Amendments Nos. 11, 12 and 13 are related and may be discussed together. Is that agreed? Agreed.
SECTION 8.
I move amendment No. 11:
In page 24, subsection (2), lines 3 to 9, to delete paragraph (d).
I propose to allow all charities to benefit from this tax relief by deleting section 8 (2) (d). As it currently stands, the section gives relief only to third world charities. By removing this paragraph, the aim is to provide that all charities would have this benefit. The parliamentary draftsman may find a better way to put this but my amendment was the neatest way I could devise to give everyone the same benefit.
I spoke on this section at length on Second Stage and gave the history of how I thought the argument about giving relief to anyone developed in the Department of Finance. The purpose is to give relief to charities who do all of their work in the Third World — a laudable objective with which I have no quibble. The Irish have expressed their commitment time and again to the relief of famine and tragedies around the world. No other nation has contributed more than Ireland to the Third World in expertise. Any time the people have been asked they have contributed more than generously. I do want to see the relief for Third World charities done away with. On the same basis that I believe in a level playing pitch for everybody the same tax reliefs should be given to charities in Ireland.
I complimented officials in the Department of Finance who conceived this section. It will neatly allow any future Government to give a more exact figure of the amount Ireland gives to Third World countries. If people claim this relief the Revenue Commissioners will be able to give a figure for the amount the Irish people give by way of private contributions in addition to Government grants.
It is not a good principle to ask people to differentiate between home based charities and Third World charities. We would all have received representations from the home charities. They want to be treated the same as Third World charities so there is not a bias in favour of people donating to Third World charities. The Minister could restrict the amount that would be allowed in relief and the national charities, who have come together to make their case, have an upper ceiling in mind. It is not too much to ask.
When Ministers bring in a good section Members of the Opposition often carp about it at the time of the Finance Bill. I hate to be seen to do that, not only on this section but on others. Since its foundation officials in the Department of Finance have told Ministers that if he gives relief he will be pressed by everybody else for the same relief. The same advice was probably given to the Minister, Deputy Quinn, and I compliment him on having the courage to include the provision. I am sure the idea has been around for some time and he has taken the initiative.
He will, however, create an anomaly against home charities although I am sure that is not his intention. As someone who espouses financial prudence in these matters, I would not like to open the floodgates in any area of tax relief without a proper costing. The proposal put forward by the national charities in Ireland that there be an upper ceiling is worthwhile. I ask the Minister to consider my amendment in his well known charitable spirit.
My amendment is an attempt to deal with the same point as Deputy McCreevy. Perhaps I take my amendments too seriously. I thought it would be odd if we were dealing with the Society of St Vincent de Paul in Ireland or another group to have the Minister for Foreign Affairs certifying them. I know the Minister, Deputy Spring, would love to be in a position to carry out such functions. I thought the Minister for Finance should be able to bypass the criteria set out in paragraph (d), which Deputy McCreevy proposes to delete, in respect of charitable institutions in Ireland which are narrowly defined as charities which have as their object the relief of poverty or illnesses in the State. It should not apply to just any charity because there are many charitable trusts in the State which people might not think are in need of huge donations, certainly not at the expense of the Exchequer.
It seems wrong in principle to designate a certain form of external charitable donation as tax deductible when there is so much need for charitable donations to bodies within this jurisdiction to which no tax incentives apply. I am also conscious of the difficulties domestic charities experience when raising revenue because of competition from the national lottery. Many charities have found that their fund-raising methods were seriously compromised by the lottery. Despite successive Government undertakings to change the limits on charitable fund-raising through lotteries, pursuant to the Gaming and Lotteries Act, 1956 nothing has been done and the same limited amount still applies.
I am not convinced of the merits of the £200 minimum. I believe in the old parable of the widow's mite. I do not believe that those who can afford to give £200 should get tax relief while somebody who gives less does not. There has to be some limit and one cannot have tax allowances of 50p but it could be a much greater sacrifice for somebody to give £50 to a charity. The charity may also get far more £50 donations. If we make an arrangement of this kind, we should have a lower starting threshold.
I am also unsure about the desirability of a maximum ceiling to protect the Exchequer. It has been set very low. Some people who, for example, inherit money may be willing to give £2,000 to a charity in a year and I do not see any good reason why they should not be encouraged to do so. People are careful with their own money and the Exchequer is not going to be bled dry because of such donations. If that were to happen, we could address it. I agree with the National Charities of Ireland's view that some ceiling can be fixed. In practice I am sceptical about the possibility of a huge rush to make donations because it appears bureaucratic and complicated.
I reiterate that the old phrase "charity begins at home" applies on this occasion. National charities in Ireland are entitled to some recognition for donations made to them. I strongly support what has been said and urged on their behalf in public and by Deputy McCreevy.
I understand where the Minister is coming from with this provision. Helping overseas development aid is very necessary. However, as Minister for Finance, he probably understands better than most that no amount of money given by generous donations in Ireland will offset the huge amount going from the Third World to the rich in debt repayments. When one puts the two side by side, a small trickle goes to the Third World and starving the domestic charities will not make up for that injustice.
Money should not be the main stumbling block. It has been mentioned that this will bleed the Exchequer. First, there is the question of equity which I was glad to hear the Minister mention. Distortion in the Finance Bill should not be encouraged and this is one area where the Minister could remedy a distortion. As we heard during the private session this morning, the number of charities in Ireland seems quite large. However, few of them depend on the type of payment provided for in this tax relief. Most depend on street collections, parish f�tes, etc. We are not talking about a large number of domestic charities.
My amendment covers most of the issues raised by the other two Deputies in their amendments. The Exchequer should be able to decide the acceptable level of tax relief. I am not saying that the figure should be £2 million; I would be surprised if it reached that figure. Deputy McCreevy said he would be happy with a ceiling. Like Deputy Michael McDowell, I believe £200 is a great deal of money for some people and that the amount should not be as high. If the principle is acceptable, perhaps the Minister might revise the provision in the Bill.
I welcome this section. To my knowledge it is the first time in Irish taxation law where we have given a tax break to those who make payments to Third World charities which have a higher priority than those at home. We must remember that this country falls far short of the United Nations target of 0.7 per cent of GDP in terms of overseas aid. Anything we do to increase the level of unofficial assistance from private sources is welcome. From that point of view, I believe the Minister's proposal is innovative and welcome.
I am delighted to see Opposition Deputies showing charity on these matters. Each year since 1987 when Fianna Fáil returned to office — Deputy McDowell spoke about the widow's mite, but his party was associated with it — Ireland's official assistance was cut or frozen. During those years we were not very charitable at official level. Although Deputy McDowell was not a Member of the Dáil, he did a great deal of talking from the sidelines and I do not remember him saying anything about this subject.
It was an external association.
Most of the funding generated by this measure will go towards increasing human security among the world's poorest people. I would like this to be extended in the future to those who donate to charities like the St. Vincent de Paul Society which helps human security by distributing money, and other charities. This is a welcome first step and it is one of the innovative sections of the Bill.
Deputy Connor stated that this was a tax break, but it is not. It is a mechanism for the Government to provide extra funding for overseas development.
This is unofficial assistance.
I welcome this section. I have many friends working in the poorest parts of the world and any extra assistance is welcome. We must also look after our own and I am sure the Minister will make adjustments, if necessary. We must make an equitable contribution to the poorest members of society. I welcome this section, but I object to it being dressed up as a tax refund for people who make a donation, which it is not.
Like many of my colleagues, I welcome this proposal which is a novel and imaginative way to get extra funding for countries which need more money than we could ever hope to send them. Like some Deputies, I also have contacts in that part of the world, but I or the Minister do not know if this means a lot to them.
I have also been contacted by home based charities which make a strong case. We have helped them in whatever way we could throughout the years. If I was involved in those charities I would have to shout "unfair competition" in this regard. How much would it cost if this scheme was extended to home based charities next year? I assume there is little information available to allow the Minister to make such an objective decision. Will the Minister monitor the situation over the next 12 months and inform us of what is happening? Home based charities will face difficulties if they are not financed although I welcome the aid given to Third World countries.
Perhaps it is a myth, but we give greater support to charities than other countries. What action will the Minister take between now and the next Finance Bill if, over the next couple of months, home based charities suffer as a result of this proposal? Many home based charities would like to hear his reply because some, although, not all, believe this will work against them.
I welcome this section and the Minister's proposal which is based on our tragic experience of famine and our concern for many parts of the Third World. Sometimes proposals which are intended to be positive have side effects which are unintended. This would be of concern to the committee. One of the regrets I have in dealing with this section is that we did not have time to hear representatives of national charities. I suggest that during the next few months we invite them to a meeting to discuss this issue in retrospect and evaluate it so as to give them the opportunity which we have not been able to give them today.
I had a discussion a few years ago with the Director of the Combat Poverty Agency, Mr. Hugh Frazer who had previously worked in Northern Ireland. I asked him about the difference between operating here and in the North. He said that one of the big differences was the number of charitable foundations in the North. He said the amount of money available to them was greater than it would be in the South. I learned in recent times that almost all charitable donations in the North are tax deductible. The Minister may wish to clarify this.
We are saying to the Minister we welcome this proposal but do not want any adverse effect on national charities and we ask him to see how far he can go in the near future to assist them on the basis that the services they deliver are much more cost efficient than if they were provided by the public service. They alleviate public services in many ways.
There are many charities and I do not want to single out any of them. However, the Society of St. Vincent de Paul raises funds which they hand on to Third World charities. If they do this in future, these funds will not be tax deductible. This proposal can affect the operations of some charities. The Minister may wish to comment on the points raised and I put the question to the committee as to whether we can invite national charities to the committee to discuss the matter with us.
I recognise very much the positive work being done by a large number of charities. There are 6,000 formally registered charities. The information available to us is that approximately 3,000 of them are active in any meaningful sense of the word. Some receive substantial support from the public and some receive very little support. Some of them receive only very partial support. Last year charities received £1.8 million from the Department of Social Welfare. The budget this year for that Department is approximately £2.3 billion.
Notwithstanding the facts that we are the 25th richest country in the world and have an elaborate social welfare system, we still have acute areas of psychological, physical and emotional deprivation. In many cases people in these areas are dependent on charities to alleviate the dreadful circumstances in which they find themselves. Nothing in what I am about to say should be taken in any way as speaking against the validity of the work being done or the necessity for those charities.
I accept full responsibility for the introduction of this section. Deputy McCreevy has speculated as to what the conversation was likely to have been. The view was that if we introduce this measure on a partial targeted basis we will produce the kind of reaction we have had and well intended advice was that we are better to leave the matter entirely as it is. I chose not to do so and have been well advised that what has transpired accordingly was well signalled in advance.
We are the 25th richest country and have international obligations. In addition, there is an extraordinary empathy between our citizens and the rest of world, as was evidenced on numerous occasions. This is across all age and social groups in our society. The role Bob Geldof played in relation to Live Aid is an indication of the extent of that commitment. Deputy Ahern and I were educated in similar institutions and the people who educated us had a very strong Third World dimension and experience. We have also signed up for the United Nations target of ODA assistance. The recommended target is 0.7 per cent of our gross national product to be donated by way of development co-operation. Our present figure is about 0.2 per cent.
I stand over my introduction of this provision, notwithstanding the understandable criticism it has attracted, for three reasons. First, it marks the 150th anniversary of our famine and the fact that we were recipients of international aid, albeit a modest amount, at a time when we needed it. Secondly, it recognises that individual Irish citizens want to decide where State ODA assistance should go and want to participate in responding to a particular area of concern in one country as against another. Thirdly, it ensures that private contributions to Third World charities added to official contributions could increase our overall contribution so that we reach the target of 0.7 per cent.
The cumbersome method of payment was introduced in the Bill following consultations with the OECD committee in Paris about how this voluntary tax foregone contribution — which can only be triggered by a private contribution in the first instance — could be deemed to qualify as additional moneys to the State grant for the purpose of meeting our UN target. The advice we received from Paris was that the cash transaction would have to be from the Revenue Commissioners or from the State to the recipient Third World charity. The original design for the proposal was that the maximum contribution would be £1,000 and the minimum was deemed to be £200 because there would be complex administrative difficulties below that figure. The £200 amounts to the cost of about two pints of beer per week per year.
They must not drink in Doheny & Nesbitts.
They just lecture in Doheny & Nesbitts; they do not drink. The figures of £200 and £700 were arrived at when we rounded the figures from the maximum tax relief on a contribution of £1,000 which would be at 27 per cent. That is the origin of the figures.
Trying to calculate the cost of this is a tentative area. It is based on Revenue's judgments, which are fairly good. However, we do not know what influencing effect this will have. The most accurate figures we have are based on a study by DKM consultants for the national lottery on the impact of lottery spending on charitable figures. There might be some dispute about their accuracy but that is the basis upon which these calculations are being formulated. Everybody agrees they are tentative. However, with that qualification, we expect the cost of the provision in the Bill at present to be about £6 million in one year. If we were to extend it to domestic charities, we estimate that the cost would be an additional £21 million.
(Interruptions.)
I qualified the basis of the figures. I am aware that is not what has been requested by private charity groups. I am simply answering a question put by my colleagues on the committee who asked the cost of this provision if it were extended.
We do not know what the take-up will be. Deputy Sargent said that many of the collections held by charities are of a type that would not reach the minimum figure of £200. Much depends on whether Third World charities organise themselves to secure payroll reduction or standing orders or various other systems that would maximise the take.
The Minister's Estimate may be excessive.
It possibly is excessive, but from the viewpoint of budgetary prudence we must factor in the worst situation with regard to what the total cost may be and if it is less than that, we will have a bit of comfort. It would be irresponsible to calculate a low figure and then find that we had miscalculated, because in terms of miscalculation, it is better to be on the right side. Officials in the Department of Finance say that this is an exact science; on the contrary, it is a very inexact science and, therefore, one has to take precautions.
This is a distortion of what was previously a level playing pitch. It is a conscious and deliberate intervention on behalf of people who are manifestly worse off than we are. It is a distortion which, if it works, will perhaps enable us to increase the overall amount of official and unofficial contributions, calculated together. I do not see it as a substitute for our Estimates next year and I envisage that whatever is donated will be added to the Estimates for 1996. I am conscious that I am giving the Deputy a hostage to fortune in making this point, but it would be a great breach of trust if in this respect, we were to use private contributions as a substitute for our official obligations. I, therefore, see this as additional.
We do not know how well or effectively this will work. I believe that the fears of Deputies who have raised concerns on behalf of the 70 charities which have come together and which undertake excellent work in this country are unfounded. I had a meeting with them and they regard the situation as very unsatisfactory, although it was not intended to be. If their fears materialise, and there is a massive distortion in the kind of revenue which they are currently getting, then this will have to be addressed in view of the manifestly good work which they undertake. Last year, £1.8 million was given directly to charities by the Department of Social Welfare — not necessarily to all the charities within this group, and I can obtain the relevant information for the committee in due course.
It would have been much easier to leave this area alone and not to have this debate. However, the people wish to have a hands on involvement in this. We all have friends working in this area or have had a personal involvement in some form, shape or size in Third World activity. From the viewpoint of the relevance to the citizen as to the way money is spent, this will give the Department of Foreign Affairs, for the first time, a much clearer indication of the preferences and order of priority of individual citizens with regard to the work of Third World organisations. Instead of taxpayers' money being taken and its expenditure decided by a group of officials in Iveagh House, the citizen will be able to participate in indicating the priorities with regard to donations and allocations.
It will also help us to meet the target of 0.7 per cent, which we are far from achieving at present. This is an international treaty obligation and we are seriously in breach of complying with it. I am not prepared, therefore, to accept the amendments that the provision should be extended to domestic charities. In my overall position as Minister for Finance, I am prepared to consider the impact, if there is one, on the fund raising activities of domestic charities. I am aware that charities have been disadvantaged with the ceiling put on the value of lottery prizes they can offer in contrast to the national lottery. This is something on which, independently of and separately from this issue, I am in consultation with the Minister for Justice and am prepared to consider. My position on this measure is one for which I take full personal responsibility and I have articulated it as best I can.
The House has voted with regard to time order, so we are in breach of orders at this point. We have 11 more sections to address before 6 o'clock. I will, therefore, put the questions on this section. The problem is that other sections will arise which we will not be able to debate. Deputies Wallace, Michael McDowell and Cullen have indicated, however, that we must observe the order.
Amendment put.
The division is postponed until 6 o'clock.
I move amendment No. 12:
In page 24, subsection (2), between lines 9 and 10, to insert the following:
"Provided however that the Minister for Finance may make a designation for the purposes of this section in respect of a body or institution to which paragraphs (a), (b) and (c) of this subsection applies where the body or institution has as its object or purpose the relief of poverty, or illness within the State.".
Amendment put and declared lost.
Amendment No. 13 not moved.
At 6 o'clock, we will take two questions. First, that amendment No. 11 be made and, second, that section 8 stand part of the Bill.
We have an hour and 15 minutes before 6 o'clock. I suggest Opposition Deputies indicate the sections to which they would prefer to give more time. We are behind on sections 9 and 10 and I am obliged to put the questions in relation to section 9. I will allow one quick contribution if Deputy McCreevy wishes to speak or nominate a speaker.
Section 9 will not take too long, Chairman. I nominate Deputy Michael Ahern to speak on amendment No. 14.
We are still in breach of the orders of the House. We have to abide by those orders but I will allow this to be moved.
NEW SECTION.
I move amendment No. 14:
In page 26, before section 9, to insert the following new section:
"9. If a claimant proves that for the year of assessment he/she is employing an individual to care for his/her dependant children, the income tax to be charged on the claimant for that year of assessment shall be reduced by an amount equal to the appropriate percentage of the payments proved to be so made.".
I will speak to amendments Nos. 14 and 15. Amendment No. 14 relates to the insertion of a new section giving an allowance for an individual. It states that ". . . If a claimant proves that for the year of assessment he/she is employing an individual to care for his/her dependant children, the income tax to be charged . . ." would be reduced. Basically, it gives a tax allowance to a person who employs someone to take of his/her children. For example, if the wife dies and the widower hires somebody to look after his children, it would give him a tax-free allowance. Similarly, amendment No. 15 allows that a tax-free allowance would be granted to a person who employs a person to provide nursing care.
This would result in a possible job spin-off. We talked earlier of situations in which both partners work. The purpose of amendment No. 14 is to give a tax break for the employment of a person in the home who looks after the children while both partners are at work. We all know of families where both partners are working and they can incur considerable expense employing a person to look after their children. There would be job creation potential if a tax break was given in this area, subject to the normal proviso with regard to PAYE, etc. It is something that would have to be tested. I am aware of the counter arguments that can be made in this regard. It would be worthwhile taking a chance with this. It would certainly recognise the working mother, which the State has failed to do in much of its legislation. It would go some way to giving cognisance and relief to the working mother.
I can only allow the Minister to indicate whether he accepts or rejects these amendments.
I am not accepting the amendments. For the information of Members, and the record of the House, I draw attention to the fact that the Second Commission on the Status of Women — which reported in January 1993 — did not recommend that tax relief for childcare expenses be given to working parents. The commission considered that it was preferable that any additional assistance for childcare facilities should be provided through increased investment in childcare support and services, rather than providing tax relief to parents for work-related costs. That would include support for creches in the workplace.
It says nothing about nursing.
The Minister may wish to circulate a more detailed reply but we are short of time.
Amendment put and declared lost.
NEW SECTION.
I move amendment No. 15:
In page 26, before section 9, to insert the following new section:
"9. If a claimant proves that for the year of assessment he/she is employing an individual to provide nursing care for his/her self or dependant parents the income tax to be charged for that year of assessment shall be reduced by an amount equal to the appropriate percentage of the payments proved to be so made.".
Amendment put and declared lost.
Section 9 agreed to.