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Dáil Éireann debate -
Wednesday, 13 Feb 2002

Vol. 548 No. 3

Finance Bill, 2002: Second Stage.

I move: "That the Bill be now read a Second Time."

I am pleased to bring my seventh Finance Bill before the House. With the exception of two specially introduced Bills, this is my fifth annual Finance Bill and constitutes part of our budgetary policy designed to secure sustainable growth and increased living standards. This Bill implements the tax changes announced in the budget and includes a range of other measures. Deputies will be aware that the annual Finance Bill is considerable and this year it runs to 137 sections and six schedules. I propose to outline its main provisions in the time available to me. Committee Stage will provide an opportunity to debate the Bill in detail and I look forward to hearing the opinions of Deputies.

One of the Government's central objectives in the area of personal taxation has been to have most income earners paying tax at no more than the standard rate. Before the Government took office, a single person with an income more than €17,270 (£13,600) per annum became liable to pay the top rate. Such an income was below the average industrial wage as it stood in the first half of 1997. Following the 2002 budget, the same person will not pay tax at the higher rate until his or her income exceeds €28,000 (£22,052), which is a sum comfortably above the average industrial wage as it now stands. The improvement has been brought about by the significant widening of the standard rate band through the budgets of this Government. Section 2 will give effect to a further widening of the band. This will remove a further 57,000 taxpayers from the top rate of tax. Section 3 gives effect to significant increases in basic tax credits resulting in further real progress towards our aim of exempting those on the minimum wage from the tax net. The increase of more than 14% in the combined value of the personal and employee credits provided for in the Bill means that the entry point to the tax system for a single person will be more than €209 (£165) per week. That represents 90% of the current minimum wage as compared with €98 (£77) per week in 1997-1998. A single-income married couple in receipt of the home carer's credit will be exempt from tax on the first €22,350, which is equivalent to €430 per week.

Since 1997 the positive changes to the income tax system have taken 71,500 elderly people out of the tax net. The increases in income exemption limits for those aged over 65 years provided in section 4 will mean that the limits have almost doubled since 1997. They will now stand at €13,000 for the single person and €26,000 for married couples.

The increases in credits provided for in the Bill, as well as the increased exemption limits for the elderly, mean that more than 79,000 people are being exempted from income tax altogether. Since the Government entered office, the number of those brought outside the tax net has increased to a record 692,000, representing 37% of all income earners. This compares with a figure of 380,000, or 25%, of income earners before the Government came to office.

I am very conscious of the costs involved in caring for family members who are ill and incapacitated and consider the tax system should support people in these efforts. I made significant changes in the tax reliefs in this area last year and am taking further measures this year. The cost of employing a carer to care for a family member who is incapacitated can be claimed at an individual's marginal rate of tax subject to a ceiling. Section 5 increases the maximum allowed from €12,700 to €30,000 per annum.

Claims in respect of medical expenses which were not reimbursed can be made by an individual against tax at the marginal rate. Currently the relief is available for a person's medical expenses which were not reimbursed or where an individual pays the expenses of a spouse or dependent child or of a widowed father or mother or incapacitated relative of the individual or his or her spouse. In section 9 this is now being extended to include a brother or sister, all parents whether widowed or not, grandparents and grandchildren. There is also a case for allowing claims in respect of non-relatives where these are elderly individuals aged 65 or over or those who are permanently incapacitated. The Bill provides for this.

Section 6 amends the tax credit available in respect of local authority service charges. The maximum amount of service charges qualifying for the credit at present is €195. This section removes the ceiling for services provided by local authority and private operations, other than for refuse collection services based on a tag system. This will allow a taxpayer claim a tax credit for the full charge for such services at the standard rate of tax.

The flat rate of tax charged on refunds of pension contributions has been 25% since 1992, when rates of tax were considerably higher. Section 10 reduces the rate for refunds made on or after 5 December 2001 to the standard income tax rate.

As I indicated last week on the publication of the Bill, I will bring forward on Committee Stage of the Bill a number of changes in the pensions area to encourage employees to increase their level of pension cover.

Section 12 provides for the introduction of a new scheme of relief from income tax on their direct sports earnings for Irish resident sportspersons involved in certain sports. I am very conscious of the contribution such sportspeople make to Ireland's image and reputation as well as the short earnings career they have in many cases. I want to encourage world class Irish sportspersons to stay resident in Ireland and I recognise the contribution they make. This relief will also benefit our semi-professional sportspeople whose efforts bring enjoyment to so many.

Qualifying sportspersons will be entitled to a deduction from earnings from direct participation in certain sports of the order of 40% for up to ten years of assessment back to and including the tax year 1990-91, provided the sports person was resident in the State in these years. Eligible income under the scheme will arise from direct participation in the sport and will not include income accruing from sponsorship, advertising or endorsements. The relief can be claimed in the year in which the sports person ceases to be permanently engaged in that sport, provided the individual is resident for tax in that year, and will begin by way of repayment of tax. The cost of this measure is not estimated to be very significant – it is unlikely to exceed €5 million a year on average on an ongoing basis.

Section 13 amends the provisions governing approved profit sharing schemes and employee share ownership trusts to allow existing ESOTs or APSSs to continue to benefit where a take- over takes place and the take-over company involved has no share capital or insufficient share capital available to do a full ordinary share for share exchange. I am aware of the arguments for extending these type of arrangements to more general gain-sharing schemes where cash payments rather than shares are involved. I appreciate the benefits such schemes can bring – a number of groups whom I met have made this case. However, there are difficulties in designing a scheme of tax relief in a way that does not lead to a more generalised scheme of tax relieved remuneration. Accordingly I do not consider it feasible for the moment to extend these schemes in the ways suggested.

Section 14 limits the use by private investors of relief available for expenditure on significant buildings. In order to combat the unintended use of this relief by passive individual investors, there will be an annual limit of €31,750 on the amount of losses that such investors can offset against their other income. This brings this relief into line with what applies generally for industrial buildings. Since this was announced in the budget I have been made aware of a number of projects where arrangements were already in place or at an advanced stage. Accordingly the Bill provides for certain transitional measures for such projects with a cut-off point of end 2003 for eligible expenditure.

Section 15 extends the business expansion scheme and the seed capital scheme for a further period of two years. The existing company limit for these schemes is being increased to €70,000. This initiative will further facilitate companies in raising funds, particularly small and start-up companies.

Section 16 provides for the reintroduction of mortgage interest relief as a deductible expense in calculating tax on rental income from residential property with effect from 1 January 2002. While this Government has made a number of changes in the taxation of the residential property market in recent years, circumstances have now changed and the presence of investors is required to secure the future supply of housing to meet accommodation needs. This change, together with the stamp duty change in sections 109 and 110, has already had an effect in restoring confidence in the housing market with positive implications for employment and output in the construction sector.

Section 17 clarifies the situation on treatment for tax purposes of reverse premia and removes any doubts on the issue.

Sections 18 to 21 deal with withholding tax and deposit interest retention tax. Interest paid to banks and building societies is currently exempt from the withholding tax requirement and section 18 extends this to interest paid to other financial services companies who make loans in the ordinary course of business.

Section 19 removes interest paid on financial instruments known as euro commercial paper and certificates of deposit issued by certain financial institutions from the DIRT tax regime and the company withholding tax regime. This will allow domestic financial institutions to compete more effectively in such markets. It should be noted, however, that there will be strict conditions imposed on deposit takers and-or purchasers of the financial instruments concerned, including the provision or supply of tax reference numbers and return of this information to the Revenue Commissioners.

Section 20 removes the necessity for pension funds, charities and resident companies to complete a declaration form in order that the interest received on deposits by them is free of DIRT. Such authorities may obtain interest gross and I am satisfied the various audit and inspection powers introduced in the Finance Act, 1999, are sufficient to monitor compliance. Section 21 clarifies the operation of DIRT, in so far as it relates to special term accounts held with financial institutions, in particular, with credit unions.

Section 22 provides for certain amendments to the scheme of capital allowances for hotels to meet European Commission approval under EU state aid rules. The House will recall that last year changes were made to this and other schemes to ensure that EU state aid ceilings were not breached, by providing in tax legislation that capital allowances could not he claimed for expenditure which had received grant aid. The Commission has since asked that this be extended to cover all possible forms of aid and not just grants. This is being provided for in this section and in section 26 in relation to the urban, town and rural renewal schemes. The scheme is also being amended to add additional items to be certified by Bord Fáilte in relation to general EU rules when certifying hotel projects as eligible for allowances.

The House will note from what I have said on this, and will mention on other later items, that the European Commission has an active role in approving such reliefs under EU state aid rules and in applying certain new requirements and conditions to these reliefs.

Sections 23 and 24 deal with extensions to the deadlines for qualifying expenditure in relation to a number of tax incentive schemes for property. They extend the existing 31 December 2002 deadline for relief for multi-storey car parks and the urban and rural renewal schemes until 31 December 2004. The period for qualifying student accommodation will be extended to 30 September 2005 and that for the park and ride scheme will be extended until 30 June 2004. The extensions to the deadlines in respect of the business elements of both the urban and the rural renewal schemes are subject to the signing of a commencement order once the extension is approved by the European Commission. No such EU approval process will be necessary for the residential elements of both of these schemes and it is hoped developers will take timely advantage of this extra time in order to proceed with the residential projects.

In addition to providing time extensions, section 24 amends the various sections that provide for the reliefs for residential investors and owner occupiers under the various urban, town and rural renewal schemes. Since the original inception of these reliefs in the mid-1980s the legislation has become both cumbersome and complex and up to now these reliefs have been provided for under separate legislation governing each scheme, a total of 12 schemes in all. This section codifies and consolidates the legislation and where appropriate redundant or non-activated sections have been deleted.

Section 25 makes a number of amendments to both the Urban Renewal Act, 1998, and the Town Renewal Act, 2000, to allow the Minister for the Environment and Local Government to extend the rented residential relief to certain areas which were originally designated under both the town and urban renewal schemes for owner occupier relief only.

These measures will have the effect of extending the relief for rented residential investors to an overall total of 1,785 sites in the areas designated under both schemes. Of these, 1,125 sites will be for new build development sites. It is hoped that, along with the restoration of relief for borrowings for residential investors, this measure will increase the level of the provision of rented residential accommodation in the areas designated under both schemes. While the provision applies generally as respects expenditure incurred on or after 5 December 2001, it is proposed for the sake of fairness that certain qualifying expenditure already incurred under the existing owner occupier scheme will also qualify for rented residential relief.

Section 27 provides for the abolition of the restriction on the amount of deductible motor car running expenses for corporation tax or income tax purposes. These expenses include expenditure on fuel, insurance, tax and repairs. This restriction was introduced in 1976 and operates by disallowing a portion of the expense where the cost of the car exceeds a certain threshold. This threshold was increased in the budget to €22,000 and it applies for both new and second-hand cars. The expenses in question are those incurred in the course of a business or employment and the restriction is a somewhat artificial and cumbersome one that has outlived its usefulness. The abolition of the limit will take effect in relation to such expenses incurred in an accounting or basis period ending on or after 1 January 2002.

Section 28 makes a number of amendments to the special profit deferral arrangement and 100% stock relief that is available to farmers who receive compensation as a result of disease eradication measures. The two year period during which farmers can avail of this measure is to be extended to four years in respect of disposals which arise on or after 21 February 2001. The section also makes two technical amendments in order to clarify the interaction of this relief with the short tax year.

Section 29 extends the definition of qualifying quota that can qualify for relief under the scheme of capital allowances for the purchase of milk quota. This relief is to be available in respect of any purchase of milk quota by active producers purchased on or after 1 April 2000. However, as before, the amount of the relief available is capped at the price set for the milk quota year by the Minister for Agriculture. Food and Rural Development for the purposes of the purchase of milk quota under a milk quota restructuring scheme.

Section 30 simplifies the arrangements for the write-off period for wear and tear capital allowances for plant and machinery – particularly in relation to capital expenditure incurred before the change in the write-off period introduced last year.

Section 31 amends the legislation providing for a scheme of capital allowances in respect of expenditure incurred on the construction or refurbishment of buildings used as private hospitals so as to streamline the provisions and improve the potential take-up of the scheme.

Section 32 provides for a scheme of capital allowances in respect of capital expenditure incurred on the construction or refurbishment of buildings used as private sports injury clinics. To qualify for the allowances, the sole or main business of the clinic must be the diagnosis, alleviation and treatment of sports-related injuries. The clinic must provide day-patient, in-patient, out-patient and surgical services and in-patient accommodation of at least 20 beds, and must contain an operating theatre or theatres and on-site diagnostic and therapeutic services. The scheme is subject to clearance by the European Commission from an EU state aids perspective. In both cases the European Commission requires that the capital allowance is not be available to anyone involved in the running of the hospital or clinic.

Section 33 extends the qualifying period of the scheme for capital allowances in respect of expenditure incurred on certain buildings used for third-level education from 31 December 2002, to 31 December 2004. This scheme has made a useful contribution to the development of important educational infrastructure and its continuation should benefit the delivery of high quality third-level education facilities.

Section 38 relates to the taxation of personal portfolio life assurance policies and is an anti-avoidance measure. I announced on 26 September last my intention to include legislation in the Finance Bill to change the tax treatment of personal portfolio life assurance policies and the measure will apply from that date. The main change is the imposition of a 20% surcharge on the proceeds of such policies. The section also provides for some additional rules governing the application of the surcharge to certain life assurance policies issued after budget day.

Section 39 provides for a scheme of tax relief for donations to certain sports bodies for the funding of capital projects. I undertook last year, when I amalgamated and expanded the tax provisions concerning donations to charitable organisations and educational establishments, to examine the possibility of allowing sports bodies receive tax relief on donations. This was an issue raised with me in the Dáil last year by some Deputies. I was pleased to announce this new scheme in the budget. This relief is aimed at providing support to sports bodies around the country engaged in projects of a capital nature such as the construction or refurbishment of sports facilities. The estimated aggregate cost of the project must not be greater than €40 million.

Sections 41 to 43 and section 45 contain a number of technical amendments to the new exit tax system of taxation for collective funds and life assurance to streamline the application of certain declaration procedures which disapply the exit tax. Provision is also made to apply the corporation tax trading rate, rather than the non-trading tax rate, to payments and gains arising from certain foreign funds where held by a financial company as trading stock. The intention of section 44, as confirmed in the explanatory memorandum to the Bill, is to remove a possible double charge for certain trusts to capital gains tax only. Paragraph (1)(b) of the section goes further than intended and I will bring forward an amendment on Committee Stage to delete this. Section 46 provides a number of technical amendments to the special savings incentive account scheme which are required as a result of practical experience of the running of this scheme. Section 47 deals with special portfolio investment accounts which are being phased out. To encourage early closure of these accounts, this section allows investors who have unrelieved capital losses on their accounts to offset these against other capital gains when their account is closed.

Section 49 gives effect to my budget announcement that a tonnage tax method for calculating the profits of shipping companies for the purposes of corporation tax would be introduced. Tonnage tax makes available an alternative method for shipping companies to calculate their profits for corporation tax purposes, though if a shipping company wishes to remain subject to the normal corporation tax rules for the calculation of its profits it may do so. Profits once calculated using the tonnage method are subject to the 12.5% rate of corporation tax the same as the profits of a shipping company calculated by reference to the normal rules. The tonnage tax profits are arrived at by reference to the tonnage of the ships used in the shipping trade. Subject to clearance by the European Commission from a state aid perspective, the tonnage tax will come into operation by way of a commencement order. This provision is aimed at providing a level playing field for Irish shipping companies vis-á-vis those in other EU member states with similar rules.

Section 50 allows for some easing in the rules regarding the offset of losses on trading income activities against profits made on non-trading income activities. This is in response to requests made by tax practitioners in relation to the strictness of the current rules. Section 54 gives effect to the budget measure that the payment date for preliminary tax is being brought forward to one month before the end of the accounting period – an advance of seven months. This brings the provision for the payment of corporation tax more in line with the general practice in other EU and OECD countries and in line with the rules for the payment of income tax. The measure is being introduced over a transitional period and will be fully effective for accounting periods ending after 2005 when 90% of final liability will be payable one month before the end of the accounting period. Any balance of tax due – over and above preliminary tax – will, as at present, remain payable within one month of the issue of the tax assessment by the Revenue Commissioners. It may be more difficult for a small company to accurately assess its potential corporation tax liability for the year. Accordingly provision is being made to allow small companies to pay either 90% of the current year's liability or 100% of the previous year's tax liability. A company will be treated as a small company if the corporation tax liability for the previous corresponding period does not exceed €50,000. Corporation tax payable on any capital gains in the last month, which could be difficult to predict, does not have to be included in the 90% provided a top-up payment is made one month after the end of the period.

Capital gains tax retirement relief applies where a person aged 55 years or over disposes of business assets by way of sale or gift, subject to certain conditions. Section 55 provides that personally held business assets, that is those held outside a family company, will also be eligible for retirement relief subject to certain conditions, including the condition that these assets must be disposed of together with the family company to the same person or persons. This facility already applies in the case of capital acquisitions tax business relief. Sections 57 and 58 deal with CGT reliefs in the case of a compulsory purchase order on farmland. The sections extend roll-over relief and early retirement relief to include land that was leased at the time of CPO provided it had been actively farmed and was leased for less than five years prior to the disposal.

Sections 60 to 79 relate to betting duty, including provisions to consolidate and modernise the betting duty legislation. The existing legislation in this area, some of which dates back to 1926, has been supplemented and amended over time to the extent that it has become very fragmented and disjointed. The opportunity is being taken to streamline existing provisions and to introduce a new collection system. Section 63 confirms the budget decrease in the rate of excise duty on bets from 5% to 2% with effect from 1 May 2002. It also includes a change in the definition of the amount of the bet to clarify the taxation of spread betting on a unit basis. Section 64 provides for a new exemption for tote bets placed in registered bookmaking premises. Section 67 allows the bookmaker to absorb and pay the betting tax rather than charge it to the customer. Section 74 includes the imposition of a new charge of €2,000 where premises are re-registered following de-registration. These and the other changes in the Bill continue the process of up-dating excise law undertaken in recent Finance Acts.

Sections 80 and 81 provide that all applicants for a permit required to operate amusement machines in public places must produce a tax clearance certificate. There is also a provision for the imposition of an excise duty of €100 on the issue or renewal of such a permit. Section 82 provides that a tax clearance certificate is required when applying for various intoxicating liquor licences. Section 83 consolidates and standardises the Revenue's powers of entry and search of premises for excise purposes by the inclusion of premises in which bets are accepted and by clarifying powers of detention.

Sections 84 to 86, inclusive, confirm the budget increases in rates of excise duty on tobacco, petrol, auto diesel, cider and perry. Section 85 also confirms the budget provision for a higher rate of duty to apply from 1 March 2002 on auto diesel with a higher sulphur content. Sections 87 and 88 extend both the repayment period and time limit for claims for repayment of mineral oil tax on heavy oil and liquid petroleum gas used for various purposes.

Partial relief from mineral oil tax by way of repayment is provided for in certain road passenger services. The current criteria apply to a person who provides a passenger road service or provides a school transport service. In recognition of the importance of tourism to the economy and the key role played by coach tourism in this area, section 89 adds a new category of tour coaches used for extended group tours to the road passenger service section. The Bill provides that the extension of the relief and the current relief will be for those who can produce tax clearance certificates.

Sections 95 to 106, inclusive, deal with value added tax. There are significant changes in the Bill in the VAT treatment of property transactions. Sections 95 and 96 are aimed at preventing the use of VAT property avoidance schemes. These have become a feature of the VAT system in recent years. I am anxious that such schemes be closed off when they are discovered and where there is a feasible way of doing so. Section 95 aims to prevent the use of low valuations to reduce the amount of VAT that should properly be paid on the surrender of possession of immovable goods in certain circumstances. Section 96 aims to prevent the use of the break-up of a VAT group as a way of avoiding VAT on immovable property which had been brought into the group and for which deduct ibility had already been claimed. Section 97 introduces mechanisms to address the issue of payment of VAT by non-resident performers and mobile traders when they operate in the State. These replace existing mechanisms which had to be replaced by virtue of the adoption of an EU directive on the treatment of fiscal representatives. Section 99 provides for the increase in the standard rate of VAT from 20% to 21% announced in the budget. This increase, effective from 1 March 2002, will provide necessary additional revenue for the Exchequer. Some changes in administrative arrangements necessary for the effective functioning of the VAT system are also being introduced.

Sections 109 and 110 give effect to the budget realignment of the investor stamp duty rates for transfers of new and second hand residential property with those for owner-occupiers, other than first-time buyers, purchasing second hand residential property. As I indicated earlier, this measure, together with others, was designed to encourage investment in the provision of rented residential accommodation.

Sections 112 to 118, inclusive, deal with capital acquisitions tax. Existing provisions provide that, where a farmer has obtained 90% agricultural relief for CAT purposes on the gift or inheritance of certain farmlands and these lands are subsequently acquired from the farmer under a compulsory purchase order within six years of the transfer, the CAT relief given will be clawed back unless the lands are replaced within four years by other agricultural property. Section 112 provides for the period for replacement to be extended to six years instead of the four years as at present where the farmlands are compulsorily acquired.

Section 117 brings the base date for aggregation for gifts or inheritances liable for CAT forward from 2 December 1988 to 5 December 1991. This measure takes effect for all gifts or inheritances taken on or after 5 December 2001, as announced in the budget. Section 118 provides that the exemption from CAT for life policies issued to non-residents by life companies located in the Irish Financial Services Centre is to be extended to cover life policies issued to nonresidents by domestic life assurance companies.

Certain tax liabilities can be discharged by way of a donation of an approved heritage item to the national collections. Section 120 increases the annual limit for all objects given in a year from €3.8 million to €6 million as well as providing other amendments to improve the operation of the section.

Sections 122 to 131, inclusive, deal with Revenue powers, penalties and administration. These measures implement recommendations of the Committee of Public Accounts sub-committee on deposit interest retention tax and strengthen the penalties regime for failure to make a tax return. They also strengthen Revenue powers in a number of areas, including the publication of tax defaulters.

The provisions regarding publication of the names of tax defaulters where the settlement figure is greater than €12,700 is being extended to include Customs and Excise settlements. A similar provision is being made in the Social Welfare Bill relating to PRSI. Provision is being made to clarify that Revenue can publish names of tax defaulters on its website. However, where an underpayment of tax arises from a relatively minor default on the part of the taxpayer, specifically where the penalty element is 15% or less, the case will not be published. Such cases will be confined to situations where the nature of the default is merely "insufficient care" on the part of the taxpayer. If there is gross carelessness or deliberate default, the case will be published. Section 122 contains these amendments.

Section 123 concerns tax clearance certificates relating to certain licences and public sector contracts. The section extends tax clearance provisions to all liquor licences and permits for public places in which amusement machines are located. It also converts existing provisions into a generally applicable tax clearance procedure covering applications for tax clearance for whatever reason other than those already catered for. As a result of this section, it will be possible to apply for and obtain tax clearance certificates through electronic means, for example, the Revenue ROS system. Revenue will also be permitted, subject to the applicant's agreement, to publish the certificate, for example, on a website where he or she may authorise persons to view it for verification purposes.

Section 124 provides that the penalty for fraudulently or negligently making an incorrect return relating to DIRT or dividend withholding tax is tax-geared, that is, a proportion of the tax undercharge rather than being a fixed penalty. Section 125 changes the basis for calculating the interest charged by Revenue on unpaid tax and paid by it on overpaid tax. At present this is done on a monthly basis but, with effect from 1 September 2002, interest will be expressed as a daily rate and calculated on a daily basis. Arising from this change to a daily rate of interest, certain minimum interest charges are abolished.

At present, a tax-geared penalty is imposed where a person fraudulently or negligently makes an incorrect return. This includes an individual's income tax return and certain other returns. Section 126 provides that a tax-geared penalty can be imposed where there is a tax undercharge and the person in question has not made the return concerned. It also equalises the penalties that can be imposed for failure to make a tax return, whether the failure referred to in that section is that of an individual or a company, and amends the method of recovery of penalties. Section 127 provides for tax-geared penalties where a tax undercharge arises and no return has been made.

Revenue's power to obtain a court order to obtain information from financial institutions is being extended to make it more easily available in Customs and Excise investigations. This is specifically targeted at cigarette smuggling. The range of records which can be accessed in a tax audit is being extended, and dividend withholding tax is being brought within Revenue's power of audit. These changes are contained in section 128.

It is also proposed to make it easier to prove in court that a person failed to make a tax return. At present, Revenue must show that the taxpayer "knowingly and wilfully" failed to make the return. Section 129 provides instead that a taxpayer can be prosecuted for failure to make a tax return unless he or she has a reasonable excuse. If a person is so prosecuted and the judge orders the taxpayer to make the return, then failure to do so will also be a revenue offence.

Section 132 is concerned with repayable advances which were made to Shannon Free Development Limited out of the Central Fund to meet the expenditure incurred by that company in the provision of houses and certain community services since the 1960s in Shannon town. The purpose of this section is to enable the write-off of the repayable advances of around €11.5 million when responsibility for these public utilities transfers to Clare County Council.

As I mentioned in my Budget Statement, the introduction of euro coin has highlighted an anomaly in the way the economic benefit associated with the right to issue coin is brought to account in Ireland. The norm in other EU member states is for the state to receive this economic benefit. In Ireland, that benefit accrues to the currency reserve of the Central Bank, even though the bank merely acts as an agent of the State in the provision of coin. As proposed in the budget, I have taken steps to rectify the position in the Bill, and section 133 empowers the Minister to direct the Central Bank to pay into the Exchequer the accrued net proceeds arising from the issue of coin. The bank estimates that this will benefit the Exchequer to the extent of some €370 million during 2002. My Department has consulted the European Central Bank on this proposal and it has no objections to the measure. In its comments on it, it notes that the change in the balance sheet treatment of coins is consistent with the accounting treatment of euro coins issued by other participating member states in accordance with Article 106 of the treaty.

Section 135 clarifies the application of budget night financial resolutions to ensure such financial resolutions will amend the tax and related law as it stands immediately before the financial resolution takes effect. Sections 136 and 137 contain the usual technical provisions.

In my time as Minister in my various Finance Bills I have made fundamental changes to the tax system. I have delivered reduced tax rates across the board – in income tax, corporation tax and capital tax. I have made the tax system fairer by introducing tax credits which ensure all taxpayers benefit equally from reliefs, and by closing off tax avoidance opportunities and broadening the tax base. I have streamlined and reformed the system in a range of areas. I am happy to stand over this record.

I hope the House has benefited from this outline of the provisions in the Bill. I look forward to the debate on it and commend it to the House.

The Minister has made a speech on the Finance Bill, which seeks to implement his budget introduced only ten weeks ago, without once referring to the current economic situation. It is evident that the budget, to which the Bill seeks to give statutory provision, is already off the rails. The forecasts for this year, which the Minister announced on budget day, will be as wide of the mark as the projections of his Department for 2001. We have a situation which clearly demands corrective action, but the Minister, by his silence, ignores the very grave situation into which he and his Government have walked us. There is very little analysis of this situation in the newspapers and when Opposition figures draw attention to it they get very little media coverage. However, I was glad to hear at least one Government backbencher sounding alarm bells when he spoke at his party conference last week. I refer to Deputy O'Malley.

We know that the income for January this year is down 6% on the same month last year while current expenditure is 22% up. It does not take a scholar to see that if that trend were to continue for even a couple of months, we would be in a very grave financial position. The month of January 2002 replicates very closely what happened during the whole of 2001. Current expenditure escalated by 22% whereas income only increased by 3% or 4%, leaving the Minister with a tiny surplus, contrived by accountancy tricks and movement of money from one Estimate and one year to another. We had a nominal, but untrue small surplus last year, but even that amounted to only one twelfth of the surplus the Minister predicted. The figures for last year were unreal. The extent of the error by the Minister cannot be accounted for by reference to foot and mouth disease or the events of 11 September. There was a grave miscalculation in his Department. The returns for the first week in January 2002 appear to show that his miscalculation has continued. It has continued for political reasons to obscure the truth from the electorate until the general election is over.

The calculations were not done by me. It is a grave slur on any official to say so.

I will deal with that matter. Chairman, I am entitled to be protected from this defensive action by the Minister.

Carlow Kilkenny): I presume there will be only one interruption.

I am obviously getting to the nub of this matter and irritating the Minister. The error made recently by the AIB pales into insignificance compared to the error over which the Minister has presided. He inherited an economy from his predecessor, Deputy Quinn, which was on a trajectory of growth and leaves behind an economy which is on a trajectory of debt. These are not political charges. This is reality.

The Government has deliberately fuelled current expenditure for political reasons which now threatens the very soundness of our economy. This expenditure bonanza cannot be identified in any obvious achievements. Where has all the money gone and where is it going? Shocking things remain undone after seven years of unparalleled growth and five years of the Minister's term of office.

No one should be surprised at Fianna Fáil's performance in this respect. The Tánaiste, Deputy Harney, and the Attorney General, Michael McDowell, however, have been shown by their mentor, Deputy O'Malley, to be both fools and knaves. As leader of the Progressive Democrats, Deputy O'Malley had clear vision and strong convictions on which he was not for turning. Regrettably, the same cannot be said of his successor, the Tánaiste, who has overturned every principle she ever held, in order to facilitate every Fianna Fáil fudge in the past five years. Weakened by the departure of Mr. Pat Cox and now further weakened by the return of the would-be führer, the Attorney General, she has been reduced to a mere shadow of her distinguished predecessor. How does she respond to the lucid criticism of the Government's budgetary performance by Deputy O'Malley? She does nothing. She would prefer to upset him than to upset the Taoiseach.

We are talking about a creeping national emergency in which the duty of all patriots is obvious. The present situation requires a reversal of current expenditure plans. If the Government was patriotic, it would take corrective action now and not wait until after the general election. This cannot be expected of Fianna Fáil, but one would have expected it from the past rhetoric of the Tánaiste and the present hyperbole of the Attorney General.

The obvious hypocrisy and double thinking of the Attorney General are frightening. Last week, at the Progressive Democrats conference he derided as "auction politics" Fine Gael's consideration of the taxi men's case for some hardship fund, yet his own Progressive Democrats colleague and Minister of State, Deputy Molloy, announced at the very conference a similar scheme. It was painful to hear Mr. McDowell throughout an RTE radio interview trying to distinguish between the Government's scheme and ours. Of course the Progressive Democrats would never get involved in auction politics, or so he would have us believe. His hypocrisy was in full flight when he tried to drum up a fear of Labour's participation in Government. It is not for me to speak for the Labour Party but the last Govern ment in which Labour participated with Fine Gael left behind a booming economy, including lower taxes, lower corporate taxes and a budget surplus. As I said earlier, the economy was on a trajectory of growth. Mr. McCreevy has now left us with hidden debts, including acknowledged debts for next year and the year after. The reality is that a Government is as strong as its weakest link and the Progressive Democrats are the weakest link. No action will be taken by a Government in which Deputy Harney is Tánaiste and Fianna Fáil predominates. The crisis will be left for the next Government to deal with. It is already clear that one of the first requirements of the next Government will be to take immediate action to curtail current expenditure.

To return to the question I have asked on several occasions previously, where has all the money gone? It is difficult to answer the question as there are so many deficiencies in society. People on £106 a week, or €135, do not qualify for a medical card. They are expected to pay £25 to £30 per visit to the doctor out of £106. Compare that to the largesse the Minister has poured out for 7% of the population who earn more than £200,000 and who have gained £60,000 to £70,000 per annum in tax concessions. It is no wonder he looks guilty and uncomfortable.

There is an eight year waiting list for orthodontic treatment. Children go right through secondary school without obtaining orthodontic treatment and live with the consequences for the rest of their lives. In Northern Ireland there is a one year waiting list. The most shocking thing of all is that 20% of children leaving primary school do so with learning difficulties. Three quarters of these cases could be avoided if the resources were provided, and I will return to that issue in a moment.

The housing problem is worse than it was when I joined politics 32 years ago. Thousands of people in this city, and cities and towns throughout the country, live in grossly overcrowded conditions and squalor. I cannot understand how the Taoiseach who shares my constituency and who must see the same things I see has done so little about this problem. There has been a massive increase in the numbers of homeless people. The waiting lists in the health service are much longer than they were five years ago. There is a 41% increase in the Taoiseach's constituency and a 91% increase in the children's hospital, Crumlin. The list goes on and on. There are many people, such as widows in my constituency, who are permanently sick, invalided, living on their own and trying to live on £90 a week. These people cannot afford a haircut, a coat, a pair of shoes or to go for a pint while 7% of people, an extraordinary number, who earn £200,000 or more per annum will receive £60,000, £70,000 or more in tax concessions. All the lolly has gone to these people. The Minister is leaving behind something very shocking. He has consigned a generation of young people in primary school to a life of disadvantage. Of the 20% of children who leave pri mary school with learning disabilities, three quarters would not need to do so if the resources were provided on time.

There are Education Acts with rights expressed in law and among the rights of children is a right to psychological assessment. The Department of Education and Science rules that unless one has that assessment one will not obtain the resources for an extra remedial teacher or home liaison officer. In my constituency of Dublin Central and one or two neighbouring constituencies, which have probably the biggest cohort of the most deprived people in the country, the children cannot get a psychological assessment because there are only 1.5 psychologists available in an area where there should be 11. The queues get longer each day and the children leave school without psychological assessment or they get it so late in primary school that they have severe learning difficulties. I know this because I recently visited several schools in my constituency. I was horrified in the case of one school where just under half the pupils had learning difficulties and could get no psychological assessment. I approached the Department of Education and Science on the matter and am still awaiting progress. I then raised the money to get these children a psychological assessment, which they are now receiving. I was prompted to do so because if children in better off areas need psychological assessment most parents are in a position to pay £200 to get the assessment. Schools in betters off areas who have this certificate can get the extra resources. Because parents cannot afford the £200, and the State will not live up to its obligations in the areas which need resources most, children are doubly disadvantaged. These children leave school with literacy and numeracy problems and in 95% of cases embark on a life of disadvantage. That is what the Minister has left behind and he ought to be ashamed.

The fundamental difference between the outgoing Government and the alternative Government will be that these burning social needs will be addressed by the latter, but have been totally neglected by the current Government which does not have the excuse of lack of resources. It is the first Government in the history of the country which does not have that excuse. It had all the resources in the world but the Minister reduced tax from 20% to 10%, 5% and 2% and capital gains tax from 40% to 20%. This was mostly justifiable but why could he not find the resources for these young children? I imagine if we were to identify all the young children in school who need psychological assessment, and provided the money for them to get their assessment, it would not cost £100 million. It would be a once-off cost. It burns me up to see very good children being totally consigned to disadvantage for the rest of their lives. It is an affront to me and I feel personally guilty that I have not kicked up more about it or about the case of widows and individuals living solely on social welfare who cannot work.

Mr. O'Malley said the day of the budget did ten times more damage to the economy than 11 September. That is not to say that the events of 11 September did not add to the stalling of the economy, but the budget of 5 December fuelled the already raging growth in public expenditure. Reckless politics and reckless financial control were evident and the Minister had the gall to attack the one proposal Fine Gael has made that would cost money, that is the justifiable proposal of giving ordinary Eircom shareholders the same tax rebates that the wealthy have already got. It would be a once off cost of not more than €90 million, not a repetitive cost. Again, it is a case of social justice over which Fine Gael is standing. That once off cost of €90 million compares favourably to the outrageous spending plan of a Government which has been reckless in the extreme.

The Minister has lost control of the economy. He was passed on a golden economy but now he passes on an economy in difficulty. His performance received rave reviews during the period of unparalleled growth. He was taken in by the propaganda that he could do no wrong. However, much has gone wrong. The Central Bank continues to give me cause for worry. Under the scrutiny of the Committee of Public Accounts, it made not just a poor impression but a very poor impression. It presided over the DIRT scandal and now it seems to have been remiss again in its role as supervisor of the Allied Irish Bank.

The present governor will retire next month. The Government has decided to nominate the Secretary General of the Department of Finance to be the next governor. This is in direct contravention of the recommendations of the DIRT inquiry, which wanted a distance put between the Central Bank and the Department of Finance. For a long time, the Central Bank has been a mere parrot of the Department of Finance. They think alike because of their close relations, as do the Revenue Commissioners unfortunately. This was highlighted by their common views on the capital flight theory, which bore no examination whatsoever. There was no basis to it. A fashion developed in the Department of Finance in respect of capital flight and doing nothing about evasion, and the Central Bank and the Revenue Commissioners were of the same thinking. The fact that there was no independent thinking in the Central Bank or Revenue Commissioners led to one copying the other, complacency and a lack of independent critical analysis. That will continue although I want to make clear that the present Secretary General of the Department of Finance is a distinguished public servant. My comments are in no way personal to him.

We need to separate the thinking of the Department of Finance and the Central Bank so the latter will be a truly independent critic or observer of the economy capable of making truly independent critiques in the national interest. That is all the more necessary because of the gaps the Committee of Public Accounts identified in the Central Bank. The Central Bank has been a mere parrot of the Department of Finance in terms of its thinking. It has been lethargic and indifferent.

I very much regret the Minister's failure to bring forward the long-promised Bill to establish a new single regulator. The agreement on the substance of the Bill took a long time to be achieved. That was a year ago. A year later, there is no sign of the Bill. It is another case of gross inaction by the Minister.

Likewise, the Government has not given effect to another important recommendation of the DIRT inquiry. It has accepted it in principle but there is no Bill. I refer to a Bill to set up a statutory oversight board for the accountancy and audit profession. This is now becoming a very serious national and international issue. In the United States, the Andersen relationship with Enron is giving rise to huge concerns in the market about what they call accountancy overhang. A lack of independence and effectiveness on the part of auditors is beginning to be a problem. It appears to be a problem in AIB. Not only were the Central Bank and internal controls and management deficient, but the internal and external auditors were also deficient, as were the regulators. This was a clear case bringing itself to bear on DIRT – the auditors were compromised because they were getting other consultancy work from the same banks. If they kept their mouths shut, were nice, decent boys with regard to the audit and did not cause difficulties, they got other consultancy work which was very lucrative.

There is clearly a conflict of interest and now it is becoming a major issue in the stock markets. It is an issue that is pertinent to Elan and AIB and the major case in the United States at the moment. Yet the Government has failed. It is now in its dying days and there is still no Bill to establish the accountancy oversight board. It is urgent, just as it is urgent for the single regulator to be brought in and for the Central Bank to be overhauled and reformed very quickly.

I am alarmed at the continuing failures of the board of the AIB group and its senior management. Their inaction and inefficiency have now been a cause for concern three times. On at least two of these occasions, their poor performance could have been a threat to the stability to the Irish financial system, including the recent difficulty. It could easily have been of a higher scale and threatened the very viability of the bank itself, thus causing major problems for the Irish banking system. Thankfully, it appears that the problem is not of that scale and we are in a better position to deal with those sort of problems than we might have been some years ago.

It will not suffice for heads to roll in Baltimore. The buck stops in Dublin and, not for the first time, Dublin has been found wanting. The lack of critical analysis of the Minister's performance by the Irish media is in stark contrast to the cres cendo of vitriol that descended on Fine Gael and Deputy Noonan for our proposal to treat ordinary Eircom shareholders in the same way as corporate institutional shareholders. Fine Gael is standing by its Eircom tax rebate proposal in the interests of social justice. It is our only commitment so far with any financial implications for the Exchequer. Moreover, its financial implications will be once off and will not cost more than €90 million.

The media severely criticised Fine Gael for proposing compensation for cases of severe hardship among taxi drivers but have made no criticism whatsoever of the Government's later, but similar, proposal. Queries were raised when Deputy Noonan expressed a wish that the Pensions Board might consider investing in Irish roads on the same basis as private sector investors, but the same media made no criticism when it became known that the Minister for Finance had previously written to the board making exactly the same point. That did not stop his colleague, Deputy Dermot Ahern, the Minister for Social, Community and Family Affairs, going on the radio and berating Fine Gael for wanting to raid the pension fund, which is a load of nonsense.

Deputy Noonan was expressing exactly the sentiments that the Minister had expressed privately. We are not expecting the Pensions Board to invest in any project that will not bring it a comparable return. We are drawing to its attention the fact the infrastructural development is important and would bring economic gain. However, economic gain for the country is not good enough to justify its investment. There must also be financial gain and we believe there could be a double gain.

There are other lessons we should learn from the Eircom debacle. There must be transparency and openness in the flotation of a semi-State company. We now know the Government deliberately fixed the Eircom flotation price at a figure higher than that recommended by the board of Eircom. Such behaviour would not be permissible in the private sector as the Minister for Enterprise, Trade and Employment well knows. Duping our citizens can never be in the national interest. Consequently Fine Gael will guarantee that the flotation price of any semi-State company in the future will be set by an independent figure. This measure combined with our tax rebate proposal for ordinary Eircom investors should help restore public confidence in any future flotation process.

I have loudly and appropriately criticised the Minister's failure to control current public expenditure. His failure is of such a scale that it has the potential to undermine the soundness of our economy. I have the opposite criticism of capital spending. The Minister has not used the full capital expenditure budget in each of the past two years. There are four or five road projects ready to start this week that have been postponed by the Department. I do not understand that think ing. Investment in infrastructure brings an economic gain by sowing the seed of future economic growth. It also helps to address other issues. For instance, the housing problem in Dublin would be much less acute if people could commute from the outskirts of the city. To get from Lucan to the city centre takes two hours in the morning and two hours to get back in the evening. Young couples drag their sleeping children out of bed, bring them to the crèche and drive to work in deep frustration. They do the same in the evening when they collect their sleeping children from the crèche. This is a cause of deep stress and concern to these young couples, both of whom now have to work to pay a mortgage on a house in the Dublin area. Apart from the economic benefits of having good infrastructural connections, there would be social benefits because people like those could commute from Lucan and also from places in the Minister's constituency like Leixlip, Celbridge and Maynooth with other areas of Dublin's neighbouring counties. However, they cannot do so because of traffic congestion.

I am a severe critic of the present traffic policy, which is not a matter for the Minister for Finance. Dublin has a crazy onedimensional traffic policy that has worked nowhere else and is not working here. It is driving the electorate mad and is causing severe stress and health problems. It is affecting the quality of life, but so too is the failure of the Government to build key connections into and out of our cities. The Minister knows well the two main roads into Dublin from County Kildare and he knows how difficult it is to commute. However, the road from Leixlip and Lucan only needs about five overpasses to allow very quick access into Dublin. Yet the Dublin Transportation Office, the director of traffic for Dublin and the Government fail to address the issue.

There is an ideological philosophy in the Dublin Transportation Office to drive the motorist off the road. I was Minister for Transport and beforehand I was a transport manager. I know transport economics. We have chosen a low-rise low-density city which means it spreads out into Kildare, Meath and Wicklow. That has inevitable consequences for car use and public transport use. Public transport is diminished by low-rise development and is helped by high-rise and high density. The need for car use is all the greater given the planning policy we have unanimously adopted in this city over the past 30 or 40 years.

Even so, and despite our growth of the past seven years, we still do not have the same car numbers per head of population as other EU countries, whose incomes we now exceed in most cases. Therefore we can expect a further increase in car numbers. What has the DTO done? It has acted in direct contradiction of the National Roads Authority. On the famous C-ring motorway around Dublin, there are two sets of policies working in direct contradiction of each other. It is best exemplified by the Naas Road on which the Minister drives every morning. In the past two or three years, we have spent tens of millions of pounds widening the Naas Road to three lanes from Newlands Cross outwards. It was already three lanes from the M50 to Newlands Cross, which is only 300 yards anyway. What is being done from Newlands Cross inwards, where the city takes over? It is being narrowed to one lane.

This ideology in Dublin city is driving motorists and citizens mad and is affecting the quality of life. It is preventing young couples from seeing their young children awake any day of the week. To go to the local village to get a newspaper is now impossible because of traffic. This is as a direct result of contradictory Government policy between the NRA, the Dublin Transportation Office and Mr. Owen Keegan, the Dublin Corporation director of traffic. The Government should call a halt immediately.

It is not just that they will not build overpasses and underpasses as has been done in Paris, Brussels, London and everywhere else in the world, but they are deliberately putting in parking lanes where they are not needed in order to frustrate traffic. Cycle lanes have been created on some roads where the footpaths are wide enough to accommodate them to frustrate traffic. Dangerous chicanes and islands which are accident hazards have been put in to frustrate traffic. This policy must be stopped. The Minister is responsible for the allocation of funds for roads and I ask him to provide the money to start the bypasses that are already delayed, such as the Monasterevin bypass. Plans should immediately be initiated to put overpasses and underpasses on the road from Lucan to Dublin, the Naas Road and the other roads where that can be done. Within the city, if there were underpasses in about ten locations, there would be a huge improvement in the traffic. One person who knows about these things summed it up for me by saying that Dublin does not have a traffic problem, it has a roads problem. Why do environmentalists think it is good to have traffic jams? They pollute the atmosphere and strain people's nerves. Flowing traffic is much less polluting and harmful to the environment.

Why is the Minister frustrating and delaying the national development plan? Can he explain this on economic, social or environmental grounds when he is missing his own targets and the objectives in the national development plan are already in most cases more than a year behind even though the plan is only two years old? This will be another major issue in the forthcoming election. It is amazing to think of the things the Government has failed to deliver. Housing output is down and the housing crisis is growing. This is directly connected to the failure to build the connecting roads into and out of cities. I am talking about Dublin, but this is also true elsewhere. I want to make it clear that if there is a change of Government, Fine Gael will not only spend all the proposed allocation on capital projects but, if necessary, it will borrow to spend more on them. The Minister ridiculously went out of his way to make it appear that he was not borrowing, as if that was something great. He should have bor rowed for capital purposes because there is a return on capital investment. The longer we delay such investment, the longer we delay a return on it. I would have thought that was obvious from the experience of the past 50 years.

What the Minister did will come back to haunt somebody.

The critique of the delays in implementing the national development plan is not confined to the Opposition benches. It irritated the Minister for Finance that CIF criticised the delays, but it did so because it had good reason to do so. Forfás criticised them, saying the Government has built only 33 kilometres of the 1,361 kilometres of motorway proposed in the national development plan. At that rate it will take 39 years to achieve what the Government has set as an objective. That represents ludicrous economic management.

In respect of Dublin alone, Dublin Chamber of Commerce reckons traffic congestion in the city is costing the economy £1 billion per annum. We will put forward serious proposals in respect of road and traffic management, an area the Government has manifestly failed to address, in the same way as it has failed to address housing. It has reversed its policy on housing several times. Its housing policies have led directly to a drop in the number of house starts compared to previous years at a time when the demand for housing is greater than ever before.

With individualisation the gap in income tax liability between two earner couples and one earner couples increased in the budget and the difference is almost £60 per week. A man from Mullingar telephoned me recently to tell me his wife had lost her job as a result of which he pays £42 per week more in income tax. That increase in income tax was based on a difference in income of £13,000. That man's income tax liability has increased in the budget. I told him I had news for him, that this year he will pay almost £60 more in income tax than if his wife was earning. Not only are one earner couples at the loss of a second income but they pay more tax than two earner couples.

That cannot happen.

It does happen. Is the Minister saying it cannot happen?

It does not happen.

What is individualisation about?

We can discuss this on Committee Stage, but what the Deputy said cannot happen.

Will the Minister take a little bet on it?

Yes, I will.

Deputy Mitchell is entitled to make his point.

Acting Chairman:

He is, but we cannot have a cross-flow of exchanges. The Minister can reply to the Deputy later.

The Deputy is not cross-flowing, he is thinking.

The Minister does not appear to know his policy. The position is set out in the first page of the explanatory memorandum. It states that a married couple with one income will come under the standard rate band of €37,000 while a married couple with two incomes will come under the standard rate band of €56,000. The difference between the two bands is €19,000. That means that the married couple with one income will enter the higher rate of 42% tax when their income is €37,000 as opposed to a married coupled with two incomes who will be allowed earn a further €19,000 before entering the higher tax rate. Can the Minister do that sum? Is he saying I am wrong?

The Deputy is misinterpreting the position.

The reality is that, by the Minister's design, a one income couple pay more tax—

That is wrong.

Is the Minister saying that is wrong?

No taxpayer is paying more tax as a result of any of the changes I made.

I will hang the Minister on this one and I will take pleasure in doing so.

No taxpayer is paying more tax. Deputy McDowell has been critical that some taxpayers are not paying more tax. Not one single taxpayer is paying more tax.

One income couples pay more tax than two income couples.

Jockeys will pay less tax.

The Minister should not tell me I am wrong.

That is a separate point.

The Minister is trying to muddy the waters.

The Deputy said that a married couple with one income will pay more tax, but no one is paying more tax.

The Minister knows what I am saying is true.

I want to talk about sport. It appears that between the Minister and Deputy Dukes betting tax has been reduced from 20% to 2%. The Minister is introducing a funny concession not for sportsmen but for retired sportsmen. The concession will apply only to people retired from a sport and it will be made retrospective for 11 or 12 years.

Ten years.

Who has made representations to the Minister about this?

The pals.

Who will benefit from it or will it all go to jockeys who rode on the Curragh in Kildare? It is as if Kildare will be made a tax free zone, if we are not careful.

That will be next year.

This is a serious issue. The Minister said it will probably not cost more than €5 million in any one year. That is a considerable sum of money if it is only divided among ten people.

It will not cost anything for the first five years.

What is behind this proposal and is there any justification for it?

Middle income taxpayers here pay more tax than their counterparts in the United Kingdom. That is why we proposed there should be a middle tax rate of 30% to overcome that problem without it costing a fortune.

Low income taxpayers here pay less tax than their counterparts in the United Kingdom.

I have the tables from the Revenue Commissioners. Certain middle income taxpayers here still pay more tax than their counterparts in the United Kingdom.

And low income taxpayers here pay less tax than their counterparts in the United Kingdom.

I challenge the Minister to contradict what I said.

The Government has failed significantly to implement the national development plan. Concessions in respect of capital gains should be available to people who respond quickly – within a specified period – to CPOs in order to move ahead with the national development plan for future economic development.

The Deputy may use the two minutes of my time remaining to conclude.

Acting Chairman:

Is that agreed? Agreed.

I thank Deputy McDowell for that.

Fine Gael will introduce a Bill early in the life of the next Government to control the transfer of reserves from the Central Bank and the social insurance fund. That will ensure that no Minister, when caught in a corner, can exploit in an unconscionable way those reserves. They should be subject to the application of clear rules. When transferable, those moneys should be transferred to the national pension reserve fund. There should be a link between the social insurance fund and the national pension reserve fund, given that the latter is supposed to provide cover in future for items that were covered by the social insurance fund.

When Fine Gael publishes its manifesto, we will set out clear parameters regarding taxation and current expenditure. Every proposal will be costed by the Department of Finance and will be included in sensible projections of economic growth over the next five years, which in turn will have been checked with the Department and the ESRI. Every expenditure commitment we make will be contained within those parameters. There will be no auction politics by Fine Gael, but that does not mean we will not address manifest cases of social injustice. We will set out the clear difference between ourselves and the Government. All our well costed proposals will be contained within prudent estimates of revenue growth for the next five years.

I want to return to the first point I made. The Government and the Minister have done an AIB on the economy. An economy that was growing rapidly is now heading for a crash if current expenditure is not controlled. The Minister's legacy is a disgrace given what his inheritance was.

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