If we were to use a popular cliché, we could say the budget and the Finance Bill will make the Celtic tiger purr. It is important for everybody, including Opposition spokespersons, to see this as the first component of a four year process. We must judge the budget and the Finance Bill against the appalling failure of the rainbow Government to reduce the standard and top rates of income tax over three years. It was an appalling record and it was essential to grant relief to working families.
Both inside and outside this House I have spoken of my personal experience, with a large family, of working in a semi-State company and paying 60 per cent of my income in stoppages. There was no other earner in the household. It was almost criminal and it had to change. I consider myself one of the ordinary people, to whom Deputy Rabbitte and others referred.
The combination of income tax reductions with the welcome changes in corporation tax and capital gains tax, will maintain strong economic growth in the years ahead. We must plan ahead and I am anxious to see the process of reducing rates and taxes in general continue until our tax rates can truly be regarded as pro family and pro work.
Small and medium sized enterprises, which everyone agrees are the lifeblood of a thriving economy, will be particularly encouraged by the process of a phased reduction in corporation tax. This is further evidence of the Government's pro-enterprise approach. In this context, the reduction in capital gains tax is also welcome and should prove to be self-financing. This is because many assets which appreciated in value in recent years were not sold due to the high rate of capital gains tax that prevailed up to now. The Minister has introduced specific conditions in hard hitting areas and I welcome that.
As a Deputy for a constituency with a considerable variation in economic conditions, I am acutely aware that changes in capital gains tax and corporation tax are much removed from the lives of many people, yet they represent an important area of the economy. I am glad the budget emphasised the need for measures to boost social inclusion. Over £200 million has been set aside for this purpose and I know it will be money well spent. Many people involved in community activities are aware of the projects that are supported by this money. They represent an important aspect of the life of the general community.
All social welfare increases have been above the rate of inflation and the £5 weekly increase in the basic State pension will be of particular benefit. This contrasts sharply with the shameful record of the previous Minister for Finance.
I welcome the decision to maintain the personal exemption limit for capital gains tax at £1,000 per person, which will assist small investors. I would prefer if the ability of persons to use their spouses' unused allowance was maintained. We must encourage small investors. We keep paying lip service to them, saying how important small businesses are, but when anything is done to help them the usual left wing rhetoric is trotted out. This a positive budget overall which is financially prudent, which promotes social inclusion, which rewards work and initiative and keeps the country on course for EMU.
EMU is the single most important issue facing the country and one of the most important decisions we have ever had to make. It is an unparalleled event in our history. It is incredible, therefore, that there has been no contribution on it other than the broken record on the rate of entry. The Opposition spokespersons on finance have ignored the issue of EMU with that one exception. In defence of the Minister for Finance, he has been totally consistent in his approach, both in Opposition and as Minister. He said in Opposition that any Minister for Finance should adopt the buttoned lip approach to this issue. He has repeatedly said his only interest is getting the best possible benefit for the country and that there are so many variables he will make no announcement until the middle of May when the decision must be made. It is amazing and seems to be no more than morbid curiosity at this stage, especially for Deputy Noonan, to demand that this should be announced before that date. So many variables exist and there are so many matters over which we have no control, it is incredible he keeps asking for the rate to be announced. He should concentrate on other issues related to EMU, such as the liberalisation of services, such as the postal and transport services, for example. These are important items which should be raised in this House but are being ignored.
It indicates a lot about the Opposition, both Democratic Left and Fine Gael, that most of their contributions concerned one item only — the changes proposed for the credit unions. I found Deputy Noonan's personal approach in his reply to the Minister regrettable. I could not understand why he was not worried about Structural Funds and Cohesion Funds, for example.
However, like Deputy Deenihan, I also watched "Prime Time" last night on which all was revealed. Deputy Noonan was not concerned about the future of this country or EMU, but about a vacant seat in Limerick East.
If the rest of his contribution on finance is as accurate as his description last week of Fianna Fáil canvassers in Limerick, he is very much wanting. He stated every canvasser was asked at every door about the issue of credit unions. I had the privilege of canvassing all day Saturday. I covered 268 houses in Limerick East and the issue was raised three times. I made one phone call at 7.30 p.m. after finishing because there was a private query in one of the houses.
One matter consistently raised on the doorsteps was the excellent candidate, Sandra Marsh. Admittedly I was canvassing in the area where her mother was born, but we covered many other areas across Limerick, and it was the one consistent issue. Her excellent qualities, how she could articulate people's cases, how she had made the breakthrough in the normally male dominated sphere of the GAA, were all raised.
Deputy Rabbitte seemed to complain that correspondence was released and available on the credit union issue. The matter must be clarified quickly. In the co-op movement, there have been situations where the leadership lost touch with the subscribers and contributors to the co-op. In this case, an approach was made by the executive of the Irish League of Credit Unions last November and a letter was issued by it in December asking the Minister to do three specific things. The Minister put it on record last night that he informed the league before the November meeting he had no intention of referring to credit unions in the Finance Bill, yet they were mentioned. I learned from people I work with in my area that three or four credit unions have reached a stage where they are out of touch with the rest because they are so big. By coincidence, they all seem to be involved in the State, semi-State or commercial areas; they are not ordinary community credit unions. If they have a problem with income tax, they should be open about it. I suggest the board of every credit union be asked if an approach was made, if they were aware of the approach, what it involved and who would have benefited from it. The issue must be put to bed. In the meantime, we will continue to work in Limerick East on the basis of our record and for the future of this country.
Credit unions have improved the financial situation of hundreds of thousands of people. They certainly improved it in the case of thousands of people who were in debt to moneylenders and others. Deputy Woods, who was then the relevant Minister, initiated the measure whereby credit unions would go guarantor for people in difficulties and would negotiate with moneylenders and others. We fully supported that.
Other issues which probably should be discussed are methods of tax relief. They can take three forms: tax rates, tax bands or tax shelters. The Minister, Deputy McCreevy, has taken steps to close down the last one. Of all the complaints I have heard over the years, most have been about tax shelters for the well off. He has taken steps to close them down. The change in corporation tax was justified by the Minister when he pointed out it was about continuing to prime the economic pump. However, tax shelters are a different issue and he has dealt with them speedily, unlike the Government of the past three and a half years. I was not in the Dáil between 1992 and 1997, but I know Fianna Fáil was not in Government all that time, so why was action not taken on the prisons and other problems? I find it hard to understand the new lease of life these matters have gained in the past weeks and in the approach to the two by-elections.
I deeply resented having to pay high tax rates as an ordinary working man with seven children. There were nine to feed, yet I had to pay that kind of tax. I had to work overtime to pay my way. I do not mind referring to my personal circumstances. The rates had to change and we can look back at Fianna Fáil's record in that regard. The first tax rate reduction was made by a Fianna Fáil Government. We are continuing that trend and I encourage it. The tax bands must change, but they must be linked to a four year programme of cutting rates. Tax rates were penal, everyone admitted it, but people still wanted to play games with the issue in this House. The rates and the bands must be re-examined and I am sure that will be the next step.
I welcome the Minister's promise of an urban renewal scheme. There has been criticism of this. Before he announced it, there was criticism it was not included. Now there is criticism the final details are not included. I welcome the time extension for other schemes as they will be of assistance.
I agree with Deputy Deenihan and others that there is a need to assist the first-time buyer of a house. We must deal with problems as they arise, and if a change in policy is needed, so be it, but it should be done quickly.
The Minister is to be lauded for his efforts at reconciling the times for tax returns and finance matters in general. Those of us not involved in the financial area but involved with voluntary groups and such like, with responsibility for making returns and ensuring the group's financial affairs are in order, found it crazy that there were three or four operative dates. I laud the Minister for coming to grips with that. As a former Minister for Finance, he is aware of the problems that can arise. The question of taxpayers moving on to the higher rate of tax too quickly has been raised. Obviously the rates need to be cut, but some contributors have totally disregarded the fact that the rates have been cut. The amount of money benefiting taxpayers in this regard is huge.
On the question of the entry rate for EMU, I am worried that the pressure being applied, by Deputy Noonan in particular, might damage financial structures. Will he accept what is being said on a whole range of issues, from the value of sterling to what the Bundesbank will do? In the interests of our economy we should wait until the last possible moment to debate the best possible entry rate. Speculators are already waiting to take us apart if they can, and they have the money to do it. In the interests of the country, people should support the Minister's approach.
The question of measures to root out the black economy and tax evasion was also raised. Tax evasion and the black economy are illegal. However, on the legal side, tax shelters had to be tackled so that everybody would get a fair crack of the whip. Last night Deputy McDowell said that they — I presume he meant the Labour Party — do not now use the language of class envy. That is an amazing statement, given their reaction to the budget. They have tried to stir up class envy. When somebody sets up a business and does well, there is a degree of envy in the approach of some of the people who contributed to this debate. That is a pity because the opportunity afforded by this debate could have been better used.
Deputy Rabbitte mentioned that Fianna Fáil was the party of the plain people of Ireland. That is great praise coming from that direction, even if it was a backhanded compliment and an attempt to be cynical. However, we welcome the compliment, because we recognise ourselves as the party of the plain people of Ireland. He praised Deputy Healy-Rae whom he ridiculed four or five years ago when he was a Fianna Fáil activist. We can do without that kind of thing here.
This Finance Bill is excellent, following on a very good budget. It is financially prudent, promotes social inclusion, rewards work and initiative on all sides, and keeps the country on course for economic and monetary union. I am delighted to support it.