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Seanad Éireann debate -
Wednesday, 14 Jul 1982

Vol. 98 No. 10

Finance Bill, 1982: [Certified Money Bill]: Committee and Final Stages.

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

These measures are welcome but, in relation to the dependent relative's allowance perhaps the Minister will remember that I referred to a possible abuse in this area and this would give cause for concern. Could the Minister indicate how the bona fides of such people will be established and if very stringent measures will be taken to ensure that there will be no abuse in this area?

Off the top of my head I can say quite clearly that we will take further note of the point raised by the Senator. I can assure her that this area, as is the case in relation to all taxation allowances or exemptions, will be watched very carefully to ensure that there will be no abuse.

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

This alters significantly the 35 per cent rate band of income tax for 1982-83. The impact of this measure has not yet been fully felt. When it is I feel the reaction against it will be very strong, very vocal and very determined. In some parts of the country there has been quite a significant shift in the number of people who suddenly found themselves being taxed at 60 per cent. Would the Minister care to comment on these changes and let us know something of the background to the changes we see before us in this section?

The change in the 35 per cent band was part of a package which enabled me, as Minister for Finance, in the short time available to me to give the same effect generally to the tax changes as were proposed on 27 January, tax credits versus allowances. The way it was done within the existing structure was the increase in the allowances and the exemption limits, plus the narrowing of the band which, by any objective assessment, will be shown to the nearest £5 per annum, per taxpayer, to be generally the same as what was proposed in the January budget. I do not accept that the situation is as critical as the Senator describes it. Because of the lateness of the introduction of the budget and the various changes implemented in it, and the difficulties in getting out the new tax free allowance certificate to taxpayers, there was a valley period of six or seven weeks which caused some problems in relation to income tax and PRSI contibutions but by and large the impact of that has settled down. Most people I know — and this includes myself — do not like to pay tax, and especially do not like to pay tax at 60 per cent, or be pushed into the higher bands quicker than they might normally be, but the purpose of the exercise as far as I was concerned in relation to these sections at the beginning of the Bill was to give the same effect to the individual taxpayer as was proposed in the tax credits versus allowances in the 27 January budget.

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

Senator Daly also wishes to speak on this section, as he did with great feeling yesterday, being a member of the Society of the Irish Motor Industry, but perhaps, a Chathaoirligh, you will allow me to proceed. The Minister and I tangled slightly on this point yesterday and I feel that he failed to distinguish between the criticisms I was making and the recommendations for an amelioration in this position which I also made. It is perfectly reasonable to advert to the political back drop of the Finance Bill. Never has a Finance Bill been the cause of so much controversy.

I agree with the Senator.

To the best of my limited knowledge, I understand that normally the budget speech and the Finance Bill do not differ so diametrically as do some of the measures in this Finance Bill. This was the cause of some slight difference of opinion between us yesterday. I was being critical of what I would see as a certain backing down in the face of pressure, not so much in the amelioration of the measure. I also criticised the extreme complications involved in the tapering relief. We in the Seanad recognise that we have no power to amend the Finance Bill, but nevertheless, I would hope to tug at the Minister's heartstrings to some extent, and to point out to him that the motor industry — and I am sure he will recognise this fact — is on its knees. The difficulties are enormous. Is there any way in which he could scale this down? Would he comment on the fact that one of the economic commentators whose comments I read said that the taxation of benefits in kind could perhaps be avoided altogether by the use of car pool arrangements. Is there in this some measure of avoidance? I should like to hear what he has to say about this.

I wonder, a Chathaoirligh, would you indulge me and allow me to refer to a letter from the Society of the Irish Motor Industry, because they would naturally make their own case so much better than I would in relation to this measure? They say:

Irrespective of whether or not the new assessments are equitable, it is scarcely just to impose such a massive hike in taxation in one year particularly when virtually all those who will pay BIK are already caught in the PAYE/PRSI net and their salary cheques are already seriously depleted this year because of the narrowing of the income tax bands and the increases in PRSI contributions.

Sales of new cars are virtually at a standstill. The optimists are now forecasting a market this year of 75,000 new car registrations, a drop of 31,000 units on the market in 1981. While some economists might welcome this situation from the point of view of our balance of payments, one must ask how the Exchequer will make up the fall of £70 million which this drop in registrations represents in lost excise duty and VAT. There is also a very heavy price to be paid in terms of job losses and the collapse of motor companies. We know of at least 20 firms which have had to close down and with the news that the banks are now returning cheques at an alarming rate we fear to think how many more firms are close to the point of failure.

The Society of the Irish Motor Industry are concerned about what is an acceptable way of taxing benefits in kind and feel that these should be set at moderate levels which will not disrupt the pattern of trade, and which those concerned will accept without continuous argument and dispute with the Revenue Commissioners. Nobody wants to see continuous arguments and disputes with the Revenue Commissioners if they can be avoided. They suggest a rate of 8 per cent where no private petrol is supplied. They say this compares with average assessments of 7 per cent in the UK where cars, of course, are a good deal less expensive because of substantially lower duties and taxes. They also say:

If at this late stage interference with the percentage rates does not appear to be feasible we would make a strong plea for the tapering relief to operate at the level of 5,000 miles rather than at 10,000 miles as provided for in the Finance Bill.

I would be very pleased indeed if the Minister could manage some amelioration without too great a cost to the Exchequer. I am aware, of course, that financial rectitude and strict budgetary constraints must operate. Could he in any way soften this budgetary measure?

Senator Bulbulia has made most of my case for me and made it far better than I could make it. She said if there was something the Minister could do she would like it to be done. I have a solution to that, and the Minister could do it. The BIK assessments are double or treble last year's assessments. I am sure the Minister will not go back to last year's assessments. If the Minister started the tapering relief at 5,000 miles rather than 10,000 miles that would give relief to these hard-pressed taxpayers. The assessment here for a £7,000 car for a representative doing 10,000 miles a year is £1,190. In the UK that would be only £360.

The point was also made by Senator Bulbulia that the Minister will lose £70 million a year in excise duty and VAT. That will be a difficult one. At the moment there is controversy about the £45 million given in PRSI relief. Nobody has come up with the answer to where he will find that. He will have to find another £70 million if he does not do something for the motor industry. We will have a drop in car sales which will affect the motor industry and employment. The worst feature is that cars will not be replaced when they should be replaced and cars will not be serviced when they should be serviced.

There is a very nice way to avoid the tax for people who are in a position to do so. I know one company who employed a consultant to find a way around this tax. He came up with a very simple solution for the company and they are adopting it. They set up a subsidiary and that subsidiary was made a present of a fleet of 100 cars. That subsidiary will rent or lease the cars to the people who are using them but they, in turn, will get a mileage amount for the cars which will offset the small amount of money they must pay. That is a revenue problem, and that is the Minister's problem. My problem is that the cars will not be replaced with the same frequency as if the company were providing them because these people will not have the money to replace the cars and the cars will not be serviced with the result that we will have cars on the road which are not roadworthy. That is very serious and I would ask the Minister to look at that aspect of it.

There seems to be some contradiction in the approach of Senator Bulbulia. Yesterday her crtiticism was of the change since the budgetary announcement and today she made a case to scale it down further. It seems a bit of a contradiction to criticise a reduction of the impact of the budget statement provisions vis-a-vis what is in the Finance Bill and then to look for a further scaling down of the impact. I should like to make a general point and I am sure all Senators will appreciate it. Here we are talking about what is in many cases a very genuine benefit in kind that should be taxable.

Take the example of the person who has a company car for work as against people who travel 20 miles and 30 miles a day to and from their work and pay the expenses out of their own incomes, or those who have to travel five, six, seven or ten miles from the outskirts of this city by public transport and pay these expenses out of their incomes. Senators, Deputies and others demand greater equity within the tax system, but when moves are made in that direction, particularly under the heading of the benefit of the use of a company car, people are critical and want it diminished even further. I do not accept the point about scaling it down at this stage; it is a new systems coming into effect with the enactment of this Bill. If we learn from experince there are ways and means of improving this new system, we will move to improve that situation. As regards scaling down the impact on the individual taxpayer who has this benefit — and who has had it reasonably free without taxation for some time — and taking into account the ordinary worker who has to pay his or her own transport expenses to and from work, I do not think I could accept the necessity for reducing the impact any further.

Car pool arrangements were mentioned but they are not referred to in the Bill. They will remain under the old system. It is for the group concerned to opt for that system if they wish to get out from under the provisions of this Bill.

Senator Daly spoke about people not buying new cars and said they would not even repair their cars. In relation to new cars, Deputy J. Bruton in the Dáil wanted to encourage people to keep cars longer. That was his approach and that of Fine Gael. Here again we have a contradiction. I do not accept that people will not repair their cars, because most drivers I know are very interested in their own safety and are very anxious to ensure that the cars are up to scratch. This applies especially to people who have to drive many thousands of miles in the course of their duty. On a more general point, and comparison has been made to the UK, it has to be accepted that in Ireland the importation of cars is a very serious burden on the balance of payments, whereas in the UK, which exports cars, it is in their interests to encourage the car industry. That is the reality and we have to live with it.

I am quite satisfied, having had long and serious discussions in relation to this item, and having reduced its impact as against what was announced on budget day, that the majority of commercial travellers — the majority of people with company cars — who travel in excess of 15,000 to 20,000 miles a year, will get a scaled down tax arrangement. Those who have been in touch with me, and there have been many thousands of them over the last few months, are reasonably happy notwithstanding the fact that some of them will be paying more tax under this Bill because they know it is of genuine benefit to them to have a company car for private use.

The provisions in the Bill are reasonably fair in relation to trying to have some equity within the system and as the system goes into effect, most people will find it has not been the big bad wolf it has been made out to be.

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

This section grants relief from income tax in respect of rent paid by claimants aged 65 years or upwards living in private rented accommodation. I welcome this and I referred to it at some length in my Second Stage speech. I am very pleased to think that the Minister accepts the principle that people, aged 65 years and upwards, who live in private rented accommodation should receive some relief. Is it possible to extend this relief to people who have very small taxable incomes? I am thinking of people with a taxable income of, say, £2,000 or £1,000 per annum. The Minister knows there is a great dearth of houses in this country. Many people are forced to live in rented accommodation, not because they want to, not because they like seeing their money going to some rapacious landlords, but because they cannot find accommodation. This particularly affects young married people with one or two small children who are very lucky if they find rented accommodation and who have to have another child before they get a local authority house. Because there is such a dearth of rented accommodation some of these people find themselves living with relatives — in-laws, a mother or a sister. Although they are paying a very small amount in taxation, in effect they are propping up those people who are buying their houses. This is not fair or just. I wonder if the Minister could consider extending this provision to cover these people? If he finds he cannot do it in the current year would he accept the principle and see if he could work towards it if he is in the position of introducing the Finance Bill next year?

I will probably bring knowledge of this section with me to the grave, having spent nearly two weeks in the Dáil on various amendments ranging from £4,500 taxable income down to something like £600 of taxable income. While I said in the Dáil on numerous occasions that one can accept the principle of extension of this provision beyond those who would qualify over 65 years of age, in relation to many points that have been made in the Dáil and other places the cost, for instance, of Senator Bulbulia's suggestion would be £8.5 million in 1982 and £13.5 million in a full year. From that it can be clearly seen that it is not possible in the present financial circumstances to contemplate such an extension.

What is in this Bill is exactly as was proposed in the January budget, notwithstanding the fact that in the election programme of the Coalition parties they had intended to have a scheme that would cater for all people in rented dwellings which would have cost upwards of £30 million. To make a start in this area my predecessor decided on this course and I have carried it through. As I said in the Dáil, one accepted in principle the necessity of something new like this being introduced and sooner or later it could be and would be extended but on what basis would still have to be decided. I do not think the taxable income bases would be the criteria used. There are many other ways it could be done and I do not want to delay the House going into them. The Senator has asked me, like some of her own colleagues in the Dáil, to look at the provision continuously to see how best it could be extended in the future, and I am prepared to do that. In the present circumstances only people over 65 years of age will qualify and it is estimated that approximately 28,000 people will benefit, and any extension will have to wait for another time.

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

This section provides for the year 1982-83, a special allowance of £312 to those employees who pay the higher rates of pay-related social insurance. This is perhaps one of the more nefarious sections of the Bill and has come to be known as this great leap backwards. It is interesting to trace the background to the great leap backwards. After the budget had begun to bite, and before the Dublin West by-election the Government backtracked on the increase in PRSI to 7½ per cent at a cost, which is engraved on most people's minds, of £45 million. An additional £312 in personal tax allowances was granted to private sector employees in the hope of blunting their anger. It did not. The question is: how will the £45 million be recouped? To the best of my knowledge, the Minister has so far managed to evade giving a specific answer to this. I would like to think that within the hallowed walls of this Seanad Chamber he might unveil how he is planning to recoup this sum. Does he agree that this concession favours the better off sections of the community rather than the poor and perhaps leaves something to be desired in the area of distributive justice and equity?

I can assure the House that I am not going to get into the area of jumping forward or backwards because the situation about the levels of PRSI payments is identical to what was proposed, and some of them even passed through the Dáil during the term of office of the Coalition Parties — mainly the youth employment levy which was passed last December. The budget proposals of 27 January dealing with the PRSI levels of contribution were put through the Dáil by the Minister for Social Welfare a day or two before I introduced my budget in the Dáil. No provision was made for their impact by the Coalition parties nor was there any differentiation between the lower or higher paid workers. As I said these proposals were passed even before budget day.

In relation to assisting those on the higher income more than those on the lower income, that argument does not really stand up. We are talking about tax allowances and those who earn more, pay more tax. The £45 million provision to ease the burden of the additional increased charges on PRSI contributions at the higher level was because of the double taxation element involved and came about after discussions with the Irish Congress of Trade Unions. It has nothing to do with the Dublin West by-election. Many taxpayers and PRSI contributors had paid their full amount for the year 1981-82 in December last. This meant that they had four months without paying any PRSI contributions and even if there has not been any increase they would have had to pay 4.5 per cent of their salaries on 6 April. There also had been the increase of the 1 per cent levy and the various increases on the social welfare side. Obviously, these increases had a tremendous impact on many workers who on 6 April had 7½ per cent of their salaries stopped for PRSI contributions as against nil for four months before, plus the fact that they had not got their new tax allowances arising from the budgetary changes of 25 March.

To ease that impact, the Government rightly introduced the £312 tax allowance for the PRSI contributors at the higher rates. I have said on numerous occasions, and I repeat, that the saving of £45 million will be through departmental savings and additional taxation is required. That is still my stance and that of the Government. It has to be accepted that the impact of these increased charges was severe for many PRSI contributors and taxpayers and some easement of the burden had to be introduced. That was done and we have given an undertaking that we will look at this whole area of PRSI contributions between now and the next budget.

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

This section amends section 152 of the Income Tax Act, 1967, so that any excess premium due to health considerations which an individual is required to pay on a policy of life assurance, will not be subject to certain restrictions imposed by section 152. Only the normal premium on the policy will be subject to those restrictions. I referred to this at some length in my Second Stage speech yesterday. I also referred to a concern I felt that perhaps those whose sad duty it is annually to fill in their income tax returns might find that this becomes yet another complication with which they have to wrestle. I ask the Minister if he has considered this and if it would be possible to bring in less complicated tax forms? Many of these people coping with income tax returns are first time workers and many elderly people find these forms very difficult to fill in. I would like the Minister to give his comments on this.

On the general point raised by the Senator, I accept that nobody likes the repetitive filling up of forms. In this instance, to enable one to qualify for this benefit, the taxpayer will have to fill in this form once. From then on he is on the record.

Question put and agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."

This section provides that in the case of a loan made by an employer to an employee at a preferential rate of interest, that is at a rate less than the "specified rate", namely, 12 per cent, or such other rate as may be prescribed by regulations, the employee will be charged to tax on the amount representing the difference between the amount of interest he pays and the amount of interest calculated at the specified rate. The amount of interest charged will be treated as if it were, in fact, interest paid by the employee and will qualify for relief subject to the normal restrictions on the allowability of interest.

When speaking yesterday, I welcomed this proposal on the grounds of distributive justice stating that these people should be liable to tax in a fair and just manner as they enjoy certain benefits because of the employment or career they pursue. Does the Minister think that the diminution, what is a substantial perk, and indeed is recognised to be so, might give rise to unrest in some sectors? I would also like to know whether there were or should have been any prior consultations before introducing the particular measure. I would welcome the Minister's comments.

In most budgetary matters there is very little prior consultation, but since this measure was introduced there has been a great deal of contact. One has to do the best one can to find additional funds. This is an example of trying to have greater equity within the tax system. One can see from other sections that we were making changes in relation to interest on various loans and one had obviously to move in the direction of preferential loans. As the Senator rightly pointed out, this is and has been a substantial perk for many people. If a particular advantage is being taken from anybody he will complain and that is natural. The Minister for Finance finds himself in that situation in almost all circumstances. Nevertheless, he has to try to correct imbalances within the system. Here is one imbalance that is being corrected and not too harshly. Loans at preferential rates have been a tremendous advantage to those who were in a position to participate in them. It is expected that the yield from the provision this year will be about £.3 million and in a full year about £500,000.

Question put and agreed to.
Sections 9 to 11, inclusive, agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."

This section extends for a further year the relief for certain expenditure on residential premises which was introduced for the year 1979-80 and was extended to cover the years 1980-81 and 1981-82. The limit remains at £450 for an individual and £900 in a case where a husband is assessed to tax on his and his wife's income.

I referred to this in my Second Stage speech yesterday and I feel that it falls into a category which may help to preserve jobs, but I am not so sure that this will be the case because most of the work will be done as so-called "nixers". Despite the fact that this should not be so and that pious platitudes fill the air bewailing and bemoaning this fact, nevertheless it is on record that the black economy is burgeoning and is now a growth industry. This is one of the measures which will strengthen the position of the more affluent and give them further relief from their income tax. I would like the Minister's comments on this, particularly in relation to black economy and "nixers". I would like to know if he feels there is a very strong element of this in this proposal and, if so, if he has any ideas as to how it might be dealt with?

The contractors concerned here would have to be registered and would not be part of the black economy. The purpose of this exercise in 1979 was to force contractors to become registered so that the taxpayers employing them would be in a position to claim for the expenditure involved up to the limits prescribed. While the scheme got off to a slow start in 1979, it gathered momentum through 1980 and 1981 and continues to generate a high level of public interest. To give you some figures the number of registered contractors in mid-July 1979 was 64 and the number of claims received was 63, but at end-May 1982 the number of registered contractors had risen to 2,921, and the number of claims had risen to 16,569. Obviously progress is being made.

The Senator made the point and I agree that this should give some impetus to the building industry and help to eat into the level of the black economy, the percentage of which nobody can be definite about. We all know about it and we are all anxious to see it eliminated because it is not of any advantage to the genuine hard working people who have to pay tax. The figures I have given will show this has been of some benefit and that is one of the main reasons it was continued this year. It was not expected to be continued but I felt that it should be because of its success so far. Those measures do not cost very much. This measure cost about £1 million this year. If this measure is a success, we will get more of these people who may have been formerly in the black economy into the tax net where they should be, and rightly so if we are to have equity within the system. Its success so far has proved it is a worthy exercise and I hope that it continues to be successful.

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

Would it be in order to take sections 13 to 16 together?

An Leas-Chathaoirleach

The debate can be on the four sections but each section must be put separately.

The plight of the farmers and the farming industry is exercising the minds of those who care about the economy. Agriculture is our primary industry and if all is not well in that sector the reverberations are soon felt right through the entire economy, and they are being so felt. In my area of County Waterford farmers who expanded confidently and happily in the sixties and seventies are now faced with frightening interest rates. Many of them are liquidating their assets and are involved in a belt-tightening exercise. Their one hope is that they will manage to hold on to their land so that it will be possible for them, if the economy takes an upturn, to continue farming in the way in which they had become accustomed in the sixties and seventies.

One would wish, but perhaps it is not possible, that in the Finance Bill there might have been just a few more concessions to farmers. The Minister knows that we on this side of the House are aware of his responsibilities in relation to the entire economy and one would not wish him to be wildly generous for these reasons. However, I would like the Bill to demonstrate a greater recognition of the plight of the farmers. I welcome the proposals contained in these sections.

Section 28, which we will be coming to, indirectly relates to farmers and their problems and applies some relief, but the situation is so bad at the moment that I do not really feel these measures go anywhere near relieving the plight being felt so keenly by our farming community and their families. That is particularly sad, and I would welcome the Minister's comments on it.

Everybody accepts that farmers have gone through difficulties over the last three years or so. I suppose I could describe myself as being in an unfortunate position now, but I was in an unfortunate position as Minister for Agriculture too, in relation to the difficulties that farmers experienced throughout 1978, 1979, 1980 and 1981. I think both the Government and the EEC recognised those difficulties and moved in many directions to assist the farming communities. Some of them are now being provided for in legislation under sections 13 to 16.

As the Senator said, it is our major industry and if agriculture is doing well then the economy is doing well. A big contributory factor to our difficulties in recent years has been that agriculture was not doing well. I do not think it would be possible in the circumstances this year to contemplate further concessions. We had the price fixing in Europe for this year which gave a fairly reasonable price increase and there were some special measures which will give substantial benefit to farmers in the course of the next year mainly, the £37 million calf subsidy agreed by the EEC.

While every sector has to continue to make its case for whatever resources are available, this year will show that farming incomes will improve in real terms and this is one of the few sectors of which that can be said at this time. I am glad to see that that corner has been turned and that the agricultural sector will come back into increased production and increased output. All the signs this year show that and the price levels are staying high, so that all in all the various measures that have been taken over the last few years have been successful. Some other measures not contained in the Finance Bill were taken by the Government, such as the halving of the rates, the various measures under the farm modernisation scheme and restoring grants that were taken back last July in my predecessor's budget. Those items are very important for the farming community.

Taking all matters into account, the EEC, the national measures not contained in the Bill, plus the measures that are contained in these sections, the various items mentioned add up to substantial sums of money in the context of the difficult financial situation in which we find ourselves. All the information available to us shows that the farming community apparently have turned the corner. It is important for them and for the economy that that should continue. I can assure Senator that I, as Minister for Finance, and the Government of which I am a member, will be watching the situation closely in the agricultural sector and making sure that the maximum amount of support and guaranteed prices will be available from the EEC. I hope we can move away from the situation where the Exchequer, as it had to do in recent years, has had to move in with substantial sums to help the industry through those difficult years.

I think everybody will agree that things have begun to improve. Let us hope they will stay that way and even continue to improve further because they have a bit of ground to make up as compared with the situation in 1977-78. The past three years have not been good but I am satisfied we have turned the corner and this is in the interest not only of the farmers and the agricultural sector but of the economy as a whole. I hope that improvement will be maintained.

Question put and agreed to.
Sections 14 and 15 agreed to.
SECTION 16.
Question proposed: "That section 16 stand part of the Bill."

Section 16, which amends section 22 of the Finance Act, 1974, provides that tax allowances for capital expenditure incurred on or after 6 April 1982 on the construction of farm buildings will not be granted. May I ask the Minister what the financial implications are for the farmers concerned and for the central Exchequer. What amount of money will be lost or gained on either side in a full financial year?

The quick answer is £200,000.

In the present difficult time it is unfortunate that this extra amount of taxation is to be taken from the agricultural sector, particularly since we are trying to encourage the expansion of any industry that has the ability or capability of expanding. I feel this gain could be detrimental to growth in agriculture and I would like the Minister to comment on that.

I do not know if the Senator is reading the section properly. What we are dealing with here is a special allowance for farmhouses, dwelling houses, not farmyard houses. At present up to one-third of the capital expenditure on farmhouses qualifies for capital allowance. No other section of the community — we had Senator Bulbulia talking, and rightly so, about people in rented accommodation — have such a concession. That is why it has been withdrawn. It is only a minute thing. It has nothing to do with agricultural output or productivity. It is the actual residence of the farmer and one has to have some equity within the system. Bearing in mind the amounts of money that have been given out in recent times by the Exchequer, and again this year, £200,000 in relation to the provision of their own dwellings or their improvement will not make or break the farming community. As I said, it has absolutely nothing to do with the production or output of the agricultural industry.

I would agree that it does not, but it has the effect of taking from that sector a certain amount of money in a time when it is unfortunate to do so from the point of view of the industry.

Would the Senator like to comment on the position vis-a-vis the 150,000 unemployed and the situation they might be in relation to their dwellings, or in relation to people in jobs who find it difficult to meet their mortgages? Would the Senator say where are the tens of millions of pounds that might be required to assist them, as against the £200,000 that is being taken from this sector?

I propose to deal with that matter at a later stage.

Question put and agreed to.
SECTION 17.
Question proposed: "That section 17 stand part of the Bill."

Section 17 states that any resource tax already paid will be refunded. May I ask when the refunds will take place, or if any such refunds have already taken place?

As soon as Senators let me out of here.

Question put and agreed to.
Sections 18 and 19 agreed to.
SECTION 20.
Question proposed: "That section 20 stand part of the Bill."

I think this is an appropriate measure because the abuses which this led to in the past were infamous. Junketing and expense account gambling had become a feature of our society. It is good to see that this feature is contained in some measure, although I would see it is or could be in some instances quite a legitimate exercise and perhaps a beneficial productive outcome for people to socialise together in an informal setting for the purposes of engaging in business growth. I would like the Minister's comments on the timing of this measure because, to the best of my knowledge, of late about 3,000 jobs have been lost in the hotel and catering industry. This measure is being introduced when the hotel and catering industry are under severe pressure and when tourism is not in the healthy state it should be for all sorts of reasons, some of them not unconnected with the stance taken by the Government on the Falklands crisis. I would like to have the Minister's comments on the timing. Also, I would ask him if the existence of an abuse and the desire to eradicate it is a sufficient reason for framing legislation of this nature.

I agree there should be sufficient grounds. In relation to equity in the system, that should be grounds in itself. The Senator raised the question of the timing. In the budget of 1980, 50 per cent of this allowance was discontinued. The second half of that is going now. The main reason is because of various abuses in the system as well as greater equity. It is accepted generally that our tax base is narrow. The PAYE sector complain about the contributions they have to make to the Exchequer, and rightly so, and they can see either preferential loans or benefits in kind for company cars or business entertainment expenses for various other sections of the community. One has obviously to move to correct that situation and that is what we are doing here finally after taking the first step in 1980. I do not accept it will have any impact on the trade because there has been no falling-off in the business since 1980 when 50 per cent of the allowances were removed. As far as this year is concerned, there is no yield expected to the Exchequer but the yield in a full year, next year, would be around £3 million.

I do not know how the Minister can say that there has been no falling-off in the trade. Hotels have been closing and 3,000 jobs have been lost in the hotel and catering industry. I really cannot see how the Minister can stand over that statement.

I gave the answer to that to Senator Daly earlier, namely, the general recession. There is a recession on, not only here but also throughout the world for the last couple of years. If it is really only hitting us this year, then maybe we have been fortunate because it has been hitting the bigger economies in the world for the past couple of years. Information that is available to me, and not argued with by some of the trade who deal in the area that allows entertainment expenses or caters for those who have entertainment expenses, shows that there has been no falling-off in that trade since the 50 per cent exemption was removed in 1980. That is the information I have and I give it as factual, as I have received it.

In relation to the £3 million which it is proposed to raise under that section in a full year, will the Minister not agree that there must surely be some detrimental effect on the trade in a full year by virtue of the fact that £3 million will be raised?

For too long we have lived in the era of plastic money in relation to entertainment expenses. We had many restaurants and hotels pricing themselves out of the market because they had available to them a clientele who created a completely artificial price structure. I speak here as a businessman. I am not against the basic principle but I would say there were total abuses of the system. Inevitably there will be some people in the catering business who will suffer as a result but that is only because they have lived in a catering utopia for so many years, where the sky was the limit, where a person took out a plastic card and charged it up without even being aware of the cost. Surely when we are taking money from PAYE people, who have to watch and save every pound, we have an obligation as legislators to make sure there is equity and that we do not have people creating artificially high prices because of the fact that no matter what the charges are it does not matter to them because they are not paying. We have waited far too long to get rid of that kind of an exercise.

This system was bad generally for the whole tourist business. When tourists arrived in Dublin they found that the city was probably one of the most expensive cities in Europe in which to dine out. I would submit that the major contributing factor to that state of affairs was the plastic currency we were using in relation to business expenses. I am talking personally now, not on a party basis. The sooner that system is got rid of the better for all of us.

In relation to what Senator Crowley said, if what is in effect an Exchequer subsidy for entertainment expenses is removed, it may encourage hoteliers to reduce prices and this was suggested by Deputy Bruton in the Dáil. The ordinary customer then may have an opportunity to avail of these services and thereby increase trade. It is not necessarily going to have any detrimetal effect on the hotel and catering industry. The impact will be felt by those who have benefited from this allowance over the last number of years.

Question put and agreed to.
Section 21 agreed to.
SECTION 22.
Question proposed: "That section 22 stand part of the Bill."

Sections 21 and 22 set out new and extremely complicated proposals concerning restrictions on the liability of certain interest for income tax purposes. As with sections 4 and 8, this measure hits at the more affluent and, as such, it should be welcomed on the grounds of equity and distributive justice. As with the expense account junketing, I do not quarrel with the measure. Equity and distributive justice must be seen to be done and must be done and in the areas in which it is done in this Bill I quite straightforwardly welcome it.

As I said, these proposals are extremely complicated and, like section 7 this section again virtually ensures that an individual faced with making out an income tax return may find himself or herself without the technical capacity to do so in the face of these new complications and added difficulties. It substantially complicates the entire income tax system and I would like the Minister to comment on that. I also feel that the transition provisions are, and have been in the past, subject to abuses. These abuses would have had a much greater impact if the proposals in the budget had been capable of being implemented in full.

It is also interesting that despite all the available expertise both of the Revenue Commissioners and the civil servants in the Department of Finance the Minister should make proposals in the budget which, on subsequent examination, were found to be technically unworkable in the Finance Bill. I do not claim any deep knowledge of these things but it fails me that this situation should arise. I would be glad of clarification from the Minister as to why it happens that there is this difference between what is not workable when it comes to the Finance Bill and what is supposedly workable when it is enunciated in the budget speech.

An Leas-Chathaoirleach

The Senator mentioned section 7. I take it she is referring to subsection (7) of section 21?

In relation to the points made about the difficulty in filling up forms, most people are well used to filling up forms in relation to allowance for interest paid and there is no change here vis-a-vis the existing system for the interest allowed for the sole or main residence. The only problem will be in relation to those who have claimed for personal loans other than mortgage interest loans, but there should not be any major complication there. Most people concerned will be used to filling up that part of their tax form. The Senator also asked why we were not able to go ahead with the proposals originally announced on 27 January. We had a discussion on this in the Dáil. While one can say quite clearly that the expertise is available in the Revenue Commissioners, it was not found possible to implement the proposals as outlined on 27 January. There are various problems with the computer regarding the £35,000 capital allowance and various problems regarding the 35 per cent rate of tax, with the result that it would be virtually impossible, without formulating something like eight or ten new computer programmes, to fit them into the system. I would have been very anxious and glad to have such a proposal. We said we would implement it and what was possible to be done is being done in this Bill. It is an area that one will have to look at very closely at.

I was asked a question in the Dáil in relation to section 5 on the allowance for rent paid. It was a small amount of money but the actual amount lost to the Exchequer in tax was something like £50 million to £60 million for various interest reliefs given to the taxpayer. I will be looking very carefully at substantial sums like that. I have explained that the technical and administrative problems could not be overcome. If it is possible at some future time to overcome them, then one can move in the direction that was suggested on 27 January which the Government and I were prepared to implement. On 25 March, or as of today, it still has not been found possible or worthwhile to go along the line that was suggested on 27 January. The Senator can be assured that I will be looking very closely at this area between now and next budget day.

I am intrigued to think that the complications and intricacies advanced in the budget have foiled even the computer, let alone the Revenue Commissioners and officials of the Department of Finance. It bears out the fact that many of the complications I have alluded to are going to prove difficult. It is interesting to think that the computers and Revenue Commissioners find that what is given in a budget speech is unworkable.

It became unworkable when there was no consultation, prior to its announcement, with the Revenue Commissioners and that is what happened in this case in January. It was not my fault.

Question put and agreed to.
Sections 23 to 25, inclusive, agreed to.
SECTION 26.
Question proposed: "That section 26 stand part of the Bill."

This section proposes to increase from 45 per cent to 50 per cent the standard rate of corporation tax. In times of recession and high inflation such as we are experiencing at present, to my mind companies need to retain profits for investment purposes, for future expansion and for employment, all vital and necessary for growth. This measure will have the effect of reducing the funds available for these measures and for this type of re-investment. In my opinion it will put some companies out of operation, with a consequent loss of jobs and an added burden of unemployment benefits and a loss in PAYE revenue. It could also be said to have the effect of preventing other companies from gearing themselves up so that if the recession recedes they will be in a position to come out of it with some capital. If companies are not able to invest and to consider expansion from the proceeds of their profits, then they are forced to borrow. If you couple this with the high rates of Government borrowing, it pushes up the interest rates and increases the spiral of inflation and, therefore, sets at naught all that the Minister is attempting to achieve.

I was trying to follow the gist of the Senator's argument but I find it hard to understand. If you do not make a profit you do not pay tax. Therefore, I see this as a purely legitimate means of collecting tax from those who can afford to pay it. Allowances are being made for the profitability of companies and allowances are also being made for the amount of tax that is to be paid on the profit.

Manufacturing industry is on the 10 per cent rate so it is not affected. What we are talking about — and I could not accept the point made by Senator Bulbulia — is that only those who make the profit will be paying tax. For the information of the Senator and the House, these rates of corporation tax are now to be restored to the levels at which they stood in 1976 prior to the reduction in the 1977 Finance Act. I do not think that the effects will be as drastic as Senator Bulbulia has put forward here. At least I would hope not, I can assure Senators. But I honestly do not think they will. Manufacturing industry has a much more favourable regime and will not be affected.

I would like to ask what the proposed benefit to the Exchequer under that section will be in a full year.

The proposed changes in the rates of corporation tax will have very little effect on the yield from corporation tax in 1982 because a small part only of the corporation tax which will fall to be assessed at the new high rate will be payable during this year. It is expected that the yield in 1983 will be £7 million greater than it would have been had the rates remained at their 1981 levels and the extra yield in a full year will be of the order of £10 million.

Having regard to what the Minister said earlier. I feel that £10 million taken from that sector of the economy at this time will, despite what the Minister has said already, have a detrimental effect on the economy generally. Non-manufacturing companies at least — and this would involve service industries — will be required to pay an extra £10 million, and excluding manufacturing companies from the arena it will, in fact, put an even greater burden on those who are not in the manufacturing business.

At the moment about £188 million comes in from corporation tax; £10 million extra is an increase of about 5 per cent. So I do not think it can have the impact suggested. Is the Senator suggesting that such profits should be left? This is an argument we had in the Dáil in relation to various sections. We all know as PAYE taxpayers ourselves that we pay the day we get our salaries and so does every worker on Friday night pay his tax. Is it now being suggested by Senators that profits which have been restored to 1976 levels should be left with the corporations and that the £7 million to £10 million should be taken as an additional revenue from the PAYE sector next year? Is that the alternative?

I fear that the Minister in replying is merely referring again and again to whether or not we would agree that there should be further taxation gleaned from the PAYE sector. I do not think that is relevant. Having regard to the fact that the manufacturing sector are to be excluded in this area then it will apply only to the non-manufacturing area, such as service industries etc. I would suggest that the payment of additional revenue by that sector at this time of economic difficulty must put a greater strain on many of those service or other type of industries. That was the question I was asking the Minister.

We may take it that the Senator would accept that any additional burden of taxation should not be paid by banks and insurance companies but should be paid by other sectors. Is that what the Senator is saying?

There are institutions other than banks and insurance companies. Suitable exclusions, in fact, could, I presume, be made in certain instances. I would refer to a number of other service industries.

It comes back to the old adage again that nobody likes paying tax. We all suffer when the squeeze is put on. Unfortunately, the Minister has not invented a magic wand yet which he waves to produce money from nowhere without anybody being hurt.

As I understand Senator Durkan's argument, he disagrees with the manufacturing industry getting this preferential rate. Obviously he is not in agreement with the PAYE people getting any greater whack than they are getting already in the payment of their tax. But I think it is only right that those who make a profit should be asked to contribute their just share to the running of the economy because, as we have been saying over and over again down through the years, neither the Government nor the Minister for Finance have money themselves. The Minister is only getting the money that he takes from the people. So, his problem basically is how to spread the burden as equitably as possible. I think the fairest possible way to do this is to ensure that those who make a profit in their business pay their fair share. I would go along with the Senator's argument in the sense that re-investment suffers: perhaps one does not re-equip in the way that one should re-equip. But we are talking about extraordinary times at the moment. We are talking about a time of recession when everybody who has to pay any extra money feels the pinch. It is not like the old days when we had, as the late Seán Lemass used to say, the rising tide lifting all boats. We have not a rising tide. I think on that basis the Minister is doing an excellent job in that he is trying to spread the load as fairly as possible.

It is hard to disagree with many of the arguments that have been put, because we all realise that re-equipping and going out and engaging in more aggressive marketing and other business activities are vital to the successful running of any company. The tax base is so narrow in this country that if you say there should be no increase in corporation profits tax there are only two or three sectors left. Do you say the PAYE sector should pay more, the farmers should pay more or that manufacturing industry should pay more? If you say that corporation profits tax should not be increased then you must opt for one of the other three in regard to where you are going to get the money. I think — although I am a victim of this personally — this is the fairest system. I think it is right. I think manufacturing industry is going through a far more stringent time than the catering and the service industries. I do not see why the banks or the insurance companies should not pay. Certainly, if you are excluding this section you are excluding them. Therefore, while seeing some of the points made I think it is only right that we should go after the other three sectors who are the only other sources of taxation.

I accept some of what the previous speaker said. There is one thing we should not overlook. While I agree fully that the banks and the assurance and insurance companies should be required to pay the amount of corporation profits tax for which they are liable and which they are well able to meet, at the same time there are a number of companies which will be affected by this increase in taxation who in order to stay in business may pass on to the consumer some of the burden which they will incur in the course of a full year. As a result the PAYE sector will be hit through that particular avenue and perhaps even to a greater extent than any of the previous speakers have suggested. We were not suggesting on this side of the House that there should be greater taxation imposed on the PAYE sector. I am sorry that the Minister and the previous speaker sought to deduce from our remarks that that was what we were trying to do. This is not the case. We questioned the effect that this particular section would have on industry in general, having regard to the fact that the Minister quite rightly stated that the manufacturing sector is excluded from any penalty. I would suggest that in the course of a full year it will be yet seen to have a detrimental effect on many service industries. It should be pointed out that there seems to be a feeling in the House that to make a profit is some kind of a cardinal sin but in fact, to stay in business, it is essential to make a profit. In order to stay in business some firms affected by this section may yet have to increase their charges and ultimately the consumer will be affected.

I had begun to wonder if the Minister and Senator Crowley and the rest of us were speaking the same language, but I am glad to hear Senator Crowley refer to the points which I made about re-investment, future employment, re-equipping and strengthening oneself to come out of the recession. He feels that because we are in difficult times and because we have a recession, this is precisely why we must gather up more taxation. But I would advance the argument that it is precisely why elements of profit must be ploughed back into industry in order to strengthen industry and in order to ensure that there is job creation, growth and development. Otherwise, we just worsen our plight and we do nothing to advance the economy. That is why I feel so strongly about this measure.

I am not quite sure of the point that has been made because there are certain contradictions in the arguments put forward, the complaints about the extra corporation tax on certain people involved in the service industries including banks and insurance companies because of the impact it will have on them and, that now it is going to affect the PAYE sector. I do not accept that approach.

I should like to make a couple of points. There is something like £4,000 million collected in taxation. Corporation tax brings in £200 million which is 5 per cent of the total tax collected. In relation to the points made by Senator Bulbulia and to which Senator Crowley referred about re-equipment, re-investment and so on — that is 100 per cent allowable for tax purposes. So, if the fellow is concerned about paying X amount of money in tax and he has to make up his mind as to whether he will re-invest in the business, instead of paying the tax to the taxman he just spends it on re-investment if that is what he wants to do and it is 100 per cent allowable, I do not see how that would have any impact. Also, in sections 43 to 49 later on we will be coming to another allowance, which is £10 a week for each additional employee for such companies.

I beg your pardon?

For each additional employee the allowance will be £10 a week. That will be of some help. I do not accept that this will have any impact. It is a very small amount, a 5 per cent increase in the tax level and, in fact, it only goes back to what was in existence in 1976.

Do I take it from the Minister's statement that both the Minister and the Department feel it is beneficial to the industry during a recession to increase the tax rate to 50 per cent? He has referred on a number of occasions to the difficult recession the country is going through. Is it part of the new thinking that it is helpful to increase the tax on profits to a 50 per cent rate? Could the Minister let me know how much exactly——

But it is not a tax on profits.

How much will this section bring in to the Exchequer in a full year?

I do not think I personally mentioned the question of recession on this section, so the point the Senator makes does not arise here. I should like to repeat that what we are talking about here is taxation on profits. If there are companies who do not make profits they are not liable; it is as simple as that. If there are companies that want to re-invest they get 100 per cent allowance for the re-investment that takes place.

Surely the recession does not apply just to one section. The country is either in a recession or it is not. If there is a recession it means that it is there for all sections.

Question put and agreed to.
SECTION 27.
Question proposed: "That section 27 stand part of the Bill."

This section proposes to bring forward by three months the due date upon which corporation tax has to be paid. It also reduces the period of grace from two months to one month during which, if corporation tax is paid, interest will not be charged by the Revenue Commissioners. From the passing of the Bill this will have an immediate impact on many industries already struggling and many of them will be brought to their knees. They will be brought closer to liquidation as a result of this measure, with consequent job losses. I would be happy to have a reassurance from the Minister that this will not be so. I think it poses an immediate threat to the position of many companies which are struggling to remain viable.

It is not, as such, imposing any additional taxation. What the section is doing is bringing forward the payment dates of the taxation. The company pays corporation tax in two instalments for each accounting period, which normally runs for 12 months. Currently, the first instalment is due in the case of all companies nine months after the end of the accounting period. The due date for payment of the second instalment can vary from nine to 18 months after the end of the accounting period. What is being done here is bringing forward by three months due dates for payment of corporation tax and for a reduction from two months to one month in the period of grace during which if corporation tax is paid interest on overdue tax is not chargeable. I do not see how people can seriously argue, with equity in the back of their minds, against bringing forward their tax payments to six months after the year in which they made their profit while the PAYE sector, as I have said already, pay in the week they get their weekly cheque. I do not think anybody can seriously argue on this point.

I am somewhat unhappy about the fact that in his reply to me the Minister should find it necessary to interpret what is in the proposal before us. I think I demonstrated that I understand what the proposal is about, so it is somewhat less than fair to spend the time in reply in giving me an interpretation of what I feel I can grasp, perhaps not to the extent of the Minister but at least to some extent.

The bringing forward of measures which has been a feature of this Finance Bill is an exercise in cosmetic accounting and will create difficulties for these companies, and I stand over what I have said. I would like the Minister's assurance that he does not feel that companies will be squeezed as a result of this measure and that it will not exacerbate the position in which many of them find themselves.

I am sorry that the Senator does not like my reply, because it is factual; that is not my fault. But, giving the same answer to the question in different words I do not think anybody could seriously argue that bringing forward payment of tax to six months after the accounting period, instead of nine months after, is a problem. I do not accept that it is when if one wants to consider equity within the tax system, the PAYE income earners have to pay in the week they get their salaries. In the 1981 Finance Act the first step was taken in relation to the corporate sector by advancing the due date for payment of the second instalment corporation tax by three months. The present section represents a further step in the same direction, that is to move closer to tax equity. I do not accept that it will have any major impact on the people in corporations or companies concerned.

Despite what the Minister says, I feel that bringing forward the payment of corporation profits tax must have some effect on the companies affected. I fully accept and agree with what the Minister says in relation to PAYE. I think also that the Minister ought to take into account the unstable state of the economy at present. While it does not apply except in cases where profits occur, at the same time I would like to ask the Minister by what amount will the Exchequer benefit (a) in the current year from this particular section (b) in a full year?

It is estimated that these changes will increase the yield from corporation tax in the financial year 1982 from £152 million to £188 million, which is £36 million.

Question put and agreed to.
SECTION 28.
Question proposed: "That section 28 stand part of the Bill."

About two months ago I read that the Minister for Agriculture stated in a press release that this section would apply retrospectively from 1 April 1981. I would appreciate if the Minister could clarify this position, because it states very clearly in subsection (1) that the period starts from 1 April 1982.

It is 1 April 1982.

Could I ask the Minister when is it anticipated that this scheme will become operative?

The closing date was extended until the end of June and from here on it should be in operation now. The applications are or should all be in and they are being examined at present. There should be no undue delay.

Question put and agreed to.
SECTION 29.
Question proposed: "That section 29 stand part of the Bill."

Could I comment in general on sections 29 to 40 under the heading of section 29? These sections deal with——

They will be put separately, but you may discuss them together.

On a point of information, when you are putting section 29 you will also put section 40?

I think I would agree with the statement you made that we will take them one at a time. Probably in my remarks I would have raised sections 29 to 40 but I think in fairness to other Members who wish to speak perhaps these individual items should come before the House.

Then you may take section 29.

These sections deal with new proposals in relation to capital gains tax. In equity and for reasons for distributive justice, I think these proposals should be welcomed. I would like to ask the Minister a question in relation to this. Does he feel that the measures as proposed are likely to delay significantly the pick-up in the construction sector with consequent loss of employment, as this sector is already hard hit? I would like to have his comments on this lest there be a delay which would further worsen the situation.

I think basically you are talking about development land capital gains. I do not think that will be the position, because most developers do not pay capital gains tax: they pay income tax because they are in the development business. They have the land and develop it. They build the houses and are liable to income tax and do not generally get caught under the capital gains tax on development land. It was to stop those who have been purchasing land and holding it for some time and making massive development gains that this capital gains tax on development land has been introduced.

I agree that the construction industry has been going through a difficult time. There are many factors responsible for that. I think the Senator has more or less welcomed the section on capital gains tax. When we come to the appropriate section we can go further into this matter perhaps and talk about something which some of the Senators including Senator Bulbulia would be interested in, which is the exemption from the development land capital gains tax up to £15,000 for individual sites. I feel that is a help and it should be a help to many individual farmers who for one reason or another have a site or two to sell in any given year and have exemption from the development land tax. They would be normally liable for the ordinary capital gains tax but will be allowed roll-over relief and certain other exemptions.

I do not think it will have any great impact on the construction industry. Certainly the case can be made, as the Senator has already made it. It is a justifiable case or argument that taxes can be blamed for causing difficulties for individuals or companies or corporations, but it is a point I do not think I can accept. I do not think any Minister for Finance down through the years has accepted it. We all agree that nobody likes paying tax. The first fright that the Minister for Finance will get in suggesting any new taxes will be the impact on the particular sector, the massive unemployment and problems of other kinds that will be created. These are arguments that have been put forward since taxation was first introduced. We still tend to overcome these problems and difficulties. The recession and other problems like the level of interest rates and the availability of funds or whatever would have much more impact on this sector than the taxation measures proposed in this section.

I do not have any personal experience of capital gains. Perhaps the Minister might be able to clarify a few points for me. In the case where a property holder has to dispose of his property, either to meet ordinary debts or an operating loss or indeed to meet taxes in the case of inheritance, what is the actual situation? I find that an additional problem arose quite recently, certainly this year, when it is very difficult to get the Commissioners of Valuation actually to take a physical look at property. This is causing great hardship in some cases. In my own constituency I have a case of a farmer who inherited property and the adjoining property was acquired since the relevant date by the Department of Lands. The adjoining property was £80 an acre, yet the Office of Valuation valued this property at £1,500 an acre. They did not come out to look at the property. This is a grave injustice. Is the Minister taking any steps to ensure that people are not treated in this very penal fashion? At the present time people are not able to meet their lawful debts due to the poor income from agriculture. When the decisions are being taken arbitrarily by someone looking at a map and just taking figures from the clouds it is most unfair. I do not see how it can be supported in natural justice. Can the Minister let us know if there are any concessions under this section for people who are forced to dispose of property to meet taxes or to meet ordinary commercial debts?

Senator McDonald covered quite a few taxes in his contribution — capital acquisitions, inheritance and capital gains tax. Capital gains tax was probably the most important innovation in recent years to get at the parasite in our society, the fellow who went along, because he had the capital, bought up land, sat on it and kept sitting on it until such time as the value of that land had increased to a tremendous degree. This person was able to make a considerable profit without any input whatsoever except for the original investment of capital. There was no attempt made to bring services into the land that he bought, to add anything to the environmental dimension. It was just left there and became an eyesore in a lot of cases. That person made a considerable financial killing from it.

Of course like all taxation you will never get a perfect system where somebody will not suffer unjustly. By and large this is one of the taxes that has the agreement of all sides of the House. For years I have opposed the system — Senator McDonald will know quite a bit about this — where local authorities zone land, thereby creating an artifically high price for land in that zone and making millionaires out of some people because of the zoning. We have got at a part of it here in capital gains, but I feel that the fundamental problem that we are up against is in the zoning of land by local authorities.

We are driving our people into areas. They must build in towns or villages. We are discouraging young couples from going to the country or going into the rural areas because we say that the cost of providing services in the rural areas is far greater. I maintain that the zoning of land creates this sort of monster. I am glad that in these sections we are getting at this monster. I have in my constituency a case where there is a considerable amount of building land available within the town that I live in but that building land is not for sale. The less land that is for sale for building the more the demand and the greater the price of land goes up. We have begun to tackle this problem but we have not fully tackled it yet. I have absolutely no sympathy for people paying capital gains tax. They should pay it and they should be taxed to the hilt. This is the area where we can make the most impact.

I must come back to the fundamental problem. We are creating the problem by the zoning of land. If we could get some message across from here to the local authorities, it would be to discontinue the zoning of land because we are putting the price of sites out of the reach of young people wanting to get married. As I said at the outset, we are making millionaires out of others. I welcome these sections. Any charge on gains or any tax on gains, expecially where there is no input, is legitimate and just. You have a legitimate, just tax code which I think does away to a certain degree with the frustration that young people feel. They see those people making huge profits from no input whatsoever so they naturally become resentful. We are breeding a type of society that is not healthy. These sections are very important sections and should be backed by every Member of the House.

I was not completely clear on the point made by Senator McDonald because there was a bit of a mix between capital gains and capital acquisitions tax, which will be coming later on, and inheritance and gift taxes which are covered under the capital acquisitions tax sections later on in section 89. A disposal is a disposal, and if capital gains tax is due that is the capital gains tax system. The Senator raised the point about delays in the Valuation Office. One has to accept that there are some delays. My experience as a representative over the years is that delays, appeal procedures and contacts that are made by solicitors on behalf of the client or by Deputies and Senators on behalf of the client in the main work in favour of the particular client. I know that there are delays there. Every effort is being made to improve the situation and speed up the decisions in regard to those particular questions. In relation to capital acquisitions tax, inheritance and gifts the Senator asked if there are losses are they taken into account. I think that is the point the Senator is making. Under that section, they are under the capital acquisitions tax when somebody inherits something or gets a gift and there are some losses, before the tax is computed the losses are taken into account.

I hope I did not give the impression that I was criticising unduly the Valuation Office. The point I was making is that they do not go out to see the actual properties they are valuing and they are acting in the main to the detriment of the people whose property they are adjudicating on.

I accept what the Senator says, but people can and do appeal against those. I am sure the Senator has dealt with the Valuation Office in relation to those cases, just as I have. In the majority of cases, with the efforts that their solicitor or public representative takes on their behalf, they work out better: maybe some of them would look at the other side of the coin and say thanks be to God he did not come out and look.

Question put and agreed to.
Sections 30 to 48, inclusive, agreed to.
SECTION 49.
Question proposed: "That section 49 stand part of the Bill."

Sections 49 to 56 deal with profit sharing schemes. The proposals are to exempt from income tax shares given by companies to their employees under the profit sharing arrangements. This is to be welcomed, but to my mind virtually all the good contained in this is negated by a section which will be coming before us again, that is section 50 in which the amount allowable as a deduction in computing the company's profits cannot exceed 5 per cent of the company's trading income.

The Senator has gone on to section 50.

I think it is in order to speak on section 49. It is about profit sharing schemes.

Section 50 deals with profit sharing.

Section 49 gives a definition.

I think the Senator is looking at the explanatory memorandum.

I am. I find it infinitely clearer.

It has been changed. We are all making that mistake.

I am relieved. I thought my newness to my role was showing.

If section 49 is agreed, we will go on to section 50.

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

The point I was making is that the amount allowable as a deduction in computing the company's profits cannot exceed 5 per cent of the company's trading income. After deducting losses forward, capital allowances, balancing charges, all the good contained in this provision is removed by this unrealistic and restrictive threshold of 5 per cent.

I am sorry for interrupting the Senator, but it is 20 per cent, as amended in the Dáil. I know that it was 5 per cent in the original Bill. I wanted to inform the Senator that it was amended in the Dáil to 20 per cent.

That takes care of that.

Question put and agreed to.
Sections 51 to 58, inclusive, agreed to.
SECTION 59.
Question proposed: "That section 59 stand part of the Bill."

I think I am in order, that this is dealing with penalties. The Government propose to increase to £800 the penalty for a variety of offences, mainly the failure by employers to fill in and return statutory tax forms. Most of the penalties used to be around £20 or £50 with a time factor added on. They have not been altered since the sixties.

I think the Senator has gone on to section 60.

It is the text as passed by the Dáil rather than the explanatory memorandum that the Senator should use.

It is the sections that have been added that put one out.

So we are really on section 60?

Question put and agreed to.
SECTION 60.
Question proposed: "That section 60 stand part of the Bill."

On the question of the penalties, the Government are proposing to increase to £800 the penalty for a variety of offences, mainly the failure by an employer to fill in and return statutory tax forms. Most of the penalties were of a significantly lesser amount, namely around £20 or £50 with a time factor added on. I gather that these have not been altered since around the sixties. Does the Minister envisage employing any more people to monitor would-be tax evaders or generally oversee the whole area of tax evasion? There is really no point in moaning and throwing our hands up to heaven about tax evasion and tax avoidance, which one would deplore, without adequate staff. Again, we are into the area of the black economy which we have spoken about before. I feel that unless we are taking the necessary measures to curtail these practices, and unless we are seen to be so doing, it is really so many pious aspirations. I would like to know if the Minister is in a position to see that more people are employed to monitor this particular area.

In relation to the penalties the Senator is correct in saying that most of them have not been increased since 1963. These increases were as announced in the proposals of 27 January. The Senator asked me if I would contemplate additional staff. I would agree with her fully that where they are required and if they are necessary it is my intention, because I am very anxious to ensure that we eliminate avoidance of any kind of tax. Where additional staff are required it is my intention to have them employed to ensure that there is the guarantee that those who are liable for tax pay it as it is due, as most other taxpayers have to.

I am very glad to have these assurances from the Minister. I hope he will succeed by virtue of this in accruing large sums of money which were hitherto passing through the tax net.

Question put and agreed to.
Sections 61 to 63, inclusive, agreed to.
SECTION 64.
Question proposed: "That section 64 stand part of the Bill."

This section provides for the increase in the rates of excise duty on hydro-carbons.

The Senator is on the wrong section. We have passed section 63. We have gone on to section 64.

According to this document I am on section 63.

I wish the Senator would put that document away because it is confusing the whole issue.

Section 63, formerly section 62, deals with holiday travel. I would like reassurances from the Cathaoirleach that I am on the right section in this case.

The Senator is on section 64.

Is this dealing with foreign travel?

Sections 62 and 63 were two Committee Stage amendments introduced by me in the Dáil, and accepted by it, to counter avoidance of capital gains tax, to further the point that the Senator was making on the previous section.

Have we come to the area of foreign travel yet under the amended Finance Bill? What is the section number?

That is on section 65.

I will hold myself in reserve, then.

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

I spoke about this yesterday in my Second Stage speech. The Minister reacted somewhat sharply to my request. I asked him why it was not possible to implement this before 1 September. I very humbly said that if there were any good reasons why this could not be done that I stood corrected in my observations concerning it. The Minister, however, countered by saying that it was a preposterous suggestion, which left me feeling somewhat deflated. I find it very difficult to understand that he would just tell me that it was not possible for the Revenue Commissioners to implement this before 1 September. When my children ask me questions I just do not give them answers like that telling them that it was not possible or it is not so. I would really appreciate very much if the Minister would give me a fuller answer to why it was not possible to implement this before 1 September, because we all know that the volume of tourist traffic takes place between Easter and September and it seems a pity to by-pass the possibility of accruing revenue in that period. A full answer from the Minister would be appreciated.

I hope my memory is as good as the Senator's because what I said in reply to her point, which was not the same as the one she made today which was that putting off the introduction of this travel tax until 1 September was political and I said that was preposterous, which it was and still is. The Senator is saying it again. The main reason for the introduction date in this particular tax is, first of all, that naturally we would not have liked to introduce a tax in the middle of the tourist season, bad and all as it is. That is why September was chosen. That is one reason. The second reason is that quite an amount of discussion had to take place with the various tour operators about the implementation of this tax. Those discussions went on as and from 25 March. There was quite an amount of detailed discussion between the various Departments and tour operators regarding the introduction of this tax. It is for those reasons mainly that 1 September was chosen, not for political ones.

I am very pleased to have the amplified reply from the Minister. He will understand that it is necessary for people on this side of the House to advert to the political backdrops to this budget. If we raise questions which concern us he will no doubt forgive us and understand that we cannot believe that his motives are pure as the driven snow in every instance.

I do not want to be, especially with the co-operation and the very serious input of Senators and the very knowledgeable questions that have been asked in relation to the Finance Bill so far on both the Second Stage and now on Committee Stage. There is absolutely no way that I would like to become political. I hope it does not happen that the House would look at it in that political way. When the Senator has raised it I am obliged to reply to her on the basis that what is being introduced in this Finance Bill is to give legislative effect to, in the main, what was the 27 January budget, as introduced by her own party in Government at that time. I am just making that point.

I am not making a speech, but the Minister has made repeated references to the budget of 27 January. In fairness to the Members of this House I feel that we have the right to debate whichever section we feel is necessary as we arrive at that particular section without reference to any previous Administration. We are doing so to give our own particular input to the Finance Bill and not to make a political point.

I do not think that in any way I suggested that the Senators had not the right to talk about any section at all. I was merely making the point, as is the case that was made by myself and by other speakers in the Dáil and here, in relation to welcoming many aspects of this Finance Bill because of the fact that they were introduced on 27 January.

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

I hope I have the right document this time — Reduction of Duty on Motor Vehicle Parts and Accessories. I would like to thank the Minister for this reduction in a phased out manner. I would now like to ask him if these reductions are finished in the four phases or will it be an ongoing thing? Will the Minister say if the reduction will be an ongoing thing?

I thank the Senator for his support in this section and his welcome for it. It will be ongoing anyway as the section outlines in the various reductions. The general question about further than the sections go at present would be a budgetary matter and I would not be in a position to comment at this stage.

I would like to make a comment that yesterday when we were speaking on this I felt very strongly that the measures had a disproportionate effect between urban and rural dwellers. I adverted to the fact that rural dwellers really do not have quite the same choices as urban dwellers. They do not have the same public transport, they have to travel long distances to go about their legitimate business, they need to use the car for shopping, going to religious services, for coming to and fro from work and in the rural community. I feel that in the rural community the brunt of this will be felt in a far more severe way than it is in the urban areas. I would like the Minister to comment on that.

I am sorry I did not get the Senator's point.

There are two facets to this. The Minister seems to be giving on one hand and taking with the other. He is giving in the area of the reduction on parts and taking in the other area of the increase in excise on the petrol duty. Without going into it all again, I spoke about the disproportionate effect of this measure as between rural and urban dwellers. I know it would be very difficult to introduce a form of taxation which would be split between urban and rural. There are far too many splits in this area as it is. I would not be for introducing anything even more divisive. I would just like to have assurances from the Minister that he is aware of the disproportionate effect of this measure. I wonder if he has any ideas of how this could be softened in some way in the interests of the person living in a rural area.

Depending on which of the sections the Senator is taking into account, excise duties or benefit in kind on cars, or a reduction in duties on parts and accessories, in my view this is the one which will be of advantage to rural dwellers because they are inclined to keep cars longer than urban dwellers. The Senator can argue that they will be affected more by excise duty because they have to use their cars more. One has to try to strike a balance between the various sectors in the economy and in the trades. This is necesary and it should help to prolong the life of old cars rather than encouraging the attitude that people must replace their cars every 18 months or two years, which seems to be a feature in Ireland. No matter what other country one goes to, one finds that the life of cars is much longer. That has enormous implications for the balance of payments.

Question put and agreed to.
Sections 68 to 72, inclusive, agreed to.
SECTION 73.
Question proposed: "That section 73 stand part of the Bill."

Section 73 deals with imposition of duties on hydrocarbon oils.

On beer, spirits and tobacco.

Table, S.I. No. 367 of 1981 — Imposition of Duties (No. 255) (Hydrocarbon Oils) Order, 1981. Have we all different documents?

Could I help the Senator? Does he want to talk about the increase in road tax on private cars or excise duties?

I am on page 77 of the Finance Bill, section 73. Is that correct?

Basically section 73 is confirming various orders going back over the past number of months, including the one last December. Imposition of duties on beer Order, 1981, duties on wine Order, 1981, Hydrocarbon Oils Order, 1981, and Hydrocarbon Oils Order, a second one in 1981, Nos. 255 and 256. Those are the ones that are covered. It is confirming all those orders, as is normal, in a Finance Bill at the first opportunity.

I want to enter my protest on behalf of the motor trade against the increases in duties on hydrocarbon oils. While the Minister has been very helpful on this Finance Bill, he has done nothing whatever for the motor trade. He has shown no sympathy for them, apart from the one thing I thanked him for. His stock answer so far is that the dire situation of the motor trade is purely as a result of the recession. I want to pinpoint all the increases.

Both these orders were reducing excise duties imposed by the previous Government and the one before that. We are confirming those orders. I will give the Senator the note I have in relation to No. 255: The effect of this Order was to increase, for a temporary period, the relief from excise duty which was introduced in the Finance Act, 1981, on oil used in sea-fishing boats. The period was from 1 June 1981 to 31 December 1981. Initially it was 5p a gallon over and above the 2p introduced in the Finance Act, 1981. That is the full relief from duty. That is what the first order was doing. The relief then reverted to 2p a gallon as and from 1 January this year. Order No. 256 made a reduction of 2.5p per gallon in the excise duty payable on hydrocarbon oils in the residual fuel oil category intended for use for a purpose other than the generation of electricity for sale and delivered on or after 1 December, 1981. We are confirming those two actions by two previous Governments.

Question put and agreed to.
Sections 74 to 77, inclusive, agreed to.
SECTION 78.
Question proposed: "That section 78 stand part of the Bill."

We are dealing with the section which under the explanatory memorandum was formerly 76/77.

VAT on imports.

The famous one. It has been a very long afternoon. This has been subject to criticism across the board. I understand the financial constraints which the Minister must juggle with and I understand that unpopular measures must be adopted in order to ensure a certain buoyancy of revenue and some stability. In the industrial estate in Waterford there was a veritable outcry in relation to this measure, and firms who were experiencing liquidity problems and cash flow difficulties found themselves trembling on the brink of disaster. I have a letter from one such firm, and the Managing Director, who is a German, said in his letter:

It will effectively mean that we will have to arrange a bank overdraft of approximately £100,000.00 on an ongoing basis and, which you will be well aware, will be a difficult task in the present economic climate, and could possibly affect the continuity of our workforce, which is presently 114 people.

This is just one firm finding itself caught in the crippling effects of high interest.

I should like some reassurance from the Minister that some way around this can be found. I understand there is some phased payment arrangement and perhaps that will ameliorate it to some extent for some firms. My anxiety is that it may lead to a loss of jobs and the closure of many firms with the consequent disruption to the economy which this will cause.

All in all, the Minister, though he will necessarily feel offensive, must admit to the fact that economic commentators have been unhappy about this measure, feeling that it is a certain cosmetic accounting, and that eventually it will catch up with us, and we will have to deal with it in 1983. It will introduce a certain artificiality into the revenue for the current year. I would be glad to hear the Minister defend his position on this and, if he could give me the reassurance that it will not lead to closures and unemployment, I would be so much happier.

I am sure the Senator does not wish me to go into the detail and complexity of VAT and various forms of payment, but the position is that what is being done here has been talked about for some years. In fact, I even quoted the Leader of Fine Gael in the Dáil at present as requesting the Taoiseach in October-November 1980 to have a serious look at the possibility of introducing VAT at the point of entry, because of the disadvantages that obtained, and still do, up to 1 September against those who produce at home. There has been quite a lot of comment on this point from many sources over the past couple of months. In fact, we put it into our election programme in January and February, and here it is now in the Finance Bill having been accepted in the budget. Obviously, I can understand and appreciate the genuine fears of those commentators and certain business people. I took note of that even before it was announced in the budget speech which made provision for a special scheme to be operative by that date by the ICC. There have been many discussions between the Department of Finance and the ICC to ensure that that scheme will be available for people who find themselves with liquidity problems in relation to the bringing forward of the payment of VAT and having VAT introduced at the point of entry.

Without going into all the details surrounding VAT generally, by and large, if a large number of people importing goods opt for the one monthly rather than two monthly system they should be out of pocket for about four days only. The majority who will be affected are those who will pay in December what would normally have been due in January. So it will not have such a huge impact. I know it could have some cash flow problems or liquidity problems for some companies and that is why, at the very time it was introduced in the budget, I announced the setting up of this scheme operated through the ICC to help people who found themselves in that situation. I can assure the House that we will look very carefully at it to ensure that the situation outlined by the Senator does not arise where it would lead to the closure of any company, no matter how small.

On the other hand, the benefits to the home producers of having VAT on imports must be enormous, plus the fact that it is now fairly common knowledge that there are widespread abuses in relation to imports of goods and avoiding the VAT liability on such goods. I was under quite a lot of pressure from 9 March until 25 March, vis-a-vis the election proposal for the imposition of VAT on imports. I had ample opportunity, even in that short period, to look very carefully at the possibility of exempting certain goods or products from the imposition of VAT at the point of entry. I felt that if we were to have the success we want to have — and I am sure the Senators and all concerned will be glad to see the outcome of this tax at point of entry in the months ahead — in relation to the elimination of avoidance, the elimination of certain advantages importers had over home producers, this should be done. When it is shown that there will be additional revenue everybody will be quite satisfied with this new proposal. I accept that there can and should be genuine fears on the part of some importers. If any liquidity or cash flow problems arise as a result of bringing forward the dates of payment of VAT, then the ICC will be there and will have a suitable scheme ready by 1 September when this new proposal will come into operation.

I should like to comment on the reassurance the Minister gave that prompt payment would ensue. Am I to understand there will be a lifting of the embargo on jobs in the public sector, and that we will see a rush of people willing to join the ranks of the Revenue Commissioners in order to deal with the outcome of this fairly radical move which, of course, will necessitate increased work in that area? Failing that, I do not see how the prompt payment which the Minister promises can be forthcoming.

In relation to additional staff?

The Minister indicated that prompt payment will be made. Will the embargo on jobs in the public service be lifted so that staff in the Revenue Commission can be augmented in order to give effect to the prompt payment promised?

This VAT payment at the point of entry is another nail in the motor traders' coffin. When a dealer collects a car from the importer or distributor, he pays for his car and he pays VAT at the time. The fact that the motor manufacturer or distributor has the benefit of that VAT which he has collected at the time of sale enables him to give to the motor trade credit which he could not otherwise give. Now the motor trader will still pay for his car as heretofore at the time of collection. The credit he got on a one-for-one basis from some manufacturers is gone by the board immediately VAT is payable at the point of entry. The benefit of the money the motor manufacturers and distributors had at their disposal, until they had to pay in tax at the end of the two-monthly period, was given to the motor trade. From 1 September the motor trade will find that their credit is gone and they will have to find a great deal of money in an industry which is already on its knees. It is almost the last straw that breaks the camel's back. There are one or two more straws left.

I am sorry that at first I missed the point made by Senator Bulbulia. In relation to staff, whether it be staff operating this system on the ground, or in the offices paying out the money when it is due to be refunded, sufficient staff will be provided. There will be no delays in that regard. If additional staff break the embargo, then I suppose in these circumstances it has to be done. The question of the general embargo is a matter for the Government and it is something they will be considering. Discussions have been going on with the Department of the Public Service in relation to any additional staff required for the efficient operation of the new system. I should like to tell Senator Daly that I am sure new suitable arrangements can be made between the importers of cars and the manufacturers of cars similar to whatever arrangements they had before. The motor trade, like all other trades, will get their refund in the refund period even before the actual car is sold to a customer. That will be the position.

I should like to correct the Minister. That would be a Utopian situation if it existed. The Minister must take into account that normally I would collect the car from the manufacturer. If the car costs in the region of £10,000 I pay for it, take it home and sell it. Then I would recover the VAT, as the Minister said, if it was all as simple as that. But unfortunately it is not as simple as that, because the person who buys that car could have another car to trade in and, instead of getting £10,000 I might get £3,000 or £4,000 plus his old car. I may then have his old car in a parking lot for five or six months and the tax is payable on it. That is where the problem arises.

The point I was making was that VAT would not be outstanding for that period. At the end of the VAT period, the man will get his refund, as is known. For example, a man brings in goods, say, cars, and on the 15th of the following month he has to pay VAT on the basis of bringing them in, and he pays it. The VAT period ends two months later and he gets his refund whether the vehicle is sold or not. That is the system.

I am sorry, but the Minister does not seen to understand me. Perhaps I am not making myself very clear. I buy a car from the manufacturer and I give him a cheque which includes the full amount of VAT. I sell the car but, instead of getting the price of the car in cash, I get 70 per cent of it on a trade in and 30 per cent in cash. At the end of two months, if I still have that car in stock, I can then claim back the tax on that money, but I can only get it back if I have a tax credit. So at best I have two months, and my money is tied up there. The manufacturer has the money he got at the point of sale and he does not have to make a return for two months. He gives us credit terms to benefit the motor trade. That will go after 1 September.

I have already replied to the general point the Senator made, but he will get back what he paid to the manufacturer at the end of the VAT period from the Revenue Commissioners. That is the position, and that is the way the scheme will operate. Whatever arrangements were there previously can be re-negotiated. They are outside the tax system. They have nothing to do with the tax system. Any arrangements a manufacturer has with a customer, or a customer has with a client, are matters for themselves. That is their own business. As I said earlier, I am sure new suitable arrangements will be made in relation to any disruption of those arrangements which might arise as a result of the new imposition of VAT at the point of entry.

Could the Minister give us the amount which will be returned to the Exchequer as a result of this measure? Also I should like to know if he has any idea at this stage of what the administrative costs of this measure will be.

The administration has not been costed, but I do not think it will be all that serious. The existing customs and excise staff, subject to negotiation with the various staff associations, and so on, and whatever additional staff are required, will be the people who will operate the system. The amount of revenue accruing to the Exchequer from this is £140 million this year.

I understand that the actual collection involved is not the simple matter the Minister would have me believe it is. I understand it involved a bank debit arrangement and there were some other fairly complex measures involved, particularly the ones designed to ameliorate the position for those who found the brunt of this too much to bear.

On the final point, bank debit arrangements already exist for customers, so there is no need to set up a new system there. I am advised by people who should know — and they are always very careful to ensure that they have sufficient personnel to operate any new system — that the additional costs involved in the imposition of VAT at the point of entry will not be excessive.

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

This is another nail in the coffin of the motor trade. VAT is being increased from 15 per cent to 18 per cent. When the Minister has heard our litany of complaints about the sad and tragic state of the motor industry, will he do something, even at this eleventh hour, to relieve the motor trade of this increase in tax?

This tax increase is of a general nature and there is absolutely no way we can single out any particular sector, even the motor trade, unfortunately.

We would not quibble about this tax increase of 3 per cent if it were the only tax. Unfortunately there are three tax increases: the increase in VAT, the increase in excise duty and the increase on petrol. I do not know of any other trade where there were three increases at the one time.

I do not want to get into an argument with the Senator. I think he made his point very adequately both yesterday and today on the difficulties of the motor trade. Unfortunately I am not in a position to assist him in any way. I was talking earlier today and yesterday about the balance of payments and the effect new cars have on it. People may be surprised to know that, in a trade which has been described by Senator Daly as being in serious difficulty, the effect on the balance of payments of imported new cars last year was £400 million. That is the reality. Things may not be as good for the first six months of this year, but that was the position last year.

Senator Daly must be a millionaire.

Question put and agreed to.
Sections 80 to 92, inclusive, agreed to.
SECTION 93.
Question proposed: "That section 93 stand part of the Bill."

Would the Minister answer a query on subsection (4) (ii)? The conditions to qualify for this very worthwhile benefit are restrictive. The 100 hour winter farm school only caters for 20 or 30 people in each country and there are many farm families. Perhaps the Minister might consider allowing the same kind of facility for young farmers under the age limit who have been apprenticed on their own farms, or to the fathers, for a two- or three-year period. There is no way the present educational services can cater for the entire body of farmers as the winter farm school caters for only 20 in one class per year in each county.

Is the Senator including the 100-hour course?

It is included, but there are not sufficient places there.

That may be so.

It is very worthwhile.

I have presented certificates at these schools in certain counties around the north west in recent times. They are always full. I do not know what demands are like or if there is anybody being kept out. I will have the Minister for Agriculture take up this point with ACOT. Obviously there is an increasing demand for these 100 hour courses, or any other kind of course, to help farmers through difficult times. When one is legislating for a certain qualification, one has to be fairly specific — the 100 hour course is one, the farm apprenticeship board certificate is another. Prior to ACOT, the Country Committee of Agriculture's certificates were issued in their name, and the equivalent university degree in agriculture is acceptable. One cannot legislate for the lad who serves his apprenticeship at home.

In most of these cases the individual already has had a year's agricultural experience, if he has not already taken the opportunity of doing the 100 hour course. It would not be possible to extend it beyond that, because if we did the qualification would be meaningless. I am sure the Senator would agree. As I said, I will take up with the Minister for Agriculture the point made regarding the number of places available for participants in the 100 hour courses, which are held throughout the winter months and see if anything further can be done.

Question put and agreed to.
Sections 94 to 96, inclusive, agreed to.
SECTION 97.
Question proposed: "That section 97 stand part of the Bill."

This section introduces substantial changes in the Capital Acquisitions Tax Act, 1976. Do these measures represent an erosion of the existing position? Does the Minister feel it would involve the break-up of estates? Would this be possible as a result of this measure, thereby breaking up businesses which are included in these estates? Would this put these estates at risk by forcing sales at an inappropriate moment? We are all aware that at the moment any sales could only take place at what is an inappropriate moment. A risk may be inherent in this, and I would like to be assured of this, but if it is, it would not be in the best interests of the country or the people.

I can give that assurance to the Senator. I do not think this is a possibility under this section or that taxes of any kind would be the reason for the break-up of estates. I have known certain businesses and properties being dispersed in certain ways according to the numbers in families, but that had nothing to do with the tax situation because there were fairly substantial exemption limits for taxation in relation to certain lands. Notwithstanding that, there was still the decision of the owner at the time in relation to the division of the property among his family and that had nothing to do with tax. I do not consider that taxes as such will have the impact the Senator fears.

In times past, revenue was more buoyant and we were not in a time of inflation. The general public are panicking because of the general economic climate.

I am afraid these measures would force decisions which would not be taken in calmer times. I asked the Minister if this measure represented a substantial erosion of the existing position. He did not refer to that in his reply.

The general changes in the capital acquisitions tax combine various acquisitions or gifts within the same classes but not across classes. Therefore, they confine the amount that can be given tax free. This is a taxation imposition. We are talking about substantial sums passing without sufficient tax being paid. We have all spoken at different times in support of the various protests — the PRSI protest, the PAYE protest, the farmers' protest — because we were not getting sufficient taxation under the capital gains and capital acquisitions taxes or whatever it might be. We cannot argue it two ways. I am saying this as a general point. All day the Senator has been asking for information about what is intended under the various sections and for further elaboration of the sections, and I am doing my best to reply.

This is a further imposition of taxation, and a relaxation of the relief that obtained for certain families. In that respect, this is going to cause some difficulty, I will not say hardship, because I do not think it should in relation to the amounts of money we would be talking about. What we are talking about here is equity within the tax system and broadening it to help the Exchequer situation.

Question put and agreed to.
Sections 98 to 105, inclusive, agreed to.
First, Second, Third and Fourth Schedules agreed to.
Title agreed to.
Bill reported without recommendation.
Agreed to take remaining Stages today.
Bill received for final consideration and ordered to be returned to the Dáil.

Maybe it is out of order, but I would like to thank Senators for their co-operation, for their very fine contributions to the debate yesterday and today and for their very informed comments on some very complex aspects of the Bill. I take this opportunity to thank them for their consideration and understanding.

On behalf of this side of the House, may I extend my thanks to the Minister for his courtesy and co-operation. This is very long and detailed legislation and I hope we did it justice.

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