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Seanad Éireann debate -
Friday, 3 Aug 1973

Vol. 75 No. 10

Finance Bill, 1973 ( Certified Money Bill ): Committee and Final Stages.

Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."

Section 2 relates to a matter to which I referred last night on the Second Reading. It is concerned with the amendment of section 138 of the Income Tax Act of 1967, an Act passed six years ago when a certain level existed with regard to the pound sterling and what it could buy. We now have a situation where, six years afterwards, an amendment is introduced which is only a niggardly throwaway towards income taxpayers; it is an amendment to raise from £74 to £104 the earned income allowance in regard to a wife's earnings. It is painful even to talk about this and more painful that the Minister for Finance, in introducing his budget, should claim this as a concession. It is the only single concession, in small print, to income taxpayers. It is a very niggardly, to put it mildly, concession from the point of view of the fall in the value of money over that period. If one were to work out the precise figure at which this should operate, having regard to the fall in the value of money since 1967, one should be talking in terms of a figure of around £250 instead of £104. I am not now talking off the top of my head in this respect. In a recent survey done by the Economic and Social Research Institute, impartially conducted by Dr. Brendan Walshe, it was calculated that, in this area, a figure of £208 to £312 a year would be a reasonable figure as far as working wives are concerned having regard to the fall in the value of money.

At the present point in time having regard to the fact that, in 1967, a figure of £74 was fixed; so, at this stage, having regard to the fall in the value of money since 1967, we should be thinking in terms of a figure over £208, a figure in the region of £200 and £300.

I was just wondering what we should have been thinking of last year when it was still at £74.

We are talking about section 2 of the Finance Bill, 1973. What is involved in this meagre concession to income taxpayers does not even acknowledge the fall in the value of money but merely makes a throw-away gesture by raising from £74 to £104 the earned income allowances as far as married women are concerned.

There is nothing in this or, indeed, in any other section in the Bill, to indicate any recognition or knowledge of the fact that the people who count in this country are the working people and those who invest their savings. These are the people who need help if this community is to make progress. If we are going to have economic development here there must be some recognition and help as far as they are concerned. The Irish Congress of Trade Unions have recognised this and have made a submission to the Minister along the lines on which I am speaking. This is the only section that gives even meagre recognition to the category that makes this community tick.

There is no point in having a budget and a Finance Bill concerned with spreading jam thinly on the bread with an odd give-away here and an odd give-away there. What any Government should be concerned about, especially a Government elected and there, presumably, for their full term of office, planning to make the economy expand, not just this year, but next year, and over their full term in office, which they hopefully may expect to occupy. It is not enough to have giveaways two weeks before a Presidential election.

A Government genuinely concerned about the economy and future development of the country would concentrate totally on various income tax remissions in the areas of earned income relief and personal allowance. There is no point in trying to tackle the bucking bronco of inflation by doing nothing in these particular areas. All we have set out in this particular subsection is a meagre increase, nothing like the increase that would be justified in regard to the fall in the value of money between 1967 and 1973. This meagre increase is the only concession in this Bill to the huge income tax paying public. The income tax paying public were at one time called the middle classes. Income tax catches every class in the community now. If incentives are to be given to encourage people to work harder, to work overtime, to invest their savings in the expansion and development of our community, they must be in this area.

Any Government concerned about the future economic and social development of the country should be concerned about encouraging and giving incentives to those who provide the basic motivation in the community. All we have in this budget for those who work and invest their earnings is this meagre throw-away which does not even acknowledge a fifth of the rate necessary in regard to working wives. There is nothing else in regard to earned income allowance, nothing else in regard to personal allowance. Indeed, there is a negative attitude adopted in regard to people with a net income over £2,500. I shall refer to that later. This is the only concession by this Government to the people who count in the community as far as work and progress is concerned.

Like the Taoiseach, I find it difficult to be moved by the insincerity of the words of Senator Lenihan. The increase represents an increase of over 30 per cent on the 1967 figure. He says here that in order to meet the increase in the cost of living since 1967, an increase which took place during six years of the administration of which he was a member, the increase ought to be of the order of 250 per cent. The Senator wants an increase of £74 to £176. I am doing rough mathematics and taking rough figures. If I am correct in my assessment he wants an increase of the order of 250 per cent. In all our allegations against the Fianna Fáil Party, we took some care in making them and we never suggested for one moment that there had been an increase of the order of 250 per cent in the cost of living since 1967. That dispels the whole basis of the suggestion of Senator Lenihan. We are proposing an increase from £74 to £104. This, for the first time brings the married allowance and the wife's earned income relief to £598, which is double the amount of the single allowance. That is a gesture worth making and is something more than a gesture.

"Gesture" is the word.

It is something which costs half a million pounds this year and £850,000 in a full year. This in a year in which we have increased social welfare allowances by £39 million. These benefits, both in relation to the earned income relief and the children's allowance, go in the main to the working wife who works because her social circumstances and inadequate family income require that she go out to work to supplement the unsatisfactory and inadequate earnings of her husband.

Of course, this allowance is of no consequence to the wife of the wealthy man who can employ a maid and domestic servants to look after the children and the family in the house while she goes out to work and her professional or well-to-do husband is working as well. That is why Senator Lenihan considers it as insignificant. It is of some marginal significance to the working wife——

Marginal and miserable.

——the factory worker who goes out to supplement the inadequate family earnings. If Senator Lenihan was aware of the problems affecting industry, particularly in the urban areas, he would know that a large number of our factories are working under capacity because wives are discouraged from working because of inadequate income tax allowances applicable to the earnings of wives.

We have made significant improvements in the family income, in the disposable income, of families in this country on a scale never equalled in the history of this State. As well as that, we have given this concession to the working wife. We consider that it is a worthy one and that the basis of the attacks made upon us is without foundation. The cost of giving income tax reliefs at the lower level, because the Government in power for 16 years did not give adequate relief at the lower level, amounts to £7 million for every £20 of relief that is given. That £20 is the income relieved, working out at about a net relief of between £6 and £7 for earned income. The cost of doing that is £7 million. We are now giving relief to a group in the community, most of whom work through nothing in this budget — the working economic necessity and hardship in their family area, and we feel quite justified in doing that. This is, we hope, but a small beginning of a great reform in the whole tax code which we propose to carry out in the period which I note Senator Lenihan anticipated and that is the life span of the present Government.

I agree with the Minister's phraseology. It is a gesture of course. It is totally marginal. This is precisely my point. The idle flinging around of millions amuses me. He talks about something that could be done positively in this area which would cost £7 million when, in fact, by Government decision in order to meet election promises we have £16.75 million removed from the VAT net and we have £12.7 million brought in as a burden on the Exchequer in order to meet another promise in regard to health charges and rates. So, in order to meet haphazard election commitments we have straight away got nearly £30 million between the removal of health charges from the rates to the Exchequer and the removal of VAT on foodstuffs.

Surely within the ambit of that £30 million odd there was ample scope straight away for very immediate and urgent reforms in the income tax code, immediate and urgent reforms in regard to substantially increasing the earned income allowance, substantially increasing the personal allowance so as to guarantee an incentive to people who want to work and who want to invest. I do not think the Minister is in the land of the living. The situation has rapidly been reached in regard to income tax that it is a totally nugatory exercise for anyone to work overtime any more.

People are becoming conscious of this and we are very rapidly developing into a situation where it will be a community of do nothing in regard to the operative section of the community, a situation where there is no incentive to work, no incentive to expand, no incentive to invest. I am repeating myself here but I believe very sincerely and positively that if this country is to make progress those are the people who are going to make this country. It is precisely those people who have got and investing people of our community.

There is no point in the Minister talking about being circumscribed from the budget point of view when he knows that the only thing that circumscribed the Government and has circumscribed the Minister in regard to his particular budget was the fact that there were election commitments unnecessarily made. There was no need to make them. I said last night that in my view they added enormously to the corrupting of our democracy and these particular election commitments circumscribed the Minister for Finance and it is around his neck and around the necks of the Government that this particular thing hangs. This was not part of our policy, it was part of their policy and by reason of their policy, and by reason of the adoption of it in this particular Finance Bill, very desirable reforms in the income tax area have been prevented from being undertaken by reason of the fact that a rates burden of £12.7 million had to be shifted in regard to health charges to the Exchequer and over £16 million had to be moved in regard to food. I appreciate that the £16 million odd is being channelled in another inflationary direction in the non-food VAT area. That is another day's work and we will have a debate on that when it comes up in the section.

The fact of the matter on this section is that this niggardly amount towards working wives is not nearly enough. The Minister knows it is not nearly enough and not alone is that not nearly enough but not nearly enough is being done in the Bill as a whole towards this particular section of the community. I take this opportunity to speak on this matter because this section represents the only concession in a Bill of over 100 sections to the income tax paying people of this country. It is useless for the Minister to come in here and say the money was not available to do this and that, that it would cost £X million to radically increase the personal allowance or £X million to radically increase the earned income allowance. I know that. We all know that. In a year, when the Minister for Finance faced a situation where he had practically £30 million to distribute in this direction were he not circumscribed and hung up on election promises in regard to the removal of health charges from rates and the abolition of VAT on food, the Minister had £30 million with which to play, to work on, with which to develop.

Practical reforms are needed in the whole area of income tax. The Minister should acknowledge that. These facts form the basis of the document submitted by the Irish Congress of Trade Unions to the Minister, a document which pointed out that a large number of our people, part-time working farmers, and those at every level of pay, are now paying income tax. Therefore, income tax is not only a matter of concern for the middle classes; it affects all classes. Most small farmers are dependent on some wage earner in their own household who again is being crucified by income tax and for whom nothing is being done in this Finance Bill other than the the meagre pittance embodied in this section.

I do not think I will be called on to deliver a Second Stage reply to a Second Stage speech on the third section of this Bill on Committee Stage. I should just like to say that during a period of 16 years in Government the previous administration made three nugatory, niggardly, insignificant gestures on the income tax front and now they have the effrontery to make an attack on us in a year in which, as I have already emphasised, we have made the greatest contribution to family incomes ever, not only under the social welfare code but also in the fields to which I am grateful the Senator has drawn attention.

The £12,500,000 that the Exchequer has now absorbed as a burden on the Exchequer is in relief of the ratepayer who in the main is the family ratepayer. That is a further assistance given to families and to the heads of families. The other aspect is in relation to the removal of VAT from food which is the largest item of consumption in every family budget. We make no apology for abolishing, for the first time in ten years, tax from food. This section speaks for itself. It is in relief of the wife who finds it necessary to work. It is a step in the right direction. Because we have not run 100 miles in the first nine weeks of office we have this demonstration of indignation on the part of those who have totally neglected the problems of the taxpayer during their own 16 years of office.

I am astonished, although I should not be astonished at anything the present Minister for Finance might state. However, even by his normal standards, I find rather astonishing his claim that during the past 16 years there have been but nugatory gestures by Fianna Fáil in relation to income tax allowances. Can he not remember that only about 12 months ago no less than £11 million was provided by Fianna Fáil in the annual budget in relief of the income tax payers? I have already mentioned this on the Second Reading in the Minister's absence, but I now remind him of it so as to encourage him to do still better in his next budget. The Fianna Fáil Government gave an extra £50 on the allowances for single people making it £299. They gave £50 relief for widows, £70 for a married couple, and £20 for child allowance, the total cost being £11 million. If he calls this nugatory and all the other adjectives he used, it gives me great encouragement as to what his all-embracing reforms are to be. We can look forward to a great future.

If a total of a 40 per cent increase was given in a period of 14 years——

I am talking about last year.

——to meet living cost increases of about 120 per cent, those who did that have no right to criticise us for not doing more in nine weeks. I have given the assurance before and I give it again that this is a field of reform in which we hope to do something very substantial, but you obviously cannot help the poorest of the poor social welfare recipients and at the same time give income tax relief to those who are earning a great deal more.

I cannot let the Minister off the hook as it is not only a question of nine weeks. I spent seven years in a Government debating budgets and Finance Bills and an automatic matter at every discussion prior to the presentation of a budget was what could we do for the income tax payer within the limits of what was available. We appreciated that there was a situation where a limited number of people from the non-agri-cultural sector were paying income tax, that this was a growing sector and that these were the people who mattered in the community.

Year in, year out — I have not the precise figures but Senator Yeats has mentioned last year's figures — there was a concession or a number of concessions in the whole area of income tax, particularly in the area of personal allowance and earned income. This was always a major consideration. At every Government meeting prior to the budget there would be an assessment made of what the Exchequer could bring in and on the basis of that assessment there was great attention devoted to what could be done in this direction. The Minister need not plead the question of nine weeks; that is nonsense. This could be done in a matter of weeks if the will were there, but the will could not be there as practically £30 million was willed out of the way by reason of the Government seeking to corrupt the voting public and as a result of that they regarded themselves as committed to the total strangulation of the VAT system by removing it from food and adding to inflation by putting it on non-food items and, secondly, because of the transfer of the health charges from the rates to the Exchequer. Straight away the Government had £30 million less to play with. That is the way it works out and the Minister now knows this.

There is no point coming into this House and telling people who know their business that this could not be done in nine weeks. This could have been done at once if the will had been there. Obviously nothing else is incorporated in this Finance Bill related to the income tax payers and no thought could have been given to it because the Government had strangled themselves in advance by pre-election promises.

Question put and agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."

In the last section we were discussing, to quote the Minister's words, "a marginal gesture towards working wives" which is the only marginal improvement so far as income tax payers are concerned. We are now discussing not an improvement but a minus so far as income tax payers are concerned. Here we have possibly the most nefarious section in the Bill. It concerns the question of family allowances which are an all important factor in cushioning people with large families against increases in the cost of living. In this inflationary age, induced to some extent by the Minister's VAT proposals in another area, we have a situation where incomes in excess of a net £2,500 are being excluded from the children's allowance provisions.

It is impossible to defend this matter.

The prime requirement in the present budget and in our present times must be to substantially increase family incomes. The Minister may think the family allowance increases written into the budget and the Finance Bill are good but I do not think they are good enough. If there is any area in which the Minister and the Government can cushion people against increases in the cost of living this is the area in which it should be done. Instead of having an army of inspectors to enforce completely mythical price control, which cannot be enforced, instead of having Ministers introducing price control measures and then having to agree to increases in prices which they had a month before set, instead of having the Government in a situation where, with regard to increases in CIE fares and rates, the National Prices Commission announce a certain level of increases and the Government have to give a greater increase, instead of going into all this fruitless area of price control and price supervision with a massive bureaucracy involved, all to no effect as we have seen, why not be practical about it and substantially increase family allowances?

I agree there are increases in family allowances in the budget but I do not regard them as nearly sufficient. Family allowances should be increased in a straight, clean manner without any army of bureaucrats to supervise price control. Instead we have an example here in section 3 where there is a negative attitude adopted by the Minister and the Government in regard to people with an income in excess of £2,500 a year. When the next pay agreement comes the net will be spread even wider and a greater number of people will be drawn into this category. I cannot understand the Minister's thinking in this matter because, on the ordinary basic canons of social justice, how can it be justified that on one side you can have a family of ten children with an income of £2,600 a year and on the other side you can have a family of two children with an income of £2,400 a year? One category is included while the other is not. Why introduce this matter in any event?

I appreciate, and this comes back to the point I made on the last section, that the Minister by reason of election promises was circumscribed and that the election promises hung around his neck. By reason of that he had to claw back £1 million. A million pounds, as the Minister quoted in the Dáil, is the figure involved in the claw-back provision, as it is called. In order to claw back in tax terms, vis-a-vis children's allowances for people over £2,500 a year net, the Minister for the sake of £1 million — where he could have had £50 million to distribute were it not for election promises — has introduced this nefarious section leading to the type of social injustice I have just mentioned.

I should like to make a suggestion to the Minister. We in the Seanad can only suggest it by way of recommendation. It has already been suggested to him in the Dáil. I cannot understand why some attempt has not been made by him or by the Department of Finance to do it. If this has to be done and if, having regard to the electoral commitments made by the present Government prior to the election, they are circumscribed in regard to current expenditure and they had to get £1 million at the expense of people over £2,500 a year net and they have to discriminate against people with large families over that level as against people with small families under that level, why not adopt a simple grading scheme in regard to children? Why have any level at all? If we have to have a level why not grade upwards having regard to the number of children so that parents with a large family with an income up to £3,500 or £4,000 a year might qualify and have it graded downwards and upwards in that manner? Were the brains of the Department of Finance applied to that particular aspect? Was there any attention given to it? If the Minister wanted to claw back £1 million why not attempt that and thereby have some rudimentary element of social justice emerging from the decision which had to be made by reason of the pre-election commitments of the Government?

I should like to join with Senator Lenihan in his condemnation of this. As I said on the Second Stage last night, were it not for the fact that there are children in this nation there would not be any Parliament, there would not be any schools and there would not be any hope for the nation in any way whatever. We have to realise that any economies we may try to make down at the infant level will eventually react on us and the nation will have to pay very dearly for them later on. I wonder do many people realise the hardships that parents with families of ten, 12 or 14 children endure. It is quite easy for people to set criteria and to draw different standards between incomes but children need food and have to be fed. This is retrograde thinking. It is something that should be rectified. I would prefer to see a graded system, as Senator Lenihan has suggested. I feel that it is wrong, especially on a fundamental issue such as this, that we are niggardly in our approach to giving relief to those people who are blessed with having large families. They are the wealth of the nation but they are costly to sustain. We in Parliament should recognise the problems of those parents.

If there is validity in the arguments advanced by Senators Lenihan and Dolan, then they have twice the validity in attacking the Fianna Fáil children's allowance claw-back. In the statement, to which the Taoiseach referred in his reply to the Second Stage, issued by the Fianna Fáil Party five days before the last general election, Fianna Fáil acknowledged that the time had come for selectivity in the payment of children's allowances. Accordingly, their proposal was that children's allowances would be paid to only 170,000 families. That was the Fianna Fáil proposal which was contained in The Irish Press published on the Friday before the last general election. Fianna Fáil said they would pay increases in children's allowances to only 170,000 families.

We have given children's allowance increases to 319,000 families which is nearly twice the Fianna Fáil number. Therefore, I do not think I am being unreasonable in questioning the sincerity of those who attack our plan. We confer benefit on eight out of every nine children in the State because they will get the full children's allowance increases. Even wealthy parents will lose nothing but, in fact, will have a marginal gain.

Why did we choose the income tax system to deal with this increase rather than the Fianna Fáil proposal? The answer is that the Fianna Fáil selectivity proposal would have required that every family would have to apply annually to the Department of Social Welfare and produce evidence of income and qualified children. Children if they once qualified would continue to be eligible until they reached the age limit but income would have to be proved annually on yet another certificate. God knows we already have enough means tests. We have something like 16 welfare means tests in this country and Fianna Fáil propose yet another in order to disqualify nearly half of the people now entitled to children's allowance.

We could not consider that would be justified. First of all, it would impose an unnecessary burden on families and, secondly, it would also involve that army of bureaucrats that Senator Lenihan pretends to dislike. We would need to have many hundreds, to say the least, if not indeed a thousand or more additional civil servants in the Department of Social Welfare to handle children's allowances' income certificates, which would have to be assessed every year. That is the only other way in which it could be done. When Senator Lenihan asks whether brains were applied to this I want to assure him they were. It is because brains were applied that they show just how impossible in administration and how unduly costly would have been the Fianna Fáil proposal.

Under the income tax code an income taxpayer's income is recorded. His income is known and it has to be returned for income tax purposes. Each person is given such allowances as he is entitled to under the income tax code in respect of mortgage interest payments, medical insurance premiums, bank overdraft interest and superannuation contributions. All these are known, catalogued and computerised, in the offices of the Revenue Commissioners. That being so, there was a readily accessible, efficient way of dealing with this matter. It also had the humane aspect which I mentioned and that is that we are going to give the allowances to about 150,000 more families than Fianna Fáil had proposed. We feel our proposal was well justified.

I would briefly put a few questions to Senator Lenihan if he wants to answer them. Does he agree or disagree with the Fianna Fáil statement before the last general election that certificates should be introduced for children's allowances? I suspect he does agree. If he does, at what point would he introduce them? Would he introduce them at the point which was proposed at which only 170,000 families would get benefit or would he prefer — and I gather from his speech he does prefer — that they be introduced at a point at which 319,000 families would get it?

I gather Senator Lenihan prefers to see it introduced at the higher level that we have introduced it. I think no more need be said. He agrees with our proposal.

The Minister appears to be unduly obsessed with the election guarantees and statements. I said on the Second Stage last night that part of the present Government's trouble is that they made very rash commitments in regard to the whole area of estate duty, in regard to the removal of VAT from food and in regard to the removal of health charges. This is why the Government are so niggardly in regard to relief towards income taxpayers. That £30 million is being thrown away by reason of rash election promises.

I am not talking about the general election. I am talking about the section of the Finance Bill that is before us. That is section 3 of the Finance Bill, 1973. I would ask at this stage, though I am certain it will be a fruitless request, that some brains be applied—they should have been applied when the matter was first raised in the Dáil — towards introducing a graded scale whereby basic social injustice would not exist, injustice such as results from a situation where people with large families on one side of the £2,500 are cut off and do not benefit from the children's allowances proposals in the Finance Bill and people with small families on the lower side of the £2,500 benefit. It is as basic as that.

I am concerned about family incomes and the importance of families, the people working and raising families in the community, the people who are making a real contribution towards society. This is so basic and rudimentary that I would have thought the Minister would appreciate what I am getting at and leave aside his obsession with election manifestos. He should feel a bit more secure now. The election is over. There is no point in talking in terms of election manifestos. We are talking in terms of a situation where the consumer price index in regard to food has risen eight times between the election and May compared with three times since February, 1972 and May, 1972. We are living in a situation where the cost of living in regard to food alone stood at 131.6 points in February, 1972, and increased to 134.6 points in May, 1972. This year the figure rose from 153.4 to 161.4 in the same period, and is probably still rising.

We are talking about a new situation altogether. The Minister should get it into his head that we are not fighting an election campaign but are talking about the people of the country who will be affected by this Finance Bill. We are talking about a situation where the Minister has written in here that a £2,500 net income is the cut off point as far as children's allowances are concerned. We are discussing a Finance Bill in which no concession is given to the income tax payer other than the niggardly concession to married working wives. We are now faced in this section with not just a zero but a minus as far as the income tax payers and general income earning public are concerned who are in this category of over £2,500 a year, a category that will be massively increased if a national pay agreement in the months ahead is based on anything like the sort of escalating inflation that the present Government are contributing to.

The Minister should stop talking about election manifestos and get down to the Finance Bill. I ask the Minister to apply his brains and those of his Department to this matter and I would suggest again: why not a graded scheme, going to any level one likes and even far ahead of £2,500 a year, but at least a scheme based on the number of children per family instead of the existing scheme where there is a crude cut-off after £2,500 a year? Why not have something of that kind which would take into account the basic social justice involved in looking after larger families? It is as crude as that. I am pointing it out in black and white terms that somebody on one side of the £2,500 with six, eight, ten or 12 in the family is cut out and people on the other side with one, two or three children are in. There could be nine more mouths to feed and because they are on one side of the barrier they are out. A graded scheme surely should not have been beyond the wit of the Minister and the Department of Finance to devise.

I would agree with what Senator Lenihan has been saying. The method adopted for having this cut-off at £2,500 is an extraordinarily crude, rough and ready one. It seems that on this occasion and a number of others the Government took the easy way out. Instead of thinking it through properly they adopted a rough and ready figure like this. As Senator Lenihan has pointed out, someone with a very large family in or around the £3,000 figure is clearly not anything like as well off as parents with maybe only a couple of children at around £2,500. Yet he gets none of these benefits and the others do. It really seems a very strange way of doing it.

There is one very small matter which the Minister might be able to elucidate. He just said that the income tax payer does not lose the whole of the increase in children's allowances but that there was a marginal amount left. In the Dáil the Minister said:

The reality of the situation is that of all the families receiving children's allowances only 40,000 will have to hand them back and not in toto. They will still be left a small amount of the increase.

That is all very well but when one reads the explanatory memorandum to the Bill in the third paragraph one finds at the end:

As the full amount of the increase is taken back by the reduction in allowances for income tax purposes, the reduction will not apply for surtax purposes.

Which is correct, the memorandum or the Minister? What is the position?

Well, £15 is the amount of the additional children's allowances this year. The maximum refund will be £14.70 so there is a gain of 30p per child.

The Minister has, not for the first time perhaps, been less than candid when he said in the other House that after all they were not being taken in toto, that they had a bit left. I think whatever his intention may have been the impression was certainly created that quite a bit more than 30p a householder was left.

Of course, in some cases the refund would not be as great particularly when you get into the marginal area, but there is marginal relief there. Nobody will be any the worse off. I think it is important, when suggestions were being made that taxpayers were being mulcted, to make it perfectly clear that nobody, even the surtax payer, will have any additional sum taken from him. What is happening is that the social welfare increase is going only to the people who are in the lower income group. I believe that that is a sustainable social policy for which we need make no apology.

Question put and agreed to.
Section 4 agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."

Could the Minister explain why this change is being made. It appears that this, I do not know if you could call it a concession but at any rate state of affairs in relation to trusts in favour of children, under which when the person became entitled to the capital sum he would have to claim personal allowances dating back for a number of years, is being ended now. I wonder why is it so. Was there some kind of abuse which arose? Is it retrospective? In other words, are trusts which were made last year or the year before last under the impression that this concession would still be in existence to be effected and will the child now not get the full benefit that was expected when the trust was set up?

Yes, I can understand these legitimate fears of Senator Yeats and I should like to explain the purpose of this section briefly. The matter was raised in this House last year by Senator Alexis FitzGerald. It is designed to deal with the problem in which extremely wealthy people can afford to assign under a trust certain income which is accumulated for the benefit of minors during their minority. Because of this, the person creating the trust is saved tax on that money which is alienated to another and yet the minor when he comes of age can then apply for repayment of some of the income tax. The trust will pay the tax all right but when the infant arrives at the majority age he can then apply for a refund. This has enabled quite wealthy people to avoid payment of tax on money which they have assigned for the benefit of their children.

It might be arguable socially that it would be all right if everybody could do it, but when it is a device which is only available to the quite wealthy who have surplus income I think there is no moral justification for it. On a legal basis, the Income Tax Act, 1967, section 154, deals with the cases of persons for whose benefit any income is accumulated under the terms of any will or settlement contingently on his attaining a specified age, or marrying. The section provides that, after the happening of the contingency, the person may within six years from the end of the tax year in which the contingency happens, make a claim for a repayment in respect of income tax which was paid by the trustees in respect of the income which arose during the period of accumulation. The amount repayable is the amount which would have been repaid to the person concerned if the income had been his as of vested right during the years of accumulation by reference to his personal allowances and reliefs for those years. It might also be of interest to know that this particular device was noted in the British Parliament in 1969 and it was closed in the British Finance Act, 1969. The then Chancellor of the Exchequer said that he proposed to repeal the existing provisions, which we are now doing. He said:

This is an anomaly which even the most single-minded devotee of tax loopholes would find it difficult to defend.

I would be inclined to agree with the Minister that there is no particular reason why one should have undue sympathy with the people involved. One wishes oneself had the kind of money that appears to be involved in this type of transaction. I do not think he answered my second question as to whether it is retrospective.

I am sorry, I did not. It will only apply to income from this year onwards and people who, in good faith, established such a trust in the past will not be affected except in so far as income accrues from this year on. It will not apply to any past income.

Question put and agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."

I might say that this section may not change the law. It removes a doubt which may exist in relation to it. It was never intended that the executor or administrator of a deceased member of a partnership should not be under an obligation to pay whatever income tax was due by that partner.

I hope the Minister will not mind my saying that this whole operation is typical of what one gets in Finance Bills. Here we are deleting an entire subsection. The only result of deleting it is that the law thereby becomes clearer.

Mind you, if we could pass a Finance Bill to make all finance laws as clear it would be well justified.

Question put and agreed to.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill."

This is also a matter which is an improvement. Senator Lenihan will be glad to know that this is a relief and has the result of increasing from one and a half to four times the amount which can be paid by way of superannuation benefits without tax.

It is a very desirable improvement. I concur.

Question put and agreed to.
Sections 8 to 11, inclusive, agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."

This is not really a matter for us but it puzzles me because I was told that this particularly relates to trade union pensions. I think the Minister has given them what they have asked for. It seems a little mean that since no change has been made for six years since 1967 all they are asking for is an increase from £350 to £450. One wonders why somebody at one stage was not a little more generous with their pension schemes.

I think that is a valid point but it will be appreciated that the increase now given is comparable to or perhaps slightly greater than the increase in the cost of living since 1967. The amounts paid by trade unions have tended to be on the low side but that is because there are limitations on their funds and their subscriptions. One has to look at this in the historical sense. There are other much better superannuation and benefits in provident schemes available outside what is available within trade unions themselves. If the trade union benefit was the only benefit now available to the people, this of course would be quite a ridiculous sum but there are now many better benefits obtainable elsewhere.

I hope so.

Question put and agreed to.
Sections 13 and 14 agreed to.
SECTION 15.
Question proposed: "That section 15 stand part of the Bill."

Why are these particular groups taken out? It seems a bit airy-fairy to confine a concession of this kind just to human rights groups under the UN and the Council of Europe. There are many other bodies who should, from the point of view of tax concessions, be included in this category of charities. Let us take, for example, Gorta, which is a national organisation under the FAO. Why should Gorta not be regarded as a body suitable for this sort of treatment? This may be tied up with some conventions we have signed or to which we are committed, but it seems anomalous that we should pick out what I would regard as a very small field of voluntary activity related to international agencies while there are many other fields offering aid with which we are associated. A similar concession should be given to Gorta. I am rather puzzled and I should like an explanation from the Minister as to why this concession should be confined to the one area of human rights under conventions of both the Council of Europe and the UN.

I should like to raise a further point on this. I also think it very odd indeed that these anomalous, mysterious bodies, some of which I have never heard of, should be mentioned. My argument is added to very considerably by a couple of lines in the introductory speech of the Taoiseach on the Second Reading. He said:

This country has, I regret, been somewhat lethargic in its adoption and its promotion of the observance of international conventions relating to fundamental human rights and freedoms. In order to stimulate more public awareness of and direct involvement in this very important task the Bill made a special two-fold provision for tax relief.

He goes on to describe sections 15 and 22. We appear to be in a situation in which the Government are giving a tax concession to certain organisations in order that they can press upon the Government the need to sign certain conventions. Would it not be much simpler for the Government to sign the conventions to start with and forget about the tax concessions?

I am glad to say that the Government have decided that the UN covenants dealing with political, social and economic rights should be signed. We regret the fact that our predecessors did not see their way to make such a decision. We propose to proceed towards ratification.

That will not improve the position.

It will. I am sorry if Senator Lenihan does not like what I am saying. I am trying to reply courteously to Senator Yeats. The point has been made as to why we should not do more. We would be happy to do more for other worthy organisations, but we thought it was timely that we should seek in some way to give encouragement to those organisations which do not get much money. We thought it might be some enticement to philanthropic people to consider some of these organisations if this tax concession were available. Unfortunately, we have a very sorry record in relation to signing and ratifying, respecting and putting into practice several international conventions concerning fundamental rights and human freedoms, not because we have individually or collectively any disinclination to do it but we simply have not done it in a formal way. We would like to see that situation corrected. The reason why we chose to give this benefit only to organisations who had consultative status with the United Nations or the Council of Europe was because we wanted to ensure that spurious organisations claiming to serve fundamental rights and human freedoms would not get this benefit. We do, unfortunately, know of some organisations who claim to be defending human rights and who, if they got their way, would trample upon the rights of most people. Organisations do not get consultative status with either the UN or the Council of Europe unless they have passed very severe tests applied by these organisations.

I was asked in the Dáil if I would name some specific organisations. I expressed unwillingness to do so and it is preferable that I should not. First of all, I am not certain of the exhaustive list of organisations who have such consultative status and there may well be organisations, including the one mentioned by Senator Lenihan, who could apply for, and qualify for, consultative status with these organisations. If and when they do, and make their application to the Revenue Commissioners, then they will get the necessary concession. This benefit, as Senators are probably aware, is already available to people who covenant money to universities or colleges for the carrying on of research and income under covenants to schools for the teaching of the natural sciences. This is a small extension of that. Perhaps over the years we can extend this kind of concession, but one must realise that sometimes to extend these concessions opens a floodgate which might prove unduly costly.

Arising from what the Minister said, there is no contention in this matter. I just mentioned Gorta off the top of my head; I am sure there are other organisations that would fit into the same philanthropic category. The only thing that concerned me was that we were narrowing the area of tax concession in this desirable philanthropic area by confining it merely to the human rights area within both the UN and the Council of Europe. I agree with the Minister that there are a lot of spurious organisations that carry this label and the Revenue Commissioners would find it difficult to decide between the few legitimate and the many illegitimate organisations in this category. An organisation like Gorta occurred to me straight away as an organisation under the FAO which is an agency of the United Nations and which is concerned with very legitimate practical help towards needy people when need arises. This is a very practical area of help where the label of human rights is not involved. It has become a label in many areas. Am I right in interpreting the Minister as saying that organisations which may not necessarily carry a human rights label as such, on a literal interpretation of the United Nations or Council of Europe Conventions, such organisations may apply for this type of exemption to the Revenue Commissioners?

They would, first of all, have to get consultative status with the international bodies. They would not necessarily have to recite fundamental human rights in their title in order to qualify for consultative status. As long as an organisation is able to prove bona fide that it is pursuing certain UN objectives, it can get consultative status. It would be a matter for proof in each case and each case would have to be dealt with on its merits.

But why confine ourselves in this very desirable area? I am looking for the thinking behind the section. Why confine ourselves to what the UN or the Council of Europe decide in regard to human rights validity or otherwise? Can we not decide on such desirable national philanthropic groups without tying ourselves to some human rights convention or charter which in many cases is a lot of nonsense? There is no point in claiming extraordinary credit for signing some of these conventions. Why can we not decide on what is desirable and philanthropic within the compass of our own sovereignty and treat such organisations as the Minister proposes under this section?

The Senator put a specific question to me so I must, therefore, answer it. I am not prepared to accept that international conventions are a lot of waffle. It is sad that they have been so regarded by so many people here.

That is not fair.

The recital of the Ten Commandments may, to some people, be a waffling recital but they contain some fundamental truths. That is the position about international conventions. They are matters of truths which, unfortunately, people do not take seriously and particularly under stress. That is one of the sad things about life. I do not regard this as the end of the concessions which ought to be given to organisations of this particular kind. We are making a start this year. We think we are making it in the right direction. We will see how it works. If we consider that this is unduly restrictive and that organisations which are legitimately pursuing these aims have some administrative difficulty in getting consultative status with the UN and the Council of Europe, we will take another look at it. It may well be that we would consider other ends of a merciful and humanitarian kind, but we believe in walking before we run.

Would the Minister take into consideration in his examination of the matter, which I understand will be undertaken within the next three months, bodies which do not have consultative status with the UN or the Council of Europe but which we may legitimately decide are bodies doing equivalent or better work?

Yes, I will, certainly.

Question put and agreed to.
Section 16 to 18, inclusive, agreed to.
SECTION 19.
Question proposed: "That section 19 stand part of the Bill."

This is welcome of course. I know there has been tremendous and rightful agitation and concern about thalidomide children. I am glad that this matter has been met here under section 19 but I feel this is an area of social progress that should be furthered. There are other people suffering to the same or a greater degree than thalidomide children and I should like to think that they also come in for consideration in this regard. I do not know what machinery one would establish to keep this matter under review but it is a very desirable area. It is an area you cannot widen too much — I can see the problems of any Minister for Finance here — but now that we have accepted this as a matter that should be dealt with in regard to thalidomide cases we should not ignore other cases of even greater severity which arise and which should merit the same attention. What machinery should be established to do this or to ensure this can be done is another day's work, but I think this matter should be kept under constant review and attention should be continually devoted to it.

This is a section which will ensure that children in Ireland who are victims of thalidomide will be put precisely in the same position as children in Germany who will be receiving payments from the same fund. It is provided under Federal German law that children in receipt of capital or income from the fund will not have their incomes subjected to tax. I might also point out this section also ensures that a father is not to be deprived of the income tax allowance in respect of a child who has income from this German fund.

To deal with the other point raised by Senator Lenihan, he himself was good enough to provide the answer for me. We, of course, all have the natural inclination to go to the assistance of people who are handicapped. Most people tend to want to use the income tax system to provide that assistance. Probably it is not the best way either to recognise or to give assistance to handicapped people. It may well be better to provide the assistance to identifiable cases rather than opening the flood gates to claims under the fiscal code which may be very difficult either to prove or disprove. That is one of the great difficulties involved here. How do you, for instance, under the fiscal code deal with a malingerer? I say that without reference to any particular welfare code. The Revenue Commissioners are not qualified to deal with cases of either mental or physical handicap. It is better to deal with such cases through the ordinary welfare code and the system of family health rather than dealing with it through the fiscal system.

We are bringing in this provision for the unfortunate thalidomide children of whom we believe there may be up to 150 in the country. Most of them, if there is income tax involved, will be relieved. This will ensure that they will be in no way disadvantaged compared with their fellow victims in Germany.

I agree with the Minister that it would be altogether impractical to help all handicapped people by means of the income tax system but he should consider looking at this from the point of view of those who have been injured, say, in road accidents and get an award in court which may be a very large sum of money. If the victim should be paralysed, perhaps the money is invested for him. He has to live on the interest on that money, but I understand that money is assessed for income tax purposes. These cases seem to me to be precisely on the same footing as thalidomide cases. They are easy to keep track of because they are court awards. The Minister should consider very seriously the possibility of adding this category of people to this section.

There is a slight difference. In road accident cases, where damages are paid in court, the court in assessing damages take into account the victim's liability for income tax on the award. Just as in calculating the person's likely income if injuries were not sustained they take into account what the person's net income would be after deduction of anticipated tax. The two categories are not quite on par because of that fact. It is only right that the wrongdoer should be made liable for the income tax liability of the victim. Were we to introduce a law which said that such damages or compensation would not be liable to income tax the beneficiary would not be the victim but the wrongdoer or that person's insurance company.

In relation to the point which the Minister has just made, the position about income tax on losses which are suffered by a person injured in an accident is going through a type of transition period in the courts. The position at the moment, as I understand it, is that the courts will allow the loss of wages to date, makes allowance for the fact that income tax would have been paid and allow the award to be somewhat smaller because of that. They do not allow it for the future for the reason that if a person is totally disabled he will have to invest the money which he gets and he would, in fact, have to pay income tax on it. Even though they may say that this man would have earned £2,000 a year for the next 20 years and he would have to pay income tax on it, the courts take the view that that should not be taken into account because the amount will be invested and income tax will be payable on the income from the investment. To that extent Senator Yeats is right in saying that possibly the Minister should look at this kind of situation.

I bow, of course, to the superior wisdom and familiarity with court procedure of Senator Ryan. But this matter was tested at law in England and on a decision of Gourlay v The Transport Commission it was decided that the figures ought to take the tax position into account.

It has been decided in England but not here.

This should be an encouragement to somebody to test it out here.

Question put and agreed to.
Section 20 agreed to.
SECTION 21.
Question proposed: "That section 21 stand part of the Bill."

I should like the Minister to explain the rationale behind the choice of subjects which are singled out here for income tax relief. Two areas are mentioned, the area of industrial relations and the area of marketing. There is a third clause which states "any other subject which is approved for the purposes of this section by the Minister for Finance".

The subjects chosen deal with productivity, or the sort of entrepreneurial area of our national life. It makes a distinction between fundamental and applied research in universities. In the third case it is confined to universities where, quite clearly, such research could be as valuably carried out in technological colleges and various institutes. Does this mean that the Government are only concerned with helping those areas which are, in the crude materialistic sense, productive or would clause (c) admit a subject which, in the first place, would involve pure research, say, into the areas concerned — industrial, marketing or commercial — or would it also admit research into matters which are not strictly productive such as knowledge? It may be a remote possibility that some industrial organisation or commercial combine would endow research in metaphysics, in literature or in poetry or, more relevantly, in languages but it would be unfortunate if this were not possible under clause (c). Singling out these two materialistic entrepreneurial areas of research indicates a materialistic bias behind the thinking of those who framed the legislation. I should like to hear the Minister's comment on clause (c). What kind of area of research might possibly be approved? I am not suggesting they should endow a chair of polemics or a lectureship for student agitation.

The House will recall that the Taoiseach, in replying to the Second Stage, dealt with this point. Perhaps the Senator was absent at the time. The reason why the two specific disciplines of industrial relations and marketing are mentioned in the Bill is that specific proposals have already been made to found chairs in these two disciplines.

Subsection (c) could be used to cover the several worthy objectives which the Senator referred to but the power is reserved to the Minister for Finance to consider these proposals if and when they are made. There is no intention of confining this benefit to universities. If concrete proposals are put forward where substantial sums of money would be covenanted to or made available for other institutions of learning and research, we would not hesitate to take the necessary legislative action to bring them in. We are hopeful that we have not just turned on the green light for universities in relation to this matter this year but, perhaps, people will do some serious thinking about it and we may have worthwhile proposals for consideration in future years. There will not be any great loss by not making the provision in this Bill for any such proposals as usually it takes at least a year or two to formulate them and to make the financial resources available. I would encourage Senators to incite philanthropists to step forward and we can deal with these cases when they arise.

Subsection (c) provides wide discretionary powers to the Minister for Finance. Is there any right of appeal?

Would the Minister approve of a chair of public finance?

At this stage it would be inappropriate for me to indicate what my mind would be on any particular proposal. I would want to see the merits of the specific proposal but my mind is not closed; on the contrary, it is very open.

Question put and agreed to.
Sections 22 and 23 agreed to.
SECTION 24.
Question proposed: "That section 24 stand part of the Bill."

What criteria will be employed to check on every business entertainment and to ensure non-evasion and that there is respect for the law?

The matter does not arise until a taxpayer puts in a claim for a tax allowance on entertainment expenses so inspectors are not required to sit in every luxurious restaurant to see who is dining and wining too well. The test will be generously interpreted by the Revenue Commissioners so as not to exclude genuine entertainment expenses which arise in the ordinary course of business or in the promotion and maintenance of business contacts. This matter has been abused to the extent of taking out to dinner and providing holiday facilities for one's friends and rivals in the same line of business not for the purpose of generating trade but to have a high social life at the expense of the taxpayer. If the well-to-do can get their entertainment at the expense of the Revenue Commissioners, the general taxpayer must foot the bill.

I welcome this provision. For too long the taxpayers have been exploited in this regard. One can see business executives at 4 o'clock any evening in city hotels recovering from their wining and dining. Not alone are they wasting the time of their firms but, as the Minister has said, they are exploiting the taxpayers. I feel that any steps that are taken to alleviate this are steps in the right direction.

Question put and agreed to.
Sections 25 to 32, inclusive, agreed to.
SECTION 33.
Question proposed: "That section 33 stand part of the Bill."

This appears almost to give freedom to exploit not only the lands of Ireland but also our coasts. Are we not being too generous with assets which will be exhausted?

The intention of this section is to do the very reverse of what the Senator contemplates. We are bringing within our tax net profits which may be generated on the Continental shelf in the development of our marine resources. Such profits would not now be caught and we are providing in this section that they will be caught in the future.

Question put and agreed to.
Sections 34 to 45, inclusive, agreed to.
SECTION 46.
Question proposed: "That section 46 stand part of the Bill."

Does the Minister think that the raising of this from £500 to £1,000 will prevent abuses?

This penalty is all right for the purpose of discouraging evasion. It is a penalty which is only imposed after court proceedings are taken against a defaulter and the court is satisfied that the person has been guilty of default. In a case where a person has inadvertently or, perhaps, on medical grounds omitted to make returns they would not be caught. It is only used by the Revenue Commissioners when they are are satisfied that there is wilful default or negligence.

Question put and agreed to.
SECTION 47.
Question proposed: "That section 47 stand part of the Bill."

Perhaps the question I am about to ask would be more relevant on the section dealing with the increase in value-added tax. Am I right in saying that as a result of the budget two increases in the price of beer have been proposed, one in this section and the other in the proposals to increase value-added tax?

The answer to the question is in the negative. We have indicated that the excise duties on beer, spirits and tobacco will be reduced on the 3rd September. The VAT element will then come in and the overall figure will remain the same.

Question put and agreed to.
Section 48 agreed to.
SECTION 49.
Question proposed: "That section 49 stand part of the Bill."

I do not think it was necessary to impose this tax at all. It was part of the only little comfort that the less privileged of our people had. While we may be gathering in revenue, we are depriving them of a certain amount of enjoyment. Because of the five-day week nowadays and the amount of leisure time people have at their disposal, that type of legitimate enjoyment should be encouraged rather than discouraged.

Is the Senator talking about all tobacco?

The net yield is £4.68 million, which is not something that can be lightly thrown away.

It is the extra taxation I am quibbling about.

I am only dealing with the extra taxation. The net yield from this addition is £4.68 million. I do not know whether the Senator will be encouraged or discouraged by the knowledge that the consumption appears to be rising rather than declining since the budget. There has, in fact, been quite a significant increase in tobacco consumption in recent years despite the efforts of the State to discourage people from it for health reasons.

There seems to be various lines of thought on this. At one end of it through the medium of television we are encouraging people to indulge in tobacco and here, in the Dáil and Seanad, we are trying to prevent them by adding on extra taxation. My contention is, especially in regard to plug tobacco and a particular type of cigarettes, that they are an essential part of life at present. It is wrong to continually add on tax to cigarettes and tobacco in particular.

We all know that in rural areas pensioners and elderly people enjoy a smoke. Even in other countries they enjoy smoking, too. The Indians enjoyed their pipe of peace. A contented community is very important. Weighing them down with taxation on commodities is unjust. They do not go to the races or go on foreign holidays. Many of our rural people enjoy their pipe of plug tobacco. Each year it has become the tradition to increase the taxes on tobacco. It is time that a halt was called to it. We have lots of talk about cigarette smoking causing cancer, and doctors agree and disagree about it. It would be much better if we, at some stage, got away from those so-called traditional avenues of taxation and let the people enjoy themselves. After all, we are in this world to enjoy ourselves in a reasonably healthy manner. The rural man or the small income man is entitled to enjoy his cigarette or his pipe of tobacco. Extra taxation should not be imposed on the less fortunate and the lower paid income group year after year. The higher income group smoke cigars.

I do not wish to get into a theological argument with Senator Dolan on the Finance Bill but I would have thought we were in this world not for enjoyment but to win enjoyment in the next. If I were assured that one would obtain universal peace in Ireland by the removal of tax from tobacco, I would certainly remove it. But I do not think there is any social, political, or moral evidence that peace would be obtained by the removal of tax from tobacco. I said earlier that I have an open mind. If any conclusive evidence of this can be produced, I will certainly yield.

Would the Minister agree that the increase he is responsible for is the greatest increase imposed on cigarettes in the last 20 years? If it is the greatest in the last 20 years it is possibly the greatest ever.

The answer is "no." I am trying to get to the figures. Certainly in percentage they are less than has often been imposed. When I get the figures I will produce them.

I do not know why it is necessary to use percentages. We all know you can play around with figures to suit each side. The facts are that non-tipped cigarettes have been increased by three new pence a packet. We have had budgets in the past that were described by the Minister's party, when in opposition, as "cruel budgets" but which carried increases of only a few pence on the packet of cigarettes. An increase of three new pence, which in old money is equivalent to 7½d, is — I speak subject to correction on this, and no doubt I will be if I am wrong — the greatest increase ever imposed by any Minister for Finance in any budget in the history of this State.

A few minutes ago the Minister stated that even with this increase the cigarette consumption appears to be on the increase. There was a time cigarettes were considered a luxury. Today cigarettes could be, for many of us, an absolute necessity. Whether cigarette smoking is good for us or bad for us should not be a consideration in this budget. In this section the Minister is imposing the greatest increase ever in the history of the State on this necessity of life.

I inadvertently said that the figure was not greater than any imposed in the last 20 years. I was thinking of the total increase in duty on beer, spirits and tobacco when I said that. The total figure is a lot less. In relation to cigarettes the increase is, all right, three pence this year, but in relation to the amount of money now being spent on cigarettes, and the total price, the increase is not significantly greater than has been imposed in the past. We live in a different day and age to ten or 20 years ago and I think percentages do matter because they indicate what people are prepared to spend on a commodity.

To quote the words of the immortal Deputy Haughey, he said on one occasion that the old reliables always come up smiling no matter what you impose upon them. A Minister for Finance naturally succumbs to the temptation to use them. It appears that the old reliables, even in relation to tobacco, are still smiling after the budget this year and in fact the consumption is on the increase.

The publicans are not smiling.

I have yet to find a scowl on a publican's face.

There is a scowl on my face.

I think we are rapidly reaching the saturation point. Tobacco has become much too dear. The question of cigarette smoking from the medical viewpoint is another matter. The Minister could get over that by removing the tax on ordinary pipe tobacco and encouraging the people to smoke a pipe rather than cigarettes. I would not like to see the youth of this country prevented from enjoying a smoke if they felt like it. It would be much better than have them going on drugs. These are problems which we have with the youth at the present. I would not encourage people to start smoking. But in regard to those who are addicted to it and those who got a certain amount of enjoyment out of smoking all through life, it would be wrong in their old age to try to force them to abandon such practices and try convert them overnight. The Minister should seriously consider this matter especially in regard to plug tobacco and pipe smokers.

There is, of course, a special rebate for the home produced pipe tobacco and particularly for the hard plug. The rebate is not being interfered with in this budget.

Question put and agreed to.
SECTION 50.
Question proposed: "That section 50 stand part of the Bill."

Is that the section which includes other material?

An Leas-Chathaoirleach

It is excise duty on certain stocks.

Question put and agreed to.
SECTION 51.
Question proposed: "That section 51 stand part of the Bill."

I should like the Minister to enlighten me — I am an amateur as far as tobacco and smoking are concerned — as to what these extra ingredients might be. What are they composed of? Where are they made? Where are they obtained and why are they included in tobacco for export? To where do we export the tobacco?

Under the present law, that is the Tobacco Act, 1842, a tobacco manufacturer may not use any material other than tobacco and water in the manufacture of cigarettes. The purpose of this restriction is to prevent the adulteration of cigarettes at the expense of the revenue. Recently a proposal was made for the establishment of a factory in Ireland to manufacture cigarettes for export consisting of a blend of tobacco and a synthetic tobacco. The purpose of this section is to enable this industry to get under way, but the product will be for export only. Therefore, it has not any revenue significance as far as we are concerned, but it has got the possibility of developing in Ireland a new cigarette. As time goes on and experience is obtained in relation to the attitude of smokers to the new cigarette and to the extent of the knowledge relating to its health hazards or possibilities, then the matter can be examined so far as the home market is concerned. It means we have immediately available to us what could be a significant new industrial enterprise.

I just made the inquiry because I was interested to know what material would be included in this. It was news to me to know that we are going to enter into the cigarette export market. What I am interested in, apart from the revenue, is whether it could be that we are endeavouring to try something out on the dog. Are we sure that this type of operation will not be injurious to the health of the people, irrespective of where they live? In a matter that would affect the health of the people of any nation I do not think we should contribute to it in any way if it involved any danger whatever, even if it meant some employment for our people. I should not like to see anybody in this country engaged in such an activity. I am not saying that it might have that effect but if it should we should be clear on it before we give our blessing to it.

I am glad to say that I have the same reservations, being a person concerned with human rights and fundamental freedoms, as might be recognised from other sections in this Bill. I am most anxious that we would not try out anything on the rest of mankind that we would not be prepared to risk ourselves. Investigations were made into the health consequence and there is no reason to believe or to anticipate that there are any greater health hazards in relation to the use of the particular synthetic fibre which will be used than already exists in relation to tobacco plants and, indeed, the possibilities are that it may be very much better.

The proposal of the manufacturers in question at the moment is only to engage in the export market. They have not made any proposal to use the product here and, therefore, for the time being we are not making any new approaches in the matter. The exemption will allow cigarettes to be manufactured for export and if and when the proposal comes to make the commodity available on the Irish market we can have a look at it in that situation.

The Minister is again much too elaborate and I do not say this with any disrespect. I should like to know if he has any information regarding this type of cigarette being used in any other civilised country and what effects it has had on the consumer. Was it through kindness that these people came in here, or do they intend to use us to try it out on the rest of mankind? I should like to be perfectly clear on it because I should not like to see the good name of our country defiled in any way. It may be a genuine, sincere effort. If it is, I welcome it wholeheartedly but I should like to know if the Minister has any information on it.

First of all, I speak as a convert from the habit of smoking and most of my travels have been in the non-smoking period, so I have not yet tested the commodity myself. Secondly, it is a totally new experiment and I am not aware that it is yet being marketed commercially anywhere. The proposals of the manufacturers are to manufacture here and to export to Britain where it will shortly be available on a commercial basis. Seeing that there are, on the neighbouring island, much larger samples of people from different walks of life, I think their intention is to carry out a consumer research of the operation. If the market takes to it, then we could be well on the threshold of a considerable industrial development here. Why they chose Ireland, I do not know but, of course, we have tax incentives and grants and other facilities to encourage industrial investment in Ireland and this is one of the consequences of it. It could not get off the ground unless we were to amend the law in this respect and that is what we are doing.

I wonder if there is a licence duty on the import of tobacco as well as an excise and customs clearance duty. In the case of beers there is a licence duty, an excise duty and a customs clearance duty. As I understand the new regulation under the whole of Part II — I am sorry to deal with in in retrospect, but I am talking about tobacco as well as beer and spirits — is there no longer a licence duty for imported beer and is there for tobacco?

I am afraid all items could be allowed on the section——

Let me deal with what is relevant.

Deal with what is relevant.

There is a customs duty on imported tobacco but where such tobacco is used for processing here and then re-exported it may be imported duty free.

Question put and agreed to.
SECTION 52.
Question proposed: "That section 52 stand part of the Bill."

What is in this section?

It confirms a number of statutory orders.

Regarding which?

A number of specified ones.

What are the ones that are not specified? Could I please have the specified ones?

If I were to deal with all the items which were not put under these statutory instruments, there would be no recess this year. If you like I will run down through the particular instruments involved.

I do not mean that the Minister should name them individually but could I have some idea as to what they relate to.

The Imposition of Duties, Excise Duties, Firearms Certificates Order, 1972: this order increases the excise duty payable on firearms certificates. There is the Statutory Instrument 220 of 1972, the Imposition of Duties, Customs and Excise Duties and Form of Tariff Order, 1972. The effect of that was really to bring the customs requirements in this country into conformity with those of the EEC. It came into operation on 1st January last. The Imposition of Duties, Customs Duties and Form of Customs Tariff Order, 1973, had a similar effect in relation to the EEC on certain kinds of paper, building materials, of asbestos, cement, hinges, for motor vehicles et cetera. There was another Imposition of Duties Customs and Excise Duties and Form of Tariff Order in 1973, which extended the scheme of tariff preferences for developing countries. The Imposition of Duties No. 203 Customs Duties and Form of Customs Tariff Order, 1973, also adopted EEC common customs tariff nomenclature and removed the duties on newsprint and on motor vehicles, fan belts of Northern Ireland origin and made a certain number of consequential changes. The Imposition of Duties No. 204, Customs Duties and the Form of Customs Tariff Order, 1973, provided that the rates of customs duty be applied to certain goods of Northern Ireland or UK origin; and the Statutory Instruments No. 83 Order of 1973 dealt with beer, spirits, tobacco, hydrocarbon oils and wine. It removed certain minor protective elements on the customs duties of beer, spirits and recognised medical preparations, tobacco and hydrocarbon oils in the case of imports from other than EEC countries. The reason why it was done was that the cost of collection was greater than the revenue would yield.

Did I understand the Minister to say that there were import duties on timber?

I do not think it is involved in any of these orders. I said "building materials of asbestos cement," but that, I think, would not involve timber.

Question put and agreed to.
SECTION 53.
Question proposed: "That section 53 stand part of the Bill."

In this section it is proposed to increase the exemption limits from £7,500 to £10,000. Most of us would agree that the main factor contributing to the defeat of Fianna Fáil in the last election and the success of the National Coalition Government was a clear, firm and categorical promise by the Coalition parties, as they then were, to wipe out death duties. It is, therefore, disappointing for many people who believed the Coalition parties' promise was an honest one to learn that the limit has been increased by only £2,500. In recent years the value of land has escalated, particularly with the advent of the EEC, so that this provision will give no extra help.

A year ago land which would have been valued at £7,500 would be valued at £10,000 today. In providing this increase the Government are only making a gesture in this increase to give the impression that they intend honouring the most serious election promise made last February. I should like to ask the Minister if it is the intention of the Government to honour this election promise and, if so, when.

Senator McGlinchey may not have been here when the Leader of the Opposition said we should forget about the last general election and deal with the future.

That is debatable.

Since then the Taoiseach referred back to the last election.

No, it was Senator Lenihan who endeavoured to chastise me. I do not mind dealing with the last election.

The Minister should deal with the IFA as well as Senator McGlinchey.

If both the Minister and the Senators on the Opposition benches dealt with section 53 of the Bill it would be better.

This section is a first step towards fulfilment of the Government's intention to replace estate duty with taxation confined to the really wealthy and property passing at a death outside the immediate family and in the interim to provide relief for the cases of greatest hardship. The effect of this particular relief this year is to relieve 530 people from estate duties. It is estimated that the number of estate duty cases this year will be about 3,000. This relief alone, without taking into account other reliefs provided for widows and dependent children and in respect of insurance policies, is going to help 530 of those 3,000 cases. That is a very substantial step to take.

In reply to the Senator's other query as to when the estate duties will be replaced by an alternative system, all I can say is that the preparation of a White Paper dealing with this matter is now well advanced. This White Paper is being published in response to a specific request received from interested parties that the Government would indicate in advance of legislation what their proposals were. Any mature person knows that any question of taxation of wealth — and that is what estate duties are — is a matter that has to be very carefully approached so that if we endeavour to achieve a more socially just form of taxation we will not in the course of doing it err in any case at all.

That is why we are preparing our White Paper. As soon as this White Paper is published we will be anxious to meet all interested parties to discuss with them their reaction to the Government's proposals. We have already indicated in my budget statement in the other House that the speed with which we can act to replace the existing system with an alternative form of tax confined to wealthy people will depend upon the co-operation we receive from interested parties. Knowing how anxious people are to achieve this reform I feel certain that co-operation will be forthcoming. I, therefore, confidently expect that we will not have very long to wait before this desirable social improvement is brought about.

I do not propose to deal overmuch with the shamelessness of the disregard of the election promise with regard to death duties. It was possibly the most corrupting and shameless piece of chicanery in democracy in this country in our time. Last night I mentioned in my speech on the Second Reading of the Bill the specific nature of the promise—"we will abolish death duties"—incorporated in the 14-point plan. It is painful to have to read over it. I leave it to the President of the Irish Farmers' Association to deal with the matter adequately. He has already dealt with it. The Minister refrained from even giving the President of the Irish Farmers' Association the courtesy of a reply. I leave it to the public and particularly farming public to judge the shamelessness of the rejection——

May I interrupt? The gentleman in question received a reply and did not publish it.

I will leave that between the Minister and the President of the Irish Farmers' Association.

I have since published the reply since he failed to do so.

I do not intend to enter into that particular arena at all. What I am concerned about is the arena in which the 14-point plan as announced and in which a very specific commitment was made in words which cannot be dismissed in any ambivalent fashion. These words quite clearly set out that as far as the unjust burden of estate duties are concerned, such as property passing to widows and their children, the Government will abolish these duties. There was no question of considering the matter, sending the matter on for committee consideration or asking that a White Paper be introduced. It was stated that the Government would abolish estate duties on property passing to widows and their children and replace them with another form of taxation. This statement was issued on 8th February, 1973. I do not intend to refer any more to this question. I believe the President of the Irish Farmers' Association will act appropriately on behalf of the Irish farmers. I am certain the Irish farmers will remember this particular matter in the secrecy of the polling station on the next occasion.

Apart from that total rejection of a total commitment we have the niggardly nature of the increase. What amazes me is the brazen effrontery behind the Minister for Finance's thinking and the Government's thinking. They should have known at the time of the making of the commitment that the abolition of death duties just could not be done by a wave of the hand. There are very specific international commitments, particularly in regard to Great Britain, in this matter. The Minister is well aware of this. There were front bench finance spokesmen with research facilities costing £15,000 per year from 1967.

£10,000.

£10,000. The Minister and his colleagues were aware in February of 1973 that these duties could not be abolished, to use the crude black and white phrase adopted. Leaving aside that aspect, and allowing for the fact that the Government found themselves in a mess, unable to meet a specific commitment, consider the brazen effrontery and contempt of public opinion involved in raising the limit from £7,500 to £10,000 in a year when land values and property values have doubled. A mere mechanical gesture, which would have been adopted by any Government; a facist, a communist, or any other type of government, would raise the minimum level in the ordinary course of events in accordance with the fall in the value of land and property.

This is elementary and to regard this as meeting a commitment of that nature is an outrageous insult to the intelligence of public opinion. The Minister is well aware that £7,500 to £10,000 is not a change; it is the status quo. Indeed, even recognition of the status quo should have lead to a higher levelling-up than £7,500 to £10,000. We allow for the rejection of electoral commitments, the insult to the public intelligence involved in raising the limit from £7,500 to £10,000, but I cannot understand, if the Minister and the Government wish to do this why they do not raise substantially the artificial valuation of land that is assessed by the Estate Duty Office under the Revenue Commissioners and why, through that mechanism, the Minister for Finance cannot find an immediate way of relieving substantially death duties. I should like to offer that suggestion to the Minister and hear his views on it. This can be done quite simply by an amendment of the existing section and this method would obviate all difficulties in the matter and give the Minister for Finance an immediate and practical way of giving relief to landholders

Senator Lenihan is a great tempter and when I hear him using phrases which possibly only he could use in this connection such as "outrageous insult", "brazen hypocrisy", "shameless disregard of election promises", "rejection of electoral commitments", he tempts me to rise and say a few words in reply.

We have just been listening to a man who belonged to a party which formed the Government for 16 years continuously and who was himself a member of the Government for about half of that 16 years. What effort was ever made by that Government to tackle the question of death duties? I regard it as certainly an unintentional but a great tribute to the ability of the present Government that Senator Lenihan and his colleagues in the opposite benches should indulge in this type of criticism because it shows what they feel they are entitled to expect from a National Coalition Government after five-and-a-half months in office as compared with what they know they could not and did not get from a Fianna Fáil Government after 16 successive years in office.

I should like to remind Members of the House of exactly what was stated in the declaration of intent by the National Coalition Parties during the general election campaign and I assert there is no iota of departure from the commitment given to the electorate. I do not believe any elector expected the full implementation of this declaration of intent in less than six months from a new Government. There is no point in anyone misleading himself on that score. The declaration made by the National Coalition parties in regard to this matter read:

With a view to relieving the heavy and unjust burden on ordinary house purchasers and farmers, the National Coalition Government will abolish estate duties on property passing on death to widows and their children and replace them...

This is important as it is part of the commitment

and replace them with taxation confined to the really wealthy and to property passing on death outside the immediate family.

Will anyone reading that objectively and with a fair mind say there was a commitment to abolish death duties and do nothing else? There was not; there was a commitment to abolish estate duties and to replace them with a new form of taxation. There are no two ways about this and there is not the slightest retreat from it in any utterance by the Minister for Finance, to the Taoiseach or any other member of the Government. There is no retreat from that in section 53 of the Finance Bill before us. In relation to this section, in his Second Reading speech in this House the Taoiseach dealt perfectly honestly and straightforwardly with the position when he stated:

Part III of the Bill is concerned with death duties and contains the interim reliefs in the field of estate duty which are designed to alleviate the greatest hardship of the system pending its replacement by a new system of capital taxation....

He may have been too optimistic in this in regard to some Senators:

Senators will appreciate that the abolition of estate duty, to which the Government are totally committed, could not be done without making provision for an alternative form of capital taxation. Quite apart from the revenue involved, which is substantial, a balanced system of taxation requires that large holdings of wealth should be taxed, in addition to whatever other forms of taxation apply to income and expenditure.

What is being done now in section 53 of the Bill is only part of the story. It is only part of the progress the Minister for Finance is making in relation to this area of death duties and estate duty. We are dealing with the section which is increasing the ceiling from £7,500 to £10,000. In addition the abatement for widows is being increased from £2,000 to £4,000 and for children from £1,000 to £2,000. As the Taoiseach spelled out in the Second Reading, insurance policies up to £7,500 are no longer to be aggregable for estate duty purposes. This is no small step for a Minister for Finance less than six months in office. It is a giant stride compared with the best Fianna Fáil did during their 16 years in office.

Senator O'Higgins has been doing his best to prop up a bad case. It is a mistake for him or any Member of the Coalition to read the undertaking they gave during the general election campaign with regard to the abolition of estate duty. The impression they are now attempting to give is that all they ever stated was that some day they would abolish death duties in respect of property passing to a widow or children and would replace it with some kind of wealth tax. As Senator O'Higgins kindly reminded us, that is not what they stated at the general election: what they then stated was that they would abolish death duties on property passing to a widow and children and replace it by some form of wealth taxation of the "really wealthy." The "really wealthy" is the operative phrase.

I suggest that Senator O'Higgins should bend his mind to this question. Is a man with 100 acres of good land and rearing a family on that farm to be classified as "really wealthy"? It is a matter of practical day to day life that not more than 1 per cent of Irish farmers could in any interpretation of the expression be classified as "really wealthy". The Members of the Coalition parties told the farmers categorically that death duties were to be abolished on farms passing to a widow or children and that they would not be replaced by any other form of taxation. That is not what they are stating now.

They say it is unreasonable of us to ask them to carry out this promise so soon. We are not the only people doing this. The President of the Irish Farmers Association recently wrote a letter to the Minister for Finance in which he complained about the outrageous comments made on his integrity by the Minister in the Dáil some weeks earlier. In this letter he stated in reference to a letter he wrote to the Taoiseach before the Presidential Election and I quote from The Irish Times of July 23rd:

In my letter to An Taoiseach I drew his attention to the pre-election promise of the Coalition Government to abolish estate duty. I went on to say. There is dismay among the farming community that this promise has so far not been honoured, and while we have been promised a White Paper on taxation, there is no indication as to when it will be published or when estate duty will be removed. These commitments, solemnly given by the Coalition parties before the (General) Election, clearly influenced the outcome of same....

...This was, and still is, a burning issue, especially among the farming community. No topic has been so tested in recent times as has the removal of estate duty. Thousands and thousands of people attended meetings all over the country specifically arranged to discuss this subject.

So it is not only those on this side of the House who are raising the issue. It is a matter of great interest to farmers and one which the Irish Farmers' Association feel strongly about. Senator O'Higgins should not suggest that all they stated was that some time in the unspecified future estate duty will be replaced by another form of wealth tax. That is not what was stated. The term "really wealthy" does not cover more than 1 per cent of the farmers.

The points so ably made by Senator Lenihan must have nettled Senator O'Higgins. Naturally he would like to take his party and his colleagues in the Coalition Government off the hook in this matter. On every pole and gate pier these 14 points were posted and they will be a sad reminder as the years go on. It is of no benefit to tell farmers that estate duties will be abolished in the distant future or that they will be replaced by another form of taxation. This effort of raising from £7,500 to £10,000 the exemption for estate duties means nothing because the value of money has depreciated while the price of land has increased. Those with knowledge of land realise that £10,000 is not an excessive price for a medium-sized farm with a residence in any part of the country.

There are many intelligent men in the Government but many of them are far removed from rural Ireland. If they were living on the land they would know that during the last three or four years, and especially since our entry into the EEC, the price of land has sky-rocketted. We know from reports circulated and from inducements given to farmers to expand, that the farmers are the real wealth of the nation. There will be a great future for the farming community and for farm produce in the EEC if we are geared to avail of it but we cannot be geared to avail of the higher prices in the EEC unless we can use our farms in an intelligent way in a modern world. This is 1973 and not the Stone Age. The amount of money involved in running a modern farm valued at, say, £10,000 is very high. The farmer who seeks a loan will not get the same credit facilities as people in other walks of life. In many instances the farm is not really owned by the man who occupies it. It could be in the names of his grandparents and has never changed down the years. A son has the use of it during his lifetime and when he dies someone else takes over. It can never be realised in money terms.

There is no point in acting the hypocrite and expecting a widow with a large family or expecting the ordinary farmer to believe we are granting them some concession by raising this limit from £7,500 to £10,000. How many here realise that a good tractor costs more than £2,000 and that modern farming equipment costs a colossal amount of money? I am not being critical of any member of the Government and I appreciate the Minister is very capable but that will not prevent me from doing my best to ensure that he or his party will not get off the hook lightly regarding the promises that were made during the election campaign.

The farmers of Ireland are very worried over death duties. There is no doubt in anybody's mind here that the Coalition Government in the last election promised that they would do away with death duties. It was definitely stated in my county that not alone would they amend death duty legislation but they would do away with death duties entirely.

Whether we have a Fianna Fáil Government or a Coalition Government, the farmers of Ireland want this death duties obstacle removed. They have fought for hundreds of years to hold on to their land. I know of young farmers whose parents have died during the last three months and who will be forced to sell their land to pay the death duties. It is wrong that any Government should allow this injustice to continue. People over the past 40 years or 50 years have slaved on their lands and fought over it, but now their own Government are trying to take it away from them. If parents die and the death duties on the farm are not paid over five years, the farm can be sold to pay off those duties.

The land of Ireland is the wealth of Ireland and anything we can do to work the land as it should be worked should be undertaken immediately. To avoid death duties our young farmers are inclined to sell their farms and get out. The farmers of Ireland respect their holdings as they have gone through much hardship to hold on to them. I do not mind what Government are in power but it is essential that those unjust death duties should be done away with completely. If revenue is necessary it should be got from some other source.

I do not wish to minimise the importance of this worry to anybody, including farmers, but it is time we got this whole question into proper perspective. Four per cent of all the estate duty paid in this country came from farmers. The average number of farmers who go to their eternal reward annually is 6,500 and of that 6,500 the average number who pay estate duty—I am bearing in mind the latest figures in valuations, stock and so forth—is less than 100. As loud as the cry has been, as much protest as there has been, as much as we appreciate the anxiety which is being generated—some of it without foundation—the realities indicate that of any section in the community the farming community is the least affected.

The reliefs given in this year's budget will have the effect of relieving about 25 per cent of the estate duty payers. That includes farmers, who in fact will be relieved to an even greater extent because of the artificial valuation. The artificial valuation is most significant. This is the reason why farmers represent such a small proportion of the number of people who are liable for estate duty. The artificial valuation will be of greater significance in the future than in the past because far more farmers have borrowed money from the Agricultural Credit Corporation, from the banks and from other agencies to buy land, to improve their buildings and to stock their farms. Where a person has borrowed money they get an artificial valuation, which means that the market value of their land is not taken into account but only £25 to every £1 valuation. There is nobody here or anywhere else who can tell me that £25 represents the market value of £1 of rateable valuation today. It is a great deal more.

I am not saying any of this to diminish the commitment of this Government to replace estate duties with a more equitable form of tax. The great drawback of estate duty—we identified it in our policy statements and this is our view—is that it falls on a family in one lump at a time of great distress, frequently when the breadwinner, the person who accumulated the wealth through his sweat, labour and a lifetime of endeavour, is no longer with them. There are, of course, provisions in the existing law whereby persons may pay estate duty—for instance farmers, because this applies to land— over a period of eight years. The interesting thing is that the number of farmers who elect to pay estate duty over a period of eight years is only about one in eight. Only a minority elect to pay over a period of eight years and this is indicative of the fact that the amount which they are required to pay in most cases is within their current capacity to pay.

A second reason why estate duty is inequitable is that the really rich can avoid payment of estate duties because a millionaire may alienate or give away part of his estate to his next-of-kin or to anybody he likes more than five years before death and thereby avoid anybody having to pay estate duty on that money. It is the really wealthy who are not at present being caught, because estate duty is our only form of capital taxation. A millionaire can alienate £900,000 of his money by giving it away to his next-of-kin and still live happily, contented and secure for the rest of his days on £100,000. Such a person escapes under our present system. There are a multitude of reasons—far beyond the hardship to the farming community, which I am not minimising—why we need to have a more equitable form of tax.

I should like to say to Senator Dolan that I am not far removed from the country, as he knows. Half of the blood in my veins comes from Cavan, so I appreciate entirely what he says. When I talk about the proportion of farmers who are paying estate duty, most of the farmers I have in mind would not be from Cavan. There would not be many small holdings in counties like Cavan or counties in the West of Ireland who would have to bear estate duty. I do not think we are doing a service to them to be generating unnecessary fears. Senator Lenihan may want to play on the words "generating fears" but more fears have been stimulated than are justified in practice. Estate duty is a burden, but it is not confined to any one section of the community.

I wish to conclude on this note. The Irish Farmers' Association, through their representative, Mr. T. J. Maher, has recently acknowledged, and I have printed his acknowledgement, that it would be wrong to abolish estate duty unless you brought in at the same time an alternative form of capital taxation. If you did not do that, you would encourage speculation in farm land. We are not going to allow that situation to develop no matter what attacks may be made upon us.

We are the people who, like the Opposition, are in the political arena. We realise that they are perfectly free to take whatever passing advantage they can out of the existing situation by saying that we did not build Rome in a day. We did not build Rome in a day nor did we let Rome collapse in a day. We believe we would be doing a serious disservice, particularly to the farming community, if we were to abolish estate duty without providing an alternative to it which would ensure that we would not have dangerous speculation, which in the long run would be more harmful to the farming community and to everybody else.

I should like to ask the Minister one question. Could he reduce the five years? This is where the real hardship lies. If a farmer has a family reared and is anxious to give up his place to avoid death duties, he could do so today and be dead in two or three years' time. Why not reduce the period to six months or one year? Five years is too long to wait. A young man with a young family is expected to give up at 40 years of age. At age 50 or 60 he would be more prepared to give it up.

Maybe by this time next year we will be abolishing it altogether.

Question put and agreed to.
Sections 54 and 55 agreed to.
SECTION 56
Question proposed: "That section 56 stand part of the Bill."

I should like to refer briefly to the question of the artificial value of agricultural land. I queried the Minister earlier as to whether he might not have through this procedure a practical way of honouring their election promises. If the Government really wished to meet their election commitments in regard to the farming community and even though the commitment was in regard to property generally——

Is it not section 56 we are discussing? This deals with abatements for widows and children.

Is it not relating to the artificial value of land?

No. I am afraid the Senator is looking at the wrong copy.

Sorry. It was originally section 56.

If we agreed to section 56, Senator Lenihan could continue his speech.

Question put and agreed to.
SECTION 57.
Question proposed: "That section 57 stand part of the Bill."

Continuing the point I was making, was it not open at all stages to the Minister and the Government to adopt this procedure in a straightforward and immediate manner to facilitate the farming community and meet the commitment which the farming community thought had been made to them? They hoped for a substantial extension of the limit of the value of an estate for determining the applicability of the artificial value of agricultural land. The raising of the £7,500 minimum limit to £10,000 did not meet the situation in any way. Through this means there was an immediate way to meet the situation and honour a commitment, at some cost to the Exchequer such as is involved in every commitment.

As I mentioned earlier, the formula for artificial valuation is one that is not readily understood. It works with very significant advantage to farmers, and for that reason only a small percentage of them pay estate duty. I should like to give a sample, as I do not wish to give particulars which might identify a particular estate. This is a case involving an estate the acreage of which was about 240 acres with a rateable valuation on the land of £200 and on buildings £36. That estate was valued for estate duty purposes at £1,925 and was accordingly exempt from payment of estate duty. Within one year that farm was sold on the market for £110,000.

That is a sample of the kind of advantage which accrues to farmers by reason of this artificial valuation. We have increased the area of the applicability of artificial valuation by 50 per cent this year, at a time when a large percentage of farmers, and particularly those who would come within the estate duty bracket, are borrowing money. More power to them, as this is the best way they have of increasing their productivity and gaining an advantage for themselves and for the country out of the benefits which the EEC can make available to them.

But because they have this indebtedness for stock and farm improvement they can immediately get the immense advantage of this artificial valuation. All debts, and this includes debts of a personal nature not related to the farm, are set off in connection with this artificial assessment which is made for farmers. I must be careful with the figures. All farmers will get a reduction, as there are certain exemptions for everybody, but up to 40 per cent will escape estate duty who would previously have been liable. For the reasons I gave in the sample, artificial valuation must be dealt with carefully. It would be wrong if the artificial assessment could be made available to an extremely wealthy farmer who had other estate as well and who as a consequence would avoid payment of estate duty. We have done something very significant here. Only when it is applied to actual positions and it is seen at what values the property sells that the extent of the concession is realised.

If the Minister and the Government really wanted to honour their commitment in this direction this is the way to go about it. If they wanted to honour it totally —agreed at some cost to the Exchequer—they could increase beyond £3,000 the level for determining the applicability of the artificial value of agricultural land and by so doing reach a situation which would bring about the exemption of agricultural land from death duties.

I acknowledge what the Minister has stated is accurate. But the point I am making is that if the Government were seriously interested in honouring their commitments this was the proper way of doing so. It could have been done simply under this section without any charade in regard to raising the minimum level from £7,500 to £10,000, which applies to property generally, whereas from the reading of this in the 14-point plan, and the way it motivated people, it was primarily in the agricultural area.

It was through the agency of the Irish Farmers' Association and other rural organisations that this matter was highlighted. I realise that for Exchequer reasons the Minister refrained from doing this. But there was no difficulty in regard to facilitating every owner of agricultural land through the mechanism of the artificial value of agricultural land by extending this provision by a substantial amount to embrace practically every agricultural holding. There is no need for a White Paper, commission or investigation into the matter. It would have been clean administration and clean government.

Who would pay the cost?

Am I right in thinking in view of what he stated earlier, that the Minister does not consider estate duty on farmers a heavy and unjust burden?

No. I do not think that is a fair interpretation to put on what I said. I said that the number of farmers affected by estate duty is very, very few. If 6,500 farmers died per annum and less than 100 of them are liable for estate duty, I do not think it is unreasonable for me to say that comparatively few farmers run the risk of payment of estate duty. The situation for Irish farmers could be made very much worse if the Government had adopted that which Senator Lenihan suggested. If we were to say that agricultural land was not to be considered, if we were to give artificial valuation in toto, what would happen? People with vast amounts of money would have exemption from death duty by buying agricultural land.

You could do that. That is another mechanism.

One of the difficulties is that we are now in the EEC, for which Senator Lenihan campaigned so well and so successfully. It is now not open to impose restrictions of the kind which Senator Lenihan has suggested, particularly, for instance, on foreigners. You could not do it on a national basis such as we appear to be able to do. Simpliciter the ideal solution would seem to be to exempt farmers on agricultural land but this would lead to the very speculation which Mr. Maher of the Irish Farmers' Association has recognised as a real danger unless at the same time as you abolish estate duty you set up some other form of capital taxation. If we had cleaned the slate of liability in relation to agricultural land, it would have immediately generated massive speculation in farm land. That speculation would already be on the go. We have made reasonable progress to relieve those whom we believe would be most seriously affected, to relieve quite a significant number of farmers this year at current prices and not on historical values. We hope that it will not be necessary to bring in some of the other excellent suggestions which have been made. Those suggestions would be valid if you are going to retain the system but if you are going to replace the system with something which will relate to payments by reasonable instalments by the very wealthy during their lifetime rather than by imposing a sum on the not so wealthy in the course of a lifetime, then I think we have done the right thing to provide substantial reliefs this year pending an overhaul of the whole system.

Really, everything the Minister says goes to show the extraordinary lack of wisdom in the original comments to abolish death duties. No matter what one does one finds other problems. I take it that the Minister discovered all those problems since he took office but they gaily made these promises up and down the country which on any reasonable assumption were just crazy. This was something that could not be done as they have now found out.

What puzzles me particularly is the Minister's reference to the "really wealthy". I suppose the "really wealthy" to some means people who have more money than they have. On any reasonable use of the English language, the "really wealthy" ought to mean those who have an unusual amount of wealth. I take it that the Minister would accept that a very large number of Irish estates in respect of which death duties are now paid could not be described as belonging to "really wealthy" deceased persons. What he has been saying is that death duties will be replaced, that an equivalent amount will be brought in by the new wealth tax on the "really wealthy". Does this mean that these mysterious people—the "really wealthy"—whoever they are will have to pay, perhaps, twice as much in this new tax than would be payable on their estates on their decease? I do not see how else it can be done. If everyone who is not really wealthy is exempted from the wealth tax a very high proportion of estates that are now liable to death duty will be altogether exempt.

I do not think it would be appropriate for me to anticipate what might be in the White Paper at this stage. When I tell the House that over the last ten years there have been estates where the estate duty payable ranged from £½ million to £3 million they will appreciate that it would be wrong to abolish a system of tax which collects revenue of that kind because nobody is called upon to pay estate duty of £½ million to £3 million unless his estate is vastly in excess of that figure. These are the problems that we have to look at.

Regarding the difficulties—as the House knows I am a lawyer by profession and so I am not a stranger to the operation of estate duty and in assisting families in relation to the administration of their estates, both when they were living and dealing with the estates of other people when they were dead. The unfortunate difficulty we are in as a Government is not that we are unaware of the administration of what we know about but that the statistical information in this country regarding wealth, its location, the way it is used, the way it is transferred is, unfortunately, most inadequate. In some way it is a reflection on those who have been in control for so long. We are working very hard on the White Paper. This is one of the reasons why we are thinking it is very important to study the matter carefully so that the matter can be adequately considered by everybody and that a fair system of taxation on wealth can be introduced— a system which will catch the "really wealthy". That is a phrase that Senator Yeats thinks is imprecise, but I think he knows what we mean nonetheless. We want a system that will catch the "really wealthy" and we will ensure that they will not be able to avoid due payment of their taxes which they certainly are able to do under the existing system.

I accept what Senator Aylward says about the hardship that arises when a person is not wise enough to dispose of his property more than five years prior to death. None of us knows when we will expire. It is one of the great uncertainties that we have to live with. It is worthy of note that it was only three years until 1965 and we were not responsible for that extension to five years. It is seven years in England. The argument in favour of having a limit at all is to avoid a situation which can arise where the "really wealthy" can dispose of their property without hardship to themselves and avoid payment of duty. It is a very exhaustive and interesting problem and I would hope, when we issue the White Paper, many of these problems can be adequately discussed.

All these quite incredible complications simply arose because the Coalition decided to tell a few unfortunate farmers that they would not have to pay estate duty.

Question put and agreed to.
Sections 58 to 63, inclusive, agreed to.
SECTION 64.
Question proposed: "That section 64 stand part of the Bill."

I take it that Senators appreciate that the Ninth Schedule goes with this section and that the one discussion should cover both.

Question put and agreed to.
Sections 65 and 66 agreed to.
SECTION 67.
Question proposed: "That section 67 stand part of the Bill."

I understand from what the Minister said in the Dáil that this arises wholly out of an EEC directive. It sounds like the kind of thing which the new Committee, which are holding their first meeting in another part of the House now, could usefully discuss.

Question put and agreed to.
Section 68 agreed to.
SECTION 69.
Question proposed: "That section 69 stand part of the Bill."

This section, among other things, quadruples the amount of stamp duty where transactions are concerned. Am I correct in thinking —the Minister mentioned this in the other House—that this is the minimum stamp duty we are entitled to impose under the directive?

Yes. The present rate is 25p per £100. This will make it one per cent, which is the minimum allowable under EEC regulations. The various provisions here may not result in any net increase; indeed it could be a net loss to the revenue. There is a different basis: at present the stamp duty is payable on the total capital but in future stamp duty will be payable only on issued capital. Although it may be at a higher rate, if it is not all issued the return may be less.

Question put and agreed to.
Sections 70 to 77, inclusive, agreed to.
SECTION 78.
Question proposed: "That section 78 stand part of the Bill."

This is the section which provides rather curiously that a business which provides its own catering has to pay VAT. From the Minister's statement in the other House it would appear that if VAT were not imposed in these circumstances the business would compete unfairly with commercial caterers. I can see the point between unfair competition with commercial caterers but it seems odd that this useful doctrine of free enterprise should be carried to the extreme that thousands of workers who eat their main meal of the day in factory and office canteens have to pay more in order to allow this doctrine of free enterprise to have full rein.

It is irrational to remind me that VAT should be charged on food in this kind of situation. After all, this is food in the full sense of the word. This is not luxury meals in luxury hotels. This is plain ordinary dinner that a worker would have in his factory or office canteen, yet VAT is being imposed on him. If the worker had an identical meal at home. VAT would not be charged. I accept that the commercial caterer is being charged, but the reason may be that it would be impossible to distinguish between the luxury hotel and the snack bar and that therefore he has to be charged that though he is selling food, the commercial caterer has to be charged. But where there is a distinct type of activity run by the firm itself I should have thought it would have been better to leave it free of VAT.

I can appreciate all the arguments advanced by Senator Yeats because they troubled me, too. The difficulty is to know where to draw the line. Senator Yeats obviously has cases in mind where the cost of the meal may be determined by the number of gentlemen in formal clothes who are standing around with napkins on their arms. On the other hand, you reach the situation in which commercial caterers who are legitimately pursuing a business would be seriously at a disadvantage if, because of the difficulty in distinguishing them from the other premises, they were to be charged this tax. If firms dismissed them and engaged people to do the job themselves they would not pay the tax.

On the question of endeavouring to establish equity between everybody engaged in the food trade and servicing the catering industry, we decided this was the most equitable way in which to do it. As I pointed out in the other House, the net effect of this probably will mean for any worker of the kind Senator Yeats has in mind about three-quarters of 1p per day. That is a lot less than the cost of bus fares if he or she were to decide to go home for lunch in order to avoid VAT on food as distinct from that consumed in the canteen. It does not add significantly to the burden of people who are lucky enough to consume their food in canteens at their place of work. In most cases such food is already subsidised by the employers so that the full weight of this is unlikely to fall, if at all, on the worker. There are many places of employment nowadays where more than a bowl of soup and a few sandwiches are given out. In some places meals which would do credit to places which cannot be named, for the reasons Senator Yeats has in mind, are supplied daily.

It would not be just that such should be exempt from tax simply because people eating more modestly elsewhere would be caught by it—we have tried to establish equity—but this is a system which will ensure that genuine employees engaged in the catering industry will not be at a disadvantage. It we did not do this we would have all kinds of schemes operated which would work to the disadvantage of workers engaged in the catering industry. That would be unfair.

I can see the Minister's point but he mentioned that the tax actually levied on the worker for an ordinary meal would be in the neighbourhood of three-quarters of 1p per meal. If that is so I cannot see floods of professional caterers being put out of jobs in order that the company could do it at a cost of three-quarters of 1p cheaper per meal. It is such a small amount it would not have much affect. I am not particularly impressed either by the luxury of the meals the Minister has said are served in some of these companies. Under his own provision for zero rating all foods, he zero rates the hamburger and also the sirloin steak or even, as has been mentioned, caviar.

I should like to emphasise that the three-quarters of 1p of which I am talking is the difference between 5.26 per cent which now applies to such meals and 6.75 per cent which will now be imposed. It is only a question of 1.5 which is being added on which is involved here. The total involved in a meal, say, of 50p— which would be a fair price for a meal provided in such places—would be about 3p per meal. In many cases that would represent probably the margin of profit to the catering firm which would be supplying such meals—it might be a little more or a little less. That is the margin of it and that, multiplied by the thousands of meals per day which an outside caterer would be providing, could amount to quite a sum.

The clearest way to establish equity is not to provide that food that is consumed outside the home would be exempt. You run into all kinds of difficulties. The commercial caterer will in many cases be preparing food beforehand. Prepared food which is precooked is not being exempted. Such food has a certain element of service done to it. You come up against a multitude of difficulties in trying to establish equity. The course we have taken is the one which ensures that the least disadvantage is done to anybody.

I am interested in the Minister's last statement. It now appears that the loss to the worker is not three farthings but is about three pennies.

He is getting, of course, with his meal——

We all know that but we are now zero rating food. If his meals in a canteen were zero rated he would pay about three pence per meal less than if the full 6.75 per cent were put on it. But not at all—in fact, can one say three farthings under the decimal system or does one say three-quarters of a penny? An interesting semantic point. However, if we say three quarters of a penny it is not three quarters of a penny that is involved. The point is not whether he would pay more than he is now paying; the point is whether he is to be zero rated or to pay 6.75 per cent so it is as much as three pence per meal, that is 15 pence per week. Nobody will go bankrupt as a result but it is considerably more than the three-quarters of a penny that seems to be involved.

The Minister stated he is worried about this situation—as we are—but that the more he looked into it the more difficulties arose. Of course, these are difficulties that have arisen because of the zero rating of food. It strengthens the arguments against doing it in the first place.

The correct method is to take .75. It is equally wrong to say three-quarters or three farthings.

It would be wrong to continue on the lines Senator Yeats is taking. He appears to be unaware that a considerable number of people are employed in industrial catering and that workers obtain first class food under industrial catering. It would be wrong to place industrial caterers at a disadvantage. There have been attempts on the part of some firms to cater for their own establishments and when this happens they try to do it cheaply and ignore the expertise which is important. Workers are entitled to good food and service just as much as those who can go into a hotel or restaurant. I hold that, as regards what is suggested here, the cost to the worker would be infinitesimal because in the main, in industrial catering, food is subsidised by the employer.

The Minister's predecessor had not the approach which Senator Yeats is advocating. He was not prepared to help the industrial caterer other than to impose VAT on them. If this section is agreed to it will not be a great imposition on the worker or recipient of the food. It is not proper to have factory workers leaving their work and helping to prepare the meals. This should be discouraged and we should give full recognition to industrial catering.

Up to a point I agree with Senator Mullen. It is probably right that companies who do their own catering tend to do it on the cheap and he is almost certainly right in stating that professionals do a better job. Where I disagree with him is that I hold a slightly socialist view which the Senator might disapprove of and that is that the worker should not be taxed in the interests of private enterprise.

Question put and agreed to.
Section 79 agreed to.
SECTION 80.
Question proposed: "That section 80 stand part of the Bill."

This is the section which one might say changes the price of every commodity sold in every shop throughout the country, some downwards and most upwards. In spite of the Minister's suggestion in the course of his budget speech that the lower rates were being increased less than the higher rates on the basis that the more essential commodities were to be increased less than the so-called less basic or luxury goods, why did he do the exact opposite? In respect of the lowest rate of VAT which was 5.26 and is now 6.75 he has put that up by 28.3 per cent. In other words, for every £100 the State receives in tax out of that former VAT it now receives 28.3 per cent more. The next slightly less essential commodities go up from 16.37 to 19.5 per cent which is a rise of something under 20 per cent and the third class from 30.26 to 36.75 per cent, the so-called luxury goods such as radios and television sets which everyone now looks upon as essentials, which is a rise of 21.4 per cent. The more essential the goods the higher rate of increased taxation the State will receive. I am interested to know the reasoning behind this or is it because people have to buy more then more money can be got in by a larger increase in taxation?

One regrets the VAT on books under the 6.75 per cent level. Originally, turnover tax and VAT were imposed on books by the Fianna Fáil Government but it is one of the less defensible things which they did in their day and is something the present Government opposed tooth and nail in both Houses of the Oireachtas. Instead of zero rating books and ceasing thereby to tax education the tax on books is now higher than it ever was. There is also the question of newspapers. It is considered immoral even to suggest that a journalist conceivably might have political views; nonetheless, it is curious that, whereas every newspaper a year or so ago contained portentous leading articles about the appalling dangers to the future of the newspaper world in the imposition of VAT, VAT is now being increased as well as all their other costs and we have not heard a word from them about it now. On the basis that journalists have no political views it seems they have ceased suddenly to be able to look after their economic interests.

I should like to echo what Senator Yeats said about books. It seems to be a staggering exclusion from what seems to be a reasonably sensible and humane Bill. I do not share the views of the Opposition that the removal of VAT from food is primitive or aboriginal or whatever adjectives they choose to affix to it. This seems to be a central, fundamental, very important and humane measure but "not by bread alone doth man live" and, in view of a number of factors, it is amazing that this Bill imposes VAT on books and newspapers.

The previous Government introduced a dashing and interesting item in their budget in the tax relief they granted to writers and artists. One of the results of that was that, not only were the Irish artists and writers advantaged but it worked to the advantage of many people who came here from abroad.

The affects of VAT on books are considerable. The average secondary school student will need at least £30 per year to buy books and, over five years, that will amount to £150. In five years' time it will be a great deal more. At university level the amount a student is expected to pay for books is quite staggering. There are 50 books on the reading list of our English department for first year honours. For three subjects that would be 150. At a conservative estimate a university student in one year could spend as much as £100 on books. If you multiply the VAT involved in that over four years that is a great deal of money.

The old cliché that has been bandied around that this is a tax on knowledge is pretty true. A Government who justifiably pride themselves on their intelligence and brains, and high intellectual calibre, and great concern for the intellectual quality of life and art, and so on, should not have ignored the possibility of a tax relief in this educational area. It appears to be a very serious and, to me, an inexplicable omission. I should like the Minister to explain it. Did they even think of it?

It is as essential for the mind as food is for the body and for the health of society. The whole area of education is utterly dependent on books.

It affects other areas such as libraries. These are very important if we are to have a contented and enlightened electorate and population generally. The lending libraries are spending a lot of money on tax which they should be spending on books. I would not be as perfunctory or dismissive as Senator Yeats felt it necessary to be on the matters of newspapers. For the functioning of democracy, newspapers are necessary. It is not a myth that newspapers are going to the wall every day. The numbers have been reduced drastically in England over the past ten years. We have four dailies and it is possible that we may have only three in a few years' time. VAT should be removed from these. I am thinking in terms of a healthy democracy which this Government claim to be urgently concerned with rescuing, augmenting, preserving and maintaining.

I should like to know if this is due to a lack of thinking or to an oversight, or is it felt that books and the whole area they cover of our intellectual life so unimportant that it should not have been considered for this kind of reduction or alleviation in tax. I would very strenuously urge on the Minister and the Government to bear this important item in mind when next year's budget is being prepared.

I should like to join with Senator Yeats and Senator Martin in appealing to the Minister to reconsider imposing VAT on books. It is a retrograde step, placing a tax on knowledge. In Northern Ireland and Britain books are free to all school children at all levels of education. Here the price of books has rocketed and parents are well aware of this. Even in national schools at which children must compulsorily attend, the parents are forced to buy the books. There is a very limited free book scheme and it is at the discretion of the teacher who has to indicate who, in his opinion, would be entitled to receive a free book. I appeal strongly to the Minister to remove this tax on education and knowledge.

I concur with the Senator who have advocated the removal of this tax on facilities for education. From one point of view, we go out of our way to provide finances to ensure we will cherish all the children of the nation equally. We have provided transport to take the children to national and secondary schools and yet we still retain an archaic tax which puts some avenues of knowledge and certain books out of their reach. Instead of looking at television, as is the case in most homes at present, it would be much better if children cultivated the habit of reading. In doing so they would be helping to educate themselves and they would broaden their outlook.

I also agree with Senator Martin's views on newspapers and periodicals. The day of censorship is past. Television can supercede censorship boards. There are many provincial newspapers in the rural areas and they pay trade union wages in my area at any rate and employ a good number of people. This is an industry in an area where industries are very scarce. I would not support anything which might put these people out of business or encourage large combines to take over our news media and deprive us of the enjoyment of having our own local newspapers.

This is the cruellest and most avaricious section in the entire Finance Bill, a section which should be remembered by the people for many years, a section which affects the lives of the ordinary working people, and particularly the poorer people. In their 14-point plan the Coalition parties undertook to introduce immediately strict price control and then went on to deal with social reform the elimination of poverty and the ending of social injustice. "It is conservatively estimated," they said, "that under Fianna Fáil a quarter of our people lived in poverty." I would readily admit, as, indeed, any Senator who leads a reasonably active political life and is in contact with the poorer sections of the community would admit, that under Fianna Fáil possibly a quarter of our people did, regrettably, live in poverty but I feel that as a result of this section of the Bill the number of Irish people living in poverty will increase.

In his speech yesterday the Taoiseach stated that the granting of the large social welfare increases more than compensated the less well-off for the rise in the cost of living. He said the removal of food from the scope of VAT was a further step of major social significance and then went on to say, later on, that the proposed increases were relatively moderate when compared with increases in other budgets. We should examine the increases, as proposed in this section, and see how they affect the less well-off. We have already dealt with tobacco, beer and spirits which are not provided for in this section but which are considered to be necessaries of life today.

This section proposes to increase taxes at the rate of 28 per cent, some dropping to 20 per cent but, on average, running around a 25 per cent increase. These increases will be applied to clothing, footwear, household furniture, hardware, detergents, building materials, non-oral medicines which are used for the disabled and the sick, medical appliances which include wheelchairs, hearing-aids and false teeth. Does anyone seriously suggest that clothing and footwear should not be considered as necessaries of life? Would anyone seriously suggest that a 28 per cent increase in taxation on those commodities will not have a serious effect on the average Irish working family? I cannot understand the Taoiseach's claim yesterday that the removal of food from the scope of VAT would bring about a 5 per cent reduction in the price of food. I believe, by this very section, impositions have been placed on the manufacturing and distributive trades to such an extent that it will be impossible to reduce the price of food by that amount.

Apart from the major cities in this country, most businesses in rural Ireland are family-run concerns employing anything from three to 20 people. Let us consider what effect section 80 of the Finance Bill will have on concerns of this nature. Petrol is being increased, the tax on vehicles is being increased, the price of vehicles is being increased and even the driver's licence is being increased. This must bring about a serious increase in transportation costs. When one considers the astronomical increase in the price of the social welfare stamp, as far as the employer is concerned, introduced since this Government took office, one must wonder how a 5 per cent reduction in food can be brought about.

The increased cost of maintaining a family must, naturally, be taken into consideration when the next national wage agreement is being drawn up. Allowances will have to be made for these increases. I suspect that when that agreement is reached, as I hope it will be reached, the Government will then try to suggest that the failure to reduce the price of food, as promised prior to the election and since, was not and would not be their responsibility but was brought about as a result of the workers looking for too much money. The cost of producing food, on the farms of this country, will naturally be affected as well. As a result we have a situation that the average working man in Ireland with four or five children and earning approximately £25 a week may never again be able to change his car because cars are becoming too dear to buy and tax and petrol are very costly. Therefore, he will have to walk. The tax imposition on footwear could mean all of us being back to bare feet in the not too distant future. There is an increase also in postal and telephone charges. While this section may not make the rich richer in Ireland, it will make the poor poorer.

I must congratulate Senator McGlinchey on what I presume is a dress rehearsal for next year's Fianna Fáil Ard-Fheis. He could not honestly expect the Seanad to take seriously what he has being saying. Supposing we accept all his strictures against imposing tax on what he regards as the necessaries of life and his heart bled for everything from books to wheelchairs although he omitted the plaster that the Leader of the Opposition in the other House wanted for his finger, is it not four times worse to impose a tax four times higher? That is what Fianna Fáil did. Their tax upon these necessaries of life was 5.26 per cent and we are increasing that by 1.5 per cent. Therefore, if all his strictures have any value they apply four times stronger to the very tax that he supported with his votes in other days. That dismisses what he has to say on that score. I have said in the other House and I will say here that I wish members of Fianna Fáil would get their thinking in agreement on this. The Leader of the Opposition in the other House said that when changes were being made on VAT this year they should have been brought into line with what operated in Northern Ireland instead of having different systems. For the first time in ten years in this State food will not have a tax imposed on it. We consider that to be a good social advance which will make the poorer somewhat better off. Food is not taxed in Northern Ireland so our action in this regard is one step forward. But the other common rate which Deputy Lynch wanted to introduce here was the rate of 10 per cent which applies on clothing and footwear and on other items which were causing concern to so many Senators opposite. They cannot have it both ways.

We do not believe in imposing a 10 per cent tax on footwear and clothing. We do not believe in imposing a tax on food. We have said that in each year during the last ten years and, at the first opportunity, we are doing something about it. Are we justified in doing it? We believe we are. We believe we are justified in making all the changes, including increasing marginally the tax on other items, so as to ensure that there is no loss of revenue. The interesting thing is that in so doing we are reducing the cost of living by a ½ per cent. We are doing this because food is the largest item in the ordinary family budget. The items to which we are transferring the revenue loss by removing it from food are the less essential items which are not bought by many people and which are outside the basket of goods which is taken into account in calculating the cost of living because they are unusual and exceptional items which are not within the ambit of the ordinary family purchase.

Senator McGlinchey suggested that the increases in VAT on motor cars and other additional excise duties on these vehicles would result in people having to walk to the extent that they would wear out the soles of their shoes and go bare-footed once again. It is not bad stuff, perhaps, for chapel gates where one ought endeavour to speak the truth having regard for the holy ground upon which one is looking if not standing. What are the realities? The realities are that if a man gave up his car and started walking it would cost him more in shoe leather than the additional cost that has been imposed by this budget on total motoring costs which is less than 1 per cent of the total cost of motoring. There has not been a year during the last 20 years in which the cost of motoring has not increased by far more than 1 per cent and everybody in this House and all over the country knows that. Whatever increases are being imposed in respect of motor cars will be used entirely for the improvement of roads. There is far more than 1 per cent of the cost of operating a motor car which is represented by inadequate use by loss of use, to inability to use the car on roads which are already far below the standards required and which as a consequence result in congestion.

I think it is time that this debate was brought down to realities and not to the highly emotive remarks which have been made on this aspect of VAT. The VAT changes will result in a reduction in living costs and particularly for the less well off sections of the community. They will gain more than a half of 1 per cent. The poorer will gain more because much more of their budget goes into the purchase of food.

I was unhappy about the increase of 1.5 pence VAT on books and newspapers. Man does not live by information alone and if I have to choose between food and information I would zero rate food because if a man does not have his belly full he is unlikely to have any desire to acquire knowledge. We are not the only country that has tax on these items and I think it is very much to the credit of the newspaper world and book world here that they have not raised a song and dance on this matter. They have certainly expressed a request to me and to others that these items would be zero rated but if they were to be zero rated it would cost a few million pounds which I think could not be justified. Certainly, the kind of text books that Senator Brosnahan referred to I would like to see zero rated. I know this matter was considered by our predecessors and they had the difficulty which we also had of trying to distinguish between one kind of book and another. There are some forms of the printed word on sale in this country that could well carry a tax of 50 per cent if it would discourage people from buying them. One only has to go into any newsagency to see books which we would be better off not having in the country. However, the fiscal laws are not the means of dealing with that matter. If the problem illustrated by Senator Brosnahan comes to be dealt with, as I believe it ought to be, it would be a matter for the Department of Education to endeavour to devise a scheme which would cover it but that would certainly not be by zero rating all books and all printed works in order that relief can be given in relation to school text books.

Senator Martin mentioned that as much as £30 a year could be spent on secondary school textbooks. That is true. Let us look at the cost of feeding the child. The cost of maintaining the child would be a minimum of £8 per week throughout the year. In relation to schoolbooks there is a taxation item in relation to VAT of 1.5 per cent but on food there is a saving of 5 per cent by this budget. This is an indication of the kind of relief which is being given here. If we can get a saving of £21 per child in VAT in respect of their maintenance it will go a long way towards assisting in the purchase of books. This one sample alone shows the social justification of removing tax from food and shifting it to other items which might be called luxuries. I do not suggest they are, but they are not as significant in the ordinary individual and family budget as is food. We, therefore, consider that we have been entirely justified socially on this. This is not an election gimmick. This is something which we declared ten years ago and we have stuck rigidly to it.

Finally, I should like to say that we have moved in the nick of time. There were suggestions before that the European Community would not approve of any item being zero-rated, but it is now clear that as long as an item is zero-rated before the end of this year it may remain so, and particularly so when, as in this case, there are very good social reasons for doing it. Our inflation has been the worst in Europe, principally due to the fact that food has become inflated at a rate far faster than anything else. We have had in relation to food inflation at least the monetary benefit of much higher incomes for our food producers, so we have that social advantage arising out of it.

We had a rise of 20 per cent in food costs—and this happened on account of our predecessors, but I am not making a political point on that—but surely when there has been such a massive rise in food costs which has caused such serious concern, even if we had never thought about it over the last ten years, we would now be justified in saying: "Let us do something to try to pull this rate back in respect of food." This case which we made for the abolition of VAT on food has been accepted by the community, who know well that there are good social, economic and fiscal reasons for making this change. We have done it with a net advantage to the consumer and we cannot see that there is any reasonable argument that can be put up against it.

I may go along with the Minister to the extent that we should look at this matter in a dispassionate manner. We had a very full debate on the Second Stage, on which this particular section naturally loomed very largely. I should like to bring the Minister out of his state of euphoria and down to brass tacks. We are talking about inflation. Inflation is the major problem facing all the democracies at the moment, particularly this country. This is our particular problem. He is not going to solve inflation by the adjustments which have been made to VAT.

The adjustments made to VAT here are going to add to inflation. I am going to give one very specific example of this, and the Minister can go back and discuss this matter with his advisers afterwards. I am sure he has already discussed it with them. There was much thought given to the original rating under value-added tax as proposed by the previous Government. The notion was, as the Minister is well aware, that, in order to prevent this sort of inflation that inevitably and unfortunately happened arising out of decimalisation, the rating would be such as not to depart from the tax system that obtained prior to value-added tax. The figures were drawn up on the basis that there would be no or a minimum departure from the existing tax situation. It served two purposes. Traders could switch to the new value-added tax with a minimum of administrative disruption. Secondly, there would be no built-in inflation by switching to new figures.

What we have here now is a straight-away built-in inflation in raising the 5.26 per cent category to 6.75 per cent which gives scope within a range of 2½ per cent for inflation right across the whole range of commercial trading. The very same applies in regard to raising the 16.37 per cent to 19.05 per cent. We have scope of over 3 per cent there for inflationary activity, simply rising prices right across the whole range of commercial activity. On the highest level we have a 6½ per cent rise from 30.26 per cent to 36.75 per cent. This gives scope for commercial price-raising and inflation right across that whole range. It was in order to prevent this sort of thing happening that the Minister for Finance, his Department and the Government fixed the original rates exactly approximating to the rates of tax that obtained in this particular area of taxation prior to the introduction of VAT.

They are the facts and the Minister is well aware of them. Furthermore, in regard to the money being diverted from VAT on foodstuffs and oral medicines, the amount of £16.75 million with an addition of £5 million in a full year, approximately giving a figure of about £22 million odd, is being injected into these other areas where you will have very high expenditure by reason of what I called last night the elastic nature of the consumption involved. We are not living in a primitive economy any more. We are living in an expanding economy where the standard of living is rising rapidly, where the purchase of consumer goods is rising rapidly and where, particularly if there is a new pay agreement, there will be a further volume of expenditure injected into the economy. Where is that money going to be spent? The expenditure on food is static. £X is what anybody can spend on food. But it is precisely in the areas where there has been a substantial increase in VAT, where we will have a growing number of people coming into expenditure on these particular items to a greater extent than at the present time, and where the Exchequer is seeking to draw off more money and thereby add to inflation, that inflation gathers momentum. Footwear, clothing, liquor, tobacco, petrol, fuel, electricity are all areas that will mushroom and expand in consumption in an inflationary situation.

In the category which has been raised to 19.5 per cent, with the natural policy of encouraging house-building, which is expanding to a greater degree, this brings us straightaway into hardware, electrical goods, furniture and furnishings. This is basic expenditure by anybody buying a house and again adds to the inflationary spiral. I am speaking now as an economist and not a politician and it is wrong economics to think that by simply concentrating on foodstuffs alone one can curb inflation. The real inflationary areas are the areas that have been fuelled and encouraged to further and greater mushrooming inflation by reason of the Minister raising the rates in the particular nonfood areas which I have just mentioned. This is not politics. We will see the reality of what I am saying this time next year when the national wage agreement comes to be negotiated.

People who are in all of these areas are not going to talk in terms of their food expenditure. The expenditure out of their pockets will derive, to a growing extent, as we become a greater consumer society, from the areas that are now being substantially increased.

These are basic facts of modern life. As I said here last night, there is no point in going back to a Stone Age debate on food subsidies such as we had here in the 1950s. I thought that was completely settled in 1957 but here we are going back to it again and ignoring the reality of the great range of consumer goods outside foodstuffs which are becoming the big expenditure factor for everyone as the standard of living goes up. This is very basic economics and is a factor that will be brought home to the Government by this time next year.

I would grant the social justice of the matter in regard to foodstuffs if I thought it was going to be effective. I would grant that, theoretically, there might be merit in seeking to add to the expense in the areas I have mentioned, which have been added to by conscious Government decision, if the 5.26 per cent elimination of VAT on foodstuffs will result in a 5 per cent cut in the price of foodstuffs. That is entirely a theoretical calculation. The Minister for Finance and his advisers should be aware of that already, but if they are not they will know it by this time next year. This is the last occasion the Oireachtas will have to debate this matter. I am as certain as we are here today, and as certain as we will be here or in some other part of the Assembly this time next year, that we will see the disastrous nature of this decision this time next year.

I am afraid we will be here this time tomorrow.

The increase in the consumer price index with regard to food is already showing up this year. It rose three times between February and May last year and it rose eight times between February and May this year.

The Senator means points.

I am talking in terms of points. It rose nearly three times more between February and May of this year compared to February and May last year. This is the type of galloping inflation of food prices which the Minister and the Government have gladly connived at. The facts of life are that by giving due notice to the various commercial interests in food production, distribution and sale they have ensured that by September 3rd there will be no reduction in food prices as far as the consumer is concerned. That matter, I can assure the Minister, has already been well attended to by the various commercial interests involved in food production and food sale.

The Minister can rest assured that no amount of price control apparatus will cut 5 per cent off the retail price of foodstuffs. The net result as far as the Exchequer is concerned, is inflation. I indict this Government for deliberately encouraging a policy of inflation that has resulted in £21.75 million being diverted to encourage inflation. The result is that, instead of that £21.75 million bringing about a definite reduction in the cost of food, it will go towards causing further inflation in other areas. Inflation of food prices will proceed apace and the various commercial interests involved in food production will benefit by reason of the Government's decision. No amount of food inspectors, no amount of price inspectors, no amount of guardsmen around every supermarket in the country will be able to control the price of foodstuffs. The whole effort will be totally in vain and the only result to the Exchequer and the country will be inflation. It is around the Government's neck that we will hang the label of inflation between now and this time next year.

I have a very brief remark to make. The Minister, in replying to the suggestions that were made in regard to books, made what seemed a very valid case in saying that it is very hard to define the kind of book that should be exempted from value-added tax. The problem does not seem to me to be quite as insuperable as he suggested. I say this in the spirit of trying to offer a suggestion and of trying to offer help in the matter. The Minister agreed that it would be very nice if such an important and useful aspect of democracy as newspapers could be exempted but said that if you exempted them you would include in that exemption a great deal of tripe and morally reprehensible stuff coming in from all over the world. It does not seem to be impossible to define a newspaper and to distinguish, say, The Irish Times, The Irish Press or the Irish Independent from Playboy or Penthouse. It should be possible to arrive at a definition which would make that distinction.

With regard to textbooks, I think it is still possible to say that any book which is prescribed or approved by the Department of Education in the primary or secondary level should be exempt from value-added tax or that any book which is prescribed or recommended by a university department in the pursuance of a university course should be exempt from value-added tax. This would be a start. I would be horrified if Playboy was to be exempted from VAT. Anyway, I understand it is not allowed into the country. For a start, I do not see why that simple definition could not be made. If that was done I do not think it would result in an enormous cost to the Exchequer. It would be a considerable saving for the students and their parents. I am convinced by the Minister's case with regard to food as distinct from books, but I think those definitions could be tried.

Question put and agreed to.
Sections 81 to 86, inclusive, agreed to.
SECTION 87.
Question proposed: "That section 87 stand part of the Bill."

This is the rather odd section which exempts sales of live horses and greyhounds from VAT. The Minister's explanation for this, as delivered in the other House, is that since greyhounds and live horses are imported and exported to take part in races, and this causes complications with regard to VAT, the simplest thing is to leave them out altogether. I may appear to be a kind of simple soul in making this suggestion but it should not be beyond the wit of man, in this case the Department of Finance, to simplify export-import regulations. What seems to happen is that somebody says our regulations are so complicated that they cause endless trouble and as it is impossible to simplify them let us drop VAT altogether on horses and dogs. That seems to be an appalling bureaucratic admission of defeat.

That is one way of looking at it, but the other way of looking at it is that we are, in fact, simplifying the bureaucratic machine. We could maintain it by imposing the tax at point of entry and refund it at the time of re-export. The most simple thing to do is not to collect the tax at all and then there will not have to be a refund; otherwise there would have to be two sets of forms and two payments resulting in the issuing of receipts on the double. It is not an admission of defeat. It is simply a recognition of the futility of collection and repayment, as this is what happens where livestock are so frequently imported and re-exported for racing and bloodstock purposes, et cetera.

Perhaps I am being over simple, but it is well known not only in Ireland but in other countries that if, for example, you are leaving the country in possession of a valuable camera or a musical instrument you acquire what I believe is known in the trade as a pink form and you show it to the customs officers on your way out and he puts an official stamp on it. All you need do when reentering the country is to brandish that form to the customs and they let you in. I should have thought that some relatively simple process such as that could be done with horses and dogs.

Then you have the trouble of finding your papers to produce when you need them. It would be better to avoid having documentation. Throughout Europe, as the Senator is so well aware, the agricultural regime is exempt from a great deal of these puny tax and form completions. It is safer and more simple to do away with it altogether than to require attendants to deal with these matters. A customs officer would have to be assigned specifically to the inspection of these forms. As the money will be refunded in most cases, there is no point in collecting it.

Question put and agreed to.
SECTION 88.
Question proposed: "That section 88 stand part of the Bill."

I note that in this section VAT is to be charged on ice cream and confectionery, which are pleasing to children. They are items often consumed by poor families and I should like the Minister to explain why VAT is to be charged on them and not caviar.

I must congratulate the Senator for being the first person in either House who made the point about VAT being imposed on ice cream. This is an item less essential than milk. There are some commodities which children might be better to do without, but they enter the luxury field. The Senator made a point about caviar, but this is not generally consumed in this country so there is no measure of social injustice in caviar, which might be classified as a fish food, being exempt. I admit the Senator has made a good debating point, but it does not enter the revenue reckoning.

This is just a query because I have said enough on what I consider to be the dangerous nature of the Government's policy in this direction. Having decided to remove VAT from food and oral medicines, I should like to know why the Government did not go the whole way—why stop at oral medicines? We all know serious medical treatment is away from the oral area, thinking, for instance, of the permanent type of treatment a diabetic has to administer to himself or herself.

There is a difficulty of definition. When does a cosmetic or a hair shampoo become a medicinal preparation? If it is used to make the hair soft it is a cosmetic, but if it is used to cure dandruff is it medicinal?

Why "oral" as against "injected"?

There are very few medicines taken orally except perhaps tablets to cure bad breath, which could be regarded as less essential items. What is consumed orally is of a medical nature. There is a difficulty of definition.

Is that the only problem?

Yes. Might I refer to the point made by Senator Hanafin? I conceded he made a good point but he might concede I have made a better one. Most caviar is served up to you? There are few people who purchase caviar for their private use. It is usually presented in establishments who give an expensive service. In such cases it would carry the 6.75 per cent VAT.

I know nothing about caviar except the name.

I hesitate to involve the Minister in the linguistic intricacies of his Bill but I should be obliged if he would explain precisely how the so-called definition of "bread" in this section works out.

This is fairly well defined. It concerns the difference between bread and cake and the amount of the sugar and fruit content of an item when it goes above a certain figure, and puts it into the confectionery category. If it is below that it is in the "bread" category.

It seems to be a question of having your bread and eating your cake.

If Senator Yeats will look at page 48 of the Bill——

I have read them 50 times and still do not understand them. Lines 20 to 50——

Maybe they do not mean a great deal to the Senator or myself but they do to those in the confectionery trade, and to the Revenue Commissioners, who are familiar with this definition.

Perhaps I might explain the precise nature of my problem. My real problem arises at line 42 which states:

other than food packaged for sale as a unit (not being a unit designated as containing only food specifically for babies) containing two or more slices, segments, sections or other similar pieces....

As an ordinary layman that sounds like sliced bread, but I take it this is not because if so it would be taxed. If it is not sliced bread, what on earth is it?

First of all, I should state that the definition contained in the Bill was suggested by the Irish Bakery and Confectionery Trades Association, who may deem themselves to be qualified to speak with some knowledge of the matter. It is a definition which includes all bread save that which is of the confectionery kind because of the fruit and sugar content or items such as crisp breads which are of a biscuit nature. Baby rusks will be zero rated but other items, such as biscuits, are regarded as being confectionery.

The problem is quite simple, but that is not the answer. Starting at line 42, we have a reference to this commodity which is "food packaged for sale as a unit" and then refers to food containing two or more slices, segments, sections or other similar pieces. That is not sliced bread. What is it?

I am sorry.

In line 42 onwards in the subsection we have this strange commodity described as "food packaged for sale as a unit containing two or more slices, segments, sections or other similar pieces". I should like to know what that is?

I appreciate all these difficulties of definition. They enter into the whole VAT field but there is a quotation in the Bill, in section 80, in which the Revenue Commissioners have power to adjudicate in which category a particular item should be. This, I might say, is being done at the request of the trade to avoid the kind of difficulties that have arisen in the past where argument has arisen after commodities have been put on the market as to whether they should be at one particular rate or the other. This power is one from which there is a right of appeal if there is any dispute. It has the great advantage that if the commodity is put on the market an adjudication may take place as to which category it may be in. If there is an area of doubt as to whether a piece of bread is confectionery or a loaf it can be decided at that stage.

The requirement to have the crust over the whole outside area seems to take it out of the sliced pan category.

That is what puzzles me. The characteristic of a sliced pan is that the crust does go all around it unlike the turnover.

No, when it is sliced it does not. The crust only goes over part of it and not over the whole outside surface of it.

Question put and agreed to.
Section 89 agreed to.
SECTION 90.
Question proposed: "That section 90 stand part of the Bill."

I should like to raise a point on the Schedule. I am not raising a point about the meaning of the Schedule. I would hesitate to do anything so foolish. Even by the standards of Finance Bills the drafting of this Schedule is quite something. I am referring to the Tenth Schedule which arises under section 90. What puzzles me is how anyone who has the misfortune to deal with the Value-Added Tax Act, 1972, will know what is in the Act after the additions and emendations in this Schedule. For the edification of Senators I will read the bit relating to section 11, second paragraph from the bottom. This is how this wonderful effusion of the bureaucratic mind reads:

In section 11, in subsection (1) (d), ", other than consideration to which paragraph (b) applies," shall be inserted after "consideration", ", (v) or (xvi)" shall be substituted for "or (v)" and "and (xii) to (xv)" shall be inserted after "(viii)"; in subsection (2), "for the time being specified in subsection (1) (c)" shall be submitted for "of 30.26 per cent." and "for the time being specified in subsection (1) (a) on" shall be substituted for "of 5.26 per cent. of"; and in subsection 3, "paragraph (xvi) of the Second Schedule and paragraph (xxxii) of Part I of the Third Schedule," shall be inserted after "10 (8) (c),".

I hope after that we know exactly what is in section 11 of the Value-Added Tax Act, 1972.

I am sure to a legislator of Senator Yeat's long experience it is no trouble at all. But he will be glad to know that the Revenue Commissioners will be issuing a guide for the trade and the general public. I dare not say it is already printed: that might be regarded as presumptious having regard to the fact that the Bill is not yet law but you may be assured that it will be very quickly in the hands of the trade and any interested person once the Bill is passed.

It will contain a complete revised Value-Added Tax Act?

It will contain a translation of this into ordinary language.

Question put and agreed to.
Section 91 agreed to.
SECTION 92.
Question proposed: "That section 92 stand part of the Bill."

Does this section imply that we exempt from death duty any shares issued here by EEC bodies which are owned by non-residents? If that is so, do we extend a similar concession to our nationals buying similar shares here or elsewhere?

I accept the point the Senator made in relation to this category of services. The enumeration has been changed since the Bill first went into the Dáil. No, the effect of this will give precisely the same benefits to other members of the European Community as apply in respect of Irish stock. It is an obligation of the EEC, but it will not give any benefit to them which is not available to Irish residents.

Question put and agreed to.
SECTION 93.
Question proposed: "That section 93 stand part of the Bill."

This is the section which imposes an enormous variety of additional duties on vehicles of all kinds. We have 10 per cent more on cars and very considerable increases on the admittedly small sums payable on foot of agricultural tractors. As has already been pointed out, it is one of these things which is constantly raising the cost of motoring. I am puzzled again by the wording of this Bill, particularly subsection (6) of this section, which seems to say that the additional proceeds of these increased duties will be disregarded in any determination of a sum to be issued out of the Central Fund under section 2 (1) of the Roads Acts, 1920. The Minister, however, has said that all the additional duties have been paid to the Road Fund, so I take it that my interpretation of the subsection is not correct. It means something different?

I can assure the Senator that the additional moneys are going to the improvement of our road system. I should like to point out that this is one of the lowest rates of increase in road tax in recent times. In 1966 there was an increase of 25 per cent; in 1970 there was an increase of 25 per cent; we are proposing here an increase of 10 per cent. Having regard to differences in money values since then, the total cost of motoring and the cost of providing facilities for motoring is a very modest increase indeed.

Could the Minister explain in relatively simple terms what subsection (6) means?

The effect of that is to provide that this money will be paid into the Exchequer and that the grants from the Exchequer this year for the Road Fund are much greater than the particular sum we had collected, because the Road Fund operating under the existing revenue is inadequate to meet the capital cost at present required for road works. Purely as a bookkeeping operation, it is being kept in the Exchequer. The Exchequer is paying out more than what has been collected here into the Road Fund.

At least I have interpreted the subsection correctly. It does in effect provide that it is not paid into the Road Fund. However, the Minister says that under some other head a larger sum is being paid in.

Question put and agreed to.
SECTION 94.
Question proposed: "That section 94 stand part of the Bill."

This is one section which makes one feel the extent of the impositions on car owners more than one normally might. The Minister has pointed out that the 10 per cent increase, by taxation standards, is not that high. What will be inclined to annoy motorists is the sneaky little bits that come in under various headings like this one. One finds, all of a sudden, when one buys a new car, which is an expensive enough operation as it is, that another £5 will be demanded as a completely new tax. In other places it will also be found that the cost of the driving licence has been doubled. All kinds of little impositions of this kind, which do not amount to much, and I have no doubt that the Minister will be able to say that they only amount to £1.25 per motorist per year, are calculated to infuriate motorists even more than they normally would be.

I hope motorists would not be infuriated. They might be consoled to know that seven other European countries impose a charge for first registration. We are moving in line with other countries who have found this a justifiable charge to make. There is a great deal more clerical work involved in first registration than in renewal. It is not unfair to make a charge for this work.

I have another approach to this. I know the money is not being taken in and going directly to the particular object I have in mind, but I have long argued that there should be a charge imposed at the time of manufacture of the motor car which would be comparable to the cost of the necessary destruction of that motor car when it comes to the end of its life span so as to prevent ruination and damage to the environment. The £5 imposed, apart from being justified as a registration charge to cover clerical work at the time of original registration, is also a fee which it is justifiable to collect for the benefit of society having regard to the immense damage which is being done to our environment by derelict cars that are abandoned and not properly destroyed.

As the Senator knows, in Dublin at the moment, Dublin Corporation is so concerned with this problem that they will remove derelict cars free of charge. If people have a car they want to dispose of the Corporation now removes it free of charge to the individual owner of the car, but society is, nonetheless, paying the cost of its removal. I think, as the Exchequer is so substantially subsidising the road fund now, it is justifiable that we should collect a fee at the commencement of a car's life which might compensate, at least in some part, for the destruction of the old jalopy when it comes to the end of its days.

I hope that the Minister will ensure that the various motor taxation offices throughout the country are as assiduous in using the £5 for removing derelict cars as, apparently, they are in Dublin city.

I will try.

Question put and agreed to.
Sections 95 to 98, inclusive, agreed to.
First Schedule to Eleventh Schedule, inclusive, agreed to.
Title agreed to.
Bill reported without recommendation and received for final consideration.
Question proposed: "That the Bill do now pass."

I can assure the Minister and, indeed, the House, that I will not make another speech on the general merits, or lack of them, in this Bill. I want to make a point about section 52 which I was prevented from making by being absent at a meeting in another part of the House. It relates to the imposition of duties of which there are seven listed in this Bill. Although it is legally correct I do not think it is a correct way of dealing with this matter. We have been accustomed in this House, and in the other House, to having these orders come before us in the form of a Schedule to Bills, dealing with these matters only.

The Bills have traditionally come to us with a memorandum listing clearly what each of these orders sets out to do. The Minister has come in specially to deal with that Bill, making an opening speech saying what the reasons were that impelled the Government to make the various orders, they have then been discussed in the House, not usually at great length, and disposed of in that way.

In this instance, they come in the middle of this very large, complex, and important Bill. There is nothing whatever in the memorandum about them except that they are there. Both in the other House, and here, the opening speech of the Minister, in one case, and the Taoiseach in the other, said nothing whatever about them. I do not think that this is, from a Parliamentary point of view, correct. The safeguards which were obviously intended to be provided in the 1957 Act were that they would come up for discussion in the two Houses and it would be known to Members of each House what was being done. If it is done in this manner the safeguard utterly disappears. I know that it is open to a Deputy, or a Senator, who get a Bill like this to have a look at section 52 or the equivalent section, to go down to the Library and get all the orders out and have a look at them. However, we all know that in practice, Senators and Deputies do not do this. They are busy people and very often do not even notice that they are there. I would ask the Minister not to bring them in in this form again but to return to the normal practice which was a much better way from a parliamentary point of view.

I am not aware of what Senator Yeats says. Perhaps he was not present when I did detail them to some extent in the House today on Committee Stage. They were principally in relation to the adoption of the EEC common customs tariff. I also mentioned that the majority of them were the responsibility of a previous administration. I know that Government, and Parliament, are on-going institutions but that is no adequate answer. I will bear in mind what the Senator has said. I can accept the difficulty which Members have in endeavouring to understand legislation, particularly when it is produced in this global form. If it has been done in the past in a better way, I will give an assurance that I will see to it that the better way is complied with in future.

Question put and agreed to.
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