Dáil Éireann díospóireacht -
Tuesday, 3 Dec 1968

Vol. 237 No. 10

Private Members' Business. - Income Tax Code: Motion (Resumed).

Debate resumed on the following Motion:

"That Dáil Éireann is of opinion that the income tax code is in need of urgent revision in view of the fact that it now creates considerable economic hardship for the least well-off section of the community."

—(Deputy James Tully).

Mr. Treacy

It is with pleasure and a deep sense of responsibility for the importance and urgency of this matter that I rise to support the motion. Let me say at the outset none of us objects to paying his fair share of income tax in this country. We realise this money is essential to maintain the services of our country but we are entitled to insist that such direct taxation is apportioned in a fair and an equitable manner with due regard to the ability of the people to pay and that obviously it should be placed squarely on the shoulders of those people able to bear that burden.

We are concerned that no section of the community should be singled out for preferential treatment, as is the position in this country, nor should a system be tolerated any longer which systematically robs the working class people of this country of a grossly unfair share of their hard-earned money, thereby causing frustration and very great hardship to individuals which in the long term stultifies initiative and effort towards maximum productivity and gravely endangers the economic welfare of the country as a whole.

I contend that the working classes are carrying this country on their backs, that they are the real producers of the wealth of this country and that it is grossly unfair and the height of ingratitude to them for their sustained effort that they should be singled out for exploitation for so long, without relief or redress of any kind, since this system was introduced a number of years ago. I rise here today to bring home to the Taoiseach, who is, I am glad to say, present, and to his Government in no uncertain terms that the unmitigated scourge of income tax is now a source of grave unrest among working people in this country. It has become a fundamental issue of social justice which calls for immediate redress.

The intolerable burden of income tax on the backs of the working class people in this country is causing widespread indignation. They are seething with discontent and the situation is reaching boiling point. If the Taoiseach and the Government fail to recognise this area of discontent in our country and if they do not bring about the relief we are calling for, they do so at their own peril. The Government can no longer treat all the workers of this country caught up in the net of PAYE in the way they have been treating them—with impunity. This kind of treatment of the working class people under PAYE has gone on so long without relief of any kind that it has got to come to an end.

An opportunity will be presented to the Taoiseach very soon in the coming Budget to give the reliefs which we call for now. The Government can provide in the Budget, as a first essential, a substantial increase in the personal and dependent relative allowances by increasing the ceiling of £6 10s for single persons and approximately £10 in respect of married persons to a more reasonable figure and to generally relate this income tax code to the steep increase in the cost of living and the fall in the value of money.

This is something which the Government have failed to take into account for the past eight years despite the spiral of costs in the interim period. The Government will have to come down from their ivory tower and realise, once and for all, that to tax a single man, woman, boy or girl on every £1 earned above £6 10s a week is a national scandal, highly disincentive and frustrating and the cause of widespread hardship. It is again patently unjust, and cannot be defended, to tax a married man on every £1 he earns over a sum of £10 a week. Is it seriously suggested that £6 a week for a single worker and £10 for a married couple is sufficient to maintain them with the present high cost of living?

Despite the steep increase in the cost of living it must be remembered the class we speak for here, the mass of our working class people, are caught in the net of PAYE and already contribute their full share towards the economy of our country. They continue to pay their full share of indirect taxation of all kinds in respect of purchase tax and turnover tax, in rent and rates and indeed on all commodities of life in respect of clothing, foodstuffs, petrol, drink and tobacco. All of us in the working class movement are paying more than our proportionate share of revenue by this indirect method without having to be fleeced directly under PAYE.

The Government simply cannot burn this candle at both ends. I want to assert in the presence of the Taoiseach that the burden of income tax deducted on a weekly basis under PAYE is no longer a painless extraction of money from the wage packets or, more appropriately, out of the pockets of the working class people. Indeed, it is causing great hurt, great injury, deep and bitter. We suggest that this rifling of the pockets of the working class must stop.

Earned income allowance for a single person has remained static at £234 for a long number of years as has the earned income allowance for a married person at £394. The dependent relative allowance of approximately £60 is being gradually whittled away by the application of a means test based on the income of the dependant.

There are flagrant injustices in the present code. The only reliefs granted in recent years were to the advantage of the mohaired executives earning in excess of £2,500 per annum. There has been relief for the surtax-paying element only and no relief has been given to the ordinary working class. There are tax free allowances for the upper classes, the executive type to whom I have referred, in respect of the use of company cars and sundry expenses, but no relief is provided for the ordinary worker who has to travel to work daily, for whom some mode of conveyance is a necessity, whether it be a motor car, a motorcycle or a scooter. There is no recognition of the cost of transport for our class but there is in the case of the mohaired class. We must ask where the justice is in the system.

There is no relief for married persons, for whom the high cost of living presents great difficulties, in respect of rent, rates and taxes and debts incurred through death, adversity or misfortune. There is no relief in the case of a single man living alone in respect of a housekeeper. There is no allowance applicable in the case of a single person who may be obliged to live away from home and who must pay for lodgings and for travelling and other incidental expenses. There is no allowance in the case of a worker for attendance at a university at night. This is an aspect which the Taoiseach should attend to. Some relief should be provided for such people who are helping themselves and the country by their attendance at a university in their spare time.

The allowances generally need to be increased as a matter of urgency to more realistic figures. The existing allowances would not maintain a human being in even frugal comfort, would not provide a subsistence level of existence. In fact, one would hardly maintain a dog on the allowances.

This vicious system affects all our working class people, to whom great hardship has accrued. Imagine the position of the poor unfortunate farm labourer who is obliged to pay approximately 7/- on every £ he earns over £6 10s 0d a week. He pays this penal tax while his employer, the farmer, pays no income tax at all. The farm worker is supposed to be full of energy and enthusiasm and to work every day, including holidays and Sundays, overtime, as the case may be. Is it seriously suggested that he should do this for the love of the farmer or for the love of the country, knowing that at the end of the week most of his extra earnings will go to the tax man? Is it any wonder that agricultural production has been relatively static for a long period? Instead of taxing these unfortunate people, would it not be better to give them a bounty, a slice of the colossal subsidies which are spent, or misspent, on agriculture? How much more beneficial would it be to give these people a real stake in the wealth which they create rather than penalise them as they are penalised under the income tax code? A worker, whether he be a tradesman, a labourer, an industrial worker, cannot be expected to work harder in order to attain higher productivity, however attractive the incentives may be, if at the end of the week he has to pay additional income tax.

This issue must be viewed in its broadest context as being not merely an individual problem but a problem which is increasingly affecting the welfare of the country. The workers for whom we now seek relief realise that they are being called upon to bear an unfair and disproportionate amount of income tax as compared with the rest of the community. One large section of the community is exempt from income tax. The really wealthy section have ways and means of evading income tax. They are not caught up in the tight mesh of PAYE, as are the people whose incomes to the last penny are known to the Revenue Commissioners. There are large sections of professional people who would receive for a half day's work fees amounting to the average worker's weekly wage. They are not involved in the PAYE system. It is a matter very largely for themselves to indicate their real income and I should think it is difficult for the Revenue Commissioners to ascertain their real income.

Clearly, then, one section, the working classes, are being asked to bear the real brunt of the burden, a burden that has become too heavy, too inequitable and utterly unjust. We are appealing to the Taoiseach tonight to apply the scales of justice and fair play in this matter. A review is long overdue.

It is difficult to imagine why certain sections of our working classes are kept outside the PAYE system. I refer to State employees such as forestry workers and members of the Defence Forces. I do not understand why these persons should be categorised with higher civil servants. It would be a great facility to them if they could pay income tax on a weekly basis rather than be called upon to pay large lump sums at the end of the financial year.

Income tax is something that we have come to accept. We appreciate that it is a necessary and inevitable device, an essential feature of fiscal policy in all countries. What we seek here is a fair apportionment of this direct tax.

The movement that we represent was the first to laud the idea of PAYE and to prompt the Government to introduce it. We little thought, though, that it would be applied in such a rigid, unimaginative and unalterable, as it would seem, way, with no regard for costs or the fall in the value of money. My own union was the first to propose this motion to Congress a number of years ago. Congress made known its view to the Government and the Government brought in PAYE. The same union which lauded it then condemns it now because it has failed to do what we expected it would do for the working classes—operate fairly and impartially. Consequently, we make no apology now for condemning it roundly as an archaic and outmoded system which has not kept pace with the changing times, which is causing very great hardship and frustration to our working class people and threatens to destroy the whole economic fibre of the nation if it is not revised and revised very soon.

I look forward with hope and enthusiasm to the coming Budget to bring reliefs to all those people for whom we are pleading here tonight. The concessions in the past have not been for these classes. They have been for the executive, sur-tax class. We should now have regard to the real producers of the wealth of this country and give them a chance to avail of the productivity incentives and to attain the all-round productivity which the economy so badly needs.

If we give the workers this encouragement we can expect them to respond and respond happily. This is the topic of the day; this is a burning issue, and those who blind their eyes to this issue are living in an ivory tower. It is high time they came down to reality and revised these figures upwards in accordance with present-day costs.

With these sentiments I commend this Motion to the House with enthusiasm and with pride. My colleague, Deputy Tully, will be replying for the Party, and we look forward to hearing the views of the Taoiseach as well. I hope he will be able to give us some gleam of hope for a better deal for the people for whom we plead here tonight.

The Taoiseach

I very readily agree with Deputy Treacy when he says that income tax as such is a burning question and that it raises some resentment in the average income tax payer. I think I can truthfully say that every income tax payer would look forward with eagerness and enthusiasm to any easement that would lessen his burden. When I refer to any income tax payer I mean not only the ordinary wage earner or salary earner or professional person who receives fees but even a Minister for Finance or the Revenue Commissioners and the income tax collectors themselves. Income tax affects everybody, and therefore any easement of income tax is one to be generally welcomed. I believe any Minister for Finance would agree with the spirit of a motion of this kind. However, he has to do his job to ensure that the expenditure that the State necessarily incurs in its various services will be met by a revenue income commensurate with that expenditure.

Many points were raised during the course of the debate, and within Standing Orders I have only a limited time to reply. Therefore, I shall confine my remarks to the major points that were made in the course of this debate. Changes in the income tax code, whether in personal allowances or in earned income allowance or in the rates of tax itself are primarily budgetary matters and, as a general rule, can be dealt with only in the context of the annual Budget. They must be taken in the context of simultaneous demands for easements in taxation and demands for increased expenditure in various directions. A Minister for Finance, even if he agrees with the subject matter of a motion like this, cannot outside the Budget period, indicate his reactions to it. Certainly, he cannot indicate his positive support for such a motion, and invariably is in the position of having to oppose it.

Deputies will appreciate, therefore, that, at this stage, I cannot indicate to the House what the intentions of the Government are in relation to future Budgets, with specific reference to income tax, but I can say that the major obstacle in the way of a significant increase in personal allowances is the amount of money involved. Let me give some examples: the cost of raising the single and widow allowances by even £10 and the married allowance by even £20 would be, together, of the order of £2.8 million in a full year; the cost of raising the child allowance by as little as £10 is estimated at £650,000 in a full year. Therefore, the total cost of these increases, which I do not think would ease the lot of the taxpayer to any worthwhile extent, would be about £3,500,000 a year. That is a sizeable sum to be made up by way of some other form of taxation if we are to continue the State services at the present level.

I suppose the single most acceptable relief that might be given would be a reduction of the standard rate of income tax, but the cost of this would also be very high. For example, a reduction of 4d, say, from the present rate of 7s, as it is now, to 6s 8d would cost no less than £4 million in a full year, and a reduction of, say 1/-, which would be a significant reduction, would cost the enormous sum of £12 million in a full year. The Minister for Finance put this in perspective when he was speaking on the Second Stage of this year's Finance Bill in the early summer. He said at column 1178 of volume 235:

A number of Deputies spoke about the fact that the Bill does not provide in any way for a general increase in personal allowances. It is, of course, easy to make the case that these allowances have been static, or practically static, for a long time now. Indeed, I myself adverted to that situation in my reply on the Budget debate. The fact is that any improvement in the area of personal allowances would be very expensive indeed... I do not think the ordinary taxpayer would be at all appreciative of minor changes in these allowances and, if one were to contemplate doing anything significant, one could only contemplate that in the context of some fundamental restructuring of our total taxation system, such as the introduction of added value tax or a major increase in indirect taxation. It is not, therefore, valid to argue at length about the inadequacy of personal allowances without, at the same time, going to the root of the problem and suggesting where the major fundamental change should be made in our taxation structure to enable something significant to be done in personal allowances.

I should like to put to the Labour Party, without any sense of rancour, that they are not being consistent with their usual policy of favouring direct taxation as against indirect taxation. It is unrealistic for them to put forward this Motion while at the same time they are pressing in many other instances for greater emphasis on direct taxation. They know as well as everybody else that the increasing cost of State services makes it virtually impossible to reduce both indirect and direct taxation at the same time. They cannot seriously imagine that substantial relief could be given on the lower incomes by increasing income tax and surtax on higher incomes. There are so many in the lower income groups and so few in the higher income groups that such a suggestion would be impracticable.

The Labour Party should remember also that, while the total amount taken in taxation has admittedly been increasing from year to year, much of the product of that taxation has been devoted to improving the lot of the least well-off sections of the community with which the present Motion appears to be mainly concerned. Year after year this Government have increased the amounts payable to social welfare recipients and it can be claimed that these increases have been far greater than the corresponding increases in the cost of living. Moreover, we have greatly extended the scope, apart from the level, of these social payments and, again, to the benefit of the least well off people.

In other fields, in introducing free education at all levels, free school transport, free books where these are necessary, we have considerably reduced the expenditure which the tax-paying parent would otherwise have to meet out of income. Quite recently we have provided income tax relief for the medical expenses of families and to that extent we have reduced their outgoings. This year we introduced special income tax relief to help meet the unusually heavy expenses that newly married couples face in the early part of their married life. I think it must be admitted that it is the least well off sections of the people that get most benefit from the subsidised services such as housing and all these must be paid for.

In effect, what I am saying is that, while we may not have been able to ease the lot of the poorer sections by increasing personal allowances under the income tax code, we have devoted a very substantial part of the yield of income tax to improving their standard of living in many instances. Unfortunately, that tends to be taken for granted as if the State did not have to provide the cost in the long run.

Deputy Tully raised a point which I think I heard him mention before, the tax allowance for expenses incurred in travelling to and from work. Deputy Treacy repeated that this evening. No relief is allowed in respect of the cost of travelling between a person's home and his work in any case no matter what position a person occupies in a business or any other commercial organisation. To use the tax definition, that expenditure is not "wholly, exclusively, and necessarily incurred in the performance of the duties of the employment". In other words, the taxpayer does not begin to earn his income until he has reached his place of work and the cost of getting there is not incurred in the performance of the duties of his employment.

Mr. P. Byrne

The Taoiseach is approaching this from the viewpoint of a much discredited rule which has been many times condemned by members of his own profession, learned judges.

The Taoiseach

Yes. I have in fact criticised it myself when I was affected by the application of the same rule. Nevertheless, one must lay down specific rules which must apply. As Deputy Byrne knows, once rules of that nature are breached or modified a flood tide is usually loosed and the ultimate cost is usually far in excess of what may have been initially anticipated. Travelling expenses between a person's home and his place of work are part of his living costs, part of the standard of living. Naturally, they vary between one person and another, depending mainly on the choice of location of his residence——

Mr. James Tully

Choice of the site of the job.

The Taoiseach

That is a different matter. One cannot always dictate where a job will be but in many cases, I think the Deputy will admit, in firms where the job site changes from time to time most employers give certain allowances over certain periods——

Mr. James Tully

Not most—some.

The Taoiseach

Some do. I think that in the case of building workers, who are usually most affected by changes in location, especially if the location is outside the immediate area of residence of an employee, a lodging or travel allowance is given——

Mr. James Tully

Some to craftsmen; none to labourers.

The Taoiseach

I suppose the labourers can be found where the employment exists. If it were to be accepted that the cost of travelling to work should be included in personal relief for income tax there is, logically, no reason why other parts of the taxpayer's income which are used to meet what are to him unavoidable personal expenses, for example housing, clothing, education and so on, should not be eligible for relief also. Apart altogether from the formidable and costly administrative problems that this would raise, it would result in a very large scale and, I suggest, haphazard extension of the personal allowances and, as I say, at a completely prohibitive cost.

Deputy Tully has said that a man who owns a building firm and who drives from his place of residence gets tax free allowances for his car. He described him as the mohair executive —I presume he refers to an executive in a mohair suit but I would remind Deputy Tully that mohair is made in Ireland too.

Mr. James Tully

Well, anyway, they have plenty of money.

The Taoiseach

However, the implication by Deputy Tully is that these people get allowances for travelling from their place of residence to their place of business. That is not true.

Mr. James Tully

On a point of order, if the Taoiseach reads what I said——

The Taoiseach

I have not read the Deputy's remarks closely but I thought he implied that an allowance was given for such a man travelling from his home to his office. Deputy Treacy did say it in a more positive way just now, the implication being that these gentlemen get allowances which are denied to the ordinary worker. Of course, this is not true. It is true to say that a person who has to travel for the purpose of his employment while actually in the employment is entitled to such an allowance. In the case of a man who owns a building firm, for example, he gets an allowance for travelling from his office to the building site or, for instance, if he has to travel to some place to submit a tender or to view specifications for that purpose, but he would not be entitled to an allowance for travelling from his place of residence to his place of employment or his business.

Deputy Kyne mentioned the allowance given for wear and tear of clothes in respect of certain employments. One of the outstanding examples of this allowance would be in regard to mine workers. However, these allowances are usually negotiated between the Revenue Commissioners and the individual or between the Revenue Commissioners and representatives of a group of individuals. I believe that this allowance is currently being received by one category of workers. The Revenue Commissioners are reasonably sympathetic to these claims but sympathetic only to the point that these claims can be justified.

Mr. James Tully

£8 is the current rate.

The Taoiseach

It is more in some cases. I cannot remember the details.

Deputy Patrick Byrne and Deputy Seán Dunne criticised the surtax reliefs that were given in the Budgets of 1967 and 1968. This has been a difficult question for a long time. I have come up against it personally in my capacity as Minister for Finance when the case was made to me—and I think rightly—that men of high calibre, technically and otherwise, on whose ability the successful running of a commercial business or industry often depends, would not be attracted to these positions in this country unless the tax allowances offered were at least as favourable as those given in the United Kingdom. We found great difficulty in attracting such men to this country because the allowances were not as favourable as those in Great Britain. At that time, I think the allowances given to people in the £3,500 class and upwards were less favourable than those in Britain and that was a factor that deterred the people of high managerial competence from coming here to help our industries and to replenish our fairly low quantum of managerial expertise. I might say that the cost of the reliefs given was offset to a great extent by increasing the burden of surtax at other levels of income. Deputies will agree that the amount of money this cost would not go very far in easing the burden of the lower paid workers.

As the House is aware, we have to deal with a very heavy industrial development programme. With the aim of increasing employment opportunities and in order to attract the capital that we require for the expansion of our economy we provide grants and other incentives. It would be rather negative to be spending this money unless we had the kind of technological experts who are required to make a success of this industrial development programme. In addition, we have spent a lot of money in improving the industrial scene and in providing the other services we have, like the Productivity Committee and the consultancy services that the Productivity Committee make available to industries. All these services have to be paid for; and all these services are manned by people who would not be attracted to them unless we could give them at least the same kind of reliefs as are being given in other countries. We must be able to do this in order to attract these people and to retain them. To refuse to apply these relatively inexpensive reliefs would amount to "spoiling the ship for the ha'p'orth of tar".

Deputy Tully criticised a statement which he attributed to me when I was Minister for Finance, namely, that when wages rise income tax should rise also. I am not quite sure of what he said but he said something like that.

Mr. James Tully

The Taoiseach should be sure. I have the document here.

The Taoiseach

The Deputy can quote it afterwards but I want to put it on record that what I did, in fact, say in reply to a debate on a motion of Deputy Corish's in 1966, which touched on the same general subject, was to the effect that, while regard must always be had to capacity to pay, the personal allowances were never consciously related to a minimum subsistence. The basic consideration that must determine the level of the allowances at any given time is a budgetary one. This, I think, is what gives the income tax code its progressive nature whereby the tax liability increases progressively in line with income. It would not suit the cause that Deputy Tully is pleading if, instead of that arrangement, there was a flat rate payable on every £ of income so that a man with an income of say £2,500 would pay only the same rate per £ as he would if he had an income of 5d——

Mr. James Tully

Is this the paragraph from which the Taoiseach quoted?

The Taoiseach

I have not got the relevant quotation. Deputy Treacy and some other Deputies referred to evasion. There is evasion and this is one of the big problems with which income tax collectors have to contend and one of the big responsibilities of those who have to procure the necessary funds from income tax. Any system of income taxation must for its efficient functioning depend, first and above all, on the honesty and the civic sense of those responsible for payment of it. At the same time, it must be borne in mind that the income tax code includes provision to ensure that tax returns are in accordance with the requirements of the law, that false or incorrect returns are detected and that those who would endeavour to file false returns and so try to throw the burden on shoulders that could not bear them are visited with severe penalties. To ensure incorrect returns do not escape attention, income tax returns are carefully scrutinised by inspectors of income tax.

In addition, the income tax investigation branch was established specifically for the purpose of dealing with cases of tax evasion. Recently, in order to tighten up the system of scrutiny, we imposed an obligation on persons carrying on trades, professions, and other similar profit-making activities, to keep proper records. That was introduced under the Finance Act, 1968. As well as that, new and comprehensive penalty provisions in relation to false or incorrect returns were introduced under the Finance Act, 1963. I can assure the House that the Revenue Commissioners do not hesitate to invoke these provisions where appropriate.

I am coming to the end of my time. There are other matters to which I should have liked to refer in the course of my reply but, as I have said, my time under Standing Orders is limited. May I repeat what I said at the outset? The spirit of this motion is one which would appeal to anybody paying income tax. Because of the usual budgetary obligations a Minister for Finance is not in a position to indicate whether or not he proposes to accept such a motion in its spirit or in its letter and he invariably has to indicate to the House that he is opposed to the motion and that is, unfortunately, a position I have to adopt here this evening.

An Ceann Comhairle

As there is no other Deputy offering, I will call on Deputy James Tully to conclude.

Mr. James Tully

I was rather surprised at the line which the Taoiseach took here this evening as Acting-Minister for Finance. He attempted to prove certain things had been said, or to disprove them, though he was not sure whether they had been said. I have here the debate, which was available to the Taoiseach also, which took place in 1966. I quote from column 294 of the Dáil Debates of the 23rd February, 1966. The whole quotation, of which the Taoiseach gave part, reads:

It is suggested that the rates in operation, to which I have referred, may be regarded as subsistence rates below which tax ought not to be collected from an individual. I do not think it was ever consciously decided that these rates of relief were to be regarded as subsistence levels. But, nevertheless

This is the portion he did not repeat:

—as Deputy Corish pointed out— there was in the Seventh Report of the Commission on Income Taxation a recommendation to the effect that the principle should be recognised that income tax should not be payable on the income needed for minimum subsistence. Deputy Corish said the Government ought to indicate their views on that. Of course, the Government have done so—in the second White Paper on Direct Taxation, paragraph 28 of which says:

It has always been recognised that income tax should not be payable on the income needed for minimum subsistence.

That is what this debate is about. We in the Labour Party feel that there should not be a deduction from the wages or salaries of people whose wages or salaries are recognised even by the State—the Agricultural Wages Board, for instance—as being a minimum rate of subsistence level. Yet, the Department of Finance make the necessary arrangements to have a certain proportion of these people's wages or salaries taken away.

When trade unions are trying to negotiate wages, and have succeeded in negotiating, say, an increase of £1 for low paid workers, the taxman is waiting outside the door with his hat out. He collects roughly one-third of that £1 before it goes to the household of the unfortunate man who is credited with having got £1 a week, and who is accused in this House of having added to the cost of living as a result of that £1. The State says "We need this for the running of the establishment."

The Taoiseach was a bit careful when he was giving figures on income tax. There are a few points I should like to put on this in the short time at my disposal for the information of those who may not understand the PAYE system of collecting tax. That system came into operation on the 6th October, 1960. Therefore, we can take it that the year 1960-61 was the first year in which it was in full operation. In that year the net receipts from income tax, as distinct from sur-tax, amounted to £29,413,345. The figure for sur-tax was £1,875,564. In 1966-67, the last year for which I have a record, that £29 million had become £60,781,857 and the figure for sur-tax was £3,236,503.

The Taoiseach gave figures of the amount which he said it would cost the State if there was an increase in the allowance. He said that, if there was an increase of £10 per year, under the system it would cost the State £2.8 million and for a married allowance of £20 he gave a figure of £760,000, a total of £3,560,000. Where did the Taoiseach get these figures? If he does a simple mathematical sum on the £2.8 million, which is less than £3 million, he will realise that that figure of £10 to produce that amount just could not be right. I hate saying this.

The Taoiseach

It is not a question of simple division and the Deputy ought to know that.

Mr. James Tully

If £10 a year would cost the State £2.8 million when it is allocated over all the single workers who are paying tax the figure which is shown for income tax collected for the year—£60 million— under PAYE could not be correct. I do not know where the Taoiseach got his figures. Perhaps at a later stage by means of question and answer we may be able to find out.

The Taoiseach

There is the married man with children and the single man as well.

Mr. James Tully

The single man with children as well! We shall have to find a wife for him! I honestly believe this sort of thing is not good enough. This is a serious discussion. To introduce figures which just could not be correct is not good enough.

The Taoiseach referred to the reduction of 4d costing £4 million and a reduction of 1s costing £12 million and the effect it would have. Again these are figures which have been taken out of the air by somebody. It is not good enough to toss them across the floor of the House and to say: "That will knock the feet from under your argument: you cannot argue against it."

The Taoiseach suggested that this Motion is in direct contradiction of Labour Party policy on direct taxation as against indirect taxation. Again, I would take issue with him. What we are complaining about here is not the system of taxation but the application of that system, the application of a system of taxation which says to the poorest wage-earner in the country that he is not entitled to any concession. The Taoiseach's argument here this evening was that, because a man travels by car from his home to work and must pay tax, insurance, for the upkeep of his car and for petrol to run it—because he is going directly to the job—it is no responsibility of the State and he should not expect anything in return for it. He has double and treble tax to meet. He pays his road tax. He pays more than half of what he pays for petrol in taxation. Along with that, he must pay income tax on it. If the Taoiseach wants to defend that kind of system then he is welcome to do so, but I think we are perfectly entitled to comment on what he says.

The Taoiseach took me to task because he said I claimed that a man who travelled from his home to a job was taxed whereas, if the employer travelled from his home to the job, he would not be taxed. I said that the man travelled from his home to the job, worked hard all day, travelled home again in the evening and usually had nothing all day except a flask of cold tea and a few sandwiches whereas if the man who employed him and lived next door to him travelled to the job, later on in the day, and travelled from that to his office and, on his way home, brought some of his business acquaintances for an evening meal, with all the trimmings, he could claim tax not alone on all his travelling but in relation to all his entertainment for business purposes. This was stopped by the Labour Government in Britain. They have done many things for which they have been criticised but you will not find many people in this country, who know what it means, criticising them for doing that. Similar action should be taken here. I think it is all cod.

Again, the Taoiseach showed he did not realise what the situation was when he said they should move nearer to their job, that it was their choice of home, that their choice of home affects the distance they have to travel. I would point out that it was the choice of job—because there was no other job available. I had this matter out with the present Minister for Finance, Deputy Haughey, who is not here this evening, on one occasion in this House. The fact that a man travels 40 miles in a car from County Meath to his work in the morning is not because he wants to do it but because there is no other employment available. What would the Taoiseach have him do? Would the Taoiseach have that man stay at home and draw unemployment benefit? Is that the answer to the problem?

Surely, when a man makes an effort to try to rear his family and to support himself and his wife, he should get some consideration? According to what the Taoiseach said here this evening, it does not matter: he should be like the snail and get a box and, when he is working on a building site in Finglas, he should move there and, when he is working on a building site in Ballymun, he should move there with his box and live in it and, if he has to go to work in Trim, County Meath, he should drag his box back there with him. A man cannot take a house around in that manner. He cannot get a house every time he has to move to a fresh job because he cannot get a house every time he applies for one. The whole approach of the Department to that problem is one which needs a complete change.

Maybe the Taoiseach did not intend to suggest that we were blaming the income tax officials for their administration in this connection. Nobody is blaming them. They get a set of rules which they must abide by. It is not their fault. It is the fault of the Government and the fault of this House that allows this system to continue. Sooner or later, this matter must be cleared up.

I have been talking about the worker here and how badly he is being treated. My goodness, even the old age pensioner, who happens to have a few pounds a week from his job, is taxed. Where is the justice in taxing a man of that age? He is not taxed on his unemployment benefit but, as soon as he reaches the magical age of 70, then, if he has over £6 5s 0d a week, he is taxed on the balance. Again, this is one of these things which I cannot understand.

There are various types of pensioners. There are people on fixed incomes. There are the small investors who invested their savings over the years for the purpose of being able to exist when they reached retiring age if no pension was due to them. All of this is now taxed. Every 1s over £6 5s is taxed. I think that is wrong. As the cost of living goes up, their income goes down. Despite that, the tax is still applied to them.

There is another problem which apparently the Taoiseach should refer to among all the things to be done with the money taken from the workers. He referred to free education, increases in social welfare, housing, and so on. Has it ever struck the Taoiseach that one of the reasons the Government are not prepared to do very much about this is because they now have allowed the cost of housing and the cost of sites to rise to such a pitch that those who are attempting to house themselves find themselves stuck with this extra site cost because some smart fellow—he does not have to be Irish—can slip in and buy a site for half nothing and sell it at a fantastic price? If the house is built, the cost of everything has gone so fantastically high, including the price of the money he borrows, that a man is put to the pin of his collar to pay all that. In addition, he is told he may not take all that into consideration for tax purposes and that he must be taxed on his income.

Many young people in this city who get married and build a home for themselves, thus putting themselves head over heels in debt, find that the income tax authorities insist on getting their pound of flesh instead of the Government's making some effort to encourage them to pay their way when they get married. I was surprised at the encouragement given by the Taoiseach to the newly-weds. I thought everyone realised, when that was introduced, that it was a cod because those who got married before 5th April were able to get as much out of the income tax. Therefore, they do not really get anything out of that. We can put it in the same bracket as the free travel to school and the free school books to which the Taoiseach referred. This is not the proper time to debate it but, with regard to free travel to school, as the Taoiseach must know, it is not costing all the enormous amount of money which is suggested because it is helping a subsidy which would be paid to CIE anyway. The net amount——

The Taoiseach

That is drawing the long bow, anyway.

Mr. James Tully

I know the figures. The Taoiseach might look at them himself and, if he does, he will realise the bow is not as long as he thinks it is. We should start issuing free school books before we start talking about it. These free school books have caused more trouble than anything else. I give full credit to the Government for what they are doing but they cannot claim to be giving free books when the amount of money is roughly half what is required. However, that has nothing to do with this debate and I do not propose to pursue it any further.

The big trouble about all this is that the Government have apparently made up their minds that there are so many lower-paid workers caught in the net it would cost too much to try to do anything for them and, in order to salve their consciences, the Government say: "We need this money for something else". I know the Government need money in order to run the State but I do not agree that that money should be taken from those who are not alone unable to pay but can barely exist on what they earn. I know that.

We hear some of the Fianna Fáil people talking about the grassroots organisation and all the information this organisation passes through the cumainn up to the National Executive. I wonder where the grassroots organisation fits in in all this? Has the grassroots organisation of Fianna Fáil not brought to the notice of Fianna Fáil Deputies the fact that this system of taxation strips the lowest paid workers of money they badly need? Something will have to be done about this. The Taoiseach refuses to accept the proposal. I was looking over the debate which took place in February, 1966, and, because it was February, the Taoiseach, who was then Minister for Finance, made the case that he would be revealing Budget secrets; it was too near Budget day and it was unfair to ask him to accept the Motion then. We put it in now in the month of November feeling that would give him ample time to do something. All we asked him to say was that, as the Budget would be coming along in April or May—I hope there will not be another before then—arrangements would be made to make some provision for relief for those at the bottom of the ladder. The Taoiseach says "No". He and his Party will fight against any such relief. I want to warn them. This is a matter of such vital importance that, if the Taoiseach refuses to accept the Motion and proposes to go to the country early in the New Year, as he suggested the other night he would, he will be hearing plenty about income taxation and income tax before the election is over.

This is a typical example of the way in which the Fianna Fáil Government are anxious to protect vested interests, to protect the moneyed classes and, at the same time, anxious to give the impression that they are also trying to help those who have very little. The evidence that they are not prepared to help those who have very little is here tonight for all to see. The system of taxation we have is producing something which I did not think it was possible for any Government to get away with. Some years ago those who were working for hire paid nothing, or very little, by way of income tax. In 1953/54 the unmarried worker paid £1 4s 7d tax and the married worker nothing. In 1954/55, the unmarried worker paid nothing. The same situation obtained in 1955/56 and in 1956/57. In 1957/58, he paid £6 12s 2d. The following year, 1958/59, he paid £6 15s 0d. In 1959/60, he paid £6 18s 4d. In 1960/61, he paid nothing. In 1961/62, he paid nothing because an alteration had been made and the Department realised they must try to keep things in line. In 1962/63 he paid £3 11s 3d. In 1963/64, he paid £5 3s 1d. In 1964/65, he paid £15 19s 2d; in 1965/66, he paid £24 13s 9d; in 1966/67, he paid £38 11s 4d and in 1967/68, he paid £42 10s 3d.

An Ceann Comhairle

The time has expired, Deputy.

Mr. James Tully

Yes. The unmarried worker is taxed at the moment to the tune of £1 per week and that on a wage on which he was paying nothing six years ago. The point has been made. Under reliefs granted last year surtax payers were given £200,000, but there was nothing for the man——

The Taoiseach

I thought I gave a reasonable explanation of that.

Mr. James Tully

Reasonable to the Taoiseach and to the fellows with the big salaries but not reasonable to the workers who are mulcted so heavily.

Question put.

The Dáil divided: Tá, 49; Níl, 60.

Tá

• Barry, Richard.
• Belton, Luke.
• Belton, Paddy.
• Burke, Joan T.
• Burton, Philip.
• Byrne, Patrick.
• Clinton, Mark A.
• Collins, Seán.
• Connor, Patrick.
• Coogan, Fintan.
• Corish, Brendan.
• Cosgrave, Liam.
• Costello, Declan.
• Costello, John A.
• Crotty, Patrick J.
• Desmond, Eileen.
• Dillon, James M.
• Dockrell, Henry P.
• Dockrell, Maurice E.
• Donnellan, John.
• Dunne, Sén.
• Dunne, Thomas.
• Esmonde, Sir Anthony C.
• Farrelly, Denis.
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Hogan, Patrick. (South Tipperary).
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lindsay, Patrick J.
• Lyons, Michael D.
• McLaughlin, Joseph.
• O'Connell, John F.
• O'Donnell, Patrick.
• O'Donnell, Tom.
• O'Hara, Thomas.
• O'Higgins, Michael J.
• O'Higgins, Thomas F.K.
• O'Leary, Michael.
• Pattison, Séamus.
• Spring, Dan.
• Sweetman, Gerard.
• Tierney, Patrick.
• Treacy, Seán.
• Tully, James.

Níl

• Aiken, Frank.
• Andrews, David.
• Barrett, Sylvester.
• Blaney, Neil T.
• Boland, Kevin.
• Boylan, Terence.
• Brady, Philip.
• Brennan, Joseph.
• Briscoe, Ben.
• Browne, Patrick.
• Burke, Patrick J.
• Calleary, Phelim A.
• Carter, Frank.
• Carty, Michael.
• Childers, Erskine.
• Colley, George.
• Collins, Gerard.
• Cotter, Edward.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• de Valera, Vivion.
• Dowling, Joe.
• Egan, Nicholas.
• Fahey, John.
• Fanning, John.
• Faulkner, Pádraig.
• Flanagan, Seán.
• Foley, Desmond.
• French, Seán.
• Gallagher, James.
• Geoghegan, John.
• Gibbons, James M.
• Gilbride, Eugene.
• Hillery, Patrick J.
• Hilliard, Michael.
• Kenneally, William.
• Kitt, Michael F.
• Lalor, Patrick J.
• Lemass, Noel T.
• Lemass, Seán.
• Lenihan, Brian.
• Lynch, Celia.
• Lynch, John.
• McEllistrim, Thomas.
• MacEntee, Seán.
• Meaney, Tom.
• Millar, Anthony G.
• Molloy, Robert.
• Mooney, Patrick.
• Moore, Seán.
• Moran, Michael.
• Nolan, Thomas.
• Ó Briain, Donnchadh.
• Ó Ceallaigh, Seán.
• O'Connor, Timothy.
• O'Leary, John.
• O'Malley, Desmond.
• Smith, Patrick.

Tellers: Tá, Deputies James Tully and Pattison; Níl, Deputies Carty and Geoghegan.

Question declared lost.