Finance Bill, 1983 [ Certified Money Bill ]: Second Stage.

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

I understand that Senator Dooge and Senator Lanigan have made some remarks about the time that is available to this House for consideration of the Bill. I would point out that the time available this year for discussion of the Bill is a little more than has been available in the last two years. I can agree with the sentiments expressed that the time available is, perhaps, shorter than Members of the House would wish. I would like to make the point that in the discussion of this Bill in Dáil Éireann we tried to bring about a number of improvements this year in the time available for discussion and in the organisation of the debate on the Bill. It would certainly be my intention that we would carry those improvements into this House and that we would make some further progress next year in allowing more time and a greater facility for Members of both Houses to discuss what is one of the most important Bills that falls to be discussed and considered every year in the Oireachtas.

This year's Finance Bill has received wide public attention largely because of the tax evasion measures contained in it.

Before the Minister becomes involved in his speech and to avoid the necessity of taking detailed notes, may I ask that copies of his speech be circulated?

I understand that arrangements have been made to circulate copies of the speech. I had understood that they would be available now.

The tax evasion measures contained in the Bill this year are important and overdue in my opinion and will be welcomed by the vast majority of taxpayers who abide by the law. I want to emphasise at the outset that it is about a great deal more than tax evasion. It gives statutory effect to the taxation policies which I introduced in the budget last February and it also incorporates a number of taxation changes which will remove anomalies in our tax system.

Because taxation levels are high, our whole taxation system is now being subjected to a degree of scrutiny that we have not experienced before. I welcome this new interest and, provided the current debate and protests are carried through in a rational manner, I believe this can only lead to good. I said in Dáil Éireann and I repeat here that I hope that we can lower the general level of taxation for a majority of taxpayers over the years ahead but I must caution that this will not be possible unless we can at the same time contain public expenditure. The Government will consider new sources of taxation. Greater efficiency in collection arrangements will bring some improvement. At the end of the day, however, there is an immediate relationship between public expenditure and taxation. If we ignore this fact of life, it is hard to have a balanced discussion about taxation.

While I have said that I look forward to some reductions, it would be unrealistic to expect that we can achieve dramatic changes in a short time.

There is a widespread demand for greater tax equity but there are widely divergent views as to what should be done. The present system has serious defects and these need to be corrected, but much of the criticism of the system arises because of the high level of tax rather than its distribution and there is considerable confusion about this. Many people are under the impression that high taxes are a consequence of inequity. This is simply not true and it is highly misleading. A fairer system will bring down the burden to some extent for many taxpayers but it cannot achieve the kind of reductions that many people want unless it is accompanied by cuts in public expenditure. I keep returning to this point because it is central to the whole issue of taxation.

When the Finance Bill was being discussed in Dáil Éireann, the criticism was made that it was strong on evasion but not strong enough on equity. Countering evasion is one aspect of equity and I would be the first to acknowledge that we must go much further and consider more fundamental reforms, if we want to claim that we have made major progress. We must aim for a system where each pays according to his means, irrespective of his role in society, where anomalies that still persist are eliminated and where the system is demonstrably fair as between the different demands in society. This is a difficult target, not least because people will disagree on what is fair, but there are some objectives which are clearly desirable. In the short time since coming into office the Government have shown clear evidence of their commitment to a better system and the Finance Bill confirms this.

There have been considerable protests in recent weeks over the levels of taxation borne by the PAYE sector. I can appreciate the sense of frustration that has given rise to these protests. At the same time I must unequivocally condemn protests which involve breaches of the law. This is wrong and futile and the workers concerned are only doing harm to their own prospects. Those who are encouraging them to withhold taxes and to get into a position of dispute with their employers on this issue must realise the damage they are doing at this stage. While I acknowledge that there are legitimate grounds for dissatisfaction it is only fair to point out also that much of the criticism of the present tax system is misinformed. Exaggerated figures, especially in relation to unpaid taxes, have been used to make the case for tax reductions. Unless we approach the situation in a constructive manner, rather than with an attitude of allegation and counter-allegation, we will only add to the confusion and unrest.

On the details of the Bill, I would propose to concentrate on those sections which involve substantial changes which have not been fully detailed already in the budget statement. During the course of the debate in Dáil Éireann a number of significant amendments were made to the text.

Sections 3 and 4 provide for a radical change in arrangements for taxation of separated spouses. I am glad to see that they have been welcomed on all sides as a necessary reform to give a fairer deal to separated couples. The present law in relation to the treatment for income tax purposes of maintenance payments is unfair to the couples concerned and has given rise to many complaints. What is proposed here is to go as far as reasonably possible to provide the same arrangements for these people as for married couples generally and to allow them the option of single or joint assessment. Where joint assessment is chosen the separate assessment provisions will apply. The effect of joint assessment will be that their combined after-tax income will be the same as if they were living together and for many couples this will be a substantial advance.

The changes will apply in respect of new maintenance arrangements. They will also apply in respect of existing arrangements where both partners request them and I expect that many separated couples will be anxious to avail of this. The approach put forward in the Bill has the great advantage of flexibility and, in future, couples will have options and the right to select the method of taxation that best suits their circumstances.

Section 8 reduces the exemption limits for certain bank deposit interest from £70 to £50 and from £150 to £120. There is also provision in this section for an extension to the Agricultural Credit Corporation of the £50 exemption limit on interest income from deposits. The corporation specialise in lending to agriculture and I consider it important that they should not suffer any disadvantage in securing adequate deposits to finance their activities.

Section 9 makes significant changes in the tax appeal procedures. In future, applications for late appeals made later that 12 months after the date of the notice of assessment will not be considered for admission unless the tax charged in the assessment, together with any interest thereon, is paid and the necessary returns and accounts to enable the appeal to be determined have been submitted. Applications for re-hearings of tax appeals in the Circuit Court are being used by some taxpayers to delay finalising their tax liability and I propose to restrict this right of a re-hearing to genuine appeals. In future, where no returns or accounts are submitted, or the documentation submitted is inadequate to determine the appeal, the appeal commissioners, if an application for a further adjournment is refused, will dismiss the appeal. Where an appeal is dismissed, the original assessment will become final and conclusive. The section also provides that hearings by the High Court and by the Supreme Court of cases stated will no longer be held in camera.

Chapter II of the Bill deals with farming profits. The principal change is the extension of income tax liability to fanners who up to now have been excluded because of their low rateable valuations. This change has become necessary following a recent High Court judgment which held the poor law valuation system to be unconstitutional. At present approximately 35,000 farmers are liable for tax. An estimated additional 90,000 will now come within the tax net. Only a minority of these will actually pay tax, because most of the farmers concerned are on low incomes, and for this reason we should minimise the extra work involved both for the farmers themselves and for the Revenue Commissioners.

A certain amount of confusion has been generated with regard to the administration of this change. The Joint Programme for Government stated that the poor law valuation system would be replaced by a system based on standard results per enterprise and per region taken from the farm management survey. Those gross results would be adjusted to take account of capital depreciation, interest payments and other factors, in order to calculate taxable income. The object of the proposed system was to ensure that farmers becoming liable for income tax for the first time, many of whom would not have a taxable income, would be able to discharge their income tax responsibilities on a simplified basis, without having to submit detailed accounts.

On further examination, I have concluded that the standard results system is unsuitable as a basis for calculating farmers' taxable incomes. Being based on regional averages, it would attribute unrealistically high incomes to those farmers who fall below average regional incomes per enterprise, and unrealistically low incomes to farmers whose income levels are higher than average. If farmers were allowed the option of a system under which taxable incomes would be based on standard results, the more profitable farmers would be systematically under-taxed, while the less profitable would have to keep accounts to avoid excessive income tax charges. Thus, in those cases for which the simplified arrangements were intended — small farmers who would not be likely to have taxable incomes — they would not derive any benefit from the system. In any event, a notional system of taxation for farmers would be inconsistent with the objective of treating all taxpayers on an equal basis.

I consider that the farm profile approach which we have developed since then will achieve the objective underlying the passage in the Programme for Government more fairly that would a standard results approach, and I believe that the great majority of the farmers affected by the extension of liability will see this, and support the farm profile approach.

I have already referred to the current interest in defeating tax evasion and avoidance. Some of the Government's proposals for improvement are incorporated in Chapter IV. A number of these were announced in the budget but there are further changes.

The provision in section 17 requiring depositors to produce an affidavit as evidence of residence abroad has caused some concern in that it might discourage investment by genuine non-residents. I have taken account of this concern and I have modified the provision so that generally there will be no obligation on non-residents to produce an affidavit. Where, however, residents here make an investment on behalf of a non-resident, an affidavit will be required from them. There is strong evidence that the exemption from reporting arrangements for foreign residents is being abused on a wide scale and it is necessary to take action to curb this abuse. Section 18 will allow the Revenue Commissioners, on foot of a court order, to obtain information on transactions made through financial institutions where they have reason to believe that the taxpayer is withholding information on personal taxation.

Up to now profits from illegal activities have not been liable for income tax or corporation tax and this situation is rectified in section 19. There is a significant new anti-evasion measure in section 20 which provides that, where the inspector of taxes is not satisfied with a taxpayer's income tax return, he may request a statement of assets. I have already given assurances in Dáil Éireann that these new powers will be used selectively and only in circumstances where the inspector has good reason to believe that the taxpayer is not making proper returns. Section 22 provides that in certain circumstances tax reference numbers must be shown on invoices and receipts. The other provisions in this chapter are budget items and I would draw attention again to the intention, expressed in section 23, to give effect to the proposal to publish particulars of those convicted of tax offences and of those with whom larger back-duty settlements, above a threshold of £10,000, are made.

Section 27 gives effect to the announcement regarding the arrangements for 1983-84 in relation to the taxation of building society deposits. It provides that the deposit ceiling for the application of the composite rate will be restored to £15,000 from the level of £30,000 which applied temporarily and in particular circumstances for 1982-83. It also provides that the existing composite rate of 24.5 per cent will be continued for this year, except that in cases where a building society does not undertake to co-operate with the Revenue Commissioners in a survey to arrive at a true composite rate, an increased rate of 26.25 per cent will apply.

Sections 29 and 30 extend for a further period of three years, from 1 April 1984 to 31 March 1987, the period in which expenditure incurred on the provision of rented residential accommodation can qualify for tax relief under sections 23 and 24 of the Finance Act, 1981. Some modifications in the scheme will apply during the extended period. The upper floor area limit for flats will be increased from 75 square metres to 90 square metres and qualifying expenditure may be written off only against the amount of the rental income from the property on which the expenditure was incurred, rather than against rental income in general as at present. Where flats exceed 75 square metres, there will be a requirement that they must have a minimum of three bedrooms. I would emphasise that these provisions are an expansion compared to the three-year scheme in operation which, other things being equal, would end next year. We have added some new provisions, although much of the discussion during past weeks would give the opposite impression.

Chapter VII provides for a new system whereby advance corporation tax, or ACT, will be payable by Irish resident companies. The system is designed to ensure that, where tax credits are available to shareholders, sufficient tax will have been paid by the company to ensure that no loss accrues to the Exchequer from the benefit accorded to the shareholders by the tax credits.

Payments of ACT may be set off against normal corporation tax on a company's income. There is provision that a company receiving distributions from another company which has paid ACT on them is entitled to deduct the tax credits in respect of those distributions from the tax credits in respect of its own distributions in calculating its ACT liability. The purpose of this deduction is to avoid a double charge to ACT.

There is a transitional arrangement for distributions made under bank loans known as section 84 loans. It relieves from a charge to ACT, distributions under such loan contracts entered into before budget day or finalised within four months after budget day where negotiations were in progress on that day. This provision is designed to avoid disruption of settled and currently pending section 84 loans. ACT will apply to distributions under all such future loans in the same way as to distributions generally. Dividends which had been declared or announced before budget day but paid on or after budget day will not be liable for ACT subject to certain conditions. This provision is designed as a matter of equity to meet cases where a company, in accordance with its normal practice, had decided on and declared its dividend, on the basis of the pre-budget legislative position, but with actual payment of the dividend not being made until after budget day.

ACT will fall due six months after the end of the accounting period in which the distribution is made. This is the same due date as that for payment of the first instalment of normal corporation tax. It ensures an early set-off of ACT against normal corporation tax in contrast to requiring advance payments of corporation tax during the accounting period with a lengthy interval before any set-off could be availed of. As a transitional arrangement, I am providing for the phasing-in of ACT so that only 50 per cent of the charge will be payable in respect of distributions made in the year to 8 February 1984. This will halve the anticipated Exchequer yield of £10 million which would otherwise arise in 1984. Following the enactment of this Bill, I will consider representations with a view to ascertaining whether changes in the ACT provisions would be appropriate in the context of the 1984 budget. I would point out that it will not be until next year that the generality of companies will actually make their first ACT payments on foot of distributions made this year.

Part II of the Bill, that is sections 57 to 76, confirms changes in a wide range of excise duties and in road tax. Most of these changes have already been implemented. Section 61 provides for an increase in the excise duty on category A motor vehicles, from 50 per cent to 54½ per cent for those of up to 16 hp and from 60 per cent to 64½ per cent for those exceeding 16 hp. Motorcycles are not affected. This additional revenue is required to off-set the reduction in the VAT rate to 5 per cent for garage services. Section 76 confirms certain impostion of duties orders, including those which were made in 1983, varying the rates of duty on the main excisable goods. I would like to draw special attention to section 73 which provides for the reclassification of dump trucks as on-site vehicles for the purpose of road tax.

The value-added tax provisions in Part III relate for the most part to the budget proposals. There are, however, a number of significant new items. The VAT rate on hotel and similar accommodation is being reduced from 23 per cent to 18 per cent. This is in recognition of the fact that this industry must sell its services in the international market place in the face of severe competition and of the important contribution made by it to improving the balance of payments. I introduced amendments in Dáil Éireann to provide for a reduction in the VAT rate on garage services and repairs from 23 per cent to 5 per cent and, as I have already mentioned, an offsetting increase in the excise duty on cars. This decision was made after discussions with the Society of the Irish Motor Industry, which put the proposal of a switch from VAT to excise duty at no cost to the Exchequer, to me. I am glad to have been able to meet this request and I am assured by the society that the change should give a big boost to business at a time when its members were facing more redundancies. The new VAT rate will apply also to the servicing of farm machinery and a corresponding reduction is being made in the flat-rate rebate paid to unregistered farmers to compensate them for VAT borne on farming inputs.

The annual turnover threshold limits, above which VAT registration is mandatory, are being reduced. The reductions are intended to eliminate the advantage which legitimately unregistered traders would otherwise have had as a result of the increases in VAT rates since 1981. I accept that these reductions may bring some small businesses back into the VAT net — I estimate some 300 businesses — but this is an unavoidable part of trying to set thresholds at a level which is fair to those just above and below the limits. The Revenue Commissioners will continue to take all possible steps to curb the activities of illegally unregistered traders. I would like to welcome in this connection the increased co-operation being received from legitimate businesses in helping to locate such illegal outlets. The information provided has been most valuable and I would appeal to those organisations which complain about the impact of illegal trading but which have not so far transmitted information to Revenue to do so without further delay.

During the debate in Dáil Éireann concern was expressed about section 94 which provides for terms of imprisonment — in addition to monetary penalties — for a wide range of offences against tax laws. The point was made that while these severe penalties are appropriate for serious tax offences, they would be inappropriate in relation to the ordinary taxpayer who for understandable reasons may have failed to make his return at all or within the prescribed time. I want to make it quite clear that it was never intended that these stiffer penalties should be applied to the ordinary taxpayer for what everybody would agree would be relatively minor offences. These penalties are aimed at those who deliberately set out to evade payment of tax either by making false returns or statements or by refusing to make any return so as to conceal their incomes.

I considered how the views expressed by Deputies in Dáil Éireann might be met and how this penalty question could be clarified so that all might be assured that only cases of serious and deliberate offences would be brought before the courts under this section. The use of the word "negligently" in the original Bill caused unease, although this word has already been held by the courts to mean something that a reasonable person would not have done. Notwithstanding the judicial view on the meaning of this word, which would limit its application, I proposed on Report Stage in the Dáil to delete it from each provision in the section and to replace it with the word "wilfully". This alteration means that the State will have to prove that the defaulter knew exactly what he was doing when he committed the offence.

I also proposed omitting the reference to "neglect" in relation to directors, and so on, in subsection (5) and to delete the word "delays" in paragraph (g).

These amendments have clarified the position and will limit the application of the section to serious tax offences including, in the case of failure to make returns, only those cases where the failure is in fact an act of defiance and a deliberate refusal to comply with the tax law.

To copperfasten the position still further, I have asked the Revenue Commissioners to apply the section only to cases of serious tax offences and not to ordinary cases of default where, due to carelessness or oversight, taxpayers have not complied with their tax obligations. I have been assured by the Commissioners that this will be done. The ordinary cases of failure to make returns in time or failure to comply with other tax obligations will continue to be dealt with under the old penalty provisions which provide for monetary penalties only. No proceedings under section 94 will be initiated except under the signature and approval of one of the three Revenue Commissioners. I hope that these amendments and the assurances I have given to the Dáil and to this House will alleviate any concern which may have arisen. In addition I would make the point that section 94 in general does not provide for new offences but provides for new penalties for serious offences.

Part VI of the Bill makes provision for the residential property tax announced in the budget. The tax will involve a charge of 1½ per cent on the excess of the market value of property over an exemption limit of £65,000 where the household income exceeds £20,000. Both the market value and the income exemption thresholds are to be indexed annually. Residential property rented at arm's length will be exempt, as will houses of historic or architectural value where reasonable access is allowed to the public. Relief for families will be provided in the form of a 10 per cent reduction in the tax charge in respect of each dependent child. The property tax will be implemented on the basis of self-assessment. Those who have reason to believe that they are liable on the basis of the provisions of the section will be obliged to make a payment to the Revenue Commissioners by 1 October.

When the Bill was before the Dáil, Opposition Members were critical of it at different times for being anti-PAYE taxpayer, anti-farmer and anti-self-employed. The only people who have reason to feel concerned about the provisions of this Bill are those who are evading tax. I have already described it as a substantial step forward towards a more equitable tax system. We are going in the right direction and I look forward to further changes of a more fundamental nature. I look forward to a time when the different lables, such as PAYE taxpayer and self-employed taxpayer, which now unfortunately generate such division, will no longer have any significance. Much of this present division is artifically created by misrepresentations of facts and by exaggeration but at the same time there are anomalies which must be corrected and we must aim for a system in which equality not only is applied but is seen to be applied.

In conclusion, I repeat my statement that this Bill implements the budgetary provisions announced in my Budget Statement. In some cases one would get the impression, listening to the debate on the Bill, that it contains a series of new measures not previously foreshadowed which have been brought forward as an additional response to our situation. That, in fact, is not the case. This is the Bill which gives effect to the provisions of budgetary policy. We have already had in both Houses of the Oireachtas a detailed discussion on the provisions of budgetary policy. What we are now doing is giving effect to the detailed legislative provisions which will implement that budgetary policy.

This is the first opportunity we have had to debate the budget and the Finance Bill which brings into effect the budgetary provisions. I welcome the opportunity to assess in detail the Government's financial programme. However, I regret that the debate must conclude this week because it affords little opportunity to Members, in the light of some changes the Minister made in the Dáil, to table recommendations. I ask the House to consider this question to see if we could be given some greater flexibility in the tabling of recommendations if we feel they are necessary.

The Finance Bill is a punitive, negative and unimaginative piece of legislation. Its provisions lack the type of incentive-orientated thinking which our economy in its present perilous state, particularly with regard to employment prospects, requires so desperately. The Bill has triggered off a further feeling of despair in our community. It has added to the already deliberately fuelled view that in many ways the Houses of the Oireachtas are not getting down to the more fundamental reassessment of our economic position and to basing our conclusions on how to generate, in terms of greater equity and national commitment, a morale boosting technique and, generally, providing the motivation for our people in self-pride, self-reliance and community endeavour.

How does the Bill measure up to those requirements? I do not want to suggest that the Minister is a miracle worker or that there are not severe constraints operating in our economy which do not allow for massive adjustment in taxation and expenditure. It is clear to anyone who looks at the situation seriously that the elimination of our current budget deficit is essential. A cursory glance at the way Government expenditure has gone in recent years indicates the enormity of that problem. It has grown in a short few years to almost 60 per cent of gross national product. It is considerably above the level of Government expenditure as a percentage of gross national product in most of our competing partners in OECD countries and any Government has to prune and look seriously at how that trend is developing.

This substantial growth in Government expenditure and borrowing has, unfortunately, not led to greater prosperity and employment but on the other hand has helped to fuel inflation and caused significant decline in our international competitiveness, a drop in investment and a large and unsustainable growth in the deficit of the balance of payments. This loss of competitiveness has had several bad consequences such as lower output, closures and lost employment and even the companies that have come through in these difficult times have not had sufficient profit to reinvest and provide the kind of job opportunities we so desperately need.

In the first half of this year we had 50 factory closures and it is estimated, as this trend continues, that there will be well over 100 closures for the entire year. A problem of that magnitude requires very stringent and earnest efforts. The inflationary spiral has forced workers to seek higher wages in their efforts to maintain living standards. New investment has become unattractive because of the poor return and the insufficiency of funds. Our costs, compared to our competitors, continue to remain relatively high. It was regrettable that in these provisions, however difficult the situation was, the Minister chose so many different areas for increased taxation, whether we are talking about PRSI payments by employer and employee, levies, tax on industrial oil, transport and communications, to name but a few. They have all unquestionably added to this already most difficult climate.

We must continue to look at Government expenditure and ensure that moneys are provided for genuine productive projects and that these are continually subjected to the criteria which are necessary in order to ensure that the taxpayer is getting full value for money. We need to continue to ensure that capital expenditure to improve our services is maintained. Funds for road improvements are insufficient and many of our roads are becoming increasingly dangerous, obstruct and hamper industrial development, cause traffic chaos in so many of our towns, cities and, indeed, present significant difficulties in rural areas also. Local authorities have indicated that their cycle for resurfacing our county roads has moved from a desirable nine-year cycle to an incredible 23-year cycle. We must consider that the amount of money being provided by the State for road improvement and road maintenance represents about 22 per cent of the amount being taken up in road tax and other direct taxes from road users. The Government's decision, therefore, to cut the capital programme by more than £200 million has obvious detrimental effects and serious import for the provision of employment.

The importance to the economy of the building industry must be stressed. The size of its output, the employment and the use of raw materials from here illustrates the impact development in this area can have on the whole economy. The graph continues to show a downward spiral and the Minister in the Bill does not address this question but in many ways introduces clauses which will only add to the difficulty. I accept that there is no way that in the present state of economic circumstances the full potential of the building industry can be exploited. It goes without saying that we will not see rapid improvement in that industry until the health of the economy improves but, at the same time, every conceivable effort should be made to gear this home based industry, with such employment potential, to be able to take advantage of an improved situation when that occurs.

As well as encouraging maximum State investment we have to encourage also more private investment. I wonder if this objective will be achieved by frightening money out of the banks and building societies with proposals, however genuine in their avoidance intent, which do not help to improve the situation. We have almost 40,000 trained personnel, carpenters, bricklayers and others, scattered throughout the country in receipt of social welfare who were employed in that industry a few years ago.

Another matter I should like to mention is that of imports for that industry. It is estimated that imports for the building industry amount to £350 million and these could be substituted by home products if we got down to a more radical approach to import substitution. The timber industry requires a radical overhaul. We are, perhaps, one of the best timber producing countries in the world. We have had a great capacity to work our forests and produce timber but when it leaves the forest gate we fail. The Miniister, and his colleagues, should encourage timber processing and ensure that we utilise the produce of out fast maturing forests. There will not only be a doubling but a trebling of matured output in a few years time but there is practically no provision for the processing of that produce. While that is happening we continue to import very significant quantities and those imports could be eliminated if we had a more dynamic and radical policy.

Many schemes offering employment opportunities could be considered. They would not cost substantial amounts of money. The Minister should consider venture capital on a par with provisions that exist in the United Kingdom and the United States. I am not asking him to go as far as those countries but he is aware that in many high risk projects investors and entrepreneurs will not get involved if there is a serious possibility that their financial situation will be overwhelmed in the event of the project not getting off the ground.

We have been talking here and in the Dáil for many years about the substitution of imports but we do little to help innovation and enterprise where there are advantages. We seem to shy away from helping out with venture capital where possibilities exist. The IDA, SFADCo, county development teams and innovation centres are all aimed at creating an interest in new product development and import substitution but we do not encourage investment or take some of the risk.

The Minister has made changes with regard to the proposals on advance corporation tax which I welcome. Obviously, he made some progress in this area in the Dáil and some further progress would be welcome in relation to the capital allowances which form the basis of encouragement by the Department of Trade, Commerce and Tourism, and successive Governments, to foreign manufacturing companies. It would be a pity if those who invested their profits in recent years for development and modernisation were now to be penalised with advance corporation tax. I welcome the change the Minister has made. In the review of this provision he should ensure that there is sufficient profit in those companies to provide for greater development and marketing. He should deal with the real problems in our economy which are in danger of creating the sort of difficulties which squaring our books or bookkeeping exercises will not answer in the future.

I should like to refer to the provision to reduce the interest allowance on small savings. Thousands of small savers, many of whom are quite elderly, will be penalised by this anti-saving device. Interest rates on savings have been for years below the inflation rate and, as a consequence, the real value of savings was being continually eroded. The drop in the standard of living for most people does not leave them in a position to save but those who can, after paying tax or otherwise, are singled out for this penal clause.

If there are people in the community who invest their money in a wide range of different lending institutions, securities or otherwise, the Minister should deal with them in a different way without introducing a provision which strikes at the core of what has been a traditional part of Irish life in rural areas and towns, the principle of small savings. Many of those people do not enjoy high living standards and do not have many modern conveniences that most others have. They have a saving mentality which is vital to the economy. We are all aware that if one wants to build a house, develop a farm or start an industry significant sums of money must be borrowed. That money is available only if other people save. That is one of the reasons why it is necessary to encourage people to save. I hope it is not intended to consider as criminals in the future people who have a saving mentality. Many people, most of them elderly and pensioners, approached me in recent weeks and expressed bewilderment and confusion about these changes. Those people do not have thousands of pounds; in most cases they have less than £1,000. In a year in which pensions have not been increased significantly and when their payment has been delayed until the middle of the year, any further punitive clauses are certainly not to be welcomed. I would ask the Minister, in some of the changes which we hope this debate will request, to consider a change also in this particular area. I welcome the facility which he has given in that context to the Agricultural Credit Corporation who were at a disadvantage heretofore, but I am anxious that overall he should allow the original threshold on interest allowances to be maintained for small savings.

I come now to the question of residential tax. I am all for the concept of those who enjoy comparatively better living standards and have better residential accommodation paying more in capital taxation. In fact the share of tax which comes from the capital side has continued to decline in recent years. Compared to most European and developing countries we are becoming unique in this respect. The fact that now we pay only in rough terms about one-third of the amount paid in total capital taxation some ten years ago leaves certain options in this regard open to the Minister. He has, however, chosen a midget, and, in operative terms, an impossible and grossly unfair and inequitable system. One scant look at the proposals is enough. The varying circumstances of individuals who may have similar incomes or live in comparatively similar types of houses are immense. Suffice to say that mortgage payments of large families do not receive any consideration. The Minister should scrap this sop to the Labour Party and come back to the House with a property thoughtout, equitable base for increased capital taxation.

The Senator's party abolished wealth tax when we had the proper proposals——

An Leas-Chathaoirleach

Please allow the Senator to continue without interruption.

Do not talk about the Labour Party. The Senator should talk about his own party and his attitude to the wealth tax.

The Senator is very sensitive today.

I am very sensitive when somebody tells a deliberate untruth in the House.

An Leas-Chathaoirleach

I am amazed at Senator Ferris.

That trip to Lisbon did not suit the Senator.

I do not mind. I know that I touched a sore point as far as Senator Ferris is concerned. If he is unable to cope with it and if it hurts that much, I would have imagined that he would have felt rather proud that the Labour Party succeeded in getting the Fine Gael Party, who, I imagine, must have found this provision quite unacceptable to them——

It is in the Bill.

Do not exhaust yourself with too much imagination.

It looks as if I am in danger, if I reply to any further comments made, of having to cover a much wider field, and with due deference to the Leader of the House who enjoys a very honourable position here, I had thought that up to now his capacity for restraint was somewhat better than it now appears to be.

An Leas-Chathaoirleach

The lovely thing about this House is that everybody is human.

I want to come now to the question of mortgage relief. It is vital in a climate where funds are scarce as far as is practicable to ensure that the greatest degree of financial relief goes to those people who are on lower incomes. There were undoubtedly situations where these concessions found their way to better-off sections of the community to a greater degree than to those who perhaps were in need of them. I submit that that needed correction. However, in the Minister's attempt to do this he actually penalised young couples at a most vulnerable time.

Many thousands of people — and this was indicated in the Dáil, almost over 200,000 — still will benefit to the maximum extent in their present situation under this existing provision. Those within the £30,000 bracket mentioned in the Dáil who had just completed purchasing their houses or who had just built their houses and are now faced with the maximum repayments, having had to pay substantial bridging facilities in the interim, are as I understand it, losing out under a provision, the change in which I would generally welcome. Considering that the amounts here would relate to houses roughly in the £30,000 bracket, one is talking about very average housing situations in most parts of the country. If I could be assured that those people could benefit to the full and maintain the existing position I would be happy, because on top of the problems which this change brings for them, there are the PRSI and other payments which these couples have to make regardless of their commitments.

Before I go into the question of farm taxation I want to make a few general remarks about that industry and how we reached a situation when these proposals are now before us. I would ask the Minister to make provision for the countinuity of one particular scheme in relation to that whole Department which I regret very much has been discontinued at present and that is the farm modernisation scheme. I know there are officials in the Department of Finance and in the Department of Agriculture who hold the view that investment in agriculture has not given a proper return. There are those who in examining the State expenditure on farm modernisation over the last ten years — it has gone into £500 million or £600 million in total, including grants and provision made by the farmers themselves — hold that the return to the country as a whole has not been of the order that one might like it to be.

I want to make two brief points on that before I move on to taxation because I regard this as fundamental. We moved from a situation of boom in the late seventies to burst in the early eighties. This created many problems for some farmers in the developing category and helped to create and cement the view in some official circles that all of this investment was in some way wrong and the fact that so many people were in difficulty was proof of that.

I want to give two samples to indicate that that is not the true position. The number of those who are in difficulty compared to all those who carried out this work is quite small. But because we moved from boom to burst in a couple of years, when you had, relatively speaking, very good conditions which became disastrous in a couple of years in terms of rampant inflation, high interest rates and low EEC prices, the position changed dramatically and a number of farmers found themselves in a most difficult situation. In case that officials in these Departments — and through their influence, Ministers — would begin to think that either farm development had reached a stage when we could discontinue further development or alternatively that this whole process has been a wasted exercise for the country, I want to indicate that many farmers when this development was carried out at first had actually increased their stock numbers to close to the limit so that subsequent to the development the accelerated increase in stock numbers did not obtain. I believe that was probably one of the reasons why so many farmers who carried out this development did not get into financial difficulty.

The Minister will know from his experience in agriculture that it is fundamental that the areas of stocking rates, improved management and so on, are attended to before any great emphasis is placed on the provision of building. Therefore, for many farmers who now want to develop — and for the range of farmers who have not even thought about it yet in national terms, using these resources and without grant aid at the moment — all of that work is coming to a standstill. Farm development services in county areas have little or nothing to do and employment downstream service job opportunities that automatically flow from farm development are at a standstill.

Some people in a non-farming sector would view these grants as unnecessary. In most cases they represent about 20 per cent of the total cost so that the farmer himself has to generate 80 per cent of the total cost in average terms for most of that development. He is unable to carry out this work himself so that there is very substantial off-farm downstream service job opportunity in this particular area. I want to ask the Minister to ensure that when this scheme is being revised or reviewed the task will be carried out fairly quickly in order that we can provide the opportunity for much further development on our farms and not arrive at a situation where in the case of the farmers who have not developed, who need the greatest encouragement, we are providing no aids for them. I use this opportunity to put on record what I regard as a fundamental necessity for future agricultural development and for those thousands of farmers who are now retreating and unable to undertake any further developments. I also want to underline the effect that lack is having on employment.

I give one example. A farmer with 100 acres who wanted to make a reasonable investment in terms of increased stock numbers, improvement of land, provision of in-winter facilities — provisions costing about £500 an acre — would find a loan of £50,000 on a farm of that size at present interest rates generally close to being unsustainable. Therefore, to undertake a proposition of that kind he needs support. The Government and the State have a system whereby the scheme is approved and carried out to the design of the local farm development service and where no grant is paid until the work is finally completed. In what other system in the IDA or anywhere else is there the same proof that the work is completed, the downstream job opportunities that were involved in it already provided and the possibility for increasing farm output opened?

The question of farm taxation is obviously somewhat embarrassing for the Minister in the light of Fine Gael propaganda in the last general election. It is never easy to have to come into the House and outline proposals which were made during the course of the campaign and then to find that these are not sustainable for any one of a variety of reasons. In the case of the farming profile and the subsequent situation when accounts will have to be provided by the farmers whom the tax people consider should be in the taxpaying category, I would ask the Minister to give further consideration to the standard account system because the amounts that are going to be paid to accountants will be probably ten times greater than the amount of the tax that the State will get from these thousands of farmers all around the country who will be asked to provide accounts to prove that they do not have a taxable income. I know that the aim should always be to have the greatest possible equity in our tax system but we must also ensure that the different kinds of employment and stresses involved in this employment are considered in our tax code.

Farming is perhaps peculiar in one sense. Take, for instance, weather conditions in the last five or six weeks. We still have about 25 per cent of the cereals and in some cases some sugar beet still to be sown. Six weeks ago farmers put out fertilisers to put in a sugar beet crop and were unable to sow that crop up to a few days ago. This will indicate to the Minister that in the effort to have equity, to have everybody paying his fair share, cognisance must be taken of climatic conditions and the different variables that can make farming a reasonably profitable proposition in one year and result in a disastrous and very different situation in a subsequent year.

I come now to one of the areas which perhaps does not really come within the scope of this Bill but in the light of the freedom which is generally given to this House in debates of this kind and which is somewhat similar to that given in the other House and with the latitude that public representatives sometimes take, I am going to make a suggestion to the Minister in relation to finance. I ask him to use his influence with his colleague, the Minister for Education, with regard to the educational sphere. I mention this because there have been many local problems and meetings all because of cutbacks in education related to school transport, remedial teaching and career guidance. In all honesty, when it comes to making cutbacks of this kind, having all these rows and this disruption over amounts of money which could be as small as £2 million or £3 million, it is a most unacceptable and ridiculous way to go about pruning Government expenditure. There are situations in education and in other areas in which — as far as the public is concerned generally — pruning could be done or perhaps other charges could be made but certainly not at the level of remedial teaching, school transport and career guidance.

The question of the charges for higher education has been mentioned in recent debates. Unfortunately, in spite of the changes which were brought in by the late Donagh O'Malley we still have the situation where the vast bulk of those receiving third level education are drawn from the middle and upper classes. Many of the poorer sections of the community have been unable to enjoy the chance of third level education. Therefore, in considering the Government's financial position and where there are difficulties and pruning has be be done, they should consider areas where the individuals concerned or their parents or families are in a far better position to pay substantially more for higher education than are other communities to deal with cutbacks at the level of primary and secondary education. Unless one is able to provide some basic education at that level all of the others become insignificant.

I would ask the Minister, when we have scarce resources and because decisions have to be taken and priority positions have to be taken up, to look to the upper echelons in society and those who traditionally have been able to benefit, who have been able to get in on the roundabout, as it were, and who knew what was needed to be known in time to get into the right stream: let him look to that area rather than take the generality and deal with a reduction of pupil-teacher ratio. One particular area in which I have a very special interest and on which I would make a very special plea is in the area of remedial teaching.

I want to say a few words at this stage on the question of tax evasion, tax avoidance and the provisions which the Minister has included. I do not find myself at variance with the Minister to the degree that others might. It is quite obvious to anybody who wants to have a serious look at our tax system, at the delays in the returns and at the outstanding moneys due under various headings, that there is room for improvement, room for ensuring that all sections of the community pay their fair share and that it is paid in relatively good time. To this extent, I would welcome most of the provisions that are aimed at dealing with this particular matter. It is important to put on record that the vast bulk of people in the various sectors comply with the regulations and pay their tax. The pressures on the PAYE sector and the pressures on people whose incomes are readily known — the disquiet that has developed in that area is understandable — are added to when small groups of people are in a position to use the existing regulations to abuse and to frustrate normal developments in that area.

I want to welcome also the reduction in VAT which has been granted to the hotel industry, which is a very valuable and largely non-importing industry which has been going through a very difficult time. I would also like to welcome the provision in relation to the reduction of VAT in the motor trade. This is a very valuable contribution to an industry that has had its back to the wall in recent years. I remember a meeting involving interests in that area where the suggestion was made that in return for State aid, in the sense of a concession in VAT, they would be prepared to take on a number of apprentices and that the industry itself would contribute in that way to the underlying employment problems we have. An industry that has had a loss of employment in overall terms in recent years of about 7,000 certainly must acknowledge any help that is given. I hope it will aid that ailing industry to become more viable in the future.

If ever there was a need for leadership and a rallying call to all of our people, to which the vast majority of us could legitimately subscribe, it is now. Faced with mounting unemployment, frustration, drugs abuse, crime, vandalism, tax evasion, we require more dynamic and radical solutions. These solutions will impose hardships on the better-off sections of our communities and will call for restraint from all those who have stable and secure employment. The people have proved in the past that they can take difficult medicine provided it is equitably shared and provided that they see a possibility at the end of the tunnel, as it were, that employment and prospects for our young population will be safeguarded. I would ask the Government, and particularly the Minister, to reach out to that underlying potential that is there in our communities and not to engulf the country in philosophies of despair. Bookkeeping has to take second place to people as we try to nurse the economy through these difficult but, I hope, challenging and opportunistic times. The hopeful signs of growth in our manufacturing exports, the potential for growth in our agricultural exports, the potential for import substitution in so many manufacturing and food areas — these are challenges which we will take up. The lowering of oil prices, lower inflation and a drop in interest rates are of some help in our present climate. I am not trying to argue the point that these have all happened for the best. For the first time in my lifetime we have had a drop in consumer demand for two years in succession and many of the goods that normally would have been imported in better times have not been imported, with obvious advantages.

I am not trying to say there are unlimited funds available to this or any Government, but I want the Minister to concentrate on providing finances in the areas where I see potential for employment. I regard that as the central theme, the area where the greatest effort has to be made, and where the most radical thought and new positions have to be taken up by all sides of the House. Apart from being politicians representing a particular party, we have a vested interest in ensuring the viability of our State and ensuring reasonable, hopeful prospects for the young people who come after us.

This is not our first occasion to discuss the provisions of the budget. Recognising the narrow timescale in which the House has normally operated in considerating the Finance Bill, the Fine Gael Party put down a Private Members' motion which called to the attention of the House the provisions of the budget. We had a very full debate in which the Minister participated. For that reason the type of contribution I intend making on the Second Stage of this Bill is fundamentally different from the type of contribution that would have been made by my predecessors when they did not have an opportunity prior to the Second Stage of the Finance Bill to express their views on the budget introduced earlier in that fiscal year. I do not intend to range widely over the budgetary situation, the necessity to reduce our budget deficit and the fact that the desire to reduce the deficit is not a negative thing but a positive thing and that those who aspire to this reduction are the very people who are positively contributing towards the possibility of employment for the very many young people who are attending full-time education at present.

The way in which the main Opposition Party and their Leader have abused those who sought to work towards the abolition of this deficit is characteristic of the way in which a person who has got into financial difficulties with his local bank blames the bank manager rather than himself and his actions. That is more fitting for the debate we already had and I say that recognising that other participants in this debate might not want to give up the right and privilege which they have taken to themselves of discussing a very wide range of topics affecting Government policy on Second Stage of the Finance Bill.

I would like to share the views expressed by Senator Dooge and Senator Lanigan concerning the short time we will have for the consideration of this Bill. The Minister has responded, and correctly responded, that we are not as badly done by as previous Seanads. He, his Department, and the Dáil, are treating us in a better way than we were treated in the past but that does not solve the problem. I will give an idea of the difficulties involved in this process. Members of this House would have got the original Bill as introduced in the Dáil some weeks ago, and would have had an opportunity of examining it at their leisure. Only last Monday Members of this House, myself included, received the Bill as amended on Committee Stage in the Dáil. This could be taken as the Bill which would come before this House for consideration, section by section, on Committee Stage. There were substantial differences between the Bill produced on Monday and the original Bill. The simple problem of identifying what those differences were was a colossal task, which took hours upon hours. The fact that the Dáil Reports were not available to me, except for the first day, was a complicating factor. New sections were included — sections 54 to 56 — which did not appear to be in the original Bill. That posed certain difficulties which with a certain amount of hard work I will overcome, but this difficulty was compounded by the fact that other amendments were made on Report Stage in the Dáil and only this morning I and other Senators got the Bill as passed by the Dáil. The problem of the identification of the amendments made on the Report Stage is in itself colossal.

I would like to emphasise that certain arrangements should be made. For example, Members should get a separate sheet of amendments passed by the Dáil. If we are to examine the Bill seriously on Committee Stage, section by section, we should have a greater opportunity of doing so because if we are hoping to give people an opportunity to make their Second Stage speeches much earlier in the year, more up-to-date information is a vital ingredient to a sensible discussion.

I would like to consider this Bill under a number of headings and to emphasise the fact that the Fine Gael Party welcome this Bill in its totality. That is not to say that there are not those of us who might prefer if particular sections were not there, but it would be impossible to produce a Bill of this magnitude which would have unanimous approval. As far as the Fine Gael Party are concerned, the direction of this Bill is in accordance with what we believe the direction of Government policy should be this year. For that reason it will have our unanimous and enthusiastic support as it passes through its various Stages in this House.

We have had an opportunity of considering most of the points I am going to mention, but before considering some sections which I do not welcome, it is only proper that I should lay out the various things I do welcome and which I think are very positive contributions towards an improvement of the taxation situation, making it more equitable and efficient. Equity is not the only thing that is important, efficiency is also important with regard to the question of the collecting of money.

Members on the other side of the House should have no fears whatsoever about the residential property tax. This is quite a modest measure indeed. People living in houses valued at £65,000, with an annual income in excess of £20,000, would not begrudge the relatively small amount of money they will be called upon to pay as a result of this residential property tax. This is a reasonable proposal but as with every new type of taxation there will be teething troubles. In the other House the Minister has shown a flexibility in his approach towards individual problems as they arise in this regard. Indeed, he has shown it in other ways too. As long as he retains that in this budget and future budgets, this residential property tax will be a valuable addition to tax equity.

One of the problems that has arisen is that we have narrowed our tax base. We have concentrated too much on income tax and VAT and we have done away with a whole range of other taxes which, if they were there at present, would allow an amelioration of the rates of taxation, which I feel have gone too high. The residential property tax is to be welcomed. The Minister has the support of everyone on this side of the House in the concept of this taxation and the individual proposals contained in this Bill.

In the course of the earlier discussion we had on the budget, I said the advance corporation tax was a good idea, but that does not mean that there will be no problems with that tax. It is a new taxation but it is a proper taxation. I do not see why those who receive dividends from companies who have not paid tax should get a credit and, indeed, a refund, from the Revenue Commissioners in respect of tax which was never paid. The motivation behind the advance corporation tax is correct. This is a positive proposal towards tax equity and its general principle is right. It is a different kind of taxation. The proposals outlined in the Bill before the House are very complicated and very complex. In implementing the provisions of this Bill there will be further amendments necessary. At this stage that should not worry us unduly, because this is a good type of taxation and should be welcomed.

We must support, and it is our duty to support, the provisions in this Bill and the general philosophy of this Government towards anti-avoidance and anti-evasion in regard to tax. There is an ambivalence in Irish society towards tax evasion. Irish society cries out that those who evade tax should be punished or restrained, but when proposals are made to end evasion, there are sections in society who plead that a particular avoidance should be permitted because of some beneficial effect. Schemes which allow those who earn substantial sums of money to reduce their taxation payment should be permitted where it is in the public interest. That is a general principle we should establish. With regard to tax evasion, there are various penalties included in this Bill and they are to be welcomed. We cannot say we are in favour of everyone paying his fair share of tax and then not support the measures that are necessary to implement that move.

One of the more controversial items in this Finance Bill is the question of the proposed change in the building society composite rate. This is a reasonable provision which has remained undisturbed for some considerable period. The building societies have not reacted positively, in public at any rate, to this suggestion. I am quite sure that if they did react positively, and if they were able to show the Minister and his Department that they were serious in arriving at a real up-to-date composite rate, the various problems they have highlighted with regard to disclosures could be helped. As far as I am aware, their public and private approaches have been negative. They have used the fear generated by disclosure to whip up enthusiasm against the establishment of a proper composite rate. It is their duty to co-operate with the Minister in establishing this new proper composite rate which takes into account in respect of those who deposit in a building society the various changes in the tax bands which have taken place over a period of years. The building societies should change their attitude in this regard. They should be much more positive and forthcoming with the Minister and seek to solve this problem in a positive way rather than causing unnecessary distress and hardship to their depositors who are under no threat by anything contained in this legislation.

The Minister is to be highly praised and congratulated on the flexible approach he has shown towards the reduction of the rate in respect of garage repairs. That is a positive step. It is very important that the Minister did this and had the courage to increase taxation in another area to make good the shortfall. The Minister has shown that it is important that any concession given has to be paid for. I would like to contrast that with the kind of concessions which had been granted over a period by many people, mostly by our political opponents, who granted concessions and merely transferred the cost of those concessions to the general body of taxpayers by reason of their failure to make specific provision for the financing of the concessions which were given from time to time.

The Minister's approach to reducing VAT from 23 per cent to 18 per cent is also a positive step. In respect of the hotel industry, and particularly hotel accommodation, this is a very positive approach and is to be welcomed. The Minister's flexibility in this regard is a pleasant omen for co-operation between this very important industry and the Minister.

I would like to deal briefly with the measures that I do not welcome in the Bill. The necessity to increase the rate of taxation from 60 to 65 per cent at the upper limit is a great pity. I will be supporting the measures necessary to complete that but it is important that the rate of taxation would not stay at this level for long. We should bring our expenditure under control to such an extent that we can reduce that rate. The effect of increasing the rate of taxation from 60 to 65 per cent, particularly in respect of people who might also be paying the PRSI contribution in respect of the same portion of their salary as they are paying 65 per cent, imposes an intolerable burden on them. An effective tax rate of 77 per cent is not acceptable in my opinion.

I would like to express my disappointment at the necessity to reduce the threshold at which VAT will apply. I was a Member of this House when that Bill was passed and I welcome the raising of these thresholds. When one takes into account the inevitable inflation which has taken place from that day to this, the reduction of the threshold is a retrograde step and is something the Minister should again look at.

Those complaints are very minor but the major complaint I have with regard to the Bill is one which I intend raising on Committee Stage and deals with the appeals procedure. The Minister was very badly advised in this regard. I support the changes that have been made with regard to limiting the right of appeal to the Circuit Court. That is a positive step for which the Minister should be congratulated. The limiting of applications for late appeals so that it is impossible to enter a late appeal after a period of 12 months after the date of notice of assessment is wrong and will cause considerable hardship. It will be impossible to enter a late appeal unless the tax which has been assessed has been paid prior to the application for the late entry of an appeal.

In my period as a practitioner — I do not practice in that area now — it was quite common because of carelessness, ignorance or various reasons on the part of the taxpayer that substantial assessments would not be appealed until more than 12 months had elapsed. In similar circumstances it will now be impossible to have those matters reconsidered unless the taxpayer pays the tax which has been assessed. I will discuss this on Committee Stage with the Minister. It is important that the Revenue Commissioners should have certain discretion to enter late appeals. Make it as difficult as you like for the taxpayer to use that procedure, but do not take that discretion away because it is vital and important.

I have mentioned three items in the Bill which I consider to be unfortunate. I now wish to mention three items of policy which are not in the Bill and which could be included in future Bills. They have not yet been considered by this or any Government but they should be considered now. Firstly, I am sorry there was not included in this Bill, or in Acts which were passed through the Houses of the Oireachtas previously, a section limiting by law the amount by which public expenditure may grow one year on another. It is vital that some brake be put on the growth of public expenditure. No matter what legislation is enacted in this area, it can be changed by a new financial provision in a new Finance Bill at a future time, but the enactment of such a general statement would have a satisfactory limiting influence on the various spending Departments in the headlong increase in the expenditure of public money to which this country has been subjected in the last 15 years. A general statement by the Oireachtas that there should be a limit in the growth of Government spending from one year to the other, relating it if possible to something like the consumer price index, would be a positive help in the fight to reduce wasteful Government expenditure while encouraging productive and socially desirable Government expenditure.

The frightening thing about Government spending is that when a scheme is commenced it is almost impossible to stop that scheme. This has happened over the years. New schemes were introduced and they have grown and the percentage of the national budget which they have taken has continued to expand. This has given rise to a situation where we had very substantial over-spending which, together with our present level of expenditure, has given rise to the necessity for such high tax rates at the present time.

The second item not included in this Bill, except in so far as it deals with the residential property tax, is the question of self-assessment. There is no possibility of the Revenue Commissioners managing to control the mountains of paper which they are trying to control at present. Self-assessment is the way forward in taxation — self-assessment, together with full disclosure of tax returns, as happens in the United States of America. Everybody's self-assessment is subject to examination by the public at large and as long as disclosure applies to everybody, I have no objection. The decision of the Minister and the Government to introduce the residential property tax, and to make it a self-assessment tax is a good start and they have made a wise decision.

With regard to income tax in general, the whole question of self-assessment, particularly for the self-employed, is absolutely vital if we are not to be snowed under with mountains of self-defeating pieces of paper. I had occasion recently to advise somebody on a problem associated with the payment of tax on £30,000 interest. That taxpayer told me his latest series of correspondence with the local Revenue Commissioners was dealing with the production of certificates which related to £2.31 tax, which he had received from a source some years previously. At that time that person was capable of being assessed in respect of interest totalling £30,000. That is not to blame the individual officer because if he sees something wrong he must follow it up, but it is ridiculous to have a system where he must follow up such things. Self-assessment is not in the Bill but it should be. I would like to recommend that very strongly as a fruitful area of taxation as it relates to income.

The third item I would like to see in the Bill is the mortgage interest relief at source, which goes under the name of MIRAS. This scheme has considerable attractions as far as this country is concerned. It was introduced in the United Kingdom over the last few years. It works this way. Instead of a person's tax free allowance being increased, the amount of interest he pays to a building society or to a bank in respect of a mortgage is reduced to take into account the effect of taxation. This means the monthly repayment to the building society or to the bank in respect of a loan for a house is reduced by the amount equivalent to a person's present tax relief. This simplifies the payment of taxation and reduces the necessity for periodic changes, like those proposed in this Bill, in the level of mortgage interest relief and the rate at which it would be allowed. It has a good deal of merit and I recommend consideration of it to the Government.

Finally, I noted with considerable interest Senator Smith's contribution in this regard. His contribution was excellent and showed a welcome maturity in the way in which we can approach the question of taxation in this House. The sentiments we express are worthy. We are in favour of lower taxation. That is extended by the person speaking saying he or she is in favour of lower taxation for the poor obviously, the middle income people who are bearing too much at present and the farmers. The approach to the wealthy is that they are paying too much as well, but if you leave more money with the wealthy they will create more jobs. People are saying they are in favour of lower taxation for every category. That is unrealistic, particularly when you set it against the background that we are also in favour of the retention of a high level of Government spending.

Hard decisions will have to be taken not only by the Government but also by public representatives of all political parties to support whatever Government are in power in the difficult decisions which have to be taken. It is easy to support the Government in their popular decisions. Supporting the Government in their popular decisions imposes an obligation on me and other Members of the House to support them in the difficult legislative proposals which come before this House. Many other Senators want to contribute to the Second Stage and we have a long Committee Stage ahead of us. Those of us who have a particular interest in these matters will be making our views krown to the Minister in great detail. Recognising that, on behalf of the Fine Gael Members of this House I welcome this Bill as a positive indication of the Government's determination to reduce the size of the Government deficit so that we can create more jobs. That is an essential prerequisite for the creation of more jobs, I also welcome the Bill because of the steps it takes towards achieving tax equity which is such an important and fundamental part of the philosophy of this Government.

In addressing ourselves to this Bill we are at a disadvantage in that we got the final text of the Bill only this morning. I tried to gather my thoughts over the past couple of hours and to get a few notes down on paper. If at times I appear to be reading from a script I am sure the Cathaoirleach will not mind too much.

Before I come to the broad spectrum of the Bill I should like to compliment the Minister on his attitude towards changing the levels of VAT in the motor trade. When I am criticising him later I might forget to mention the fact that there is a positive element in this. We must also recognise that the change is not being made at any cost to the Exchequer. For the first time we have had from an industry an indication that, if Government will give a little on one side, the industry will be prepared to give a little on the other side.

Although we have not yet seen the full extent of the changes it should not go out from here that the changes are being made only in relation to services and spare parts which will be supplied in the servicing of a vehicle in a garage. If a person buys a motor trade product over the counter he pays 23 per cent on that item. It is only if it is fitted in a legitimate motor trader's premises that the 5 per cent rate will apply. There are exemptions to the regulations, we believe. Tyres and batteries will not be included, and we believe that a third of the job will have to have a labour element which means, in effect, that a part of the industry which needed to be helped is not being helped, that is, the commercial vehicles trade where it would be virtually impossible to have a one-third labour ratio as against two-thirds material. Having said that, it is a very welcome change in the Bill. The motor industry are to be complimented, especially the people who will suffer most — the distributors who will have to forego 4½ per cent of their margin because they have given a guarantee that the public will not be charged the 4½ per cent excise which is to be charged to them.

In his opening speech in the Dáil and the Seanad the Minister set out his objectives and in the main those objectives are directed towards achieving equity, a reduction in borrowing and the minimising of the ill-effects of the recession on the less well-off members of our community. Other objectives are to correct anomalies, to improve the tax codes, to counter evasion more effectively and to improve the collection of tax.

We have a very high rate of taxation both on a corporate and on a personal basis. The Minister stated that the tax rates are unavoidably high due to the high level of public expenditure. He mentioned the need for a better distribution of taxation. He is of the opinion that the Bill before the House will contribute towards a more equitable taxation system. This Bill does nothing of the sort. As I will show when we reach Committee Stage, in many ways the Bill introduces more inequities than it eliminates. In the Bill there is emphasis on the collection methods to be introduced, on the penalties for tardiness in sending to the Revenue Commissioners the tax that is due, and increased penalties for tax evasion.

The great failure in this Bill is that it does nothing to stimulate growth in the economy. It does nothing to help the poor and underprivileged sections of our society. It does nothing to stimulate action. We have a fire brigade type of action in the youth employment scheme intended to help the large and growing numbers of young people who are coming onto the employment market. Under the Youth Employment Agency scheme many millions of pounds are being poured into Department of the Environment schemes which are administered by county councils and corporations. Basically this scheme gives a man with a leaving certificate, or possibly a university graduate, a shovel to clean the sides of the roads or to make a flower bed. Unfortunately while the amenity value of this to our community is great, it does nothing for the confidence in the future of the person who is being helped in this shortsighted manner.

The Finance Bill is being introduced against the background of world recession but if one looks at the recession one would reasonably expect that it would begin this year to ease, and the indications from abroad are that this is happening. It becomes more noticeable each day that external economic signs are becoming more favourable, and one would have expected the Finance Bill to take these world economic indicators into account, and to have some elements which would help our own economy to benefit from this external growth. This is not the case.

Our immediate prospects are for an unchanged level of economic activity and a substantial rise in unemployment, coupled with an erosion of living standards. By now we should have had a downturn in interest rates which rose so dramatically on our currency realignment. As yet we have not got this downturn and nothing in the Finance Bill will bring this about. The Government had an obligation to review all aspects of State spending. The State, like other bodies, has to adopt a more selective approach to capital expenditure and economies in relation to such expenditures. Expenditure should have been on the basis of a well-structured profit-oriented approach, and it is important that this should be the case in the future.

We agree that there had to be a saving in our budget deficit but, in the main, we do not agree with the method being adopted by the Government whereby the burden of reducing the deficit falls on the taxpayer in increased direct and indirect taxes, rather than a sustained curbing of expenditure. We agree that no matter which option the Government took, sacrifices are necessary, and we agree that the burden should fall on those best able to bear it. We recognise that the principal sufferers from the current recession are those who have lost their jobs and cannot obtain employment.

The much maligned self-employed must be bearing a heavier burden than most in these current recessionary times. Even though to some people these are the leeches on society, it must also be stated that, when times were good, the very people who are now maligning them were looking to them to do the jobs necessary to sustain the economy. The same self-employed have not got the cushion of redundancy payments. They have not got the cushion of unemployment benefit. They have not got any of the cushions which are available to other sections of society. I am not criticising the fact that other people have these cushions because, in the main, they have paid for them. They pay for them more and more dearly as each year goes by and as the number of levies imposed increases, such as the 1 per cent levy this year. It would be nice to think this 1 per cent employment levy was helping the young unemployed, but it is not. It is just another element of taxation. It is a 1 per cent levy on those who are working, supposedly to help the young who are not working but I am afraid that is not where the money is going.

People who are privileged to be in employment, particularly where it is secure, should not seek to increase their standards of living at this stage. That must be said quite categorically. I am not hitting at anybody looking for an increase in salary or wages this year which is due to him and to which he is entitled. I am saying that those who are in secure employment should not try at this stage to increase their standards of living. In other words pay increases should be related to the level of inflation, or below it, or whatever the industry can stand. They should not seek to increase their living standards as this would have a significantly adverse consequence on competitiveness, on national production, on employment, on the public finances and on the living standards of those who are not in a position to work at present, or to protect themselves from the current recession.

On the economic front, we have seen the volume of domestic demand fall in 1982, due largely to the effect of the fall in real disposable income available because of budgetary policy. This fall in real disposable income will continue in 1983. The fall in real disposable income in 1982 was in the order of 2 per cent, and the fall in 1983 is expected to be in the order of 3 per cent. This is brought about by virtue of the fact that income tax this year — and this has to be said — will increase in real terms.

One of the many things lacking in this Bill is any incentive for industry to expand. The volume of total investment in industry is estimated to have fallen by about 6 per cent in 1982, and investment in building and construction is estimated to have declined by 8 per cent, while the volume of investment in machinery and equipment fell by around 4 per cent. We can see nothing in this Bill which helps to ease the heavy burden of unemployment. Unemployment in the year to December increased by 38,700 and by March 1983 the figure stood at 187,100. If we could see light at the end of that tunnel I would be delighted, and I would be delighted if we were dealing with a Finance Bill which would ensure that this would happen but, unfortunately, this Bill will have the opposite effect.

Employment in the manufacturing industry is forecast this year to fall by around 3 per cent. In the light of current unemployment figures that ESRI figure may have to be upgraded. The forecast for the decline may have to be upped from 3 per cent to 3.25 per cent. Other sectors are very unlikely to increase their employment content this year. The budget measures now being implemented make unavoidable a further increase in the level of unemployment during 1983.

Since the Minister takes so much account of tax equity we must wonder does this Bill give the level of taxation needed to provide the services that are necessary in the community. Does the Bill give a more equitable personal income tax system? Does it give an equity between taxes on income and on capital? Does it give a relationship between income tax and social welfare insurance contributions? Does it contribute to taxation paid by companies? Does it in any way improve the administration of the tax code?

In the Bill the Minister has introduced many new regulations regarding the more efficient collection of a huge amount of taxes. He has increased penalties for tax evasion in all areas. Like the people working at the sharp end of the customs and excise, the people working in the Border areas, we will see a further deterioration of performance within the collectors' offices because producing on paper what would seem to be an equitable tax collection system and the provision of the means to collect are at total variance.

The Minister made much of the need for an equitable tax system but to my mind the Bill does not take account at all of the Report of the Commission on Taxation. The Bill does not in any way meet the criteria laid down by the commission. The commission suggested that income tax should be the main source of direct taxation. That is not so. This Bill does nothing to bring nearer the day when direct taxation will be the main area of personal tax paying. The Commission on Taxation looked for income tax to be charged at a single rate on all incomes irrespective of the source. The single rate of income tax is not lowered as the commission suggested, and it does not take into account the wide range of income, wages, salaries, profits, realised capital gains, and so on.

We have seen over the past few weeks the understandable frustration of many people who pay their tax through the PAYE and PRSI systems. There is no doubt that much of the frustration these people felt was caused by statements made in this House and in the other House about the level of unpaid tax due to the State, and which could be got if the tax collectors went out to look for it. Figures of £1,200 million to £1,400 million were mentioned in two separate speeches in the Dáil and Seanad. According to the Minister for Finance, about £80 million to £90 million of outstanding tax was due at the end of the past financial year. The fact that any tax due has not been collected is inequitable. It should be collected. In many cases there are reasons why it was not collected. Irrespective of provisions in the Finance Bill relating to appeals and the manner in which appeals are to be taken at the end of any particular year money will always be due to the State, just as at the end of any particular financial year the State owes money to many companies. It is just as hard for a private businessman to get money from a semi-State or State body as it is for the State to get money from those who owe tax under any tax system, whether it be PRSI, PAYE, VAT, personal tax, Schedule A tax, Schedule B tax, or whatever.

Much has been said over the past number of weeks about the so-called cowboys, the company directors, the self-employed and the business people. The impression has gone abroad that people in business are crooks, the self-employed are crooks, and company directors in general are crooks. Just as in every other area of society there are crooks in the business community. There are crooks in every sector, but the labelling of a particular group as crooks should not be allowed to continue. Were it not for the sacrifices made by many small businessmen this country could not have got to its present stage of development. I believe 99 per cent of the people who are in business pay their due share of tax and, if they employ an extra person there is an 11.61 per cent levy on them, an employment tax at a time when it is virtually impossible for business people to stay in business. This Bill does nothing to alleviate that. There is an 11.61 per cent tax on employment which to me — and I have not seen any figures to disprove it — is a very high level of taxation on employment at a time when we are trying to reduce unemployment. A tax of 11.61 per cent on employment to me seems not alone ludicrous but inequitable.

In other areas the employer acts as an unpaid tax collector for the State. He has to collect tax and administer the taxation system. Businessmen who have been planning over one or two years suddenly find that, within a particular economic year, the levels of VAT have increased dramatically. This creates cash flow problems which are becoming insurmountable. The increases from 18 per cent to 23 per cent and from 30 per cent to 35 per cent created problems. A number of businessmen work on a credit basis. They have charged VAT at 23 per cent and they will be claiming 23 per cent.

On Committee Stage we will deal with the various points where we feel the Bill does not contribute in any way towards easing the taxation burden, giving a more equitable taxation burden, increasing productivity and increasing employment. There is the narrowing of the tax bands. There is an attempt to transfer to the householder the burden of paying for the services he gets, which is a reintroduction of rates. Laying down the charges to be levied by local authorities is supposed to be giving back autonomy to the local authorities. It is supposed to be giving back to local authorities the means to put their own finances in order. What it does is give the county managers the right to collect levies and charges. In a year in which we have a huge number of people unemployed, when we have increased burdens on those who are employed, we are to have at least £1 a week extra charged for water. In certain areas there is to be a refuse collection charge. In certain areas there is to be a sewerage charge.

The Government should state quite categorically that they want a reduction in services rather than trying to put the burden of paying for these services onto already hard pressed sections. We had the first reaction to that attempt recently when the National Association of Tenants' Organisation said that they will not agree to the reintroduction of charges or rates. The extra £1 a week for water in a corporation house could mean the difference between being on the bread line and not being on the bread line. Too many people say "that is only the price of a pint." Everything seems to be equated with the price of a pint. For householders who cannot afford a pint it can be the price of two and a half loaves of bread. It can be the price of a lb. of margarine and a lb. of butter. It can be a very essential part of the household budget. I wish people would stop talking about something being only the price of a pint if it costs £1.

On the next Stage of the Bill we will discuss each section. Education will be a burden on parents on top of the burden of the imposition of charges for services from the local authorities. They will have to pay a very high price for school transport in the rural areas. Not alone that, but it appears that the educational cuts will bite deeply in the smaller schools in rural areas. Mention has been made of remedial teachers. You can have a remedial teacher if you have a school of over 500 pupils. A remedial teacher is needed just as much in a 175-or 200-pupil school. One must consider the number of teachers who are in danger of losing their jobs throughout the country in September because they are above the number sanctioned by the Department. What will happen in most schools is that these teachers will be kept on and the school managers will pay the salaries indirectly, but they will be charging the pupils for services such as the use of the gym or the football field because they must be reimbursed for these extra charges.

We have seen an unprecedented rise in the last 12 months in duties on petrochemical and allied products. It might not seem relevant but every time the price of a gallon of diesel rises the price of our exported goods rises also. Over 80 per cent of the manufactured goods that are sent abroad are sent initially by road. One can appreciate the difficulties if one looks at the poor condition of our roads which is due to a lack of commitment by the Government to road maintenance.

The transport industry is crippled with taxes. Under EEC regulations the axle ratios of motor vehicles are going up so that heavier vehicles will be able to come into this country. Since the roads are not capable of being maintained with the present 40-ton vehicles, what will they be like when we have 50-ton vehicles? At a county council meeting on Monday last in Kilkenny it was shown quite categorically that certain public roads there will have to be closed down this year because of lack of maintenance. Our roads are an essential part of our infrastructure. The Finance Bill will not do anything to alleviate this problem.

No matter what area one picks one can see that this Finance Bill does not address itself to helping any of the sectors of the economy. It does not help the poor or the rich. It does not help the farmers, the Department of the Environment or the local council. It is not a Bill that we could recommend to the House and we will have amendments down on Committee and Report Stages.

The Minister started his speech by referring to tax evasion and he finished on the same subject. Unfortunately the proposals he makes will do nothing to achieve tax equity. It will be interesting to see how far these measures will go towards catching the real tax evaders.

I welcome the Minister's change of emphasis in relation to the motor trade. I can guarantee it will get the support of the motor trade and any commitments made by the motor trade in relation to that change will be met by them. Apart from that I cannot see very much to recommend this Bill to the House.

As Senator O'Leary said earlier, we had a discussion on budgetary strategy and policy some months ago and therefore I would like to intervene briefly on a limited number of self-evident points which bear repetition.

The first thing that we all need to accept together and make clear to the people at large is that the demographic and economic structures of our society are such that the overall burden of taxation will remain high for the foreseeable future. That is not to say that the lack of equity in the taxation structure should remain as it is but the overall burden of taxation on the community as a whole will remain high inevitably. It is proper that we should say that to people rather than pretend otherwise, as we often do.

The overall burden will remain high because we have a very high dependency ratio between those in the labour force of working age and those outside the labour force, either because they are young or old. That high dependency ratio means that a relatively small proportion of our population has to carry through taxation a relatively large proportion of the same population. It is also clear that the reality of our high unemployment rate will impact significantly on taxation levels and will require the continuation of high levels of taxation whether PRSI, direct taxation or taxation generally in the future.

It is also true that we have to spend in the future a large amount of money in attempting to restructure traditional areas of our economy which are going under with the impact of free trade. All of these things together seem to point to the fact that the overall burden of taxation will remain high in the foreseeable future.

The alternative to maintaining that high level of taxation would be to cut public expenditure in ways that would be unacceptable because they would either cut into the living standards or social services available to our people or because they would cut back on public investment which we need both for infrastructure and for jobs. That is the first point I wish to make. Basically the Labour Party accept the need for high public expenditure and the consequent need for a continuing high level of overall taxation in our society.

The second point I want to make is that while we in this party support high levels of public expenditure to serve essential social and economic objectives this does not imply that we support wasteful public expenditure. There is now ample evidence that much public expenditure in both the economic and social sectors does not yield an adequate rate of return, whether measured in economic or social terms. Part of the waste is due to bad decisions by Government in the past.

One can point, for example, to misjudged capital investment programmes in the fertiliser and steel industries here which must now be carried on until the industrial base in Cork is restructured to provide alternative employment. One can point also to an unnecessarily high level of incentive expenditure on foreign industry and perhaps even to a misguided and unplanned industrial development policy which as a result has proven unnecessarily expensive. One can point to a range of quangos which exist for reasons which are unclear to anybody but which cost significant amounts of public money. One can point to transfer payments and subsidies in the social policy areas which frequently benefit the well-off much more than the poor and less well-off for whom they were originally intended. Therefore a lot of wastage in public expenditure derives from Government decisions taken over the years which were misguided or which constituted mistakes.

It is also true to say that a lot of wastage of public expenditure derives from administrative or management inefficiency within the public sector. The reasons for this are complicated and derive from historical circumstances and are to do with the constraints within which the public service works, but the problem is a serious one which must be faced by politicians, senior civil servants and senior executives in the commercial State sector sooner rather than later. There are many examples such as disease eradication schemes in the agricultural sector. One can go right through a whole set of areas in the public service where despite the best will in the world the costs of carrying through projects are higher than they would be in an efficiently run operation, whether in the private or public sector. These things we must speak about honestly and we must set about trying to rectify them as soon as we possibly can so that we can conserve scarce public expenditure resources for purposes which either add to the social benefit of the population as a whole or add to productive efficiency.

I strongly support the suggestion that there should be an all-party Oireachtas committee on public expenditure. I hope that this committee will be instituted without undue delay and that it can get down to the business of both clarifying public expenditure objectives and eliminating expenditure waste. The alternative, given our expanding population and the scale of our economic and unemployment problems, will be cuts in public expenditure or unsustainable increases in taxation, both of which the Labour Party will oppose. We will not, for example, support cuts in public expenditure which further exacerbate the existing scandalously high levels of inequality in our society, nor will we continue to support tax increases to finance inefficient or wasteful public expenditure projects. The Labour Party are traditionally committed to a high public expenditure policy, but that does not say that we will condone one which is based on wastage and inefficiency. That point is also true increasingly of the trade union movement and indeed of the public at large. Public expenditure, yes, provided it is socially concerned and provided it is operated and administered efficiently. That is the second point I wish to make.

The third point is that in the recent debate concerning taxation there was confusion between two different questions. The question of ending tax evasion and tax avoidance is one matter which rightly deserves attention. The other question is what kind of taxation model we need here and what is a fair taxation system? The danger of having them confused in public debate is that, certainly from a Labour Party point of view, if progress is made in ending tax evasion as it should be, people will then sit back and say that is that, we have done what has to be done in relation to tax evasion. That is not the Labour Party position. Our position is, yes, we must end evasion and avoidance, but we must also go on from there to create a fundamentally fair taxation system, which is something we have never had in this country because this country has consistently been governed by conservative parties who refuse to create a taxation system which relates to equity, to fairness and to justice.

These two questions of ending evasion and of creating a fair taxation system are separate and should be seen as such. The question of ending evasion and avoidance is largely an administrative problem, backed up by due legal sanctions and support. This Bill contains some very useful proposals in this regard. What is now required in addition to any further proposals which the Revenue Commissioners or the Minister may feel are necessary to support a programme to end tax evasion is a review of administrative procedures in relation to tax collection. Certainly the notion of self-assessment requires urgent study provided, of course, such a study is accompanied by another study concerned with the penalties which would be imposed for avoidance or evasion under a self-assessment system. A self-assessment system will only work if the penalties for incorrect self-assessments are stringent and heavy and are made to stick. Consideration should certainly be given to self-assessment.

Also, it might be wise to look at the whole question of trying to regionalise further the tax collection system. At present, while there are regional offices, the administration of the collection system is still highly centralised. This might be reviewed with a view to seeing whether decentralisation of powers and functions would help to create a more efficient system. We should also look at the possibility of greater use of the computer system in this area of tax collection to improve efficiency, speed and administrative methods generally.

The whole question of ending evasion is largely an administrative problem, given the existence of good law. It is a different question altogether from that of creating a fair taxation system. It might be useful to quote a limited number of figures in comparison of the percentage of total tax revenue taken from different sources as between 1965 and 1980. Personal income tax accounted for 16.7 per cent of all tax revenue in 1965; in 1980 it accounted for 32 per cent of all tax revenue. The contribution of personal income tax to tax revenue has doubled during that 15-year period. Corporate income tax, on the other hand, fell from 9.1 per cent of total tax revenue in 1965 to 4.6 per cent of total tax revenue in 1980, so corporate income tax approximately halved during that period. Capital taxation, of course, was totally inadequate in both periods but it did fall from 1.9 per cent of total tax revenue in 1965 to 0.5 per cent in 1980. This was to do with the total or virtual abolition of the State inheritance and gift taxes in the early seventies and the subsequent abolition of wealth tax and the other capital taxes which were introduced as replacements during the middle of that decade. The reality about capital taxation is that it is almost non-existent and this is a cause of great scandal to those who do not have wealth but are themselves paying disproportionately through income tax. It is also significant that rates contributed 12.2 per cent of total tax revenue in 1965, compared with 3.4 per cent in 1980.

What has happened basically is that the halving of corporate income tax, the cuts in capital taxation and the significant fall in income from rates which occurred between 1965 and 1980 have all been replaced by income tax. We have had a straight switch from these forms of taxation to income tax. Inevitably there was going to be a crisis when all of these burdens fell together on the income tax sector. These figures point clearly to the fact that we must widen the tax base, we must tax wealth and capital much more significantly than we have done in the past — as I said, we hardly do it at all now — we must have a greater take from the farming community and from self-employed and we must, in my view, consider ways of raising local taxation. Otherwise, local authorities can close up shop and the only option will be to continue to increase the personal income tax levels which we have spoken about.

The question of tax evasion seems to be well in hand, provided the administrative follow-up is there and continues to be there over the next year or so, but the question of devising a fair taxation system has not yet begun and this Government must act in that area in the next budget. If the taxation system is not seen to be fair by all sections of society, irrespective of what level the overall taxation burden is at, then the possibility for Government to continue to collect sufficient taxation to sustain social expenditure and employment creation will disappear. We are not just talking about a small matter in public affairs; we are talking in effect about the continuation of the basic social and economic fabric as we know it and possibly about the political fabric as well.

I have yet to come across a Bill which has caused so much concern and anxiety to so many people. I know from meeting people who work in various financial institutions, building societies, banks and post offices that they have never received as many queries as they have received regarding this Bill. People who have small deposits, average deposits and large deposits are all looking over their shoulders and asking questions, wondering what they should do. There certainly is a great deal of terror being put into many people as a result of this Bill and life for many of those people has become very gloomy indeed.

There are some aspects of the Bill which I welcome. Section 78 should be welcomed and that is where the Minister recognises the problems which are being faced by the tourist industry. He recognises the contribution which the tourist industry makes to the economy and the need to attract visitors. I am very pleased to see that the VAT rate for hotel accommodation has been reduced and this has been rightly acknowledged by the hotel federation as being very important to their trade. It is very important in these difficult times to attract as much money into our country as is possible and if we charge less for accommodation tourists will naturally spend more on other aspects of their holidays, such as entertainment and so on. This can only do good for the country. The tourists will leave and report to their friends in other parts of the world and, hopefully, they too will come and take holidays with us.

Section 29 is also welcome as it provides for the continuation of a scheme to encourage firms taking on extra employees. I do not know how many people benefited last year from this scheme but I feel that anything that can be done to encourage firms to take on extra staff at a time when so many people are out of work, despite having undergone many training courses, should be encouraged. I will be interested, as will be all Members, to know how many people will have benefited from this scheme and how many firms will have taken on extra staff.

The Minister referred today to the fact that he was modifying the provision in regard to investment by non-residents. He stated: "I have taken account of this concern and I have modified the provision so that generally there will be no obligation on non-residents to produce an affidavit". I welcome this modification because in my opinion the proposal should never have appeared in a Finance Bill. Already it has frightened millions of pounds out of the banks of this country. The Minister has made some reasonable compromise to eliminate this problem, but if a person wants to abuse a system then the filling in of an affidavit may not be the answer. Nonetheless I feel the Minister has made the right decision. If that affidavit scheme were allowed to continue bank managers would write to people in other parts of the world advising them of what was happening. I have no doubt these people would write back to the bank manager asking what is happening and sending for their money. We would have massive withdrawals.

The staff of the income tax offices must be under very great pressure. The implications of the Finance Act, 1982 must be making themselves felt particularly in regard to the new interest regulations and, as far as I know, there are seven points to be looked at before a decision can be made to grant interest relief. This obviously must slow down their work greatly. When this Finance Bill becomes law it will be a very heavy burden on taxpayers but also the tax officials will suffer. They certainly must be under pressure and stress in clearing backlogs of arrears, deciding what is actually collectable and what is not collectable. How are they going to cope? I know there has been a suggestion of extra staff being provided but when will this staff be available? Who will train this staff? These will, in effect, be new recruits to this type of business. Is there time for the present staff to cope with all of the new rules and regulations? They must be under severe stress and strain. Certainly their role in this whole effort must be examined and they must be given a better deal.

The Minister also referred to the arrangements regarding the taxation of building societies' deposits. I know something of building societies in that I do business with one of them. My honest opinion regarding building societies is that the majority of people are putting in sufficient money to raise a mortgage when they want it to build or buy a new house or to get a bigger mortgage later on when they move to another house. The section, as outlined in the original Bill, would undermine confidence in the building society movement.

We cannot forget that there are 750,000 depositors with the five big building societies alone. That reflects in a great way — in political and financial terms — the importance of the strength of the building society movement. Building societies contribute in a responsible way and are responsible for the funds for 70 per cent of our housing programme, second hand and new houses. They are playing a huge role in our overall economic development. Anything that is done to undermine the movement will have serious and grave consequences for the nation.

Building societies are our most efficient tax collectors. Investors with building societies are all deemed to have discharged their income tax liability to the extent of 35p in the £ on their earned interest This liability is paid to the Revenue Commissioners on their behalf by the building societies. In the current year the figure paid will be in excess of £50 million in tax. That is a sizeable figure which is easy to collect. It should not be pushed about and should be considered when dealing with building societies in a Finance Bill.

The building societies have asked for some amendment and if the Minister is going to go ahead with this business of court orders he should do certain things. The societies ask — and rightly so — that if the amendment is to be implemented the powers in the section should not be exercised by an officer below a certain rank. They suggest that the authorised officer mentioned should not be below the rank of inspector of taxes. They also ask that we spell out what is meant by section 7 (4) of the Central Bank Act, 1974 which is referred to in the Bill. The societies say that rather than simply refer to that section, the Bill should spell out clearly that it includes building societies, credit unions, the post office savings bank and the trustee savings banks. That would be a fairer way of informing the public of the range of financial bodies to be covered by this section, in addition to those holding a banking licence. I hold the view that if the deposit of one investor is examined by the Revenue Commissioner as a result of a court order it could be the end of the building society movement as we know it today.

I should now like to deal with other aspects of the Bill. Single people bear a heavy load at present. We cannot forget that nuns, brothers and teaching priests all come into this category. Indeed, if one takes as an example a religious person who has given a lifetime of hard work and dedication to a religious order, the tax payable by that person will reach more than £5,000, including PRSI. We all know that this income was utilised in the past to help in the upkeep of the houses of religious orders. However, with ever-increasing PAYE and PRSI many colleges and convents have to sell off property or close part of their buildings because the money is not coming in. That is true throughout the country. If one takes, for example, a single person with a salary of £12,500, perhaps a teacher, a nun or a civil servant at a very high level of experience and aged 55, that person will be paying close to half the salary back to the Government in tax. Single people with dependants and mortgages are crippled with tax and PRSI. In my opinion they are now the new poor. With the single rate bands it is not worth while pursuing a career or endeavouring to get to the top of one's profession. From their point of view it is as well to clear out early. Many of them are doing this with the result that their experience and expertise will be gone. The rate bands are too narrow. People with fairly low incomes are now finding themselves in the 45 per cent band. A young person in his first job is now as well off as the person on a maximum salary after a lifetime of dedication. Such a person may well have acquired a house or may have been saving for many years.

The interest exemption is too low. What are people to do with their small savings? The levies at 1 per cent are too high. The health levy is 1 per cent, and the income levy and youth employment levies are also 1 per cent. An old age pensioner with a small company pension, perhaps from the ESB or CIE, is liable for PAYE, plus the levy of 1 per cent on the pension. I do not think that is fair. In fact, I do not think it was ever intended. People are incensed about that. The self-employed person who gets an assessment for perhaps £6,000 at the beginning of his tax year is billed for the year's tax but the true position will not be known until his accounts are settled. He must guess what 80 per cent of his true tax position will be or otherwise he will be caught for heavy interest. On top of that he must pay the three 1 per cent levies, £6,000 at 3 per cent which equals £180 on top of his tax. If his assessment is reduced to £4,000 the levies will be £120 but do the Revenue people send the money back to him? In my opinion they do not. The person will never know that he has overpaid unless he writes to the Revenue Commissioners explaining his case and asking for a refund. I believe that as many as one in every hundred finds himself in this position. The tax position is so complex that one would need to be a wizard or magician of some kind to know one's rights. The best profession to be in now is income tax consultancy. We all badly need them now more than ever.

The question of the unrealistic estimates is also a problem. The estimates for the self-employed tend to be unrealistic to say the least.

I should like to refer to the interest exemption reduction from £70 to £50. Here again we have a near witch-hunt going on with everybody being chased, even those small lifetime savings. Those people may not be liable at all but the announcements from day to day regard ing penalties, imprisonment, and so on, have made life very gloomy for ordinary people. I cannot help feeling that in many ways this is becoming more like a police state every day. I should like to deal with the situation of a boy or a girl working during the summer holidays, a boy serving in the FCA or a girl working in an office. Will the father lose the child allowance as a result of this temporary work and the money going into the house? In my opinion the answer is yes, since the child would earn more than £80 in the short period of work. This indicates to me an element of a witch-hunt.

There is certainly massive probing going on all over the place and this could result in penalising the humble worker while the big fellow could, in the process, slip away.

Much has been said regarding the new house property tax which was introduced amid some controversy. We did not know what we were talking about in those early days and that is the position now. When it was first mooted the Taoiseach said it would apply to the incomes of the breadwinner and a few days later the Tánaiste said that was not so, it would apply to the incomes of the husband and wife. On reading the Finance Bill we find that neither of them is right, it applies to the income of all the household. However, many areas have not been covered. It seems to me that to use granny's pension, whatever it may be, to bring up the income to £20,000 is very unfair. Certainly, if that had been spelt out at the beginning there would have been a massive revolt against it. If the husband and wife earn more than £20,000 who is going to prove that a house has a value of more than £65,000? One house may sell for that price in an area but the one beside it might not reach £50,000. How is the valuation to be carried out? How will the tax officials cope with this problem? Will separate sections be set up for this? What will the cost be? Indeed, will the cost of administration outweigh the gain that might be reached? This section of the Bill has failed before it becomes law. There are many worried people with large mortgages and big outgoings. In many cases the husband and wife are working primarily to pay the mortgage. They have high overheads and many worries.

The Revenue Commissioners, as I understand it, can enter the front door of a person's private house. Once inside, what next? I am sure the Revenue Commissioners do not welcome this and do not wish to be involved in it. It is a new departure for them. Nonetheless, once inside, what will happen next? If the Revenue Commissioners are given the power to enter a private residence they will be going further than was ever intended. This would be breaking new ground which most people would find totally unacceptable.

There are a number of anomalies and injustices in this Bill and I believe it is unworkable.

I should like to refer briefly to the provision which relates to allowances for the year of marriage. The decision to delete this was petty. There was always a rush before April by young people to get married so as to avail of the full year's benefit and that is being done away with. For young couples getting married it was a help to get a rebate of tax in the first year of marriage. This small point indicates the pettiness of some aspects of the Bill.

Section 83 deals with revenue offences and proposes substantial penalties for breaches of the tax law. This is causing some concern particularly to accountants and tax consultants. The section is to apply to all taxes and its provisions are in addition to the penalty provisions that are already contained in the existing legnise islation covering the various taxes. This proposed section gives extremely wide powers and discretions to the Revenue to initiate proceedings in extremely minor matters. If this section was already in force most taxpayers, self-employed and PAYE, would already be in breach of the section in that few of them have submitted their 1983-84 annual return at this time.

The Bill has certainly put terror into the hearts of many humble people with small deposits or life savings which they were putting by for their old age, funerals or whatever. It is causing problems for the ordinary man in the street. More than ever before he is asking questions, rushing to his bank manager or financial institutions for advice. It is causing problems, and will continue to, for the tax officials. While I welcome a number of measures certainly the majority of the provisions are very extreme and tough and I cannot give the Bill total support at all.

I should like to welcome the Minister of State to the Seanad on his first visit since I was again elected to this House. I wish him well. It is good to know that the Leas-Chathaoirleach and all of us are going to be here for five years.

An Leas-Chathaoirleach

That is presumptuous.

I should like to refer to the reduction of VAT for the motor car business, the only business I know anything about. I should like to congratulate the Minister for Finance on reducing the rate of value-added-tax on vehicle repairs from 23 per cent to 5 per cent, thereby giving the motor trade a long sought after parity with the construction industry with which it has so much in common in terms of employment of skilled craftsmen and designated apprentices. The reduction in VAT will certainly help to revitalise garage workshops. I have no doubt that it will save hundreds of jobs of motor trade employees, who otherwise would find themselves joining the dole queue.

The Minister's concession on VAT must be greatly welcomed by motorists. Not only will they see their repair bills coming down but they must surely be able to look forward to cheaper motor insurance cover as the cost of claims for car damage to insurance companies must fall dramatically. The recent commission on motor insurance pinpointed the necessity for a substantial reduction in VAT on car repairs and motorists will be looking forward to having the full benefit of the reductions passed on to them. As insurance companies are not registered for VAT and do not claim VAT it is going to make a big difference to them and I hope they will pass on this benefit to motorists.

It was obvious that the motor industry was not happy about having to pay a price for this concession in having to agree to a rise of 4.5 percentage points in the already heavy burden of duty on passenger cars. However, when it was clear that the Minister was not in a position to make any concession other than on a self-financing basis the motor industry took its courage in its hands and decided it was worth making the sacrifice in order to ensure the survival of many garages which would otherwise have gone under and to save a very large number of jobs.

Senator Smith welcomed this concession to the motor industry. He said that the motor industry at the time promised to increase employment, particularly of apprentices, but he seemed to have some doubt about that. I should like to assure Senator Smith that there is no doubt about that. Senator Lanigan made a few points and I regret I have to correct him because he was involved with the Society of the Irish Motor Industry who carried out this campaign for this reduction. Some of his statements were not quite correct. He said that commercial vehicles would not benefit from this because they did not come under the Bill. It is true that heavy commercial vehicles do not come under this but it is also true that heavy commercial vehicle owners, 98 per cent if not 99 per cent of them, are registered for VAT. Not only do they benefit from the 18 per cent reduction in respect of motor cars and light commercial vehicles but they benefit also to the extent that they get all the VAT back by being registered. The Senator made another point that surprised me. He said that to get the benefit of the tax the motorist had to have the work carried out in a garage, the garage had to have one-third labour input into it and that it covered repairs and parts and had to be carried out in the workshop. That was surely one of the main reasons the motor trade went after this because such business had gone into the black economy. This was the only way we could defeat the black economy. We are now competing on terms they cannot compete with unless they are registered and pay their PRSI and other taxes like the rest of the motor trade. We are happy if they join in doing that. The Senator also said that with regard to the excise duty that was increased to make this self-financing package, the distributors were generous in financing it but that is not correct. The retailers agreed to have their trade discount cut from 13.5 per cent to 11.5 per cent a reduction of 2 per cent which is equivalent to 4.5 per cent of excise duty. The retailers took that reduction so that the price of the car would not be increased to the public.

The increase in excise duty is designed to match the full cost of the VAT concession and is disproportionately high because the demand for new cars this year is very slack. It is only fair to say that the motor industry expects that when the demand for new cars takes off again, as it must inevitably, the industry will expect that there will be a corresponding reduction in the excise duty. Everybody knows that the sale of cars is really nonexistent at present. The motor industry is suffering because of that. The reduction in VAT is going to be a saviour in the workshop because when garages cannot make money out of car sales they have to make money to keep employment and their businesses going. That ensures that they will be around when better times come.

With regard to VAT on imports and bank guarantees, I understand fully that the Minister finds it difficult to agree to any concession which is not self-financing. There is, however, one concession which he can authorise for assemblers and distributors of cars which will not cost the Exchequer one penny but which is so seriously restricting the cash resources available to companies for normal investment and day-to-day operations. Vehicles importers have to provide Customs and Excise with very large guarantees to secure payment of excise duty on vehicle sales. The Exchequer is not at risk because no importer could suffer the withdrawal of the deferred facilities through failure to meet these obligations. Before VAT on imports arrived, motor vehicles importers were already providing bank guarantees to the tune of £30 million. VAT on imports has required them to increase their guarantees by £17 million at a substantial cost to the importers and with the sole beneficiaries being the banks. The capacity of the companies to borrow for productive investment is greatly hampered by the borrowing capacity tied up unnecessarily in these bank guarantees.

I should like an assurance from the Minister that as the removal of the bank guarantee scheme will result in no loss of income to the Exchequer, and would not expose the Exchequer to any risk, he will have another sympathetic look at the arrangements. I hope he will agree to talk to a representative group of the distributors so that he can get a fuller appreciation of the problem.

I should now like to deal with the benefit-in-kind and capital allowances. New car sales this year will be the lowest for 11 years. A large number of cars are purchased for or on behalf of a business and there are two reasons why the demand for cars has slackened off. Firstly, many employees who have the use of company cars have asked their companies not to renew the cars at their normal renewal date because of the drastic increase in their benefit-in-kind assessments since 1982. Nobody objects to the principle of a benefit-in-kind assessment in respect of the private use of a company car but, in my view, the revised assessments have been fixed at an unreasonably high level and in terms of contribution to the Exchequer they have been self-defeating. The loss of excise duty and VAT revenue to the Exchequer from postponed car replacements must surely be substantially greater than the return from benefit-in-kind.

Virtually all the users of company cars are themselves contributing at the top levels of pay-as-you-earn rates and their earnings have been unreasonably reduced over a very short period by the insensitive levels at which benefit-in-kind rates are introduced. The Minister should have a look at the whole situation again to see if some modifications could be introduced to make the benefit-in-kind assessment more acceptable to the users of such cars and less of a deterrent to car replacements.

The other great deterrent to new car sales has been the restriction on the amount of motoring expenses which companies are allowed to set off against their profits for corporation tax purposes. When the capital allowance was introduced it was fixed at a level which, at the time, was twice the cost of the average representative's car. Now it is about one-half of the cost of a representative's car and this means that companies are having to write back into their accounts about one-half of their motoring expenses and pay corporation tax on them. This is a totally absurd situation which successive Governments have allowed to get out of hand. One might as well argue that companies should be required to write back one-half of their electricity charges or postal charges or whatever. Many quite small companies are having to write back quite large sums. A £20,000 write-back for a relatively small company would not be unusual. Again, this is dissipating the resources that should be available for productive investment apart from having a deflationary effect on new car sales.

I know that the Minister's advisers will tell him that depressing new car sales will help to restore a more favourable balance of payments situation but I believe that a greater amount is being spent on food imports than on car imports. While we have to import virtually all the components for the assembly business we should be able to replace food imports with home-grown produce. The Minister gets no excise duty or VAT on food imports but by depressing car sales he is depriving the Exchequer of large sums of revenue. It is time for the Government to reassess the role of the motor industry and its contribution to the economy and set aside the hang-up with the very narrow issue of the balance of payments.

Senator Lanigan suggested earlier today that we might sit late tonight so that we would have ample time for the discussion of this Bill without encroaching too much into the weekend. I think it could be agreed at this stage that we would sit until 10 p.m. I would propose that. In view of the fact that we would sit until then, I suggest that we should adjourn not until 7 p.m. as is customary, but until 7.15 p.m.

In relation to that, could we leave the matter of deciding whether we sit late or otherwise until I consult with Senator Lanigan?

Certainly. The Senator does not object to an extra quarter of an hour's eating, does he?

Sitting suspended at 6 p.m. and resumed at 7.15 p.m.

There is a question of our sitting this evening. It was suggested today that we might sit until 10 o'clock tonight. I am in the hands of the House on this matter. I understand the Opposition would prefer that we should adjourn at 8.30 and resume at 10.30 in the morning. If this is the wish of the Opposition I would concur on the understanding that the Second Stage would be concluded by lunch time tomorrow.

Would it not be difficult to have an understanding that we would finish the Second Stage tomorrow? That is unrealistic, presumably — to be certain of that at this stage.

If we are uncertain about finishing by lunch time tomorrow then I suggest that the proper thing to do is to sit late tonight to move towards that achievement. There are indications that tabled amendments may be for Committee Stage. If so, there would need to be time for the tabling of those amendments. That is why I suggest finishing the Second Stage before lunch because the lunch break would allow people to draft their amendments, allow for their being reproduced so that they could be circulated. Members have expressed the view that we should finish on Friday, and finish as early on Friday as possible, and we want to be realistic in regard to having a meaningful Committee Stage. We can only do so if we finish Second Stage by lunch time tomorrow.

This morning on the Order of Business we suggested that we would sit and try to ensure that we would have the Finance Bill finished as early as possible on Friday evening. There was an earlier suggestion that we would finish late tonight and go on late tomorrow night. The consensus on this side would appear to be that we finish at 8.30 tonight, start tomorrow morning at 10.30 and sit as late as is necessary. I do not think that we on this side of the House could guarantee that the debate would break down at lunch time tomorrow for Second Stage even though the Bill to me would appear to be a Committee Stage Bill rather than a Second Stage Bill. So, I suggest that we finish at 8.30, but I do not think that a guarantee could be given about lunch time tomorrow.

I appreciate that and I am not looking for a guarantee but what I am looking for is a firm expectation of finishing at that time so that we can keep to our programme.

I would suggest to the House that would be a reasonable aspiration. The word "aspiration" would not have been my word but I think that Senator O'Donoghue's word "aspiration" is the correct one. I think that we should aim at finishing Second Stage tomorrow at a reasonable hour to give plenty of time then for Committee Stage and that we sit tomorrow night and try to get away as early as possible on Friday. I do not mean get away from the Bill but that we try to get away from the House as early as possible.

I agree with the Leader of my side of the House but I would not like to give the idea that we were rushing this Bill. There are Members here who saw fit to come up for the New Ireland Forum on Monday and are here since Monday and will be here until later on Friday night and that is quite different from the picture that is painted of us as being in Dublin only one day a week. I would like to say that that will be my fifth evening in Dublin this week but I am sure we will be able to have a sensible Committee debate on this measure and take it then to the final Stages, as the Leader of my party has indicated.

Is it agreed that we sit until 8.30 tonight?

Provided we all aspirate together towards this.

The honourable Senator to whom that observation refers is, as usual, not present.

I will be the first to try to fulfil those aspirations by being extremely brief. I think it is right that one should say at the outset that the Government were faced with a particularly difficult task in introducing this Finance Bill. It should also be recognised by people on all sides of this House, the Independents and the Fianna Fáil Party as well, that they had some very difficult decisions to make, that the Government had a certain amount of courage and have showed determination and political courage in tackling these problems in the way they have acted. It should also be pointed out that no Government in this country had any option but to tackle these problems at this stage because the alternative would have been a disaster for the country and some external pressure which they probably could not have resisted.

The Government have tackled the easy part in this Finance Bill because what they have done is introduced a heavy load of taxation upon the people but what they have not done is introduce cuts in Government expenditure. So, in that way one has to criticise the Bill in that it is only a vague attempt to tackle our real economic problems because the difficult part is yet to come. There is no doubt now that despite all the trumpetings, all the statements, all the intentions of the Government, Government expenditure will rise in this financial year and that is the enormous drawback of the budget and of the Finance Bill. The budget, although it has in many ways the right outlook and has the determination to tackle these problems, is full of a hotchpotch collection of attempts to catch people here and people there. It is full of political sops to various sections of the community and to the Labour Party and it is full of some very clumsy pieces of revenue raising. It also contains, I think — and we saw it in the Minister's speech — a certain amount of worthless propaganda. I quote from him here when he said:

The only people who have reason to feel concerned about the provisions of this Bill are those who are evading tax.

That is to me total and utter nonsense and it is typical of the budget and the way it is being presented, that this is the budget which tackles the tax evaders. There is plenty of evidence that the PAYE workers are certainly concerned about the provisions of this Bill because they have been marching in the streets of Dublin since, that the farmers are concerned, that the self-employed are concerned, that the householders with houses that are worth over £65,000 are concerned. There is plenty of evidence that the unemployed are concerned, so it is nonsense to say that it is only the tax evaders who should be concerned about it. They should be concerned and rightly concerned but it is typical of the camouflage and the propaganda that it is presented as a budget to tackle tax evaders when there is a lot of meat in it which is hitting all the income tax payers in this country.

Total revenue from this budget during this year is scheduled to rise by about £700 million; therefore, all taxpayers should be worried. All individuals should be worried by this budget because that is going to hit the individual and hardship is going to be imposed on individuals while the fundamental problem of Government expenditure which has been running well over target for many years has not been tackled. That is a very difficult thing to tackle as we know. It has been postponed until next year, according to the Government and the strategy therefore has been postponed for another year. We can see the difficulties of it in England where Mrs. Thatcher with her very strict monetary policy has found it almost impossible to tackle Government expenditure. I would be interested to hear what the plans are, how they intend to tackle Government expenditure this year. It is a very wide gap. What the Government have done and which is wrong, is tackle the minor issues, tackle small groups, tackle things piecemeal without an overall strategy. We can see the property tax, the rather cosmetic efforts to tackle tax evaders and we can see the way they have totally ignored the Commission on Taxation. I would like to know what the plans of the Government are regarding the report of the Commission on Taxation which took up an enormous amount of time and money but we have seen virtually none of their recommendations implemented. Why does the Government not attack the broader issues? Why have we seen nothing in this Bill or in the budget about pay policy?

Very briefly, some of the symptoms of this very piecemeal approach in the budget, of this shortsighted attitude, are evidenced in the details of the Finance Bill. The clause which deals with depositors swearing affidavits that they are non-residents, while it has been revised to the good certainly but not adequately, has discouraged investment. It is typical of the insensitivity of this budget, and to a certain extent of this Government, that they were not aware that even mentioning the fact that residents from abroad would have to sign affidavits will discourage people from depositing money in this country, if it does not encourage them to take it out immediately. It is unrealistic to amend it to say that residents will now have to swear an affidavit when they are lodging deposits for non-residents that these people are non-residents. The object of this clause is to stop residents pretending they are non-residents. If they are doing that, they are going to do it anyway, and they would be quite prepared to swear an affidavit. What the Government should realise is that there are deposits of £1,000 million in this country from non-residents and to tackle them is a very sensitive subject and to mention it is a disaster. I do not know how much money has gone out of this country as a result of this problem being tackled, but it is a very dangerous matter with which to play.

Another item which shows the piecemeal way this Finance Bill has been tackled is the effort and the intention to tackle illegal activities. This is an extraordinary piece of ambivalence — and I presume it refers to activities such as pirate radio stations. Either these should be made legal and taxed, or they should be closed down. You cannot take the attitude that you can tax illegal activities because it is an abdication of Government responsibility to do that. It is saying these things are illegal, but we will turn a blind eye to them and if we can get revenue from them we will take it. It is in effect silently to condone them. Action should be taken on illegal activities such as pirate radio stations either to legalise them or to close them down, one or the other, but you cannot have it both ways.

In section 22 we have taxation of reference numbers on invoices and receipts. Again there is a problem of doing this because there is no legal requirement to produce receipts. It does not take into account the possibilities of collusion between buyer and seller. I believe this sort of taxation is going to drive people underground. It is going to encourage people — and there is great difficulty in taxation of this sort — to evade tax.

Towards the end of the Bill we have the deposit ceiling on building society investment being restored from £30,000 down to £15,000. This is a very insensitive piece of taxation because it is a Government saying "Where can we grab money from? We are desperate for money. We will tackle the building societies". It is shortsighted and will inhibit investment. It will inhibit investment in building societies, and so it will inhibit investment in the building industry. It is shortsighted because it will probably lead to unemployment.

The VAT rate on hotels is being reduced from 23 per cent to 18 per cent. That is right and is a piece of sensitivity, but I see no justification for reducing this tax for hotels more than for any other industry or group. The reason given was that hotels suffer from severe international competition. This is being encountered by industries all over the country. What about the newspaper industry which has a very heavy VAT rate and suffers from international competition? There is an inconsistency there; a very powerful lobby managed to get the VAT rate brought down.

The property tax is a clumsy measure and was obviously brought in to satisfy the Labour Party. It is not something in which the majority of the Government believed, because it is clumsy legislation. There are real doubts about equating single people with married people in this tax on the income requirement. There are doubts whether this property tax is constitutional. The whole basis of self-assessment — and I disagree with Senator O'Leary here — is going to be very difficult to enforce. The collection costs on the property tax are going to be very high. We do not know what they are going to be, but they could even outweigh the revenue to be gained from it. This is a possibility. This is a very vague area in which we move for political reasons rather than for fiscal reasons.

Although I welcome the determination of the Government in having the courage to introduce an unpopular Bill, I feel they had no option, but I regret enormously that they failed to tackle the fundamental problem of cuts in expenditure.

In making my short submission at this stage I think it appropriate to point out that our small party have been subjected to a lot of criticism as a result of a narrow band of complaints from various sections in society, that we have been part of a Government at an economically difficult time when unpopular measures had to be taken. One of the reasons the Labour Party joined the Coalition was because of a declaration between our two parties in this area of tax equity. I would like to quote from page 13 of the Programme for Government. It read:

Our society is riddled with inequities. Those that cause most unrest are the evasion of and avoidance of tax (including the withholding of PRSI and PAYE by employers from the Revenue Commissioners) and abuse of the social welfare provisions by a minority. The Government will act against those who deprive the State of its due revenue. The Government will also give priority to removing loopholes in the social welfare system leading to misuse either by employers, medical certifiers or recipients.

Changes company laws to control the abuse which is now prevalent, through which individuals can establish companies with limited liability, which then welsh on their obligations to their workers and to the Exchequer, while remaining free from any personal liability.

It was in that context that our small party, the Labour Party had a commitment with our partners in Government; we could sense in them the same commitment that this problem of inequity had to be tackled if the trade union movement and the PAYE workers were not to be in the streets daily in protest.

This Finance Bill contains many important measures to counteract the scandal of tax evasion and avoidance, and will begin the job of introducing a tax system which is fair to all. Among the more important measures being sought by anybody interested in tax equity are the following headings which the Minsiter referred to in his opening speech: the Revenue Commissioners have been given the power to demand completed statements of assets in cases where there is any doubt about the honesty of the completion of tax returns, and very severe penalties, including jail sentences, can be introduced now for people who are caught cheating. The Minister toyed with various words in his opening speech today but my contention is that people who do not pay their fair share of taxation are cheating their neighbour, society and the poor particularly, who are dependent on the State being able to provide for them in areas of necessity.

In future, late appeals against assessments will be admitted only after the tax due has been paid with interest. Hearings in the High Court and the Supreme Court will be heard in public, which will be a deterrent to people who in the past played the system for everything it was worth, in the knowledge that they could fight their eleventh hour case behind closed doors and their neighbours, or those who did business with them, were never aware of the fact that they had been welshing on their commitments to fulfil their legal obligation to pay tax. The nominees of shareholders will now be asked to identify the people on whose behalf they are holding these shares. The Revenue Commissioners will have the power to publish the names of those people who are cheating.

Those are only some of the measures this Government have taken to date but we are continuously under tremendous pressure to take further measures. The trade union movement at annual conferences, at branch meetings, at meetings of my own party, are impatient with the progress we are making, and we have made a lot of progress within a couple of months. There must be a commitment — and I am satisfied that there is a Government commitment — to continuing this onward thrust of ensuring that there will be no further inequity in the tax system and that the PAYE worker will see that justice is being done, and can be distinctly seen to be done in this area. There must be no doubt about my party's determination and, I am glad to confirm, the determination of the whole Government, to end this scandal of inequity.

This Finance Bill contains certain measures which will attack these tax spongers who over a long number of years have been allowed to get away scot free. This Bill has more measures in it than any Finance Bill since 1978, and that speaks for itself. The Opposition condemn us for various sections which try to tidy up anomalies, but during their period in office they ignored the trends that were coming about in certain areas, particularly in the area of the self-employed.

There are various sections in the Bill I would like to deal with and ask clarification on, but before I do, I want to deal with a few points which my colleague, Senator Smith, mentioned. I succumbed to the temptation of responding to him when he was speaking because I felt if there was a genuineness in his party to the principle of broadening the capital tax net, they would not have slowly dismantled whatever kind of capital taxation system had been put together by a previous Coalition Government. Nobody wants to take money from people who do not have it, but those who have money must contribute. It is a well known fact that there are areas of untaxed wealth which contribute relatively little to the coffers of Government. The fact that that capital taxation system and the discretionary trusts were dismantled by the previous Government meant that vast amounts of money were not available to the Government. Major cutbacks in the public service have of necessity taken place as a result of a constriction of the tax base. Many of us who are part of the public service, as members of health boards, county committees of agriculture, VEC committees or county councils, take the view that cuts would not have been necessary if the broadest possible tax base was still available. It is because of that that we have had this anomaly of the introduction of cuts in the public service, cuts which affect those who are unable to provide a service for themselves.

Rather than follow that philosophy of cutting the public service and also trying to broaden the tax net, the first duty of Government is to widen the tax net. We are faced with the dilemma of a massive foreign debt, but we are also faced with the dilemma that we have a responsibility to poorer people who are unable to provide services for themselves. We have a Minister of Health who is aware of the problem and every day he is looking actively at the problems in the health service.

Senator Smith mentioned the Department of the Environment. He said that roads are in a very bad condition and that there is very little money for roads. I am not defending any Minister, but the record should be straight when one makes a contribution in this House. When presenting his Estimate in the Dáil, the Minister, Deputy Spring, mentioned specifically that the total Vote for his Department was £636 million, the fourth largest Vote of this Government in money terms. That gives us some idea of the large amount of funds involved, especially as it does not include a further £454 million of non-voted capital expenditure in the current year. The Minister said that the Department's Vote for road grants this year amounted to £115 million, an increase of 14 per cent relative to the period in which Senator Smith's Government were in power, and at a time when inflation was at about 11 per cent. This is a net increase over the previous year.

Between 1979 and 1982, when Senator Smith's party were in power, with the exception of a short period, the total employment on road works declined from 11,500 to 10,000 people. The Minister expected that this fall in employment in the Department of the Environment would be halted as a result of the allocations of money made to his Department. I could go on forever quoting figures for the Department of the Environment to prove that this Government have given a commitment to hand back to local authorities through this Finance Bill ample funds to ensure that necessary infrastructural work can be carried out. Pending a total review of the financing of local government, self-financing and the control of local democracy as we understand it and know it at local level, local authority are being empowered to ensure that they can finance services from their own resources and this will ensure the retention of the independence of local authorities.

It might be unfair to Senator Smith if I were to quote broad figures; therefore in fairness to him, I will quote only the relevant figures for North Tipperary. As a member of North Tipperary County Council, he will be aware of the actual allocations that have been made. I want to remind him of the allocations and their comparisons. This year's road block grant amounts to £259,000; for the national primary road surface dressing there is £90,000; ordinary maintenance is £122,000; for national secondary roads it is £250,000; for surface dressing ordinary maintenance, and major improvement works on ordinary road development the sum is £970,000; in special grants there is a further £250,000, making a total of over £2 million for North Tipperary County Council in 1983 for road maintenance alone, not to mention sanitary services, the capital programme for rehousing and all the other programmes that North Tipperary's progressive county council have embarked upon. If the record is to be mentioned in this House, it should be straight and accurate and nobody should try to gain political kudos.

Some of my constituents are worried about the introduction of new sections in the Finance Bill and how they will apply to them. Section 8, which amends section 344 of the Income Tax Act, 1967, and deals with the question of reducing the interest declared for income tax purposes from £150 to £120 for married couples, and from £70 to £50 for a single person. Section 17 also deals with interest payable. We are all concerned to ensure that small savers are not penalised under any new section in the Finance Bill. I would like the Minister to spell out categorically why this particular change was brought about. We realise that several big depositors deposit in almost every branch of every bank and in every lending institution to try to get all the tax-free interest they can. I would like confirmation that a small investor — such as an old age pensioner or a person with a small public service pension close to the threshold — would need to have over £2,000 invested before he need worry about paying tax under this section. Having his interest disclosed for tax does not necessarily mean that it will be subject to tax. The principle of disclosing the interest is fair, but people, particularly old age pensioners and small savers, must be convinced that we are not penalising them; we are trying to ensure that people who play the system to escape paying tax on unearned interest from investments will now be caught in a net, but others, although they are required to disclose their interest payments may not necessarily have to pay tax on the amount disclosed. That is an assurance small savers would like to get from the Minister.

Do you not think it would be more appropriate to deal with these matters on Committee Stage? You are not out of order, but you would get more detailed answers then.

I accept your advice and will do that on Committee Stage. It might be appropriate if I referred to the changes that have taken place in the method of determining farmers' liability for income tax. The Minister and I had discussions before the formation of the Government about the fairest system under which farmers would be expected to make a contribution to the Exchequer, based on their ability to pay. Many of us are aware — and I have been involved in a farming county for a long time — that, in spite of what people might say, there are still problems in farming and there will be even more problems this year because of the weather and whether many farmers will be liable to pay tax, or will pay any tax, remains to be seen.

In his opening speech the Minister mentioned another system which could be used to determine how much tax a farmer would have to pay. I would like to put on the record that I have made repeated representations to the Minister along these lines. I have been in communication with the farming organisations, particularly the ICMSA and they confirmed that they felt we had agreed, before we entered Government, that a system, based on standard results per enterprise per region which would be taken from the farm management survey carried out by An Foras Talúntais, would be used to determine farmers' income tax.

I want to remind the Minister that on page 12, section 6, of our joint programme we stated that the PLV system currently being used as a basis for assessing farmers' eligibility for certain benefits and liabilities for certain contributions would have to be replaced and we suggested the farm management survey as a replacement, but not, I repeat not, as a replacement for assessment for income tax. It was never intended that that section would be a replacement for tax; it was to decide on a farmer's eligibility to pay either his health contributions or his youth employment levy from which ACOT will benefit over a number of years to the tune of about £6 million. It was also to be used as a determination for eligibility for social welfare, particularly in disadvantaged areas in the west. Because the PLV system has been proved in court to be illegal another means had to be decided upon to determine the liability of farmers for tax. If it is decided that they should pay income tax based on their ability to pay — taking into account their income and profits, expenses and inputs, whether they be fertilisers, rent, veterinary expenses or any other expenditure, and also taking into account the legitimate expenditure which has been set against their gross output — the section referring to the farm management survey is unnecessary. You can multiply the farmers' profit by 1 per cent for his youth employment levy; and you can decide his percentage for the health contribution, and his eligibility for social welfare, farmer's dole or so on. Nothing could be fairer than that. I appeal to the leaders of the farming organisations, particularly the ICMSA who have launched a campaign advocating this system, to do what is expected of them by every section of the community, that is pay if they make a profit. They are not expected to pay if they do not. That is the story behind our agreement for using this system and I wanted to put it on the record of this House today, because it is only fair for all of us involved in the negotiations including the farming organisations, that we know exactly how we are progressing.

The Minister had the courage and the concern to meet people in the tourist industry, the hotel industry and the motor car industry. I compliment Senator Daly on his contribution today. All of us were subjected to a good deal of genuine lobbying from people who are legitimately concerned about the anomalies which have appeared in both these vital sections of our economy, the tourist industry and the motor car industry. The Minister has met their case completely along the lines suggested by them. This shows that in a period of recession he was prepared to make concessions and amendments which will allow those two industries to prosper and create further employment in the process.

The Bill has gone some of the way towards settling the problem of tax equity. My party in Government will be looking for further moves along these lines. This is one of the reasons we welcomed the fundamental principle of the property-related tax. For some unknown reason there has been a squeal from various sections, and particularly in Dublin from people in very high income brackets living in exclusive areas. I am concerned about the ordinary people who do not have anything like £20,000 per annum coming into their house. Relatively few of them have houses valued at £65,000. The amount to be contributed by this section is almost negligible. It does not bear any relation to the old rating system which was considered inequitable because nobody knew who should or should not pay. People with an income of £20,000 should certainly be expected in this kind of economic recession to make a contribution towards the cost of government. Owners of premises valued over £65,000 are privileged in that they have all the services free in urban areas, in corporation areas, in Dublin, and throughout the country. They have free sanitary services and free water services. They expect to have lighting and all the services in exclusive houses in exclusive parts of this city and to pay nothing towards the cost of providing these services.

I am pleased that we have been associated with this section. I want to dispel any doubts that there were any worries on the Minister's part. There was no problem in having discussions with him along these lines because he could see the fairness of this aspect of it. It can be reviewed. It can be looked at. The fact that people can make their own assessment makes it fairer than fair. People have their property insured for a certain figure and they can produce that as evidence of what they consider to be the value of their house. If they have not got an income of over £20,000 they do not have to show the value of their house. To suggest that inspectors will be in and out of their houses every day looking under the bed is overstating the case. That will not happen. If the time comes — and I hope it will — when local authorities are given the power to determine their own local tax, or rate, or whatever one likes to call it, this section can be looked at again if it creates any problems. It is amazing that the people who have been most worried about this section are the very people who talk piously about extending the tax net and suggest that wealth tax should be broadened, and so on. This is a small gesture which people in a certain income tax bracket could make.

The 1 per cent levy on workers' pay should be looked at in the context of the fact that PRSI and PAYE contributions did not change. There was no increase in the rates payable because the Government wanted to have an input in trying to ensure that wage increases and other factors this year would be reasonable to enable us to get back on our feet again. Income tax was not increased and some bands were extended slightly for the poorer sections and those in the lower income bracket. The 1 per cent on workers' pay is the only additional charge in this Finance Bill. That makes the levy acceptable to the Labour Party. We have to be thankful for small mercies. We have always been subjected in Finance Bills to increasing rates of income tax, lower levels of income tax allowances, and so on, which should have been adjusted in line with the cost of living. Many people are now concerned about the anomalies in the taxation system. They have no way out because they are caught in a financial system which ensures that, before they get their hands on their pay packets, every conceivable deduction is made. Other sections of the community are allowed more latitude. Sometimes two or three years go by in which there is no contribution from people who could genuinely afford to make a major contribution. This section is a genuine effort towards achieving tax equity. I am glad to see there is a commitment on the part of this Government and, indeed, the Minister personally, to try to ensure that the Bill will make some impact in an area most of us have been worried about for a long time.

As a small businessman I can assure Senator Ferris that, if he knew the total effect this 1 per cent levy has right across the board — everybody has to pay it and little if any employment will be created by the huge payment we will be making to the Exchequer — he would not be as generous in his comments as he has been. I appeal to the Minister, whom I welcome to the House, to look again at this 1 per cent levy and realise the strain and the burden it is putting on the business community, and to look again at the genuine benefits that will accure from it. What youth employment will it create? What jobs will it create? I ask him to have second thoughts and withdraw this heavy burden. As I see this Finance Bill, the burden of tax proposed is crippling.

I go back again to the question of small business people, the family grocer and the publican. I see that the motor industry and the hotel industry have got a reprieve which was more than welcome. The small builder is nearly finished. The price of a pint today is a new form of Prohibition. Successive Governments have been to blame. The last increase was the last straw for the small businessman. These people are the conscientious, hardworking section of the community. They are the backbone of Ireland. I had hoped that 1983 would be a year to which we could look forward with enthusiasm, that it would be a year in which the Government would pursue a necessary, hopeful and encouraging programme for development as outlined by the 1982 Fianna Fáil plan in The Way Forward. I was hopeful, too, that a realistic and commonsense approach would be adopted with a view to solving the social and economic problems which have become part of our everyday living.

I view this 1983 Finance Bill as being totally devoid of incentive, totally lacking in stimulation of employment, and totally ruthless in its approach to taxation. It is completely heartless in so far as it has failed to provide for the alleviation of poverty. As a member of a local authority since 1967 and as a Member of Dáil Éireann — admittedly for a short period — and now privileged to be a Member of this House, and having served on various committees over the years, I feel, as one who is only too familiar with the problems as well as the needs of the people that I am entitled to comment on this Bill. As a small businessman in my own right I feel I have an added duty to point out to the Minister and to the Government some of the glaring inadequacies which are so apparent in the Bill.

At the same time, I would be less than honest if I did not give the Minister credit for at least recognising the fact that new structures are urgently needed, and that a completely new taxation system which will provide equity in all sectors is long overdue. People who pay their fair share of tax should not be penalised because a section of the community have succeeded in not paying tax, by way of evasion or otherwise. I wish to remind the Minister, as I reminded the Minister for Social Welfare some few weeks ago, that a fairly substantial number of people who, prior to this, were not given to serious forms of accountancy — mostly in the bracket I have mentioned; the smaller type of family business passed down from family to family through the years — who had a certain routine way of conducting their business, a very honest approach, now find themselves assessed for income tax purposes by way of various demands and assessments. They are put in a very serious and nerve-wracking position.

The provisions in this Finance Bill can actually brand somebody as a criminal, or as having criminal intent for tax evasion purposes, due to the fact that they have failed in their accountancy methods to produce the returns which I agree they are entitled to produce — and it is their duty to produce them. It is very hard to break away from an old system. I know people who have the fear of God in their hearts at the thought of a tax assessment coming in their door. I suggest that people who have not got the ability to cope either financially or otherwise — I am not referring to professional tax dodgers — should be encouraged to communicate more openly and freely with the office of the inspector of taxes. They should be offered friendly assistance in an effort to sort out their problems. I mentioned this to the Fianna Fáil Minister for Finance last year. I know the olive branch was proffered by the Department of Finance and the inspector of taxes some years ago. This had some good results.

Once again a new approach should be made to the type of people to whom I refer. I am very sincere in this request. I am sure many Members of this House know people who are in dire trouble and who have lost the will to work and the ability to cope because of income tax demands. The Minister should ask the inspectors to try to help these people. They are quite willing to pay their fair share of tax but, for the reasons stipulated, they are caught now. Perhaps they have mortgage and bank repayments to make. They have let themselves slip a bit too far and they are not able to regain their momentum and their ability to meet their commitments. Another look at that area would be gratefully appreciated by many people.

Many proposals in this Bill give cause for concern. I mentioned the 1 per cent income levy about which much has been said. I am very concerned about the fact that this Government are to reduce the 1983 Public Capital Programme by a staggering £220 million. I am saddened that they have failed to provide extra money for the construction industry. I am very worried about this cut in the capital programme of £220 million. Part of my constituency in north Meath may be affected by this. I should like to know what schemes will suffer. Will schemes already committed to, be allowed to go ahead? The Clonmellon sewerage scheme which has been a bone of contention down through the years has been sanctioned. I am hopeful that Westmeath County Council will get the go-ahead to tender for this scheme. It would be disastrous if this village which has fought for so long to have a sewerage scheme provided were to be disappointed once again.

I should like to refer to the north Westmeath group water scheme, Stage II, which was sanctioned. This will cover a very isolated area where a large farming community are totally without water supply. The whole idea of this scheme was to provide a water supply for farms from Finea to Castlepollard, through Delvin and into Clonmellon, a huge stretch. For years this scheme has been in the pipeline and we are afraid that it may fall by the wayside due to the cut in capital spending. For many years we begged, hoped and prayed for a water scheme for Kells and Oldcastle which was finally sanctioned. Stage I of that scheme is under way and covers Kells. The first stage for Oldcastle has to be sanctioned for the extra cost involved, about £100,000. I am very worried that in six months time, when the first stage is completed, that will be left uncompleted.

An Leas-Chathaoirleach

I do not like to interrupt Senator Lynch but we are on the nation's Finance Bill.

I am very worried about the cut in the capital budget of £220 million which is part of this Finance Bill. I object to it and I will vote against it. It will affect the people who elected me to Seanad Éireann and to the county council. I am putting these questions to the Minister in the hope that I will get an affirmative answer and that he will smile kindly on my part of north Meath and that part of Westmeath which I mentioned.

I want to bring a few matters to the Minister's attention with regard to local authorities. I hope that he will accept that they are relevant to the Finance Bill. I am a member of a local authority and I am sincere when I ask this. What is the real future for county councils and local authorities in general? In what manner is the future financial stability of local authorities to be guaranteed? Are they now in an abyss? The Government say that we can regain autonomy by the generation of our finances. No guarantee is given that we will not be penalised for doing so. Will it be the case that the more we collect the less we will get each year by way of financial subvention from the Department? The local authorities are a vital part of the administration in the country, and they have proved this down the years. To me it seems ridiculous and crazy that we are supposed to collect water rates, special rates for the fire service and rates across the board in a piecemeal exercise. The cost of administration will be astronomical. I do not know what the answer is, but the county councils and the local authorities have serious problems and the sooner we tackle them in earnest the better.

Many of the programmes administered by the Department could be handed down to the local authorities, for example house grants, house improvement grants, group water schemes and so on. We could cut costs by having one inspector or engineer carry out an inspection for a planning permission or a house improvement grant. There are many areas in which improvements could be made. In my area there are vast tracts of boglands and other land which could be used for afforestation. I understand generous grants are available from the EEC and the Department for the planting of trees. We should encourage this type of work, create this type of development, and create more work for our young people. My area in north Meath is a disadvantaged area but it is not recognised as being disadvantaged. It borders on Cavan which has tremendous facilities by way of grants, funded from the EEC Social Fund, for huge road works. Across the border in our part of Meath we do not get any of those facilities because we are not designated as under-privileged. We have our case with the EEC. I would appreciate it very much if the Minister would ask the Government to try to help that part of north Meath by considering us as a disadvantaged area.

Finally, I should like to say something about the social needs of our community. In the past we have suggested that the various public bodies should reassess and streamline their operations in the interests of the economy. In doing so we must ensure that our young school going population do not give up in despair and, most importantly, we must not shirk our responsibilities to the elderly section of the community. We are committed to ensuring that the sick and under-privileged in our society are maintained and looked after. We should not be seen to pay lip-service only in these areas. By our actions we should confirm that we have a social conscience and a sincere commitment towards the needs of these people.

Muna mbeadh Aire Airgeadais ann is dócha nach mbeadh aon cháinaisnéis againn agus muna mbeadh cainaisnéis ní bheadh aon cháin le n-íoc againn ach ní dóigh liom go bhfuil an fhírinne ansin! Tá cáin ag teastáil uainn agus caithfidh airgead a theacht isteach don Rialtas i slí éigin, agus tá an-trua agam do Aire Airgeadais ar bith atá ag iarraidh a sheacht ndícheall a dhéanamh chun airgead a sholáthar don Rialtas. Tá gach éinne ag lorg airgid bhreise ach níl éinne ag scréach go bhfuil sé toilteanach cáin bhreise a íoc. Tá seirbhísí breise ag teastáil i ngach contae, ní hé amháin i gContae na Mí nó áit ar bith eile ach thosaigh an trioblóid, sílim, i bhfad níos faide siar ná mí Eanáir 1983.

Thosaigh an trioblóid trí bhliain ó shin ar a laghad agus bhí sé soiléir ag an am sin nár leor deich faoin gcéad do chontae ar bith. Níor leor é, agus bhí a fhios ag gach éinne nár leor, agus sin é an fáth go bhfuil an-trua agam don Aire Airgeadais atá againn faoi láthair, mar is air féin a bhfuil gach rud ag titim anois. Caithfidh sé an obair a dhéanamh — an t-airgead a bhailiú — agus dá mbeadh sé leisciúil is dócha nach mbeadh cáin ar bith breise ag teastáil uaidh agus ní bheadh sé "unpopular" ar fud na tíre. In one way it amazes me that the Ceann Comhairle is automatically re-elected and the one man who can really make or break the country, with the help of his Ministers of course — the Minister for Finance — has to stand and fight an election. If we were really serious about keeping our country floating, the Minister should be guaranteed re-election, which would mean that he could certainly make his stand on the Finance Bill for the good of the country and not for "popular" reasons.

An Leas-Chathaoirleach

We might agree to that for the next Government, but not this one.

I am making it easy for the Leas-Chathaoirleach.

The Senator could give us a better illustration.

On the other hand, I could give the illustration of Ministers in the past who did not put the nation first and took the easy way. That is the other side of the coin. In the meantime, it is very difficult for any Government to provide a Minister for Finance with the backbone to get the country back on its feet. As a PAYE man I understand the problem of paying tax. I also understand the frustration of people who are fed up with the tax they have to pay, and I understand why people object to it. I understand why people march. But are we getting to the stage where we are beginning to fool ourselves? We have people marching and taking three days off work as a protest against paying tax. Some people come to the conclusion that they have a lot of money because they can afford to do that. We can over-play the card of protesting about taxation.

Somebody has to pay tax. While we all ask for extra money to be provided by the Minister for the Environment or the Minister for Health, none of us is very quick to say tax must be collected somewhere. I worry slightly that we are overplaying the card as well as far as the self-employed and farmers are concerned. This has adverse effects throughout the country. We seem to brand as tax evaders self-employed people. They take risks. They have to worry at night about their business. They have to worry about the bank manager, about whether they will have to let some of their employees go. They pay their just taxes. Yet because some people may not pay tax, or may not be in a position to pay tax, we get this tax "evasion" right across the papers day after day, just as we get it about farmers. The good are smeared as a result.

I said in my maiden speech that many people do not understand farming. I think that is still true. When the weather was very bad, up to a few days ago, we all cribbed about the weather and about our awful country where we can never get a fine day. For us, it was only an inconvenience; for the farmers who were waiting either for their crops to grow or waiting to get crops into the ground it was a real worry. While it is very easy to count the good crops in the autumn or to count the cattle in the fields and say farmers are making a fortune, they take their risks too. One thing that worries me about farming is that one particular group should be giving advice to farmers at the moment — or is being quoted as giving it — that they should burn the assessment forms or the special forms that are coming out.

I complimented the Minister, in my maiden speech, for the fact that he sent out tax forms to every farmer. It was not that I was rejoicing that every farmer was going to be fleeced for tax, but I felt that in having farmers fill in forms the myth that there was a lot of money due from them would be killed. I felt that if every farmer got an assessment form and returned it, and if it was seen that not all of them had a taxable income, then it would take away much of the division and much of the jealousy that is rife in the country at the moment, because we are all watching one another. We all think we are paying more than our fair share of tax. By advising against filling in forms, the farming organisation will now convince people that farmers have something to hide. The farmer feels that the PAYE worker has a secure job with no worries so why should he not pay more? The marches going on at the moment are certainly doing something that is not patriotic. We can and do march to honour our dead heroes. It is overdue that we ourselves march to preserve the nation and not simply to tear it apart.

Mention was made a few minutes ago about the cutback of about £220 million on capital taxation. This, if I may repeat the word I used the other day — now that my colleague from Kilkenny is not here — is another type of oxymoron. If we do not cut back on capital taxation or capital expenditure we will have to come up with the money. If we are to provide £220 million to spend on roads, buildings or some other such things, the money has to come from some source. I am sure the Minister would very gladly hear about a source where that much money is hidden. We have this problem. We cannot just talk about taxation being too high — and it is too high — and at the same time expect the Government to continue to provide extra money to keep the country going. We will have to have it one way or the other.

Debate adjourned.
The Seanad adjourned at 8.30 p.m. until 10.30 a.m. on Thursday, 2 June 1983.