantile for Government speakers to pretend it will represent a boon to tenants or that it represents any realistic attempt to put tenants on a similar playing pitch with people who are purchasing their own houses. The allowance is limited to £500 at the standard rate of tax, 27 per cent, for a single person. I know many single people in Dublin and in Limerick who are paying rent of £400 or £500 per month for an apartment. The person in question will benefit from this provison to the tune of 27 per cent of £500. That amounts to £135 which is not even one week's rent. It will not be worth the hassle of applying and filling out forms, obtaining receipts and getting the land-lords's tax reference number, which may not be forthcoming in each case. I welcome the provision if it succeeds in bringing more landlords into the tax net. I believe people should declare their income and pay their taxes. To represent it as a boon to tenants is a gross misrepresentation.

Section 32 provides for the expansion of the urban renewal tax incentives for the Custom House Docks area in Dublin. I have no particular hang up one way or the other about that. There is no similar incentive for the other financial zone in Shannon. There is no urban renewal tax-based scheme for Shannon. Because of the totality of the operations being carried on at Shannon it may not be of great value but due to the problems we have had since the removal of the compulsory stop over, now compounded by the crisis at Shannon Aerospace, we can use whatever we get. Representations have been made to me that a similar scheme operating in the Shannon area would be welcome and would generate revenue and investment in that region. God knows we badly need it.

The position in regard to covenants, as I understand it, is that as from 6 April 1996 covenants in favour of people over the age of 65 will be restricted to 5 per cent of the total income of the covenantor unless the person is permanently incapacitated. Who will decide the question of permanent incapacity? This is not an academic question. This will be vitally important financially to many families. Presumably the person's doctor will sign a certificate to say they are permanently incapacitated which will go to the Revenue Commissioners. Will the Revenue Commissioners have their own doctor to examine the certificate and will he go so far as to examine the patient? It will mean the difference between survival and non-survival financially for many families.

What is the position about elderly relatives who cannot look after themselves but who are not permanently incapacitated? The amount a person can covenant to them will now be restricted to 5 per cent of gross income. I was Minister of State at the Department of Health when the nursing homes regulations were introduced. The reality is that those regulations are not working. Nursing home owners have increased the fees to accommodate themselves as regards the extra subvention. I came across a case recently of a pensioner who has another small source of income and who is paying £130 per week for his wife in a private nursing home. The subvention he is being granted is £21 per week. It is no empty hyperbole on my part or on the part of any Member from this side of the House to state that amendments in relation to covenants, which are to finance something which has nothing to do with elderly people living in nursing homes, if carried through into law, will cause unendurable financial hardship for many families.

What is the position about a covenant in favour of a cohabitee? I am not asking the Minister for Finance to change the tax laws to favour cohabitation. In some cases people are living together because divorce is not available. Deputy McDowell referred to a good example of a person who had written to him about their situation. What is the position about covenants in favour of children who do not qualify for Minister Bhreathnach's unexpected benevolence because their parents income is not sufficient to bring them into the fee paying category?

The main core of the Bill concerns allowances. The general exemption limits are increased by less than the rate of inflation. In real terms the general exemption limits for tax purposes are reduced in the first year in which this country has had a budget surplus and at a time of almost unprecedented economic growth. The paltry increases in tax allowances will be halved in real terms. The same applies to the extension of the tax band which is chargeable at the standard rate.

I welcome even the 2 or 3 per cent increase in real terms in so far as it goes, but it is certainly not consistent with the Minister's claims to radicalism with which his budget speech was prepared. It should come as no surprise that there is no real tax reform in the budget or in the Finance Bill, no real diminution in the tax burden, and that is because of the Government's abject failure to control expenditure, that monstrous weight borne exclusively by the traded sector of this economy. Control of public expenditure, as anybody with even an elementary grasp of arithmetic will know, is thesine qua non of real tax reform and real tax reduction. When public expenditure is allowed to grow, as it has been by successive Governments, at four or five times the rate of the price index, any notion of tax reform simply evaporates. At the moment we have a deadly combination of a weak fiscal policy and a strong exchange rate policy which, if it goes unchanged, will lock this country for many years into an ever decreasing circle of high tax, high spending and high unemployment. Since the political events of last November and the formation of the new Government people have told me that the Government will last the two years and is working. It is something of a misstatement to say that the Government is working if over 20 per cent of the labour force is not.

According to Deputy Broughan and others section 153 is based on a recommendation of Judge Hamilton in his beef tribunal report. In many cases it will achieve the opposite of what was intended — if people trying to fiddle the system are engaged in tax evasion and know their auditor is now compelled to blow the whistle, they will use every device to keep the relevant information from the auditor. It must also be remembered that the beef tribunal dealt with malpractices in the mid to late 1980s. The world has moved on since and much has happened in the interim which considerably reduces the necessity for something like section 153. For example, since the events reported on in the beef tribunal report, the Revenue Commissioners have been given sweeping powers under the revenue audit scheme, on top of the powers they already had, to conduct VAT and PAYE inspections. In addition, the accountancy profession's code of conduct has been amended to oblige its members to report any offences they find in the course of their auditing work.

My fundamental objection to the present proposal is that it goes infinitely further than Judge Hamilton intended or, I am sure, anticipated. The section provides that anybody involved in the preparation of the company's accounts must alert the company if he suspects an offence as defined is being committed. If the problem is not rectified within 30 days, he must then inform the Revenue Commissioners. The list of offences about which the auditor must blow the whistle ranges from serious tax evasion at one end of the scale to the most minor transgressions at the other. These include late filing of returns, an error however minor in the returns submitted, failure to keep detailed records. For example, if a VAT return is one day late the reporting procedure is triggered. If an auditor notices any irregularities in the manner in which a huge multi-million pound corporation operates its petty cash or pays the cleaning lady, he will be obliged to report. If the auditor does not report, he or she has committed a criminal offence for which the maximum penalty, if prosecuted on indictment, is up to two years imprisonment. It is hard to imagine a more absurd proposal in a country where the prison system cannot hold the perpetrators of the most vicious crimes for more than a few months, sometimes only for weeks, because the system is bursting at the seams. This legislation will, if implemented, alter irrevocably and fundamentally the relationship that traditionally existed between client and adviser. It will create a climate of suspicion and, in many cases, hostility between the wealth creators of this country and their advisers.

It should be remembered by the Minister and others advising him that auditors' fee income here expressed as a percentage of GDP is one of the highest in the world. This proposal, by creating a great deal of unnecessary unproductive extra work will oblige auditors to increase fees considerably. This increase in costs will be particularly marked in the case of small and medium sized companies because the auditors' work will become more extensive when reviewing clients' accounting systems and financial results. To put it in a nutshell, auditors and tax advisers are being compelled to do work which the Revenue Commissioners are paid to do anyway, but because they are being compelled to undertake this extra work, somebody will have to pay them. Unfortunately, the people they will fall out with because they are compelled to do the work in the first place are the very people we as a nation are depending on to create employment and wealth.

The public servant who is responsible for this legal Frankenstein must have left his intellect elsewhere on the day he conceived it, because the net effect of section 153, if it goes through in its present form, will be to turn every accountant's office into a downtown branch of the Revenue Commissioners. It will transform auditors from watchdogs into bloodhounds.

I ask the Minister to change it. I had correspondence this morning from the Institute of Taxation asking the most serious questions about the constitutionality of this provision, and I share its concern. The provision is unworkable and tilts the balance dangerously. The most interesting thing I have discovered from my research on section 153 is that the Revenue Commissioners, the experts working at the coalface, do not want it. What Deputy McDowell called "some amateur from the Department of Finance" has taken it upon himself to expand the fairly mild suggestions of Judge Hamilton into this legal monstrosity which will strangle many parts of the business sector and poison relationships between the people we are supposed to be encouraging to invest their money and create jobs and the people they employ to advise them. The Revenue Commissioners, the people who will have to work the section, do not want it. I can say that without hesitation. Several tax officials have told me they do not want it. It should not be forced through to satisfy the conscience of Democratic Left.

Deputy Deasy, who is now in the House, is particularly interested in the provision relating to VAT on golf clubs. The VAT distinction between green fees to commercially operated golf courses and member-owned clubs has been abolished. However, similar VAT distortions arise in the provision of other sporting facilities and in the health and fitness area generally. This provision will be a powerful temptation, almost an invitation, to commercial providers of such services, not only there but in other sectors of the economy, who feel they are disadvantaged by the VAT exemption afforded to the nonprofit making bodies providing the same type of service and the same facilities. It is hardly necessary for me or anybody else to point out that the removal of any such distortion will involve imposing VAT where it was not imposed before rather than removing it.

Section 10 involves the removal of certain unemployment and disability benefit payments from the calculation of the total tax bill. When this measure was introduced and tax extended to unemployment and disability benefit there was considerable angst among the members of Democratic Left, but what members of Democratic Left who expressed objection to this fail to recall is that for many years invalidity pensions were reckonable for tax purposes — invalidity pension is simply disability benefit expanded into book form where somebody has been on disability benefit for a year and is permanently incapacitated. I have come across many people who qualify for invalidity pension but prefer to stay on disability benefit even though it amounts to less money, because disability benefit was not reckonable for tax purposes.

The view was taken that there was no logical distinction. If disability benefit is included there will be no distinction between disability and unemployment benefit. Unemployment benefit is payable for a maximum period of 15 months while the payment of disability benefit may terminate before that period expires. There is a powerful argument for including it as income should be taxable. If a person is in receipt of £100 per week from unemployment and £100 per week disability benefit one would logically say they should pay the same amount of tax as the person in receipt of £200 per week from employment whose marital and financial circumstances are the same. One is either in favour or against.

I cannot understand the position of Democratic Left on this issue. It does not go one way or the other; it has not said that it will stand over the budgetary provision, as there are powerful arguments in favour of it or, because its colleagues in Government are not in favour, that it will abolish it.

Child dependant allowances are excluded when reckoning unemployment and disability benefit. What is the position regarding the payment of injury benefit, occupational injuries benefit and so on? It seems that they have not been dealt with.

In regard to the second concession another distinction is made whereby the first £10 per week of unemployment benefit is disregarded. This is a ludicrous compromise and has been designed to try to convince people that what Democratic Left is doing is consistent with what it said it would do in office. This is a delusion and will not work. I doubt its constitutionality and cannot see any logical reason people whose circumstances are the same should not be treated in the same way. There is no logical reason for discriminating between disability and unemployment benefit. It is a ludicrous and nonsensical monstrosity.

The taxation system is a mess. There are 3,000 pages of tax legislation bearing down on those who have to create wealth and employment in the economy. Many provisions in the tax code have achieved the opposite effect; they are profoundly anti-enterprise and work. The best we can do on Committee Stage is to make the best of a bad job. I hope the Minister will be amenable to accepting reasonable amendments to eliminate the anomalies which are both glaring and obvious.

If I did not speak the debate on the Finance Bill would not be complete. It is extraordinary that there is no one on the Opposition benches.

As is normal, the Finance Bill alludes to many interesting areas some of which are dealt with in great detail while other are mentioned in passing. The Bill contains some excellent proposals and I do not think anyone could find serious fault with it or the budget. One of the most welcome aspects of debate since the Government was formed is the responsible attitude taken by Democratic Left and its Minister and Ministers of State.

That tells me a lot.

A considerable number of people would have doubted its intentions and resolve to solve the country's problems but its performance to date has been excellent. It has shown an ability to take tough decisions. This would not have been the general view of the public six months ago. It has been a shining example and I pay tribute to it for this. It has agreed to measures which single party majority Governments did not have the guts to implement 15 to 20 years ago.

The Bill contains some welcome measures. I refer in particular to the urban renewal scheme under which provision is made for tax incentives to encourage the continued development of the five cities within the country — Dublin, Cork, Waterford, Limerick and Galway. The scheme is now being expanded to include a number of provincial towns, including my home town of Dungarvan, County Waterford. In the past week the Minister of State, Deputy McManus, announced that villages and small towns will be able to avail of the scheme to renovate a streetscape or historical and attractive dwellings.

Measures were announced in the budget, under the aegis of the Department of Tourism and Trade, to promote the revitalisation of the traditional holiday resorts. These are extraordinarily innovative and welcome. Under this scheme the seaside resorts of Tramore and Youghal will benefit. Both towns badly need a stimulus as the trend has been for people to take their holidays in scenic areas and areas which are sparsely populated such as the Ring of Kerry, the Dingle Peninsula and Connemara. That is another welcome phase in the development of the tourism industry but the traditional holiday resorts need an injection of capital to ensure a return to the levels of activity and prosperity they enjoyed in the 1940s, 1950s and 1960s. I am sure that millions of pounds will be spent in each of these resorts. There is tremendous enthusiasm in the towns of Tramore and Youghal where business people and the owners of tourist related facilities are delighted to have an opportunity to invest and attract outside capital.

The days of the hurdy gurdy are gone as this kind of activity is no longer considered acceptable. People now want to see something more meaningful in a tourist resort. They do not want to be ripped off in amusement arcades containing slot machines which offer poor value and cost parents a huge sum of money if they have a number of children. In other words, they want value for money and to engage in activities which are enjoyable, healthy, useful and productive. There should be sufficient facilities for outdoor and indoor activities. The facilities have not been available on the scale needed in a country with such a variable climate as Ireland. That was illustrated last summer. When the south-east of England which is close to us was basking in sunshine for three months we had three months of dismal weather, with cloud and rain almost every day.

Expensive amenities and facilities should be made available to cater for people travelling to traditional holiday resorts. People are no longer willing to sit indoors in guesthouses, hotels and caravans; they prefer to be involved in activities and if the facilities are not available the obvious alternative will be to go to a foreign holiday destination such as Spain, Italy or France. It behoves us to ensure our people stay at home so that the badly needed revenue stays within the State. Tourists who come here from abroad should also have the opportunity to enjoy themselves irrespective of weather conditions.

Deputy O'Dea referred to a statement in the Minister's speech about the recommendations of the beef tribunal. There is an angry mood among the public with regard to the lack of action on the recommendations of that tribunal, particularly considering that the taxpayer will have to pay more than £100 million in fines to the EU because of malpractices in the beef industry. To compound the anger, to date nobody has been charged as a result of the irregularities that came to light during the course of the tribunal. Although there are certain tax reliefs in the budget, taxpayers are overtaxed and they become particularly annoyed when an imposition such as this is placed upon them.

A senior Government Minister, whether the Minister for Finance, the Minister for Agriculture, Food and Forestry or the Minister for Justice should state whether action will be taken against people who were clearly in breach of the law, as we illustrated in the beef tribunal. People are infuriated that they are expected to pay for the sins of others. That sense of injustice is widespread and it is justified. People must be answerable for crimes and malpractices that occurred. Although the malpractices took place during the course of previous administrations, the time has come for somebody in high office to make a categoric statement on what will be done about the people who perpetrate frauds, for which the taxpayer is expected to pay.

Ten years ago when I was a member of a previous Government a subsidiary of the Allied Irish Bank, namely, the ICI Insurance Company, found itself in massive financial difficulties and the Government of the day had to underwrite the losses of the institution in the tune of approximately £400 million. That money did not have to be paid out of public coffers but it was just a stroke of good fortune that the business of the companies in question improved and the losses were not very great. Nevertheless nobody was prosecuted or answerable for putting at risk £400 million of taxpayers' money and the banking system. To add insult to injury, two weeks ago the directors of the AIB gave themselves enormous salary increases which outraged the public and even the employees of the bank in question.

The ordinary person believes that the bigger the crime the better the chance of getting away with it. People who are caught are often generally law abiding citizens who do little out of the way but are soft targets easily apprehended perhaps for staying in a public house ten minutes after closing time or exceeding a speech limit by ten miles per hour. The laws must be implemented, but it appears that the bigger the crime the less likelihood there is of action being taken against the perpetrator.

While reliefs in the income tax code are to be welcomed, they are not sufficient. We are one of the most, if not the most highly taxed country in western Europe. Our rates of taxation are far too severe and the level at which income tax becomes payable is far too low. In continental countries such as Germany and France people earning very good salaries, professional people and civil servants, enjoy a much better lifestyle because their level of taxation is much less than ours. They earn a much greater amount of money before being subject to income tax and the levels of taxation are low in comparison to ours. A more serious effort is needed to ensure the levels at which income tax apply and the rate of income tax payable are reduced. That should be our primary concern because it will give hard working people a sense of fair play and it will give people who are not working an incentive to work. Some people, particularly those with large families, find it more profitable not to work because they derive fringe benefits which bring their incomes up to a level superior to what they would earn if they were in jobs.

I have referred publicly to the item in the Finance Bill which refers to the payment of VAT on specific activities in golf clubs. Golf clubs do not get much sympathy because it is considered they cater for the better off sections of society and can afford to accept additional levels of taxation, but I do not agree. Golf has now become a game for people of all classes. There has been an explosion in the number of golf courses and clubs over the past five or six years and we may have more courses and clubs than are needed. That means additional taxation will create severe problems for clubs competing in an overcrowded market. It is a retrograde step to consider imposing 12.5 per cent VAT on green fees because golf is not just a leisure pastime for our people, it is also very much involved in our drive to increase tourism and any additional taxation in that regard would have a negative effect. I do not see why we should encourage leisure activities, like golf, while at the same time increasing taxation on them; that seems contradictory. I do not see the sense in imposing 12.5 per cent VAT on green fees. Many clubs have endured financial difficulties in the past few years. As newly created clubs encountered growing pains and unexpected expenses and it is not helpful to impose 12.5 per cent VAT on them. During the past winter some golf clubs were unable to operate for three to five months because of bad weather. They had large overheads and bills and had to retain and pay staff during that period while their income was virtually nil. After that period of huge loss making it is insensitive to impose 12.5 per cent VAT on them. It is ill-timed, retrograde and contrary to the concept of tourists and the tourism industry.

Regarding tax evasion and tax collection, it has always been my belief that the Revenue Commissioners have far too much power. Their autonomy is envied by politicians and others, but it is not healthy. Politicians should call the shots regardless of governmental activity. I remember when I was appointed Minister for Agriculture being given advice by the then Secretary as to what I could or could not do and what it was inadvisable to do. He made the point that the then three Land Commissioners were totally independent and could not be politically influenced. That seemed a reasonable point because the division of land involves huge amounts of money and it would be wrong if political influence could affect the distribution or allocation of land. My discussion with the Secretary was educational because I did not realise that was the case. Over the years I have heard that various Ministers had been instrumental in giving away farms to their party political supporters. It was something of a culture shock to be told that I could not have any hand, act or part in such decisions, but I was not annoyed or concerned because that is as it should be. The Revenue Commissioners have almost a God given right to act independently and can go to extremes in some cases. I appreciate that political influence might possibly affect their activities, but today I do not think that would be the case.

Not while this Government is in power.

That is one of the reasons politicians have short-changed themselves and why they are held in lower regard by the public than should be the case.

That is because Fianna Fáil was in power far too long.

We are not the masters of our own destinies or of the system of Government, we are very much the boys. There are far too many institutions above and beyond the control and influence of politicians and I do not believe that is correct. Politicians are elected by the people who expect them to be in charge, but we are not. That applies not just to the Revenue Commissioners, but to all State and semi-State bodies. We have a committee to investigate the activities of State and semi-State bodies. The Minister is supposed to have control of State bodies under his jurisdiction, but that does not alter the fact that many people in authority in those bodies do what they like without reference to this House to which Members are elected and which is supposed to be in control of all activities within the State. I do not believe that type of autonomy should be tolerated. There is a need for a basic change in our political system whereby politicians will again take control of all activities within the State; that is what we are elected for. If ordinary members of the public realised what little influence is held by an elected Member of this House, they would be appalled. If they thought that a politician was influencing day-to-day decisions on running State or semi-State bodies, they would be rightly appalled, but if there is interference people should be brought to book, made responsible and have to answer charges which would amount to fraud and corruption.

We have the worst of all worlds at present. The public come to us with problems they believe we should be able to resolve. We know we are not capable of resolving them because, whenever we ask a parliamentary question about such State or semi-State bodies we receive the stock reply that the relevant Minister has no responsibility, it is a matter solely for the State or semi-State body in question. That is not the way to run any Government or country. It is about time we politicians reasserted ourselves and administered the country. We have delegated power to a number of other people not answerable to the public which is not acceptable.

Control of public expenditure goes hand in hand with taxation provisions and, until we control public expenditure, taxation will not be reduced to satisfactory levels. Until we bite the bullet on overspending by State or semi-State bodies, taxation cannot be reduced realistically. Any overspending State or semi-State body which could reasonably be expected to break even if in private hands, should be privatised. For far too long politicians have been afraid of pressure groups, of the influence of unions and other groups who do not have a mandate from the people. The privatisation of the majority of State and semi-State bodies could save us millions of pounds.

I listened yesterday to the President of Hungary address the meeting of the Joint Committee on Foreign Affairs and the Joint Committee on European Affairs in the Seanad Chamber. It would embarrass people here to realise that a country such as Hungary, recently freed from the shackles of communism, is privatising many of the services which remain nationalised here. I can see no justification for burdening people with huge taxation while individual companies that should make a profit lose hundreds of millions of pounds.

The Minister's introductory remarks yesterday revealed his very peculiar understanding of his role in that ministry, amounting as it does, to squandering public money and using KGB-type tactics to collect taxes, which is how I would describe the provision of section 153. The role of any Minister of Finance is critical in any Government, a post cited specifically in our Constitution. An effective Minister for Finance needs to have a mature sense of proportion and a prudent approach to public finances, if he is to strike a balance between short term needs and sound, long term policies. He must also communicate to the public the reasons for his long term policies in order to retain their confidence if our economy is to prosper. He cannot succeed if he engages in short term operations using ruses to conceal decisions and resorts to thoughtless comments which are taken seriously by those in the marketplace, in response to taxpayers' legitimate concerns.

Lip service along to long term policies is not acceptable. The Minister said repeatedly he would not go beyond his budget parameters and will control public spending. We agree with what he says but we disagree with his doing nothing about it. This State cannot afford the luxury of a Minister for Finance who enunciates the right policies, whose speeches are correct, but whose actions do not mirror them. Any objective analysis of the Minister's speeches, when viewed against the most recent figures available, must indicate that the Minister is in favour of controlling public expenditure but in speech only; he is not in favour of actually doing so.

The Deputy's party advocated more spending on social welfare. It cannot have it both ways.

I will tell Deputy Eric Byrne how it can be done. A 2 per cent corporation tax reduction costing £15 million was provided for in the budget. That afforded our banks a tax cut of £12 million which would have gone some way to meeting the 2.5 per cent overall social welfare increase obviating the need to increase public expenditure.

What about the moneys spent on the Tribunal of Inquiry into the Beef Processing Industry along with the £100 million of taxpayers' money in fines to be imposed by the European Commission because of the ineptitude of the former Government?

Carlow-Kilkenny): Deputy Byrne will have his opportunity later.

Deputy Byrne asked me how I would pay for the social welfare increases.

Acting Chairman

Deputy Brennan should not answer him.

What about the £100 million of fines for the mishandling of intervention beef by the previous Government?

On behalf of the banks, I thank the Deputy and his party for the £12 million.

Which side of the fence is the Deputy on?

Democratic Left gave £12 million to the banks.

Acting Chairman

Deputy Brennan must be allowed to continue without interruption.

The Minister's speech yesterday was significant both for its failure to deal with the Government's lack of control of public spending and for seeking to defend an unprincipled proposal to punish some people for the crimes of others. Were it not that the Government does not know what it is doing, one might believe the Minister introduced section 153 in this Bill to detract public and investor attention from that lack of control of our public expenditure and the lack of any realistic foreign exchange rate policy.

The Minister was criticised on a number of fronts having introduced his first budget. I might recall some of the criticisms I made a day or two afterwards because, unfortunately, what I predicted has happened in the intervening months. I pointed out that the 6 per cent increase in spending in the year 1995 over that of 1994 was not possible and his claim was misleading, which is exactly what has been proved. I also pointed out that the accounting was creative — it was in the National Housing Finance Agency with the Loan Fund. I pointed out that the Minister would not be able to hold public expenditure at 6 per cent, that it would head towards 10 per cent. Unfortunately the figure produced by IBEC yesterday is approximately 10.4 per cent. Public expenditure now appears to be heading to four times the Minister's predicted inflation rate of 2.5 per cent rather than twice that rate which he himself predicted in this House.

I made it clear that the Minister's plan to limit spending to 2 per cent in real terms this year over the 1995 budgeted levels was not possible. It has now become clear that it is not possible in that proposals already adopted by the parties in Government involve additional expenditure above the 2 per cent of approximately £177 million.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.