Is dócha gurb é seo an Bille is tábhachtaí dá dtagann os ár gcomhair chuile bhliain mar is í an aidhm a bhíonn ann ná straitéis airgeadais an Rialtais a chur i gcrích. Ar ndóigh, cheana féin i mbliana bhí an Bille Leasa Shóisialaigh ann, agus curtha leis sin anois tá an Bille Airgeadais. Tá sé anéasca ag daoine dearmad a dhéanamh ar an áit a rabhamar ceithre bliana ó shin, ag an am nuair a bhí ráta ard cánach de 58 faoin gcéad, agus ráta íseal cánach de 35 faoin gcéad ann. In imeacht ceithre bliana tá ísliú déanta air sin, go dtí 52 faoin gcéad agus 29 faoin gcéad. Is minic a dúradh gurb é ceann de na fadhbanna agus na lochtanna a bhí ar an tír seo ná an ráta ard cánach pearsanta. Níl aon amhras ann ach go bhfuil cion fir déanta ag an Rialtas chun an fhadhb seo a réiteach.
Tá i gceist ag an Rialtas leanúint den obair seo ach tá an chinnteacht níos mó nuair a chuirtear i gcuimhne go raibh ag an am a thángthas ar an obair seo a dhéanamh fiacha troma ar an tír agus go raibh an fiach náisiúnta ag méadú as cuimse in aghaidh na bliana. Ag an am céanna gur íslíodh na rátaí cánach cuireadh cúrsaí airgid na tíre, trí chéile, faoi smacht. Mar shampla, laghdaíodh an ráta ar a bhfuilimid ag tógáil iasachtaí síos go mór i gcaitheamh na mblianta sin agus, mar sin, tá ag éirí, ó thaobh airgeadais de, le straitéis iomlán an Rialtais. Beidh mé ag caint ar ball ar chúrsaí fostaíochta agus an tionchar a mbeadh súil againn ar an obair seo ar chúrsaí fostaíochta, ach creidim go bhfuil sé thar a bheith tábhachtach go ginearálta go mbeidh rátaí ísle cánach ann.
Creidim gur ceann de na fáthanna gur éirigh leis an Rialtas an obair seo a dhéanamh ná gur fheabhsaigh said go mór na modhanna bailithe cánach a bhí i bhfeidhm sna blianta sin. Níl aon amhras ann ná gurb é ceann de na rudaí ba réabhlóidí dá ndearnadh i gcaitheamh na mblianta sin ná an amnesty a thug an tAire Ray MacSharry isteach sa bhliain 1987, sílim. Ní amháin gur thug sé sin isteach mórchuid airgid, ach thug sé seans do dhaoine a raibh faillí déanta acu sna rudaí seo iad a chur i gceart, agus níl aon amhras ann ná gur thug sé go leor leor daoine nua isteach sa chóras cánach agus go bhfuil daoine ag íoc cánach ó shin i ngeall air sin.
Cuireann sé sin go mór leis an gcreideamh atá agamsa gurb é an bealach ar cheart dúinn a dhul ná simpliú, trí chéile, a dhéanamh ar an gcóras cánach, rátaí ísle cánach bheith i bhfeidhm agus deiseanna éifeachtacha a bheith ann chun iad a bhailiú. Ní mar sin a bhí ach is sa treo sin atáimid ag dul le cúpla bliain agus tá an-mholadh ag dul don dá Aire Airgeadais a bhí ann a thug aghaidh ar an fhadhb seo agus atá tar éis muid a dhíriú sa treo sin. Thar an t-ísliú iomlán sa ráta cánach, tá rud eile fíorthábhachtach déanta, is é sin, tax exemptions a ardú go substaintiúil.
I always believed that the idea of a single person paying tax on a salary of £2,500 upwards was ridiculous and that the idea of a married couple beginning to pay tax on a salary of £5,200, irrespective of family size, made no sense because you wound up with the ridiculous situation of people paying tax and needing State hand-outs to live on. One of the most revolutionary concepts introduced in recent times was the radical increase in tax exemptions. When people talk about the disincentive to work of high tax rates, and particularly of the top band of tax, I often wonder do they think of the reality of somebody earning £60 or £70 per week and paying income tax and the disincentive involved. Therefore, the increase in tax exemptions has been of fundamental importance over the years.
It was a pity that in the seventies the relief for children in the income tax code was done away with. I have never understood how this happened. It is quite obvious to anybody that the increases in child benefit did not in any way compensate for the loss of these benefits. In a country that places great emphasis on the family it seems of fundamental importance that the cost and the importance of children and of families be recognised in the tax code. The Minister in recent budgets certainly gave recognition to children, particularly in low income families. It is of great significance for low paid workers that for a family with five children the tax exemption has gone from £5,500 to £8,900. That is of major significance and only people who are dealing with low paid workers understand the relief felt by people on low incomes at being clear of the tax net when they quite patently cannot afford to pay tax. I hope to see this extended dramatically; and if there is money for tax relief it is in the level of tax exemption that much of this money should go.
I have always felt that in today's terms the idea of a single person paying tax under £5,000 income is unrealistic and I would ideally like to see the threshold for a married couple starting at £10,000 and increasing based on the number of children after that. I will make reference to this again when I am talking about the provision of employment. If the tax code was amended in this way, and continued to progress in the direction it is progressing, it would act as a stimulus to people to go out in the work place, much unnecessary administration would be done away with and, generally, tax income would not fall that dramatically.
There is of course attached to exemptions one problem that hits the low paid worker and that is the question of the marginal rate. A family with five children and an income of £9,500 to £10,000, pay a rate of 52 per cent tax on the amount of income marginally over the exemption level. This can cause problems, particularly if overtime is involved. For a person on a flat rate wage of £8,700 who earns overtime it effectively means that this overtime is taxed at the high rate of 52 per cent. I admit that the 52 per cent rate as it is now is a great improvement on the marginal rate of 60 per cent that applied two years ago; but it still causes serious problems because people are reluctant to get involved in overtime if between PRSI and tax they are penalised at a rate of 60 per cent. I would favour a lower rate of marginal tax in those cases and I suggest that the 48 per cent level might be the level to aim at.
In regard to indirect taxation, we have had two major significant reductions in the general level of VAT. In two years it has gone from 25 per cent to 21 per cent. This will certainly have a significant effect for business and the consumer. It has been a major contributor to holding down the consumer price index. Being involved in business, I felt that high rates of tax provided the temptation for people not to declare all their tax liabilities. Therefore, as with income tax, what we need is, very rigid implementation and lower rates of tax. I look forward to the rate of VAT dropping significantly over the next few years.
When we compared our tax rates here to the tax rates in other countries, and particularly our nearest neighbour, it was overlooked that we were using our VAT code to make up for the loss of rates income, which was abolished in 1977. It is of significance, now that the British Government are moving in the same direction, that the difference between the Irish rate and the British rate is beginning to close dramatically. At the moment the differential is 3.5 per cent. This brings home to us the fact that in the whole basket of taxes you cannot isolate one, you have to take them all together. I have no doubt we can continue to reduce these rates and to come fully into line with the rates in other countries.
To prove my point on the question of tax yield, there is no better example then the increase in the yield from corporation tax. Even though the general rate of corporation tax has been reduced, by elimination of certain exemptions and the tightening up of the system, the total yield from corporation tax is going to increase from £257 million in 1987 to £527 million in 1991. This is of great significance. It proves that a simpler tax system, with fewer exemptions and lower rates, is not only much simpler to administer but is also a much more effective way of collecting tax. I would favour further steps in this direction with the elimination of loopholes or incentives, or whatever one wishes to call them, the lowering of the general rates and a tightening up of the method of collection.
Even though I made use of the business expansion scheme, I think, in general the Minister has to be complimented on the steps he took to reduce and to change certain conditions of that scheme. I appreciate that there has been much olagón from certain sectors regarding this. In general, it must be recognised that this scheme was being used to finance projects not, as was originally intended, namely, for risk capital, but for projects that basically were bank guaranteed. If there is a justification for this type of scheme, and I sometimes have my doubts, I think it has to be within the term of taking risk. Where this is seen not to be so, the Minister is perfectly correct in taking swift and prompt action.
Such schemes do not always recognise the possibilities of development among the smaller, less wealthy sections of the community who would not have access to such funds. I know that when the scheme was set up originally it was thought it would bring money into small venture capital schemes. Time has proved that this was not so. It was not the small hotels, the guesthouses, or farm houses that obtained BES funds but the big conglomerate organisations which would in any event have obtained funding for the projects they had in hand. Our biggest problem in this field is to get money to the small operator on the ground, who will grow organically. It is he who, over time, can provide rapid development in rural areas particularly.
The question of decentralisation is of significant national importance. We hear every day about the problems of emigration, about the problems of traffic in this city, of crime and of social disorder. It was even mentioned today on the Order of Business. One of the biggest problems we face, and which we will have to tackle dramatically in the years to come, is the problem of the centralisation of all services in the greater Dublin area. The relocation of Government Departments outside Dublin has been of fantastic significance to rural cities and towns. Certainly, the provision of places for 900 public servants in Cavan, Galway, Sligo and Ballina has been of major importance to these towns.
Deirtear, má chruthaíonn tú post, go gcuireann tú dhá phost eile ar fáil i seirbhísí atá timpeallaithe ar an bpost sin. Mar sin, tá sé ionann is cinnte, maidir leis an 900 duine a aistríodh siar faoin tuath nó siar go dtí na bailte móra ar fud na tíre, gurb ionann é sin agus 2,700 post a chruthú san iomlán. Má thógaimid meán teaghlaigh de, abraimis, cheathrar nó sheisear, tá tú ag caint ar riar maith daoine, os cionn 10,000. Is ionann é sin agus baile réasúnta mór thíos faoin tír. Ach creidim go gcaithfimid tuilleadh a dhéanamh. Ní fheicim cúis dá laghad — go mórmhór le ríomhairí anois agus an ceangal ríomhaireachta is féidir a chur ar fáil ó háit go háit — nach ndéanfaí tuilleadh den obair seo. Tá sé thar am ag cuid de na comhlachtaí Stáit, go mórmhór iad siúd atá bunaithe ar shaol na tuaithe, ar nós Bhord na Móna, Teagaisc, agus mar sin de, a gceannárais a athrú go dtí an áit a bhfuil siad ag tarraingt as.
Beidh daoine ag cur ina aghaidh sin ach creidim go bhfuil daoine ann, ní amháin atá sásta filleadh ar na bailte tuaithe ach go bhfuil bís agus fonn orthu é sin a dhéanamh mar go gceapann siad go mbeidh caighdeán maireachtála níos airde sna bailte sin ná mar atá acu i láthair na huaire. Bheadh sé mar aidhm agamsa go gcoinneofaí an brú go dtí go mbeidh sé le rá ag chuile dhuine sa tír seo go bhfuil cónaí orthu i bhfoisceact 30 mile d'ionad díláraithe Rialtais de shaghas éigin ina mbeidh deis fhostaíochta ag a gclann. Creidim gur sprioc réasúnta é sin, gur rud é sin a chuirfeadh go mór leis an tuath, go gcuirfeadh sé go mór leis an bailte agus, ag deireadh, go gcuirfeadh sé go mór le cathair Bhaile Átha Cliath, mar ní dóigh liomsa go bhfuil éinne atá ina gcónaí sa chathair seo go dteastaíonn uathu é a fheiceáil ag glanadh soir, siar ó thuaidh i dtreo na gcnoc, siar ó thuaidh go chuile threo agus é ag fás agus ag dul ó smacht agus na tailte glasa atá timpeall ar an gcathair seo a fheiceáil á slogadh de dheasca forbartha gan teorainn.
The effect of the budget on unemployment has been discussed. The whole question of unemployment has come very much to the fore in recent times. I have been involved in the provision of employment for 18 years and I realise that it no easy task. First, one needs capital, which is, obviously a prerequisite to any type of modern development. There are those who thought that in rural areas, for some mysterious reason, one could create employment with no capital. Secondly, you need enterprises to put that capital into and which give a return on profits. Thirdly, you need people and perhaps the third requirement is the most important one.
Over the years I have become very sceptical about employment-giving schemes, about incentives and about specialised tax breaks for the provision of employment. I have come to believe that the only way of creating employment in the future is the creation of a viable competitive economy. People will say that is a right-wing view. I think it is a rational view. I have been working in the area of creating social employment through co-operatives and I have found that you cannot survive in the marketplace if your goods are not competitive. Competitive cost structures are absolutely vital.
I have said consistently over the years that the biggest problems faced by employers are the high payroll taxes, between PRSI and PAYE; the high cost of transport, particularly for those involved in indigenous industry using heavy raw materials, high volume by value; high overhead costs in telecommunications, electricity and in the provision of insurances. That is the reality employers face. There is no employer who, if offered incentives, will not accept them. I have not yet met the employer who, in private, has not admitted that the greatest barriers to development have been the overhead costs in this country.
We are a nation on the periphery of Europe and some of us work on the periphery of the periphery of Europe and the high cost of labour and transport puts us at a total economic disadvantage. I recognise, and anybody in business who is open-minded and fair recognises, that on the budgetary controlled elements of this, the Government have made major strides in recent years. The decrease in the tax rates has been most significant. It has meant that the overhead cost of tax to employees has greatly reduced. I have always maintained that the tax for the many is more important than the tax for the few. There has been great emphasis in certain quarters on reducing the highest rate of tax so as to bring in the entrepreneur and encourage entrepreneurs to work. However, no entrepreneur can produce if the people on the factory floor do not believe there is an incentive for them to produce, on behalf of the company for whom they work. The reduction of tax for the low paid worker is more significant in the long term than selective top rate tax reductions. We have seen major steps in that direction over the past few years.
A budgetary measure that was of minor significance last year has now come to be of major significance, with the changing of the part-time workers Act and the bringing of part-time workers to full PRSI. Last year there were very few full-time workers whose wages dropped under £60 per week. You can take on part-time workers now, and they do not get penalised, although the employer does, in paying 7.5 per cent PRSI on a small income. The second thing the Government have done, on this general overhead front, is the reduction in VAT and the third thing that has happened is the reduction in Government controlled overhead costs. Basically, the general rates of excise duty on things like diesel have not increased, which has effectively meant a decrease.
A very significant step has been taken, in relation to the western areas, by the Minister for Tourism, Transport and Communications in the decision to give some equality in the cost of telecommunications. This is a strategy, a broad package. Even though that item is not part of the budget as such, it is part of the totality of steps being taken by the Government to decrease overhead charges. In my time as a manager, the difference between the new telecommunication charges now and what they were, would be a saving, in the time of about £60,000 on my operation alone. We would have considered it fantastic to have been given a cash grant of £60,000, even over that period of time. It is in this context that one begins to realise the terrible burden placed by high overhead taxes.
If we want to stimulate further development, we have to continue to control the cost side of the equation. We have to continue to decrease, in absolute terms, those taxes that particularly affect the cost of industry, agriculture and tourism. Rather than an increase in grant-aid, in new schemes, in the budget of the IDA, I would prefer to see a reduction of overhead costs by the State.
From the industrialist's point of view, there is another advantage in this. There is no administration involved in getting a smaller telephone bill. There are no application forms to be filled up. You just get a smaller telephone bill. If you apply for grants, much of the time you twist and turn, trying to comply with the terms of schemes that were not tailor-made for your requirements. I do not think this point can be stressed strongly enough. There is always a temptation to hold out the lollipop, to hold out the incentive, in the belief that it will make people happy. In the sixties and seventies, people had enough of that approach. They are looking for something more radical now, something more basic and something very simple. Our cost structures must be put right and we must develop in that way.
There is one other point I would like to refer to in this question of development, namely, the question of capital. It has long been believed in this country that the only source of capital is foreign investment and big investors. We have to reexamine this in the light of the realities before us, which we sometimes ignore. For example, life insurance companies rely mainly on small investors, a large number of people making a small investment, building up to massive sums of money.
There is money available in this country. One of the challenges that faces us is to make that money go around. We have not made that money go around fast enough. Anybody in the west of Ireland would tell you that much of the money paid out by the State is left dead. Some of it is left under mattresses——
