When speaking on the Finance Bill the other night I was told there would be a vote and that both Labour and Fine Gael would vote against the Finance Bill. I shall not make a political speech today.
Finance Bill 1971: Second Stage. (Resumed.)
Question again proposed: "That the Bill be now read a Second Time."
We always put the Deputy in his proper place.
As a national parliament I thought we would look after the weaker sections of our people in a proper manner. Dealing with the poorer sections of our people——
Why do you not look after the small children in big families, with your old guff?
Any time we try to look after them the Deputy Professor votes against anything we try to do for them. I shall deal with the Deputy Professor now if he gives me a little time.
I bet the Deputy will not deal with that.
Deputy Burke should be allowed to make his speech.
Without interruption, he would be finished.
If we are about to help the weaker sections of the people, Fine Gael and Labour should be with us. As I said previously, there are very decent people in both parties.
The Government did not help them much by putting up electricity charges.
The Deputy should be allowed to make his speech.
He said he was talking about poor people and I am putting him on the right track.
I am dealing with the Budget and with poor people. In this national Parliament one group say they are socialists, the other group say they are socialists and we are a Christian socialist organisation. I never thought that the Opposition Members would vote against small increases, as far as the resources of the nation could afford, for the weaker sections of the people.
(Interruptions.)
What about the small children?
If Deputy Burke would address the Chair perhaps these interruptions would cease.
I apologise. Deputies are trying to confuse me but that would be one of the greatest miracles since Moses struck the rock. The personal rate in the old age pension is increased from £5 to £5.50 and Deputy Dr. O'Donovan, the Fine Gael and Labour Parties all voted against that increase. Why did they vote against that increase?
Was there any real increase?
Deputy O'Donovan is not going to coves up by interrupting me. He might as well be idle. The rate for a person with an adult dependant has been increased from £8.50 to £9.35 and the Opposition voted against that Increase. They are all decent people and I cannot understand why they want to play politics on the weaker sections of the community.
The Deputy voted against the dole.
The Deputy voted for increasing tax on the poor.
The Deputy seems to be getting under the skins of Opposition Deputies.
The personal rate of widows contributory pensions was increased from £4.50 to £5.
Bread has gone up too.
Deputy Coogan voted against that, he did not want to see widows getting that increase and so did Deputy O'Donovan. Out of charity Opposition Deputies should be anxious to give people these increases.
That is not the only increase we are talking about, electricity and bread have gone up.
There will be an increase in bus fares shortly.
The allowance for the first two children under the widows' contributory pension has been increased from 90p to 100p and the allowance for the third and subsequent child has also been increased to 100p. All these people voted against those increases.
What about the children of the ordinary worker with a big family?
Would Deputy O'Donovan cease interrupting?
Deputy Burke was talking about the increase in allowances for children as though it applied to all children and I just wanted to put him right.
Disability and unemployment benefit and retirement pensions have been increased from £4.50 to £4.95.
The bus fares have gone up.
Deputy Coogan also voted against these increases and so did Deputy O'Donovan. Would Deputies like to tell the people why they voted against these small increases? I would like to see every one of these people getting £20 a week and so would the Minister for Finance, The allowance for a person with an adult dependant has been increased. Why did the Opposition vote against that increase? It seems that for political reasons Opposition Deputies vote against Fianna Fáil no matter what good Fianna Fáil do.
That is not the way to speak about Deputy Foley.
people vote Fianna Fáil in order to keep themselves in jobs.
The maternity allowance has been increased from £4.50 to £4.95 and again the Opposition voted against these increases.
Are they real increases?
The orphans' contributory allowance has been increased from £3 to £3.30. Why did Deputy Coogan vote against that?
It was not enough.
Order, order.
I apologise for annoying the Chair. I do not know why Deputies are interrupting me, I never interrupt anyone.
The Deputy is too busy.
Opposition Deputies voted against an increase in non-contributory blind pensions from £4.25 to £4.65. I never thought I would live to see that day here. The widow's non-contributory pension and the allowances for deserted wives have been increased from £4.25 to £4.65, Deputy Coogan voted against that increase as well.
(Interruptions.)
The allowance for each child of a non-contributory widow pensioner and a deserted wife has been increased to a uniform 90p. Orphans non-contributory pensions have been increased from £32.25 to £2.50. I do not think the Opposition realised what they were doing when they voted against this Budget.
The bigger the family the smaller the allowance.
Unemployment assistance in urban areas has been increased from £3.60 to £3.95 and the Opposition voted against that increase as well.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
Thank you, a Cheann Comhairle.
Thank your own party.
Loyalty is a great thing.
Come on. This is costing the taxpayer £500 a minute.
You should realise it.
I want to tell Deputy Desmond what he voted against. The personal rate of unemployment assistance was £3.60. It was increased to £3.95. He voted against that. A person with an adult dependant went from £6.40 to £7.05. Deputy Desmond voted against that, and he is supposed to be looking after the poor. I am sorry, from a national point of view, that the House is divided on small matters like this. When we are trying to give something to the poorer sections of our people the Opposition should be big enough to say: "We will go into the lobby and support Fianna Fáil, whatever they are doing, when it is for the good of the nation." The attitude today is that no matter what Fianna Fáil are doing it must be wrong and they will have to vote against it. You should all grow up. I am sorry for delaying the House. I do not speak very often and I do not have very much to say at any time. The personal rate in rural Ireland went from £3.30 to £3.65. For a person with an adult dependant it went from £6 to £6.65.
Are there many of them left?
The Minister said:
At present, £39 per annum of earnings is disregarded in respect of each child in the assessment of means for non-contributory widows and deserted wives. This will be doubled to £78 per annum.
I cannot understand this because I should like to see all of us trying to help the weaker sections of our people.
What about the small children, the big families?
I am sorry that I am needling the learned professor because he is a very courteous fellow.
Deputy Burke is very kind and charitable but he seems to be disturbing the Deputies opposite. I think they must have consciences, surprisingly enough.
The personal rate of the infectious diseases maintenance allowance was £4.10. It now goes up to £4.O and the Opposition voted against that. Did you know, Deputy Flor, that that was done?
Shocking.
The allowance for a person with an adult dependant went from £37.90 to £8.70. Why did you vote against that, my dear fellows? The sun is shining on me now and I cannot see so well.
That is God smiling on the Deputy.
That is the halo.
Disabled persons allowance went from £4 to £4.40.
They did not vote against that, surely?
They did. I do not know whether they realised what they were doing. They were mad to get in here to vote against it. I am sorry these things have happened because I believe that when we are trying to help the poor we should have the vote of all sides. We would like to see the poorer sections of our people getting five times as much. The Minister said:
These improvements will cost the Exchequer £3.1 million in the financial year.
I shall take off my glasses now and I shall——
Ad lib.
——ask the Opposition where do they think the Minister for Finance will get the money. Do they think the Minister for finance is a multi-millionaire or that he could take the money out of his own pocket——
He is going to take 10s a week from the lowest paid worker in the country anyway.
Twelve.
——or wave a magic wand? Suppose the Opposition were on this side of the House and we were in opposition do they think we would vote against increases for the weaker sections of our people? Certainly not. We had hypothetical resolutions tabled here, filled with hypocrisy, about giving the old age pensioners more. Then when they get an opportunity of doing it they vote against it. It would not be so bad if they would say we should increase taxation in a certain area and give the people a good deal more. What I said in my Budget speech is true, that it is like the Merchant of Venice—you can take your pound of flesh but do not draw any blood. For goodness' sake grow up and when we are trying to do something for the weaker sections be with us.
What did they vote against?
If the Deputy does not know what we voted against he does not know what he voted for.
Deputy O'Donovan was complaining about corporation profits tax.
Would Deputy Crowley please cease interrupting?
I am just making a correction.
Make it some other time.
I am only half way through the concessions that were given.
You have told us about ten times.
Local improvements schemes——
Is this relevant to the Finance Bill?
It is much more relevant than the Deputy's interruptions.
It is not relevant.
I am glad that Deputy Dr. O'Donovan is so anxious to keep order in the debate. The Deputy must keep to taxation.
I am doing that, Sir. I am trying to prove that we must have taxation to meet these concessions. I am dealing solely with taxation. It is my job to justify taxation and what we are doing for it. There are local improvement schemes. There is free travel which is costing a good deal of money. The Minister said:
Up to £0.1 million will be made available to provide free travel in hardship cases for a limited number of parents visiting children in institutions such as hospitals, schools for mentally handicapped and refermatory and industrial schools.
That is a most charitable concession.
In regard to the public service the Minister said:
From October, 1971, public service pensions will be brought up to the levels appropriate to pay rates in force on 1 June, 1969. Cost: £0.56 million in the current year and £1.35 million for a full year.
We must increase taxation to do these things This will benefit retired civil servants, gardaí, teachers, members of the Defence Forces, local authority staff and their widows and corresponding increases will be paid to military and other Army pensioners including recipients of special allowances.
This sets a precedent for all the rest of us in this debate.
Why did the Deputy vote against this? I want to put on the record of this House that Deputy O'Donovan voted against all these increases.
Put it in as often as you like.
This is a big concession and we had to increase taxation for it also. The widow of a military service pensioner——
The Deputy will appreciate that the Finance Bill deals with taxation.
I admit that. I am proving to the House why we had to increase taxation.
We cannot deal with expenditure on this Bill.
He cannot prove it this way.
Could we deal with lack of expenditure?
He is doing a good job of showing the voting against the taxation proposals in this Bill.
I want to show why Deputies on the opposite side of the House voted against increased taxation. When I am speaking on the Second Reading of the Finance Bill, it is my job to prove to them that what we were trying to do was intended to help the weaker sections of our people. A number of concessions were made. I will bow to your ruling, Sir. I will not give you any trouble.
Why did the Government not help the big families?
Military service pensions are increased. There is provision for manpower training. We had to increase taxation so that we could increase the pensions of retired persons and bring them up to the 1969 level. This is very welcome. Any increase in taxation proposed by us was for the purpose of helping the weaker sections of our people. If we were in Opposition we would not have voted against any increase for the less fortunate people and for retired teachers and retired civil servants.
Take out the needle now.
Of course this is all completely out of order.
I am delighted that my representations to the Minister got a very favourable hearing. I want to thank him personally for all the fine things he has done *or these people.
Even this is not in order.
The Deputy forgot to congratulate the Minister.
I congratulate him also.
Are we to hear something relevant now?
This Finance Bill was introduced for the purpose of doing something good for our people. How could all this be done without increasing taxation? Can any economist tell me? If anybody in the Labour Party or the Fine Gael Party can tell me how you could give concessions to thousands and thousands of our people without increasing taxation I will try to make a collection and build a monument in his memory because the man who can tell me how he could increase benefits for thousands and thousands of our people without increasing taxation deserves one. Do they think the Minister has a magic wand or that he is a multi-millionaire? Members of the Opposition should examine their consciences. They should ask themselves what can the State afford to do for our people. Great things happened in our time and we have come a long way in a few years. In this National Parliament why should people vote against these concessions? The Minister is doing a very good job in his office. Some day, some time, members of the Opposition will grow up.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
I have been trying to deal with this Finance Bill and with increased taxation. I have here a quotation from Deputy Oliver J. Flanagan——
Could we have the reference?
I will give the reference to the Chair.
To the House, through the Chair.
I am quoting from column 1786 of the Dáil debates of Wednesday. 16th June, 1971. Are there any other inquiries that the Deputy wishes to make?
If there are, I shall not hesitate to make them.
Deputy Flanagan said:
This Finance Bill is a disappointment. It is like the Budget, a complete fraud.
Is it a fraud to help thousands of our people? Deputy Flanagan says it is and he is an honourable man.
Were they helped by an increase in income tax?
Deputy O'Donovan was the economist within the inter-Party Government which he helped to bring down. Therefore, he should keep quiet. Deputy Flanagan continued:
Deputies on all sides should have no qualms in telling the Minister that there is nothing in the Budget to improve the financial or economic position of the country.
According to the Deputy Flanagan, everything is a fraud.
Is it the Minister for Lands to whom the Deputy is referring?
I am talking about the honourable Deputy Oliver J. Flanagan. This Government have always carried out their responsibilities. In so doing, we are helping the Irish nation and we have always put the interests of the country before the political interests of our party. We shall continue to do so.
Especially during the past 12 months.
Does Deputy Crowley wish to make his maiden speech?
Be quiet.
Deputy O. Flanagan continued:
... We must all express our keenest disappointment at the lack of drive initiative and courage in this measure. There is no attempt to tackle the numerous problems which are seriously affecting the country.
Deputy Flanagan went so far as to make a speech down the country—it was reported in the daily papers-in which he said we were frauds because we would give only £5 per week to the old age pensioners. I wish to put it on record that when we were increasing the allowances for old age pensioners and others, Deputy Flanagan voted against them. That is the type of fraud we have here. It is typical of the insincerity of some of the Opposition Deputies. It seems to be ah right with them to say one thing here but to say another elsewhere.
Of course, Deputies are entitled to criticise any measures brought in by a Minister but if they wish to do so they should at least be constructive and not try to destroy what we are trying to do for our people. I suppose it could be said that out of three million people, two million benefited by the Budget. For that matter, one could say that the entire population of three million were helped because each link in the chain is relevant to the other. I am sorry for those in the Opposition parties. They are a decent bunch but when they go to the hustings they should tell the people that they voted against social welfare increases. If they do not tell them, I shall tell them myself. It is time the Opposition grew up.
I ask those in the Opposition parties to tell us how any Minister could give increases to some sections of our people without, at the same time, increasing taxation. Perhaps some day my learned friend, Deputy O'Donovan, will tell us how this can be done and if he does so, I have no doubt the Minister for Finance will take him into his Department in the capacity of an adviser at a salary of more than £5,000 a year.
The Minister has too many of those already.
Deputy O'Donovan would not get that job since he is not a member of Taca.
During my many years here I have tried to contribute to the debates in as broad a way as possible. I have never indulged in personalities and the Opposition should not do so either. I congratulate the Minister on helping so many of our people by these measures. Our economy is a thriving one and I hope that next year the Minister will still be able to continue to give increases to the weaker sections of our people in spite of what the Opposition may say.
A weekly increase in income tax of 5s.
Mr. O'Donnell
Normally, debate on details of the Finance Bill would be more appropriate to Committee Stage. However, because of the special significance of this Bill and its implications in relation to the economic and social problems of our country, perhaps these could be discussed at this stage. Like the Budget, this Finance Bill is the product of a Government that have lost all contact with reality. Not only is it the product of a Government who lack initiative, imagination and foresight but it is the product of a Government who have lost all credibility.
There is nothing in these taxation measures that would even attempt to counteract the many adverse causes now affecting seriously the economic and social life of our country. In fact, some of the taxation provisions are bound to have an inhibiting effect. I refer, in particular, to sections such as section 10 and its implications, both social and economic for rural Ireland. Through this Bill the House is given an opportunity to discuss taxation measures proposed in the Budget. I realise that discussion of the economy would widen the scope of the debate and that economic matters do not fall for discussion on this occasion. I propose to endeavour to confine myself to the terms of the Bill and to what is permissible in the debate.
Reviewing the trend of taxation and Finance Bills and Budgets over the past ten years one finds a continuing rise in taxation. On closer examination one finds a number of remarkable features in the trend of taxation. We find, for instance, that the burden of taxation has far exceeded the targets laid down in the Second and Third Programmes for Economic Expansion. The additional taxation proposed in this Bill will create still further imbalance. In the Second Programme for Economic Expansion the target was that by 1970 taxation should reach 26.2 percent of gross national product. In fact, it reached 31 per cent. In the Third Programme it was forecast that taxation would rise from 29 per cent of gross national product in 1968-69 to 31 per cent in 1972-73. This target of 31 per cent has already been reached, well before the end of the period covered by the Third Programme for Economic Expansion.
It is when one examines the return to the nation from the continuing in crease in taxation that the true picture emerges. Every Finance Bill, including this Finance Bill, proposed increased taxation but the benefits to the country, to the economy, to the poorer sections of the community, to whom Deputy Burke has referred, seemed to get smaller and smaller because, unfortunately side by side with the increase in taxation there has been an insidious spiral of inflation. The last straw has now been reached with the announcement by the Electricity Supply Board in the last 24 hours of a second increase in charges in the current year and the forecast of a third increase. Our competitive position in. the tourist industry has been greatly eroded by Government policy. A situation has now been reached where it is patently obvious and becoming more obvious day by day that the Government have neither the capacity, the will nor the ability to introduce the fiscal and economic policies required to put the country back on the road to progress.
There is one aspect of this Finance Bill which is very worrying for those engaged in the manufacturing industry. This Bill continues the proposals enshrined in the Supplementary Budget of last autumn regarding company profits tax. It must be that our industrialists are now being placed in virtually an impossible position particularly vis-à-vis British industrialists. Irish companies have now to pay company profits tax at the rate of 58 per cent compared with the British rate which has now been reduced from 45 to 40 per cent. Despite the good tuition that I received from my distinguished colleague, Deputy Dr. O'Donovan, in UCD years ago, I do not claim to be an economist but one does not have to be a professional economist to realise the implications of this differential in company profits tax in relation to our closest neighbour, Britain.
Surely this was the appropriate time and surely it was not merely desirable but a matter of urgency at this point in the history of industrial development, when industry is faced with increased competition, in a year when we have had a serious amount of redundancies, when we are preparing to enter the European Economic Community, that any Government conscious of their responsibilities and realising the gravity of the situation would have brought the rate of company profits tax down to the level obtaining in Britain, that is, 40 per cent? Industrialists, exporters, people in various spheres of industrial life, independent commentators have adverted to this serious situation.
The Minister has made a serious mistake in not making it possible through this Finance Bill for Irish industry to cope with the tremendous challenge it now faces, a challenge unprecedented in the industrial history of the country. The Minister should have helped Irish industry to overcome the problem of increasing costs, to regain and maintain our competitive position and to prepare for the greater competition and, let us hope, the greater opportunities that will arise when we become a member of the European Economic Community. The failure of the Minister to do anything practical. tangible or really significant for Irish industry is the biggest flaw in this Finance Bill. Minor modifications have been made in relation to depreciation and so forth, in relation to designated areas. These are only minor considerations. In the light of the problems facing Irish industry at present and the still greater problems that will arise in the immediate future this Finance Bill is farcical.
I come now to the agricultural industry. What has been said about industry can be said about agriculture. When Irish agriculture should be geared for the tremendous opportunities which appear to present themselves with our accession to the EEC the provisions in this Finance Bill designed to improve the situation in agriculture are minimal. I doubt if any steps could have been taken to gear the dairying industry in particular, for which membership of the EEC offers the greatest prospects, without a change in the present ridiculous price structure for creamery milk which indicates a lack of awareness on the part of the Government of the harsh realities of life in agriculture. I admit that for a number of years the Government provided incentives designed to expand milk production. But for the last year the policy has been to retard milk production and as a result there has been a 14 per cent drop.
The Deputy is going outside the scope of the Bill.
Mr. O'Donnell
I am sorry. I wish to say, however, that there is nothing in this Bill any more than there was in the Budget to gear the Irish agricultural industry, particularly dairying, for the situation that will arise in EEC conditions and they will therefore find difficulty in grasping the opportunities that will present themselves.
I wish to refer to the third major national industry—it may not be recognised as such by everybody but I have always regarded it in that light—the tourist industry. I suggest that the taxation measures in this Bill, particularly the increased price for drink, will present serious difficulties to the industry, particularly from the point of view of attracting more British tourists. Everybody familiar with this industry will agree that one of the inducements we were able to offer in post-war years to British tourists was that drink and associated commodities were a good deal cheaper here than in Britain. Now a situation has been reached where it is much dearer here than in Britain.
I do not want to create the impression that this is the sole matter which has created difficulties in the tourist industry. I say, however, that it is an important factor. I know this from my contacts with British travel agents and with tourists and I have discussed this with British travel agents in an effort to attract more tourists here from Britain. One great difficulty travel agents are coming up against is why is the price of Guinness, traditionally associated with Dublin, dearer in Dublin than in London? By reason of the increases he proposes in this measure, the Minister aggravates the position still further. I have already criticised his lack of initiative in relation to doing something to give taxation concessions to Irish industry to gear itself. The same applies to the Irish tourist industry which is facing serious problems at the present time.
There is another matter, which was referred to in the Minister's introductory statement. which I feel I must comment on. The Minister stated :
The introduction of modern techniques in customs controls of large numbers of passengers and their baggage, particularly at airports, requires alterations in the existing legal framework which is based on the premise that each passenger coming into the country is questioned by a customs officer. Under section 28, individual questioning may, in effect, be dispensed with and a "self-selection" or "dual channel" system used instead. The basis of this system is that the passenger may choose to go through a "nothing to declare" channel where he will be subject only to a spot check....
I agree with the Minister that the operation of the dual channel system will facilitate the easier movement of passengers and baggage. This is a timely measure and it brings our customs clearance facilities in line with those in operation in Britain and elsewhere, particularly at our airports. Aircraft are getting bigger every year and are discharging greater loads and therefore the advent at Shannon and Dublin of the dual channel system is very important. It was long overdue and I do not mind stating publicly that I welcome it.
One of the frightening things and one of the major problems created by the introduction of the Boeing-747 into service on the transatlantic route was the colossal one of passenger and baggage clearance. I have had the opportunity of seeing this at work before the actual introduction of the service at Shannon and I have seen it at London Airport. The introduction of this system will make it very much easier for everybody concerned, particularly the airlines, to keep to scheduled arrival times and so forth.
One factor which is relevant to section 28 and to what I have been saying about tourism is that the Irish Sea is the only stretch of water to my knowledge in Europe and perhaps in the world where duty-free concessions do not exist. I wish to impress on the Minister for Finance the importance and the desirability of introducing duty-free concessions both for air and sea transport on the Irish Sea, I understand that resistance has been encountered from the British Government. I believe there must be a cast-iron case in favour of the introduction of duty-free facilities on the Irish Sea and there is no reason why the Government here should not get tough with the Btitish Government to ensure that the same facilities are afforded to the Irish Sea as exist for transatlantic passengers. The introduction of it would encourage tourist growth, from here to Britain in particular.
There are one or two other comments I should like to make without going outside what is permissible. The value added tax has been referred to but I will not deal with it at length. There is one important item to which it will be applied for the first time, that is to building materials, at a rate of 23 per cent. I wish to reinforce what has been said in relation particularly to the colossal job that confronts the Minister for Local Government and all future Ministers who try to ensure that there is adequate housing to meet the needs of our people. I am sure the Minister has considered in this Finance Bill the possibility of our entering the EEC in this financial year. In that context, the decision to tax building materials was retrograde. On the contrary, we should have been doing everything in our power to accelerate the building of houses.
The Minister for Local Government has been talking about the need to keep down housing costs to a reasonable level. I do not know what the situation will be—I am not experienced enough in relation to the building of houses—when this 23 per cent value added tax is applied to building materials. The Minister should have another look at it. There are certain changes proposed in section 40 in relation to transfer of gifts, as it is called, and transfer of property from father to son. There has been a very adverse reaction, particularly from rural organisations, to the proposals contained in this section. In his Second Stage speech the Minister attempted to defend this new arrangement, but he has failed to convince the people who are concerned about it. I have had discussions with young farmers, members of Macra na Feirme. who have been engaging in a policy of encouraging the transfer of farms from father to son at a reasonably early age, This has very big social implications. The traditional system of the father clinging on to his holding until a very late age and the son inheriting the property at an age when he is well beyond his prime has led to the serious social problem of late marriages and no marriages at all in rural Ireland. This has been a contributing factor to the decline in rural population.
The Minister should have another look at the proposals in section 40 in so far as they affect the transfer of property from father to son. I have been a firm believer for a long time in encouraging parents, particularly farmers, to hand over their property to their sons at a relatively early age and I am glad to say that in recent years there has been a considerable increase in the number of farmers in particular who are doing this. It is a very desirable thing. Apart from the fact that it enables the son to take over the running of the holding at an early age and to marry at a reasonably early age, it has many other things to recommend it, While I have not expert knowledge of the legal implications of section 40 in relation to the transfer of property, I would appeal to the Minister to have another look at it. Perhaps he has had another look at it since he made his speech introducing the Second Stage. The National Farmers Association, Macra na Feirme, the Irish Country-women's Association, and the Irish Creamery Milk Suppliers Association have come out very strongly against this particular section.
There are other matters in this Bill which are of minor importance and I do not propose to follow the example set by Deputy Paddy Burke in giving a line by line commentary of the Minister's speech interspersed with a line by line commentary on what Deputies on this side of the House have been saying. I was not inclined to take Deputy Burke too seriously as I have not been at any time during the past ten years. He used the expressions "Christian social principles" and "social justice" in describing this Finance Bill. This bandying about of terms such as "social justice" and "Christian social principles" is nauseating. It sickens anybody to find a Government Deputy attempting to justify a measure of this nature containing minimal provisions for the poor and the underprivileged sections of our people and describing it as an example of the Christian social policy of the Government in power. There is nothing in this Bill to justify it as such. The Deputy's reference to the fact that Opposition Deputies have voted against measures to help the underprivileged sections of our community is so ridiculous as not to be worthy even of comment.
Last year when I spoke on the Finance Bill I protested very strongly about the method of drafting. We could certainly take an example from Congress in the USA in this kind of legislation. We have a method here which panders to a body for which I have very little respect. The whole approach panders to the Institute of Chartered Accountants in Ireland, with these amendments to such and such a section. You have at least a dozen sections in Part I, half a dozen sections in Part III and three or four sections in Part V which refer back to sections in previous Acts. The method adopted in Congress in the USA, of rewriting the whole thing so that you have each Act passed as a unit, should be adopted here. Any intelligent person taking the Act could read right through it and would know exactly what each section referred to. It could be said that this method would increase the size of Acts but we have had some pretty massive Finance Acts in this country in the past and the clarity which would come about by this approach for the ordinary person attempting to ascertain what his liabilities are would certainly be well worthwhile.
This method of referring back to previous Acts suits lawyers but in this particular case it suits the accountants. They seem to have a remarkable capacity for looking after themselves judging by the way they treat their students: they pass only 20 per cent of them in the final examination in this country. In Scotland 50 per cent are passed and in England 60 per cent. Unless we are to regard ourselves as a dud nation this obviously is an attempt to get cheap labour and it is well recognised as such. The institute have young people who commit themselves to become accountants caught in the trap and they can have their labour cheap until they qualify.
This method of referring back to previous Acts is no credit to the Revenue Commissioners. It turns people into experts who have no other grounds for being regarded as experts except they have a long chunk of legislation going back to the year 1806 which other people cannot give time to study. The other people, therefore, if they become involved with them have no option but to employ chartered accountants in order to keep up their end with the Revenue Commissioners.
An official of the Revenue Commissioners said to me recently: "I am only trying to help you." I am afraid I was extremely rude and said: "The best way you can help me is by terminating this telephone conversation," and it was terminated accordingly. You get an offer to help you at the beginning of the letter and an offer to help you at the end of it. That is just claptrap, the known instructions to the officials of the Revenue Commissioners: "We will do our best to help you" when in fact what they are doing all the time is their best to gut you. Section 53 reads:
All taxes and duties imposed by this Act are hereby placed under the care and management of the Revenue Commissioners.
Therefore any Deputy in this House is within his rights in saying what he likes about the Revenue Commissioners.
This is an outrageous method of legislation, deliberately guaranteed to create incomes for people who otherwise would not have those large incomes. Not only are the taxpayers who are involved—and they are becoming more numerous-caught in relation to the tax but they are also caught by this outrageous approach. As I say, there are about 30 sections in this Bill, all of which are amendments of other sections, so you get this method of approach which no ordinary person can understand. This is contrary to natural justice. Everybody is supposed to know the law. I should like to understand how a person can know the law if it is made as complex and as difficult to get hold of as possible.
I do not intend to take advantage of the fact that an earlier speaker made another Budget speech. Perhaps we would be here all night if I did. I interrupted him a few times, and I think it was no harm. I want to refer to what I regard as by far the most significant change in the law in this Bill, that is, the huge increase in the interest rate that is charged on income tax that is due far a period, or, still more important, estate duty that is due for a period. The rate of interest that has to be paid on estate duty is increased from 4 per cent to 9 per cent. When the Minister is concluding he may answer me—and there is some truth in the answer—by saying that it should not have been left at 4 per cent. I will go that far with the Minister, that it should not be left at 4 per cent; it was not a genuine rate of interest. However, it is true, as was said by Deputy Tom O'Higgins, that estates are frequently not wound up for years through no fault whatever of the people who own the estate or money. People whose estate is not wound up for six, seven or ten years, as often happens, will have to pay 9 per cent interest on the estate.
There is an even worse section, section 18, which deals with income tax. The side heading refers to "Interest on income tax and sur-tax in cases of fraud or neglect". I have no sympathy for people Who engage in fraud, but it is ludicrous to equate neglect with fraud. People very often have a great deal of hard work to do to earn their living or to look after their business, and it is disgraceful to suggest that because they did not comply with the rules and regulations of the Revenue Commissioners, that because they negelected to attend to their income tax affairs, they are the same as people who defraud the Revenue. It is an entirely different proposition. Again in relation to section 18, what is the rate of interest? It is not 9 per cent a year. It is .75 per cent for each month or part of a month from the date on which the income tax was properly payable. At simple interest that is 9 per cent, but at compound interest it is not 9 per cent a year at all. I have not bothered to calculate what It is but it would not surprise me if it approached 12 per cent a year. The section says:
...shall carry interest at the rate of .75 per cent for each month or part of a month...
It is a compound interest added monthly. In other words, the Government have gone into the hire purchase game, into the cheapest form of finance there is, a form of finance that was frowned upon in this country until recent times. Now we have the Government adopting it for its own purposes.
What I regard as the most serious aspect of this Bill is the change in outlook; Another matter which is important from the point of view of the burden on the people is the way the Government have changed their minds since last year. There is the reference in a side heading to the "Cesser of section 2 of Finance Act, 1970 ". This is the section under which we all got Ell last year. This concession is being taken away this year and, as I said in my speech on the Budget, it is being taken away from the man who is earning £700 a year and from the man who is earning £7,000 a year, people like the Minister for Finance. I regard this as an outrageous business, and the Government should be ashamed of themselves.
Has the Deputy related this to section 6?
What is section 6 about?
It increases the earned income allowance. If the Deputy relates to the two, there is very little involved.
The Deputy does not understand this at all because section 6 does not relate to ordinary income tax at all. Section 6 reads:
Section 134 of the Income Tax Act, 1967, is hereby amended—
(a) by the substitution in paragraph (a) of the proviso (inserted by the Finance Act, 1970) of "£250" for "£225", and
(b) by the substitution in paragraph (b) of the said proviso of "£150" for "£125".
That has nothing to do with the ordinary calculation of income tax. What that has to do with is the minimum allowances. Let me read out the explanation of it in the White Paper:
Section 6 increases the minimum earned income relief from £225 to £250 for married persons and from £125 to £150 for single and widowed persons.
What in fact is the married exemption limit? I think it is about E500. What is the present exemption for single people? It is about £350 a year or £7 a week. Therefore-that is a purely technical matter. It has nothing to do with what I am talking about. I am saying the man who is earning £700 a year is going to be charged an additional £11 in income tax this year compared with last year, and the man earning £7,000 a year is going to be charged an additional £11 this year compared with last year. Is that true or is it false?
I do not agree with the Deputy.
I ask whether it is true or false. In fact, it is true, In 1939 the earned income exemption limit was £150 per year. The value of money halved by 1947 and halved again between 1947 and 1958. The value of money has dropped by 25 per cent since 1958, One now needs five times as much money in order to have the same-: purchasing power as in 1939. Five times £150 is £750. The allowance for a single person is £350. The Parliamentary Secretary is studying this.
The person with £724 will pay less income tax than he did last year.
Would the Parliamentary Secretary care to make a bet with me on that?
I beg your pardon— that is the figure for a married man.
If a married couple were to have the same income limit of £225 as they had in 1939 they would now need a limit of £1,125 per year. What is the exemption limit for a married couple? It is something like £500 per annum. From 1959 when PAYE came into operation there has been no change until last year in the levels at which people were exempt. A small concession was made last year which was worth fall to some people. This concession has been withdrawn. Section 2 of the Finance Bill reads:
Section 2 of the Finance Act 1970 shall not apply or have effect in relation to the year 1971-72 or any subsequent year of assessment.
That is the only simple section in the Bill. The other sections are gobbledegook.
Let us consider the burden of income tax on the ordinary worker. Every single worker in the country is paying income tax. We could not get figures from the Minister; he would not disclose them. There are 700,000 workers and about 300,000 farmers paying tax so that every single worker in the country is paying income tax. Let me compare the position in 1939 and in 1959 before PAYE came into operation with the position today. In 1939 there were 100,000 taxpayers; in 1959 there were 150,000 taxpayers; today there are 700,000 taxpayers. Perhaps conditions have so greatly improved that everyone's income has risen to tax paying level. I have a document here for the edification of the Parliamentary Secretary. It is a wage packet which was sent to me anonymously, it is dated 19th January, 1971 and marked "week No. 42". It contained a carpenter's wages for 43½ hours. This number of hours multiplied by 11s per hour equals £23 18s 6d. There is an additional 5s for overtime and the total was £24 3s 6d. The deduction for income tax was £4 13s from which I conclude that the carpenter was a single man. The sum of 18s 2d was deducted for national insurance. This man received less than £19 10s after deduction of income tax.
The Deputy did not get a series of wage packets. Sometimes the income tax deducted from one pay packet is greater than the tax deducted from another packet.
What the Parliamentary Secretary said is just not reality.
I have difficulty with the Revenue Commissioners about employees of the Office of Public Works. The Revenue Commissioners suddenly decide that a large amount of income lax is to be deducted from a particular worker about whom they have no details.
The law is that the Revenue Commissioners have no right to deduct more than 7s in the £1 from anybody.
They average out the overtime.
The Parliamentary Secretary is dealing with something other than what I am dealing with. I am dealing with the reality of a man with a wage of £24 paying £4 10s income tax.
In one particular week.
£24 for 52 weeks is about £1,200 a year. The exemption level is £7 a week so this man has to pay income tax on £900. Taking the income tax at 5s in the £1 he must pay £225 a year. That is the same as £4 10s a week. The Parliamentary Secretary need not interrupt me with his ridiculous arithmetic.
The Deputy would need to see pay packets over three months in order to make an accurate assessment.
I have an accurate assessment of what I know to be the law. This means that every week this carpenter is paying his correct income tax.
That is incorrect. I send the Minister for Finance a year's pay packets in order to find the correct tax.
I know the law.
The Deputy is drawing conclusions from one pay packet. I will make a note of what is said.
I wanted to develop this point in a far more important way. I wanted to demonstrate that this carpenter in real terms was norse off than a carpenter in 1939. If one divides the income of £18 12s 4d approximately by five—admitting that national insurance is something from which he might benefit at some date—one gets £3 14s. It was a 44-hour week then as it is today—a 53-day week, eight hours a day. What was a carpenter's weekly earnings in 1939? He was paid 2s per hour for a 44-hour week-88s, less a completely nominal sum for income tax. About 4s weekly was deducted for income tax and he was left with £4 4s a week. Having regard to money values in 1939 he earned 10s weekly more than he does today. In other words, a man would need now to have a standard weekly income of £27 to be as well off as he was in 1939. There is no use in the Parliamentary Secretary talking about overtime. Overtime can be done by, for example, bus drivers until they are about 50 years of age. However, when they reach this age they can work only a standard working week and that is all people should be expected to do.
In regard to the increase in the rates of duty on beer and spirits, I have not the slightest doubt that it would have been much better for the Government to increase duty on tobacco and cigarettes rather than increase the duty on beer and spirits. However, I realise that this would lead to a decrease in the revenue obtained by the Government. There is general agreement that heavy smoking is more deleterious than drinking, provided drinking is not carried out to excess. I have been trying for a considerable time to make a comparison between the amounts of taxation raised in the past years. Eventually, my question was accepted and today we were informed that the total revenue for the coming year was estimated to be £551 million and that at the end of last year the total was £491 million. Accordingly, there will be an increase in taxation of £60 million this year.
This comparison is false. Taking the position at the beginning of last year, as compared with the beginning of this year, the revenue then was only £470 million. The burden which the operation of the State is placing on the public this year is increased by £80 million—not £60 million. The purpose of this argument by the Minister for Finance, the Taoiseach and the Fianna Fáil backbenchers is to prove that the Government are dealing with inflation.
They are not dealing with inflation —they are aggravating the situation. Deputy Power spoke about a cutback in expenditure. I presume this was from a document that emanated from Mount Street. In this context income and expenditure are equal and opposite. I realise I am not supposed to talk about expenditure and I shall not-do so but I shall talk about what provides the money for expenditure. What is providing the money for the kind of expenditure we have is the violent inflation that exists here. Instead of dealing with the problem of inflation the Government have added fuel to the flames by increasing taxation by 20 per cent as compared with last year. The Minister admitted that it has increased by 123 per cent, as though this were a great achievement.
The Minister spoke about the flattening out of the curve of rising prices. This cannot be done because there is not any provision made for the fantastic amount that must be found for the transport companies in the coming year. The air companies, the B & I and CIE will require an immensely greater amount than they received last year. However, a much smaller sum has been provided by way of taxation than was provided last year.
Deputies often ask if we will have a supplementary Budget. The supplementary Budget in 1968 created an inflationary situation—we had inflation of 1 per cent per month for three months and the then Minister for Finance learned his lesson. He would not have anything more to do with supplementary Budgets and I agree completely with him. Increasing taxation is one of the worst inflationary forces in the world. The only people who are caught by increased taxation are those who are not in a position to alter their incomes. Everyone who can alter his income, whether a trade unionist, a farmer, shopkeeper or a civil servant, will try to do so. The forces in our community in favour of inflation have taken over completely.
Nothing will be done to cope with the problem of inflation as long as the Government continue with their policy and they have shown no sign of wishing to change this policy, despite the talk of cutting back on expenditure. What happened was that Departments sent in greatly inflated Estimates because they knew that they would have to compete with each other. Having sent in these inflated Estimates, the Government got a chance to set up some kind of economy group within the Government. They thought they had made a great achievement when they cut expenditure to the extent that it is only £80 million more than last year.
Deputy Burke was good enough to quote from the speech made by Deputy O.J. Flanagan. I agree with the statement of Deputy Flanagan when he said "This Finance Bill holds out no hope for anyone". However, this is not completely true. Under section 4 people with incomes from abroad can siphon them off provided it is done before 28th April, 1971. It is strange that this Finance Bill, which is so savage towards everyone else in the community, should be so careful about making things cosy for people who are really getting out of paying income tax by fraud. The strange thing is that they are the only people it is sought to please in this Bill. They will say: "We came into this country and we did a certain thing following advice from those learned gentlemen, the chartered accountants, and the Government are now going to underwrite us." Mark you, the Government did not underwrite ordinary companies in the supplementary Budget last winter in this fashion. On the contrary, they went after those retrospectively.
This Bill is really a Committee Stage Bill. There is nothing in it that is new except this idea of a penal rate of interest on those who owe income tax, whether through fraud or neglect; the Government, of course, equate fraud with neglect. In my terminology fraud and neglect are two different things. I take it they are two very different things in Deputy Tom Fitzpatrick's terminology also. I have no doubt we will have a prolonged debate on the technical sections when we come to Committee Stage. They are sections one would need to study with great care.
The aim of any taxation is to try to effect a better distribution of wealth and to place the heaviest burden on the shoulders best able to carry it. In this Bill there is a marked e*fort to levy taxation on those who can most easily bear the impost. I do not know if I would be in order in discussing local taxation, which is a pity, because local taxation and State taxation are interdependent.
(Cavan): If Dublin Corporation had not been abolished that would be the proper place to discuss it.
The Deputy will appreciate that what is before the House is the Finance Bill and, if we were to allow local taxation to be discussed on this measure, the debate could not be kept within limits at all.
In the past ten or 15 years local taxation has been subsidised from central taxation. I regret I carrot discuss local taxation, but I accept the Chair's ruling.
It is amazing to find the number of points on which both the Minister and Opposition speakers agree. First of all, there is agreement that we must have taxation. Secondly, it is agreed that nobody has as yet been able to devise an alternative system, a system under which the taxpayer gladly contributes to the common good. It is difficult for the ordinary worker to appreciate the fact that what he pays in tax is a direct contribution to the common good. It would be very easy for a Minister for Finance to cut back on taxation. Cutting back on services would help to stop inflation. The fact is, of course, that cutting back on taxation would mean no increase in social Welfare benefits. Presumably the Opposition may vote against increases, not because they do not want increases but because of the Government's attitude to taxation. I can see no way of cutting back on taxation and at the same time increasing social welfare benefits. The only way taxation could be reduced is by greatly increased productivity. Increased productivity would mean a bigger national cake and a bigger cake would mean a bigger share. Comparisons are made with Britain. Deputy FitzGerald spoke about comparisons being made with Britain and the complete failure of our people to make comparisons with Germany, France or Belgium. As he pointed out, this causes a great deal of dissatisfaction. I believe the Irish worker today has a feeling of insecurity and a desire to strike for more wages. Until we can convince people that their efforts to increase production will not be wasted we will not get very far. I am certainly no socialist but I approve of an annual increase in pensions of all types and in benefits for those who must be helped.
There are some very technical sections in this Bill. We have a great deal of State enterprise. Some State enterprises have been very successful. Others have not been so successful. Concessions by way of taxation and subsidy have helped to create monopolies and some of these monopolies are crushing private enterprise. To my mind this is the worst form of State socialism. People are taxed in one sector to build a State monopoly in another, a monopoly which may provide an inadequate service and which crushes out a service which is of benefit. This is altogether wrong and workers may well say that this is what State taxation does, gives a monopoly so much power to the detriment of legitimate private enterprise. Most of our industrial unrest is found in semi-State industries from which we have some trouble almost every day. Yet, these have been built up by taxation. Some State monoplies have been outstandingly successful but some of them must be regarded as inefficient when the amount af taxation that has been required to build them up is taken into account. I hope that the Minister during the year will have an opportunity of examining how taxation is imposed so that subsidies may be given to inefficient State enterprises. Is it not time this was done? We cannot go on paying all the time through heavy taxation for enterprises which are not giving a good return and which have done much to destroy the belief we had in these institutions when they were set up.
If we can get across to the people that in our own interests production must be stepped up and that we must create conditions here which will attract foreign capital it will be a move in the right direction. I think every Deputy agrees that it is essential that if we cannot raise sufficient capital from our own resources to expand the economy we must get it from outside. If we do not create conditions here which would give outside investors confidence in us we shall find that instead of having economic expansion we may have a recession and that more workers, instead of working for foreign investors in Shannon, Dublin or Cork may have to emigrate and work for them in some other country.
There was criticism of the high rate of company tax here as compared with Britain. Everybody would wish to see a lower tax here if we could afford it and if it were in the national interest. We have had bitter complaints from people in private enterprises against what they regard as excessive taxation. We all say we are excessively taxed even if we pay 6d in the pound in income tax. Human nature is not always understanding of the other person's point of view and so people may find it easy to criticise the Finance Bill and say that the Minister should have done this or that. The Minister and his advisers, being realists, have been able to gauge the taxation we can afford and, more important, what taxation is desirable. They have done this in the Finance Bill which is not perfect and which omits things I should like to see included but it is a fact that today many people want something for nothing. I am sorry that in Ireland now we have a great demand for ever-expanding services not alone from those in the social welfare category but from everybody. There are wealthy people who while they receive great income tax concessions also demand that the State should help them while they are building their fifty-room house. Perhaps this trend is not peculiar to this country; it is all over the world. It leads to this inflationary atmosphere we have.
I am not an economist and I cannot say how to check inflation but it must be checked. If we see a powerful country like the US battling this problem we can realise how serious it is. In this Bill the Minister has gone some part of the way to check inflation. I hope next year the results of this will be seen. Inflation, no matter what our good intentions, if not checked, could destroy all we have built up. There is no use in thinking we can go on paying higher wages, salaries and allowances if we are not producing the wealth to pay for them and, if we cannot produce goods for sale abroad at competitive prices, we shall have much more unemployment than we have at present and more emigration at a time when emigration is at its lowest level since the famine.
My purpose was to mention some of the things that people in the street talk about. They tell you their grievances and suggest that this or that should be done but we must get it across to them that we must put our house in order. Unless we are prepared to think of the man who has no job or no house and accept taxation because of this we shall not make progress. We must remember the emigrants in England or the US who want to return here and unless we are prepared to make sacrifices for these people we are failing in our duty as Irishmen to build up the economy so that we can cherish all the children of the nation equally.
The Opposition have painted a very dark picture but on the Government side, where we must be realists, we can give a picture of an economy which is growing and improving each year. It is becoming more buoyant but it has problems that must be tackled. I see no sense in Deputy Oliver Flanagan quoting from an article that three people had died in our city some years ago because of neglect or penury. That sort of thing can happen in any city but probably in no city in the world are fewer people left abandoned by the State or their neighbours than in our own city of Dublin. In the past ten or 12 years there has been an upward surge in social welfare payments. These may not be discussed as I would like to discuss them on this Bill. Increases were made because through good government we could afford to give them. I hope that in future years the Minister for Finance will find that by good government he can afford to give further increases and will not be slow to disburse increased wealth.
Deputy FitzGerald in perhaps the most pharisaical speech I ever heard in this House, and another Deputy, spoke of corruption. I am quoting from Volume 254, column 1741, where Deputy FitzGerald said:
Even a Fianna Fáil Government of the kind we had up to a year or so ago led by men for whom one could have little admiration in respect of their moral attitudes....
This holier-than-thou attitude was taken by a leading member of Fine Gael. When he talks of their moral attitude may I point out that to my mind the most immoral thing is to deprive old age pensioners of part of their pension or that you should have the audacity to offer them ten pence a week. Then they talk of morality. There was no definite statement, just an innuendo. But what I hold definitely against the Fine Gael and Labour Parties is their failure when in office to do anything to help the widows, the blind and the unemployed. If we must talk of morality let us talk of basic concepts and consider ourselves as our brothers' keepers in this respect and develop the economy so that we can give these people pensions sufficient to enable them to live decent lives and not allow them to live in garrets on a pittance from the State. it is all very well for Opposition speakers to talk economics; it is all very well for them to criticise the Government—they have a right and duty to do that—but when they start talking about morality then let us talk about the morality of offering an old age pensioner ten pence a week.
When did this happen?
It happened before they got rid of the Deputy.
I have never yet found out when it happened.
It happened during the three years of the coalition Government.
This is not in order. We are dealing with taxation not expenditure.
I apologise. I was just being courteous. The Deputy asked me a question and I was answering him.
I want to know when this happened.
When the Deputy was in power he suggested that the size of the loaf be cut.
Deputy Moore should be ashamed to mention a loaf. A loaf cost nine pence then and it costs the equivalent of 2s 6d now.
(Cavan): The Deputy should talk about the dolt. The Deputy talks about our increasing the old age pension by ten pence but the Government took £3 6s from the poorest people in the country a few months ago.
That is totally irrelevant and anyway it is not true. In conclusion I want to say the Minister has made a good attempt in this Bill, with the means at his disposal to try to provide a more equitable system of taxation than we have had before. We look forward each year to a Finance Bill which will give a fair chance to each section of the community, always bearing in mind that the weaker sections must receive the greatest attention. Edmund Burke once said that no man is wise enough tax and to please, to make love and be wise. The first part of that is very true; no Minister, whoever he is, will ever please the House, but this Minister has done a more important thing, he has pleased the people and that is what counts.
(Cavan): I do not usually refer to speeches that have been made earlier in the debate but having listened to Deputy Moore giving us a lecture on social justice, the failure of past Governments and on the necessity for spreading taxation in a way that would be fair and could be easily borne I cannot help recalling that in framing his Budget, which this Bill is implementing, the Minister saw fit to rob the unfortunate, underprivileged people by talking away from them £3 6s a week and transferring them from the social welfare assistance to what was the old poor law method of keeping people alive, home assistance, which is the lowest form of assistance which can be given in this State. That is all I want to say about Deputy Moore's speech.
It did not happen here.
(Cavan): Of course it happened.
Not in this city.
(Cavan): is this city Ireland? Is that what we have come to? It did not happen here. Do the people of the country not mat-H*,,Are we only to be concerned the people in——
The Deputy is not telling the full truth.
(Cavan):——Deputy Moore's constituency?
Order, order.
(Cavan): That is the sort of mind which has come in here this evening to lecture us on social justice. I am speaking about the people from one end of the country to the other. This Finance Bill is anti-social in several of its major sections. It is anti-social in its income tax proposals in that it imposes an increase in taxation of approximately £12 on a man earning £500 or £600 a year or less and it imposes the same increase in taxation on a man earning £6,000 a year. I say that is anti-social and I shall deal with it in greater length later on. This Bill is also anti-social in its death duty proposals because it has been regarded for many years as being in the public interest that people should be encouraged to marry and that taxation should not prevent them from marrying. This Finance Bill proposes to alter the law, which was in existence long before the foundation of this State, which did not tax gifts given in consideration of marriage. This Bill has for the first time in many years altered that law.
Indeed, this Bill is anti-social not alone in the taxes which it imposes; it is also anti-social in the taxes it fails to impose. As Deputy O'Donovan pointed out, it has taxed beer, which is a relatively harmless enjoyment, but it failed to tax tobacco which we are told is a deadly drug, injurious to health, causing heart disease and bringing on cancer, because it was thought such taxation would not pay. It it anti-social in that respect. To get back to income tax, Deputy Moore talked about morality and what was moral and what was immoral. In recent years the income tax code has become immoral because it is enforced rigidly and has to be observed scrupulously— perhaps scrupulously is not the right word—by what I describe as the pay-as-you-earn classes. Since we have the PAYE system of collecting tax it behoves any Minister for Finance to ensure that his income tax proposals are as fair as possible and the income tax proposals in Budgets in recent years have not been fair. There has been no worthwhile increase in the personal allowance for many years not-withstanding the fact that the value of money has gone down and the cost of living has gone up.
We have a typical example this year A single man earning £7 a week, I am speaking approximately here, will be called upon to pay an increase in tax of between £11 and £12 under this year's income tax proposals, whereas a man earning £5,000 or £6,000 a year will only have to pay the same £11 or £12 increase. That cannot be justified and it is anti-social.
The trend has been the same over the years. The only significant feature 1 have seen changed in the income tax code in the last few years is in regard to surtax and I make no apologies for bringing this up again. A few years ago a person commenced to pay surtax when his income was £2,500 and by one operation that ceiling was increased from £2,500 to £3,750 on the pretence that it would encourage the managerial classes to come from England to manage our industries. The ceiling was lacked up by a further £750 and surtax does not now come into operation until the taxpayer is in receipt of £4,500. At a time when no relief of any sort has been given to the unfortunate PAYE class that is hard to justify.
Of course budgets have ceased to be used as weapons of social justice. In recent years they have been simply and solely operated as methods of taking in money. I know it is necessary to take in money but it should be taken in by fair means, having regard to social justice. The Minister would tell us that if he were not to exercise this operation whereby he would take away £12 a year from lower paid people he would lose hundreds of thousands of pounds or, perhaps, even millions. That is his only justification. He does not justify it on the ground that it is fair to increase tax on the small man who is barely existing by the same amount as in the case of the man who is living in affluence. I am against it. I make no apology for that because it is only fair social thinking and fair play.
I wish to deal with the business of death duties in a general way. I know money has to be got somehow but it was argued here in 1961 by the late Dr. Ryan, then Minister for Finance, that something should be done to encourage wealthy people to reside here. In that year death duties were reduced from a maximum of 53 per cent to a maximum of 40 per cent. This Budget proposes to put the death duties up to 55 per cent.
The argument the present Minister put is that in the ten years from 1961 to 1971 he did not notice any huge influx of wealthy people into the country. Is he not a little impatient? Did he expect those people residing outside to sell their properties abroad, o come over and settle here, which Would take them a couple of years, and to die all of a sudden so that he could see whether they had come here? He should have given this a longer time to operate to see whether it would have the effect which his 1961 predecessor thought was desirable. This can be regarded only as a nasty confidence trick on any people who decided to come here for the purpose of enjoying the death duties introduced in the Budget of 1961.
Supposing people came here in 1963, 1964 or 1965 having accepted the invitation extended to them in the Budget of 1961 to come here and to enjoy the favourable death duty rates; they now find that the law has been changed and that they will not be able. to enjoy the promise of a former Minister for Finance but that they will be taxed not alone at the pre-1961 rate but at a higher rate. That is hard to justify. It is a breach of promise and I would expect the Minister to put in a clause exempting, if he is not prepared to do anything better, people who changed their domicile to avail of the promise extended in 1961. I do not think ten years is long enough to give this proposal a fair trial. As I have said, you could not expect people to come in the year it was introduced. It might be five years before they became aware of it and one does not expect them to fall off and die the year they come.
However, the principal objection I have to death duties is in regard to gifts made in consideration of marriage. For a long time—I do not know how long but I would say it is many years—it has been the law in this country that marriage was regarded as a valuable consideration and that a gift given in consideration of marriage was not deemed to be a gift properly so called but was deemed to be given for valuable consideration and was exempt from death duties.
The social thinking behind that is clear. It is a desirable thing that people should marry and settle down in this country, that they should inherit their parents' property and should bring up their children here. It was thought that one of the ways of encouraging young people to settle down here was to encourage their parents to transfer their farms or other property to them. It was a privilege which was enjoyed for a long time and the proposal to change it here is anti-social. It is not a proposal seeking to catch large gifts of money being handed over from father to son, or stocks and shares. It is an all-embracing proposal that says that any gift that is given in consideration of marriage in excess of £5,000 in one case and £1,000 in another is to be subject to duty if the donor dies within five years.
It may be argued in favour of death duties that they are a method of preventing the accumulation of large hoards of wealth in perpetuity, but I do not think the policy behind death duties was ever intended to prevent the passing on of family farms from father to son, that it was ever intended to regard as socially undesirable the passing on of family businesses from father to son. That is what this proposal is doing: it will make it more difficult for the son to inherit his father's farm because it will tax him too severely.
It is argued in the Minister's brief that there have not been very many cases of gifts in consideration of marriage. How does the Minister know? He could only know about gifts which were made in consideration of marriage within five years of the death of the donor and in my opinion he might not know of a great many gifts in consideration of marriage which took place within five years of the death of the donor because, speaking in a commonsense way and in ordinary legal language, I do not think that a transfer of a farm of land from father to son in consideration of marriage is a gift at all. I believe that many affidavits are sworn and lodged in the Estate Duty Office with the question answered "No" when it is asked in respect of any gift made within five years of the death of the donor whether it was in consideration of marriage, because the person who is preparing the affidavit would regard it not as a gift but as a transfer in consideration of marriage. Up to now, at any rate, he knew that it would not make any difference good, bad or indifferent, because it would not be regarded as part of the estate and would not be subject to death duties. I think 81 was the figure the Minister gave for the number of gifts given in consideration of marriage in one year. I think that is wrong for two reasons. It does not take into consideration gifts that have lasted for more than five years and it does not take into consideration the fact that these are not gifts at all and need not be included in the affidavit.
To close a gap or to prevent abuse taxation law should be changed only when the device is used for the purpose of evading death duties and for no other purpose. I do not think it can be said that marriages are arranged so that the parents will not die within five years of the marriage and death duty will be avoided in that way. This is the worst bit of anti-social legislation to come before this House for a long time. We speak about the flight from the land, about the failure of young people to get married, about the failure of young people to pursue agriculture as a way of life. We reconcile ourselves to a fantastic flight from the land and we spend endless millions of pounds in trying to create jobs— sometimes not very successfully—for people who will leave the land. At the same time, we are in this section doing nothing to keep them on the land; we are doing everything to drive them off it.
If the Minister thinks there are abuses in the handing over of large hoards of stocks and shares or cash why not frame a section in such a way that the family farm or the family business will be exempt? The Minister must be joking or he must not be too serious when he says he is exempting a farm worth up to £5,000. A farm of very indifferent land in County Cavan, situated several miles from a town, with a house that has not been inhabited for several years, and which is not situated adjacent to a mining area, is readily sold for £4,000 and only 25 or 30 acres are concerned. This £5,000 concession is no concession in 1971 when farms—even farms that could not be regarded as large farms— are readily fetching £7,000, £8,000, £9,000, £10,000 and £12,000 even in County Cavan where I come from. The Minister need not take my word for this. He can resort to the Stamp Duty Office where all this information is available to him.
This is not a concession in Cavan and, if it is not, surely it cannot be regarded as a concession in Tipperary, in Kildare, in Meath or Westmeath. I appeal to the Minister to think again about this and to exclude the family farm. Now and again I have something to do with the return of estate duty affidavits. This is not a major problem in Cavan but sometimes I am asked to deal with estates in a neighbouring county and I know that farmers in Meath and Westmeath are severely hit and severe hardship is inflicted on them by death duties. Therefore I strongly appeal to the Minister to re-think this £5,000 exemption. It is not an exemption at all. He should go the whole way and exempt the family farm and the family business entirely from this iniquitous anti-social proposal.
I want to repeat briefly that I believe the proposal to tax the print of beer and to exempt the packet of cigarettes is another anti-social proposal in the sense that it suggests that you can smoke as hard as you like as long as the Minister gets the tax or as long as the Minister does not lose tax. It is admitted that if cigarettes were taxed much further they would probably cease to be a paying proposition. Is that not what the Minister wants? Is that not what his colleague, the Minister for Health, wants when he launches a campaign advising people about the dangers of cigarette smoking? Why not tax cigarettes and tobacco and in that way discourage people from injuring their health?
There is a proposal here to increase the rate of interest on arrears of income tax and death duties to 9 per cent. That is particularly severe in relation to death duties because for one reason or another it very often takes time to get death duties assessed. Not the most insignificant of reasons are delays in the Estate Duty Office because it is not properly or adequately staffed. The Minister will avail of these delays, including the delays in the Estate Duty Office to collect interest at 9 per cent on arrears of death duties. I concede that there are delays in solicitors' offices. There are delays while people make up their minds to take out a grant of administration perhaps because the farm is run down, or they are in poor circumstances or they have not got any money in the bank, or there is no immediate necessity to take out a grant of administration. In all those cases the rate of interest on arrears of death duties is to be "upped" from 4 per cent to 9 per cent. The position is the same in regard to arrears of income tax.
I am rather amused when I compare that with the attitude of the Minister for Justice towards the rate of interest payable on judgment debts. It still stands at 4 per cent. I have been asking the Minister for Justice to bring that up to a more realistic figure but I cannot get him to do it. He says it is not important and that it will be dealt with at the same time as a number of other matters in some Bill in the distant future. In the meantime a poor man down the country, who is badly maimed, who loses his eyes or his limbs, in an accident and recovers £10,000 damages may, if there is an appeal, have to wait for a year to have that appeal heard in the Supreme Court; the Supreme Court may reserve judgment and, in the heel of the hunt, he is kept out of his £10,000 for two years. This is common practice. It is as common as are some of the practices to which the Minister refers. However, that person will be paid interest at the rate of 4 per cent by the insurance company concerned while the insurance company are probably utilising the money in the meantime to earn themselves 14 or 15 per cent. It is difficult to understand that attitude when we see the Minister coming here and increasing to 9 per cent the interest on arrears of death duties and income tax while his colleague says that he is not really concerned in seeing that justice is done in the other respect but that he will do something about it sometime.
In passing I must say that I approve of the proposal to have the dual channel system at airports and, presumably, at other ports also. This will bring us into line with the practice that has prevailed across the water and at airports in other places whereby people indicate whether they have anything to declare by walking through the appropriate channel. This is a move in the right direction, and I do not think it will make it any easier for people to escape the net.
It is proposed in this Bill to increase the excise on firearms dealers and it is intended to differentiate between a dealer who deals only in sporting weapons and one who deals in weapons of war. Although belated, this is an indication of sound thinking on the part of the Government. It is a pity it was not done several years ago. An atmosphere should be created here in which people would know that we do not want guns, that we do not want lethal weapons, whether they be licensed or unlicensed, and that we believe all guns in the country should be under the control of the Army, the Minister for Justice and the Garda. Perhaps some of the events of the past three years have shocked the Government into a sense of educating the public in this regard.
I wish to speak about the increased tax on beer and spirits only to the extent that it affects our tourist industry. We have now reached the stage where, in many cases, the prices of drink here are higher than what they are across the water. I know that most grades of beer are dearer in Cavan than they are in Fermanagh and nobody is going to analyse his beer to ascertain whether he will get drunk quicker in Derrylynn than he will in Butlersbridge. At any rate, beer prices are higher than in Northern Ireland and much higher than in England. This will have a crippling effect on our tourist industry. People going on holidays to the Channel Islands are told that the prices of beer and cigarettes there are very low. Coupled with this, they can expect to enjoy good weather while they are there. Generally, our weather is not very good from the point of view of sun worshippers, but when people realise that their drink and cigarettes will cost much more here than elsewhere, we can hardly blame them if they are not interested in holidaying here. As well as these factors, our political situation is very unsettled. Is it any wonder, then, that tourism is faced with a hammering this year, as it was last year?
I suppose it would be fair enough to ask me what I think might be done about the situation. I would suggest that some concession be given to tourists to encourage them to spend their holidays here. I have not worked out a formula for the type of scheme I have in mind but I am sure that since the Government are able to deal with such matters as value-added tax, turnover tax and decimalisation, they must have people at their disposal who could work out a system whereby concessions would be given to tourists. Of course, I am aware that many of the people who come here do not need a passport on arriving in the country. I concede that in so far as those who require a passport are concerned it would be easy enough to work out a scheme. Up to some years ago—I do not know if the practice still prevails—it was possible for tourists in some continental countries to obtain a discount of 20 per cent on purchases on production of a passport or travellers cheques. If we intend to rely on tourism as one of the big props of our economy, we must do something about these problems. We cannot hope to encourage people to come here if our hotel charges and the cost of luxuries are higher than they are abroad.
This year's Budget was not in any way imaginative and the Finance Bill is far from being imaginative. It seeks simply to take in a few extra pounds regardless of the assault that that may make on social thinking, on social justice or on public policy. I am disappointed in the three major respects that I have mentioned: the imposition of income tax; its dealing with death duties and the other matters that I have mentioned.
Government members say to us that we are always opposed to taxation. I suppose there is a certain element of truth in what they say. However, we must have taxation and it is only through taxation that a government can raise the money for expenditure. The Government are playing a greater part in our lives. They are dominating our lives a little more in every sphere. Naturally they must raise money by taxation.
We would all hope that the taxation system would be an equitable one. We are living in a very complex era in so far as the Government dominate our lives so much and certain aspects of our lives which were once the concern of the private person now become the concern of the Government. There is Government involvement more and more in education right up to university, in health matters, in economic matters. Because of this we find the Government encroaching more on our lives and taxation becoming more and more part of our way of living. Taxation becomes, perhaps, a dirty word. We do not like to hear of any form of taxation. We are opposed to it.
The Opposition have a public duty to point out where taxation can be unjust and they have an obligation to make constructive criticism and to make suggestions as to how taxation might become more equitable and might be more equitably applied.
We have a taxation system which we inherited from Britain. It is far from being an ideal system. There are, however, certain aspects of our system which are different from the British system. It is an interesting aspect of our system that we have an unusual community. We have really too many old people and too many young people living on too few productive workers. It is, perhaps, unique to this country that we have so few productive workers. This has evolved from the massive emigration over the years. It is obvious that if we have so few productive workers the level of taxation must be high to pay for any benefits that it is necessary to give the old and the young. Unfortunately, this fact has not been borne in mind by any Government, to my recollection. No effort was made over the years to stop the massive emigration. It is the younger people who emigrate, the people who have the potential for improving the economy. The country was literally depleted of these and there were left in our midst the very old and the very young who were dependent on the Exchequer for their survival. We have never tried to alter this state of affairs and to prevent this mass exodus. We have never tried to change our taxation system so as to spread it more evenly. We have been tinkering with the system that is in operation today and which we inherited from Britain. I suppose it would call for a Minister with tremendous imagination to depart radically from the present system. Taxation should be more than just a means of punishing people or making their lives more difficult. That is how it is regarded at the present time. Taxation makes one's life a little more difficult and cuts down on the funds available to the individual.
In the Third Programme for Economic Development the Government had a few points to make on taxation. They said that the continuing policy of the Government was materially to strengthen those incentives which provide more jobs, increase productivity, create competitiveness. Unfortunately, the Government failed badly in regard to this aim by the imposition of the corporation profits tax last November. I think it was wrong. I have to admit now that it was wrong and I have seen the results of this in letters from companies who are very hard pressed as a results of this tax and who now lack the money for reinvestment in their industries. Generally, native industries suffer from under-capitalisation. The credit, the money, the funds and the resources are not available for them and they must have some measure of relief to enable some of their profits to be ploughed back into the industries. It is, perhaps, the greatest failing of Irish industries that they are all under-capitalised. This is a great pity. Because of this they should be given some greater measure of relief of taxation to enable them to expand. At present they are being constricted so much that they will be far from geared to compete in EEC conditions.
This is a great problem and it reflects badly on a Minister for Finance who had not the foresight to see what he was doing. The Minister should have been advised more profitably. He should have been better advised than to do as he did. This shows a Minister who was concerned with the present, not having regard to the future consequences of his action. The revenue that the Minister could hope to get from the corporation profits tax is negligible when considered in the light of its effects on struggling industries. Whether we like it or not, we have struggling industries which are not geared for entry to the Common Market. The average rate of income tax in Ireland is high by general European standards. I will go further and say that our income tax is one of the highest in Europe. This is also due to the fact that we have not had a Minister for Finance with the imagination or vision to bring about tax reform and who would give an impetus to industry that could produce more employment, encourage our people to come home, create work for them, provide houses for them and thereby provide more people with more wages who would then be paying more taxes, which would ensure more revenue and greater social benefits to those in our community who are dependent on the Exchequer. We have not had this. We have had no Minister to do this, no one who would view taxation in a different way.
The Third Programme for Economic Expansion reads at page 180:
The Government recognise that a moderate level of personal taxation encourages personal effort; it promotes thrift and it helps to attract from abroad the enterprise, skill and capital which are vital for rapid economic progress.
It encourages personal effort and it promotes thrift. The very opposite has been achieved with the policy pursued by the present Government in matters of taxation. Nobody—I say this with conviction—is satisfied to work overtime, to improve productivity. Nobody cares. They say, "Why should I? What the Central Exchequer will not take from me, the local authority will take." People feel that the present system is unjust. It victimises them to the extent that they will not bother.
This apathy is widespread. Everyone who has anything to spend is on a spending spree because there is galloping inflation and no incentive to save. If the cost of living is going up as it is by about 10 per cent per annum, what purpose is there in putting money away? There is no purpose. There is no incentive to save. I have talked to groups and tried to impress on them the value of saving and they have always come back with this answer and it is impossible to argue about it. They say: "Costs are going up and we might as well spend now." There is no leadership and where there is no leadership and where there is a Government in control who have lost respect and have lost credibility you will not get initiative, patriotism, the desire to work for the country. This is absent at the moment.
This may account for the strikes which are so widespread and which are causing economic chaos. In the field of medicine there is what is called the trickle down syndrome. One might readily apply it to the situation in this country at present. I wonder are we tackling it in the right way. Are we applying a taxation system which will encourage people? I really do not know how we will survive at the rate we are going. We have the highest incidence of strikes in Europe. I certainly have no regard for strikes. I think they are destroying our country. Strikes are becoming so commonplace that they are part of our daily lives now. They are hitting people badly; they are hitting industry; they are literally destroying industry. We must have a rethink on the situation, we must have somebody to stand up and talk about it and we must not just accept it or resign ourselves to the fact that this is part of our lives. We must do something about it. If we are not to have economic chaos in the country we must set an example for people, we must have new leadership and we must have devaluation. Devaluation is the only answer if we are to encourage tourists to come back again and ensure that our exports will be competitive.
I do not think the Government's approach to the problem is a realistic one. Their attitude and their actions are being governed by political expediency all the time. I think their advisers are aware of this fact; their advisers are aware of this fact, their advisers are giving them the advice but they are not taking it. They are adopting a Micawber attitude—let us see what tomorrow holds for us. They are adopting an attitude which is adopted by many a poor person I have seen in economic difficulty. She owes a lot of rent, she owes for gas and electricity. She goes down and gets trading cheques and sells them.
This attitude is being adopted by the Government. I was appalled to hear one Government Minister say: "We will get £30 million immediately from the agricultural fund of the EEC when we go in." Go in quickly for that alone was the attitude. They will not give us a gift of £30 million immediately for nothing. If that is the reason the Government want to get into the EEC quickly and if they want to shirk their responsibility by blaming any future trouble on extraneous factors, then they are an irresponsible Government. They have never approached the problem with imagination or with proper planning. I honestly believe they are not listening to their advisers. This is what has gone wrong with them. Their advisers are looking on and seeing political expediency in action and seeing the Government tinkering with the system, afraid to upset or offend any particular section of the community, trying all the time to please sections.
If this continues we will have nothing but chaos in this country and the people who will suffer most will be the people who are on fixed incomes, old age pensioners, the disabled and the unemployed. We as a nation should sit back and listen a little more and look at what is happening because there is a terrible self-fishness here. We see people on spending sprees. It is hard to see whether it is a result of or a prime cause of the situation. There is one section of our community drinking heavily—we see lounge bars full—and there are other people literally trying to survive on old age pensions. When they get a 10s increase the local authority moves in and takes some of it back. It is very wrong to expect a person to live on £4 a week in these days of spiralling costs and galloping inflation. The whole system has gone haywire and we should come up with something better than merely providing fringe benefits for people to keep them from starvation while another section of our community is on a wild spending spree.
We should have aimed at a taxation system that would have stimulated business and industrial growth more. We should have encouraged our people to come back. Many of our emigrants cherish thoughts of coming home some time and I have often been annoyed at hearing some of our Ministers speaking to our emigrants in Britain telling them to integrate into the British community and become part of it. I should like to see our emigrants encouraged to come home. I should like to see employment provided for them and I should also like to see them become taxpayers to our own Exchequer. The increased revenue from this taxation could be distributed to provide increased benefits for the aged, the disabled and the unemployable.
Something will have to be done to stimulate a love of our country, a willingness on the part of our workers to work more to get greater productivity. We have to give them the incentive which we are not giving them at the moment. Strikes often result from boredom and certainly some of the work done by our workers is very boring. There is no incentive to greater effort in this type of work. I am amazed there is not a greater degree of absenteeism from boredom in the car assembly industry. We have a high degree of mental handicap in this country. Some of the work which is so boring and not calling for any high degree of skill or craftsmanship could be done by some of our mentally retarded. They could be involved in work like this which could be productive, which could help immensely and might allow some of our other workers to engage in much more important work.
I feel the Deputy is straying away from the Finance Bill which, as he knows, deals with taxation.
I accept that. We might consider ways and means of putting those people to work and this would enable other workers to do more productive work. If we were to do this we might have a better country. This must be said even at the risk of offending certain sections.
Our taxation system is archaic. There is too much emphasis on indirect taxation. It would be interesting to consider the tax an ordinary worker pays out of his wages every week. We would, perhaps, see that the money he pays in indirect taxation eats into a considerable portion of his wages. This country has, perhaps, the highest indirect taxation. This is unjust. I should like to see a greater incidence of direct taxation so that people earning between £1,500 and £2,500 would pay a certain percentage of tax and those in receipt of £2,500 and £4,000 would pay a different tax percentage. If we did this we would have a much more equitable system of taxation.
Some years ago the Minister for Finance provided incentives to the higher managerial class by increasing the level at which surtax is payable. This is a good thing. If we want to get top experts to live in this country and work in it we have to provide some incentives for them. I would be more pleased if the Minister had been a little more considerate towards the lower paid members of our community. He should have considered the married women who go out to work but who are still penalised. Despite the extra allowances given they are not getting what they should. There is a greater tendency for married women to go out to work, perhaps, because the mass media and advertising induce people to seek a higher standard of living. This is why many families nowadays look for a second income. This encourages married women to go out to work to pay for the extra luxuries their families seek. We cannot turn back the clock. We must accept that married women wish to go out to work so we should give them the same advantages as men get. We should, in fact, encourage them to work.
We are not doing this at the moment and our tax system is not equitable as far as married women are concerned. It is all the more annoying when we find that the level of taxation in this country at the moment is nearly one-third the GNP. This is certainly higher than most of the EEC countries.
It is most likely that we will enter the EEC so our taxation system should be adjusted to the EEC level where there are greater incentives for married women to work. As the Government are hell-bent on getting us into the EEC, we must look at everything from the point of view of our entry into that Community. If entry into the EEC does nothing else than make us competitive with these countries like Germany, where the incidence of strikes is so low, if it does this and makes us more aware of our position, then it will be good. Unfortunately, because of our close proximity to Britain, we have judged everything by British standards, and we have sought the same wages as British workers. Perhaps due to the fact that so many of our workers go abroad, we have looked for the same level of wages as applies in Britain. This has been obvious over the years. In some trades, particularly the printing trade, the rate is higher than in Britain, even though productivity is lower. We have decided to judge everything by British standards, comparing our very small country with Britain which, despite its malaise over the years, did have considerable wealth and resources which we do not have.
If we do go into the EEC, as it is most likely we will, it may inculcate in the Irish people a greater love of their country and give them a greater incentive to work to put us on a par with these other countries. If it does that it will help this country. If it improves productivity and makes us alert to our standing there and if we make every effort to ensure that those countries do not have an advantage over us, then, perhaps, it will lift us out of the depression this country is in at present. We need something to shake us out of this state of national apathy. As far as the Government are concerned, leadership is not there, with the result that people have lost confidence in Parliament. There is, perhaps, a greater tendency on the part of the people here to evade taxation. It has been evident in so many businesses and so many aspects of life that they have tried to do this, and they fail to see that there is anything morally wrong about it. When they see that a former member of the Government can make a massive profit and that that money can be had tax free, there is on their part a reluctance to pay tax on small profits that may accrue to them. We would need to look at the cause of the apathy and this malaise that is evident in the country.
The Deputy will appreciate that we cannot do it on this Bill.
I am just saying that if we could stir our people into action and do something to end the strikes, to increase productivity, we would have a much more progressive country, a country that could be economically sound, which it is not at the moment. Someone has got to say it and, due to political expediency, no member of the Government will do it. There is a crisis one minute and then the crisis vanishes like the morning dew when it is politically important that it vanish. We must speak out when the necessity arises. If we see that strikes are going to cripple us, as they are, then at the risk of offending certain sections of the community, we have no hesitation in saying that it is bringing economic ruin to the country. Taxation is intended to provide for Government expenditure, but we see colossal waste in Government expenditure——
The Deputy may not discuss expenditure on this Bill.
I am not going into the details of expenditure. I am talking about it in general terms. The purpose of taxation is to provide for Government expenditure and to distribute the wealth of the country a little more equitably. That is what I would hope the purpose of taxation is.
As a general principle, but it is not relevant on this Bill.
We would hope that people would be encouraged to work a little harder, to work overtime where needed, but they must be given the example and the incentives. Example can only be given by proper leadership, which is absent. The Government, in the Third Programme for Economic Expansion, stated that they had under review the possibility of aligning tax treatment of traders and professional people with that of employees under PAYE, so that they would pay on a current year basis. I should like to see this put into effect.
The decision of the Government to increase to 9 per cent the interest payable on unpaid taxes is good. People can go on for years without paying taxes because the amount has not been agreed. Something has to be done, to speed up the process. Money that is not coming into the Exchequer is money on which the Government have to pay interest, no matter what Government are in power. If we were to look upon things from that point of view we might ensure that taxes were paid in time. Unfortunately, many of our Irish companies are undercapitalised. Whilst on paper they might have the money, in fact, this is not so. This is where the problem arises. It is only there on paper. Because of demands and because of credit restrictions they have no money to pay the tax. However, I should like to see the PAYE system applied to traders and professional people. It would make it easier for them to pay their tax, and it would ensure more money would become available to the Government. The PAYE system has proved very lucrative to the Government. While the system was a painful one initially, like every innovation of its kind, it has proven successful. It has made available a vast amount of money which it would have taken years to collect under ordinary circumstances. There is no need whatsoever to delay its extension to traders and professional people. If it was being considered in 1969, there should be some result two years later.
A different problem arises from estate duty. From my experience of cases, I found that delay in the payment of these duties has been due to unnecessary problems arising with the legal profession. Perhaps I am being very critical of them but I cannot get any satisfaction from them. This is the cause of the delays in the settlements. People are frustrated by the fact that they cannot get satisfaction. There should be some means of streamlining in order that settlements can be reached quickly and effectively.
The value-added tax must be discussed now because whilst it is not being provided for in the Budget it will be in operation before the date of the next Budget, as the Ceann Comhairle knows. Have people been given an opportunity of learning about it, of discussing it and of making their views on it known? Is the Minister a little hasty in asking that the people's views be made known by the 30th June? Britain do not intend to introduce VAT next January. We are applying VAT on the basis that they are doing so. This is bound up with our entry to the EEC. If Britain are looking at it from that point of view and if there was urgency about it they would have worked on it in order that it would apply from 1st January next. Why are we being so hasty? Widespread discussion on this subject is needed. The Minister should be more lenient. It seems that the Minister wishes to have VAT introduced by 1st January next. Will the Dáil get an opportunity of discussing it?
Small traders have told me that value-added tax will make their lives very difficult. Untold harm has been done to these people by the application of turnover tax and wholesale tax. Small traders have difficulties in collecting turnover tax. They find it hard to explain to customers that they must pay tax on a package of tea marked 2s, making the purchase cost 2s 1d, while the supermarkets charge 1s 10d for the same package. The packets are marked with the recommended price but the small trader must ask for one penny more for the tax. The turnover tax has put many small traders out of business. A small grocer whom I know and who was an avowed supporter of Fianna Fáil was forced out of business by the imposition of this tax.
If we must apply a tax to replace the turnover tax the new tax should be flexible and just. Small traders are having a tough time because they must compete with foreign monopolies. The Revenue Commissioners know that these people make small profits. Life cannot be any great pleasure for them. We should delay the application of VAT until the views of the people are known to the Government.
The Deputy appreciates that no tax may be imposed before the House has an opportunity of discussing it. The question does not arise now because no tax may be imposed before the House has approved of it.
This is the time when we should be discussing the tax and talking to the public about it. The Minister has decided on 30th June as the closing date for the submission of views.
There is no opportunity on this Bill to discuss such a tax.
This is the 22nd June. There are eight more days in which the people can send their views on this subject to the Minister. I am delighted to see that the Minister for Finance has come into the House. I must ask him to postpone the proposed latest date for the receipt of submissions on VAT. The Revenue Commissioners would probably be co-operative.
Last night I listened to a lecture given to a small group by a Mr. Egan on behalf of the Revenue Commissioners. The lecture was first-class. I learned a lot from it. I hope that Mr. Egan and his colleagues will be permitted to give more lectures. Last night was the first time I enjoyed such a lecture. We must ask for further lectures by officials in various areas so that the people can become aware of what is involved. It would help the people to understand the VAT and to submit their comments on it. There is no immediate rush. There is no need to introduce this tax on 1st January. Britain is not doing so. Perhaps we might withhold the imposition of this tax until the people understand it better. When people understand something there is less criticism and more willingness to co-operate. The turnover tax was rushed through and was imposed before the people understood it. The people blamed the traders. The people might accept VAT more readily if they were educated to understand it.
We are opposed to taxation and we voted against it but not because of the benefits which accrued to the poorer sections of our community. We would like to see a more equitable distribution of wealth. We would have liked to see the introduction of a capital gains tax. Such a tax is vital. We should have had it. It is annoying to see parasites in our community who do not pay tax and who can get away with so much. Are such people necessary to our community? Some of them have no love for or interest in the country and they are only interested in what they can get out of the country. We would be better off without them. We should try to make such people pay heavily. Are we taxing people properly?
I went into an auctioneer's office and I was astonished at the opulence of the office. There were cushioned seats in it and my feet sank into the carpet. Some of the auctioneers have conducted business deals worth £200,000 in three months and they get commission at the rate of 5 per cent or 10 per cent. I wonder if we are taxing these people sufficiently?
Are we taxing the doctors?
I wonder too. I have no objection to that. It is a long time since I charged.
I did not know that Deputy Dowling's conscience was bothering him.
I am not saying that my colleague is in that class—far from it.
References to the professions of Members of the House are not in order.
It is a useful source of tax revenue.
That may be but remarks about the professions of Members are not in order.
Do these people to whom I have referred play their full part in our society? Instead of listening to remarks of his constituents that people are receiving the dole and working at the same time, the Minister for Finance might look closely at these companies rather than devoting his energies to getting rid of the dole.
The companies to which I have referred have acquired extensive premises throughout the city. Dawson Street and Molesworth Street can be classed as the auctioneers' streets in the same way that doctors and Harley Street in London are synonymous. These companies make vast profits and it is important to consider if we are taxing them sufficiently, especially when we take the dole from the poorest section of our community. I do not agree that these companies have the right to spend vast sums on sumptuous offices and I am sure the Chair would not disagree with me on that. Having read of the profits some of the companies make, I have wanted for some time to make this point. The Minister will agree that it is difficult enough to buy a house without having to pay considerable fees to auctioneers.
We should like to have a graded form of taxation imposed. Frequently I wonder if Ministers get sufficient time to apply themselves to the work of their Departments, particularly when they seem to spend so much time opening petrol stations and similar establishments. I realise that it is not easy for them to have to sit in this House and listen to debates and attend at Question Time. Perhaps if we allowed our Ministers to devote more time to their Departments they might be able to consider the changes that are necessary.
I read recently of a Minister who phoned a man who had just started a business in the country and he asked him if he could attend at the opening ceremony because it was important for him. The man told him that at the rate the Government were going it was more likely that the Minister would preside at the closing of the premises. He told the Minister that he would not be in business very long in view of the rate of taxation. If Ministers had to attend at the closing of factories they would be very busy people.
I have no doubt that the Minister for Finance has the ability—although he does not always show it—to consider the tax structure and see what changes might be made. I have already asked him to impose a capital gains tax. I do not believe he is opposed to it, although I realise it may be a difficult tax to impose. When the late Seán Lemass was in Opposition in 1955 he asked that a capital gains tax be introduced. I was amazed that the head of the Opposition, who had been in government for such a long time, should ask for this measure while in Opposition and not mention it when Fianna Fáil returned to power. There may be difficulties in imposing this tax but Britain has been able to introduce it. Even if it does not yield a tremendous amount of money, at least it establishes the principle and other members of the community know that parasites are not evading tax. There is nothing more galling to a hard-working man who is compelled to pay tax than to find that people are making vast profits on which they do not pay tax. Again, I would urge the Minister seriously to consider this matter.
Despite what Fianna Fáil backbenchers may have said, we are not opposed to the social benefits given in the Budget. We commend the Minister for what he has done but we do not consider he has applied the taxation in a proper manner. It was a hurried Budget, it did not display imagination. We have not had many Ministers for Finance who have shown any degree of vision—the important factor has always been political expediency. This is an important ministerial post—perhaps the most important. The Budget presented an opportunity to the Minister for Finance to show his ability, but unfortunately he has not done that.
Perhaps he is dependent on VAT to carry the Government forward to the next Budget. In regard to the imposition of VAT, it appears that some services are excluded. I am disappointed that the Minister did not impose a higher tax on cigarettes in view of their harmful effects which have been fully established now. We should tax them so highly as to discourage people from smoking. We all know the harmful effects of smoking. Heavy taxation would have been helpful in deterring people from smoking and a reduction in smoking would lead to a reduction in expenditure on health. Again, there would be no need to mount a campaign against smoking. In future Budgets the Minister should take this into consideration and tax cigarettes so highly as to discourage people completely from smoking.
This debate has been a rehash of the Budget debate. We have had the scaremongers as usual misleading the public. Not alone is this tactic used here but it is also used outside the House by the leftists and the obstructionists. A certain group is determined to distort all the good done by successive Ministers for Finance whose ambition has always been to improve the lot of the weaker sections of our community. If the nation is to survive it will survive only by the united efforts of the Government, the politicians, employers and trade unionists working in harmony to ensure the very best for those most in need of assistance. There are sections of our people who are endeavouring to do that. There are also sections here and elsewhere who are endeavouring to slow down the rate of progress and the passing on as a result of that progress of some of the benefits to the weaker sections of our community.
Progress can be achieved only by all of us working in harmony. It can be achieved only by a united effort and a united will. Deputy Dr. O'Connell says that the Labour Party are opposed to taxation but are in favour of better social welfare benefits. Better social welfare benefits cannot be provided without increased taxation. It is scarcely logical to say one is in favour of increased benefits and then vote against the taxation designed to increase those benefits. Reasonable people are not against taxation designed to increase social welfare benefits. The survival of this nation depends on all of us and not just on one particular section. We have people who want everything for nothing, people who are prepared to make no contribution of any kind. They say they have rights but that they have no responsibilities. With every right there goes a responsibility and, when these people are called on to make their contribution, it is not logical for them to say they will not make a contribution and, at the same time, demand that a contribution should be made to someone else.
The situation with regard to rings and cartels is in need of examination because there is tax evasion and that tax evasion casts a heavier burden on those who are unable to avoid paying tax. Professional people can evade tax by running several cars, expense accounts and so forth. All these devices ensure the hiving off of profits and the evasion of taxation. I wonder what kind of returns do those people who are paid in cash make for taxation purposes. I hope there will be a comprehensive examination into all this to ensure that no one will evade legitimate taxation. It is not just television spongers; we have tax spongers too and it is the people with the large accounts who are the biggest tax spongers. It is not worth the while of the man with the few pounds tax to pay to call in taxation consultants to advise him on how to dodge paying tax.
We will have to have a look at the whole system. I trust that a comprehensive examination such as I have suggested will bring some positive results and ensure that everyone pays the tax he should pay. Evasion is a very serious matter. The ordinary worker is not in a position to evade taxation. Some pay little but they can ill afford the little at times while the man who drives around in the big "Jag" or the Mercedes can dodge paying taxation in a variety of ways and point the finger scornfully at the man on the footpath who has to pay all the time because he cannot evade taxation. I hope these, together with the rings that are forcing up prices in this city—there are many such and I spoke about them on several occasions already in relation to food and farm produce—will be examined and corrective action taken to ensure public confidence in us. Prices of farm produce——
On this Bill the Deputy may not refer to the question of prices.
The benefits paid to the old age pensioners, widows and orphans, are very limited and if prices are forced up by rings and cartels it dilutes the benefit and the provisions made at Budget time become inadequate. Since the last Budget we know that a number of such groups have been operating in this city and have pushed up prices. As well as the changeover to decimal currency there was a rise in prices. I did not hear any shopkeepers complain about decimal currency because in their own way they were able to increase prices very discreetly.
The Deputy may not refer to this matter on the Finance Bill.
It is sad that the benefits which are given are all too quickly eaten up by practices such as those I have mentioned. When we do not hear a large volume of complaint from shopkeepers or others they are obviously quite satisfied with the system despite what Deputy O'Connell says in relation to shopkeepers. I have every respect for small shopkeepers who are facing a difficult position at present as a result of large groups that have come in from abroad and damaged their business. I have every sympathy for these shopkeepers but the way to remedy their situation is not by means of a price rise. The changeover to decimal currency afforded certain people an opportunity of getting more profit. I hope the profit aspect of the matter will be further examined and we can then see whether what I say is correct.
Deputy O'Connell mentioned the taxation system on several occasions, but it was difficult to understand what he meant. In one case he said we were following Britain; in another he said we should follow them and again we should not follow them, depending on the argument he was making. He gave instances which were completely contradictory. He mentioned the desirability of having a new taxation system at the earliest opportunity. He said Ministers for Finance had no imagination in regard to changing the taxation system. He thought the value added tax should be delayed but five minutes earlier he wanted a new system implemented almost immediately. Yet, when a new system is about to be implemented he wants the Government to delay it. It is difficult to know whether he wanted a change in the system or whether he wanted it now or later. Only he can explain that and he has not done so: he has only confused the situation.
Deputy O'Connell also spoke about industries not being geared for EEC conditions. We all know that incentives and assistance and advice have been given to industries in this regard but we have many lazy and inefficient managements in industry, many people who are making a good living out of an industry at present and are not concerned about its future survival or about jobs. They are mainly concerned about the money they can accure to themselves. These lazy inefficient managements have not met their responsibilities and it is to these we should direct our criticism because it is on them the blame lies and not on the Government which have made every effort and given many aids to ensure that workers will retain employment and that those engaged in industry will be able to enter EEC on a competitive basis.
The misfits in management should be weeded out and industrialists should gear themselves for EEC conditions. Otherwise, many jobs will be in jeopardy. In speaking of the closing down of factories Deputy O'Connell did not criticise inefficient managements, people who spend most of the year following the sun while their factories are ticking over, people unconcerned about the future or the workers. The sooner the House gets down to pointing out in detail the inefficient groups and telling them to get on with the job and letting the people see who is at fault the better. If the public get the full facts they will know that the Government made every effort by aids and incentives to ensure that industry is ready for the conditions Deputy O'Connell envisages and which we agree will exist. Quite recently a man got a very important position in a very important industry. He had failed in every other job he had attempted——
The Deputy is getting completely away from the Bill before the House.
The amount of taxation we can extract depends on the prosperity of the country at any given time. The amount we can give in the next Budget depends on the efficiency of industry to ensure that there are more people employed and that they have higher wages. If these conditions are not fulfilled we shall be in a far weaker position than we are at present as regards getting extra taxation to meet the needs of the weaker sections of the community. For that reason I feel that misfits in management in industry, people who do not care about the survival of the industry and the workers should be criticised and I have no objection to criticising them here and I feel I am justly entitled to do so.
The Chair feels we should keep to the Bill.
I am sorry if I have deviated from the Bill but I did not think I was going far away from it. I think I have made my point in regard to industry and to the group of people who are not meeting their obligations. I am not quite certain that it is outside the scope of this Bill because money is being made available to these people——
The Deputy is now proceeding to question the Chair.
No, it was just a comment that I thought——
This is not an economic debate; it is a taxation measure.
In order to have the necessary results from taxation it is necessary to be geared so that we can ask people to pay more. This can only be achieved by a high degree of efficiency in our industrial arm. I hope the industrialists will avail of the facilities provided by the Government to ensure that we are in a position next year to ask for more and more for the people who have less and less, the weaker sections of the community.
The Minister provided increased welfare benefits for deserted wives, widows, orphans, the sick and aged. They all received special attention as they have done over the years. I feel they should get more but the resources available do not permit this. At least when we on this side of the House are called upon to vote for the necessary legislation we do so. If we were to wait for the Opposition to provide increases in old age pensions, sickness and unemployment benefits, better health services and housing services we would be waiting for ever because they are afraid to face up to their responsibilities and support the tax measures necessary to provide such services.
Deputy O'Connell suggested that the Government should endeavour to close down Player-Wills which would mean many workers were made redundant. He suggested the Government should tax the smoker out of existence. I feel quite differently about the dangers of smoking. I believe the tobacco factories should develop ways and means of eliminating the harmful ingredients—if there are harmful ingredients—in tobacco. To tax smokers out of existence and thereby bring about the closing of cigarette factories with the consequent redundancy of workers is an unrealistic suggestion which should not be considered. If Deputy O'Connell was the deciding factor on the taxation of tobacco the workers in our tobacco factories would be looking for new jobs in the morning.
The Labour Party are no more concerned about maintaining jobs than they are about the survival of the weaker sections of the community. In this Budget the Minister has ensured that the weaker sections get increases. While the taxation which has been imposed falls heavily on some sections of the community, the sections which can barely afford to pay these increases are not opposed to assisting the weaker sections in the many ways the Minister outlined in his Budget speech. When the Minister comes in with his Budget next year I hope he will be in a better position to look for more money from more efficient industry geared to meet its current requirements which will be paying more money to its workers so that more money will be available to the people in the greatest need.
My sympathy lies in the first instant with the public servants who were obliged in an extremely difficult year to anticipate what was in the Government's mind in respect of the Finance Bill. The political climate of the past 12 months was not conducive to sound economic or taxation management and the contradictory developments in taxation policy which arose because of the departure of Deputy Haughey as Minister for Finance and the taking of office of Deputy Colley did not give grounds for much confidence being allowed to rest with the economic advisers of the Department for Finance or, indeed, the Revenue Commissioners themselves.
The Bill is retrograde in some respects particularly in relation to the poll tax on every taxpayer. The problem is to try to bring in an equitable system of taxation geared to ensure that we have a more egalitarian tax structure so that any inequities which develop are removed as speedily as possible. By imposing a global £12 tax on everybody the Minister fails to match that basic criterion. In my estimation there is very little evidence that the Minister either appreciates the need or accepts the urgency to introduce positive discriminations within our tax system.
The Minister has not tried to introduce measures to ensure that our tax structure is harmonised not merely with Europe but with Britain. I say this not because we may enter the EEC but because it is sound economic management that our tax structure should be as uniform as possible with the tax structure of the Six or of the future Ten. Total taxation, including social security contributions, which I understand we may not discuss in terms of the Bill itself, is of a lower proportion of GNP than in other countries. The figure here is roughly 32 per cent, whereas in France it is in the region of 46 to 48 per cent. At a seminar I attended in Brussels last Tuesday the point was brought home very forcibly to me by the economic adviser to the Central Bank when he delivered a paper on fiscal policy in Ireland. One found a very considerable contrast between our structure of taxation and that of the Continent generally. Our composition of tax revenue relative to GNP differs quite considerably from that of the EEC countries. I do not think the Department of Finance or the Revenue Commissioners have been given the opportunity or incentive to undertake working papers in preparation for entry into the EEC. For example if one takes taxation on household expenditure generally in Ireland, it is in the region of 6 per cent. In Britain it is roughly 12 per cent and in France and Germany 13 or 14 per cent. These are wide disparities to which we do not seem to pay any attention and indeed we seem to be totally unaware of them. There is a very useful and fruitful field here for the Minister for Finance bearing in mind that the proportion of our population gainfully employed in agriculture is now dropping to about 25 per cent. In the decades ahead, certainly in the 1980s, we will not be that dissimilar in income structure from many of the European countries, certainly not that different from the general structure in France, for example.
There is an absence of stress on the part of the Minister on the need to harmonise our taxation structure with that of the Continent generally, irrespective of EEC entry. I strongly support the plea by Deputy FitzGerald to have a comprehensive survey undertaken by the Department or, if necessary, on a commission basis by the ESRI. There is sufficient ability within the Revenue Commission to undertake this work. We should have a comprehensive survey of general trends and current income distribution in the country. I accept the comment by Deputy FitzGerald that there is not enough information available and the information that is available may, in some respects, be politically explosive. If one takes income differentials in agriculture alone, the various measures of transfer payment, if these were spelt out to the public at large they would in many respects be politically explosive.
This is the kind of survey which the Minister for Finance should commission from the ESRI or indeed have done within his own Department. It is something which would prove very useful. We have had nothing of this nature since the general Commission on Income Taxation. It is tragic that we do not have information made available to the public. Deputy FitzGerald also pointed out that there is need for an analysis now on the effect of local taxation on incomes generally and on the means of payment of tax revenue.
I understand that one is not permitted to talk about revenue accruing from social security. The only comment I shall make on that is that the fact that one is prohibited from alluding to such revenue pinpoints not only the primitiveness of the conventions of the House but also the very marginal regard we have had in this country for the extent of social security contributions into general revenue. This is a serious issue of principle to which we do not pay sufficient attention. If I may make one comment on it—I ask the indulgence of the Chair—contributions paid by employers represent only 1? per cent of GNP whereas in Denmark and France the figure is 13 per cent and 10 to 11 per cent in Italy and the Netherlands. In Belgium, Germany and Norway the figure is between 6 and 7 per cent. It is ironic that in the UK contributions by employers into general revenue are in the region of about 3 per cent whereas in Ireland they are 1? per cent. In Ireland we contribute, as employees——
The Deputy is going on now to develop the point.
I am finished with the point but I think the point is entirely relevant. I should like to refer to estate duty. I suppose it is not politically profitable, in a constituency such as Dún Laoghaire-Rathdown, to say that I accept the good intentions of the Minister in this matter because there is no doubt that it has been an area of serious tax evasion for many decades. In equity and in conscience, particularly speaking from the Labour Party point of view, one must defend the Minister for his efforts to close off serious legal devices for the evasion of estate duty. I am referring particularly to estates in excess of £100,000 and upwards. This is a matter on which the Minister deserves the support of the House.
The Minister should give very special attention to anticipatory land speculation. It has certainly been noticeable that, in anticipation of entry into the EEC, there have been a number of land speculators operating quite openly in the country, for the most part, I would stress, of Irish nationality, and now buying up substantial tracts of land in the hope of making straight-forward capital gains from such property in the mid-1970s. The Minister should pay close attention to this. There is a great deal of—I will not call it national hypocrisy—indulgent breast-beating about such speculation. Speculation is engaged in openly by Irish people and not necessarily by people from Britain or the Continent. Therefore this speculation should be considered in its native perspective.
We in this House may talk and continue to talk about sources of revenue. Annually we analyse the Finance Bill but, by and large, we do not pay very much attention to the public staff who have to implement our tax laws, supervise the collection of the taxes and make sure that they are collected efficiently, democratically and with the minimum of public inconvenience. I am profoundly dissatisfied with the conditions of the staff of the Revenue Commissioners. Physical working conditions are very important but they are matters that could be remedied overnight. The staffing structure should be geared towards ensuring the maximum revenue intake and towards giving guidance and assistance to the public. If a computer breaks down everyone loses his nerve, but if 20 of the staff have nervous breakdowns in a year nobody seems to bother very much.
As we are facing the introduction of a value added tax and the problems which were quite evident during the introduction of the turnover tax, the Minister should pay attention to the staffing requirements. He should devote an increasing amount of his time to assisting the Revenue Commissioners in this regard. This is the first occasion on which I have spoken on a Finance Bill and there is one question I should like to ask the Minister. He has the power to direct the Revenue Commissioners to permit duty-free entry of goods into the Republic. Has there been any internal review of this procedure? In the light of the events of the past two years, and particularly in the light of the evidence given by the former Minister for Finance during the Arms Trial, and the various statements made by the Secretary of the Department of Finance on the administrative procedure, in the public interest I feel I must ask the Minister if there has been any Government or departmental review of the role of the Minister for Finance with regard to duty-free entry of goods.
I want to place on record that I felt that the Revenue Commissioners were placed in a highly invidious position vis-à-vis the Minister, particularly in relation to that incident. I am seeking an assurance from the Minister that there is not even a remote possibility of such a thing happening again in the future. Such authority should not be vested in the Minister, in my opinion, except in the gravest circumstances. I am putting that to the Minister on a direct basis.
A very high consumption of alcohol and a fairly substantial maintenance of cigarette consumption and, indeed, buoyancy of incomes in general has led to revenue buoyancy. One of the remarkable aspects of the whole structure of our revenue is our dependence on the traditional sources of taxation, alcohol and cigarettes. There are, perhaps, lessons to be learned in this regard.
These are my views on this Finance Bill. I have not found it very encouraging. I have been very depressed over the past 12 months. The more one comes into this House and has to suffer the views of some of the Government backbenchers on Bills of this nature, notably the contributions of Deputy Burke and Deputy Dowling this afternoon, the more one tends to admire the public servants who have to sit through hours of this kind of approach and who are allowed neither to talk nor to smile and have to keep their private thoughts to themselves. It often tickles me when I wonder what precisely they think about when such contributions are being made.
It is interesting to know what depresses or what tickles the fancy of Deputy Desmond. I suppose this knowledge is of some benefit to us and perhaps we will put it to good use at some time in the future. However, I would not have thought that it was particularly appropriate to the Finance Bill, 1971.
In my Budget statement of 28th April, I referred to the three major problems with which our economy is faced. These were the rapid rise in prices, the large balance of payments deficit which covers, of course, the whole aspect of inflation, and the slow rate of growth in the economy which last year was considerably below our potential. This year's Budget was intended to tackle these problems in different ways. First, by reducing the rate of public expenditure, secondly, by ensuring that the tax increases required to produce a balanced Budget would have a minimal impact on prices and, thirdly, by encouraging investment and expansion of industry through improved tax allowances. The budgetary improvements in the different forms of assistance to farmers as well as helping to improve farm incomes directly were designed also to promote certain lines of agricultural production that have good prospects and to assist us in the modernisation of equipment. In this connection I might say, without in any way purporting to be condescending, that Deputy O'Higgins's contribution was one of the most constructive speeches that I have heard him make. Deputy O'Higgins laid great stress on the necessity, in view of the imminence of entry to the Common Market, in encouraging agricultural production in many areas where we could reap the rewards. I would not disagree with that view but I would suggest that the combination of encouragement that is being given plus the very substantial encouragement of better markets and better prices should operate to ensure that our farmers will avail themselves to a very great extent of the opportunities offering.
I have always held the belief that our farmers were very efficient and had the raw materials and the soil that were far superior to that of many of our prospective competitors, and that given a larger market without the prospect of a drop in prices they would produce more and certainly would produce very efficiently. I am sure that entry to the EEC will demonstrate this.
Before going on to deal with details of the debate I am dealing with the Bill in a very general way. Deputies did refer to the general economic situation. I shall deal with that first. The main thrust of this year's Budget was related to the steps being taken to control the growth of public expenditure. The action that was involved in this was described in the Budget speech and again in my reply to the Budget debate.
Therefore, I do not wish to go back over that ground again but I do wish to reiterate that the Government have made a very firm effort to cut back the rate of growth of the Budget to a level close to that which could be supported by the growth in revenue. This course did entail difficult decisions in relation to the pruning of Estimates, in the postponement of new and desirable schemes but it renders it possible for us to avoid the adverse effects of a too steep increase in taxation and an over-rapid growth in Government expenditure. I outlined also for the House the different procedures we are adopting now with regard to block allocations for Departments, and so on. This, also, will be of some importance in that it should ensure a tighter linking of outlay with revenue availability. This should have a stabilising effect and help to ease inflationary pressures.
Deputies have criticised this Finance Bill on the grounds that it provides too little relief for some sections of the community and places too heavy a burden on other sections. Basically, this is a very old problem—a variety of claims for easements in taxation and, at the same time, demands for increased expenditure. It is a perennial problem in debates of this kind. It has been referred to by speakers on this side in particular. Of course, the Government would like to be in a position to provide additional income tax reliefs for those on the lower rungs of the income tax ladder and, at the same time, to allocate additional resources to industry, including the agricultural industry, by way of further grants and tax reliefs. However, at any one juncture there is a limit to what can be done. To give an example, it would cost £5½ million in a full year to increase the single and widows' personal allowances by £20 and the married allowances by £40. I think Deputies will agree that the figures I have mentioned——
The figures are worth checking because they are not correct.
That is interesting. Deputy Tully must have a built-in special computer that is superior to those available to the Revenue Commissioners.
That has been tried before.
I was about to make the point that the figures I have mentioned—£20 and £40—are not exactly astronomical but the overall result gives an idea of the kind of problems with which any Minister for Finance is faced in trying to give reliefs to the lower paid sector and, at the same time, to stimulate production on the part of industry and agriculture and distribution—the sectors of the economy which enable any improvements to be made in our social services in general.
There was reference in particular to what one might say is becoming an old friend of ours. That is the subject of company taxation. Again, I do not wish to go over all this old ground but there are some things I must say in response to some of the arguments that were made. In referring to this question a number of Deputies referred also to the position regarding taxation of companies in Britain and to the position in EEC countries and in other applicant countries for membership of the EEC. I should like to remind the House, first, that when the increased company taxation was introduced last autumn it was necessary to take a substantial step towards balancing the Budget. Deputies will recall that, even allowing for the steps then taken, we still had a projected deficit of nearly £9 million. But, also in the context of the steps which had to be taken at that time, this taxation could be regarded as being merely fair socially, as being just and helping to avoid increases in prices. In the context of the dire need to combat inflation, I do not think that companies could have expected to get off scot free from additional taxation, leaving the burden of additional taxation to be carried by salary and wage earners and other sections of the community. All of the community must play their part in this. There cannot be any exception made for companies.
The only case one can make for companies in this regard is that if one taxes companies unduly one may prevent their growth and thereby damage the economy in general. I propose to deal with that in a moment but I should like to correct the mistaken view that the average company in Ireland pays much more tax than its competitors abroad. Leaving aside altogether the effects of the very liberal tax incentive reliefs available in this country, a company with taxable profits of £100,000, 40 per cent of which are distributed, bears an effective rate of tax in the following countries at the following percentages: in Belgium, 36 per cent; Norway, 39 per cent; Britain, 40 per cent; Ireland 44 per cent; United States of America, 45 per cent; The Netherlands, 46 per cent; Canada, 47 per cent; Sweden, 51 per cent; Germany, 57 per cent. Our position in this league would be nearer the top of the table if account were taken of the tax incentive reliefs such as export tax relief and capital allowances.
Some Deputies in talking about this matter have chosen to ignore these incentives and allowances and in particular they have chosen to ignore the sections of this Bill providing for additional incentive reliefs for investment that will cost the Exchequer some £3 million next year and £6 million in the following year.
The recent reduction in bank lending interest rates for productive enterprises and the additional credit being made available as a matter of priority for financing investment in these productive and competative enterprises will argument the effects of the tax reliefs that are provided for in this Bill.
As regards the position of Irish companies vis-à-vis those operating in Britain in particular—I have dealt with this before but Deputies have come in again in this debate and again have quite unrealistically simply compared our effective maximum rate of 58 per cent with the British corporation tax rate of 40 per cent. This is quite unrealistic because such a comparison does not follow through to the position of the shareholder. In the case of the Irish company, when it has paid its tax, the shareholder pays no further income tax but when the British company pays the corporation tax the shareholder will have to suffer an additional 38.75 per cent on the dividend.
It still ends up 49 per cent as against 58 per cent.
This depends on distribution, as the Deputy knows. Since Irish companies can deduct income tax on payment of dividends their net effective tax rate can be reduced, in fact, well below 58 per cent.
But, if you take the company on its own, first of all, I think it can be stated generally that with a distribution of profits at a level of about 50 per cent of pre-tax profits, the rate of tax effectively borne by an Irish company will be almost the same as the British corporation tax rate, that is, 40 per cent. If the rate of distribution is lower than 50 per cent the rate of Irish tax borne by the company is higher than the British corporation tax rate. If the rate of distribution by an Irish company exceeds 50 per cent, then the rate of tax which it actually suffers is lower than the British corporation tax rate.
I have been talking heretofore about the position of the company alone but if we take the company and the shareholder together the Irish tax charge will remain constant at 58 per cent no matter what the distribution is but the British tax rate will rise from 40 per cent where there is no distribution to 63.5 per cent where there is full distribution. Even where there is no distribution of profits the recent increase from 50 per cent to 58 per cent in Irish tax should not adversely affect expansion by the bulk of our Irish companies because, as I say, of an effectively reduced tax burden arising out of such things as export tax reliefs and the liberal tax allowances I have already referred to.
I would remind Deputies that the estimated yield from the increased tax on companies in a full year is £6 million and that the estimated cost of the free depreciation plus the 20 per cent investment allowance in the designated areas provided for in this Bill in the second year of its operation is £6 million. I should like Deputies to think about this. What we are doing in effect is that we are directing the relief to companies which are investing their profits in expansion.
The case has been made against the 58 per cent tax that we are preventing people from investing, that we are not giving them any inducement to invest and are taking away the money they might otherwise invest. I would suggest to Deputies if they consider this matter in the light of the provisions of this Bill, the free depreciation plus the 20 per cent investment allowance in the designated areas, they will agree that that case falls down, whatever other case can be made against the 58 per cent, because companies which want simply to distribute their profits, and not to reinvest, should in my view be subjected to the same kind of burden that had to be imposed on all sectors last autumn and in the present Budget. As I indicated earlier, there is, of course, a strong case to be made for companies which are prepared to invest in re-equipment for expansion and that case is being specifically met in this Finance Bill. What we are doing is, we are, if you like, increasing the taxation on companies which are not reinvesting but we are providing very specific and very valuable reliefs for companies which are prepared to reinvest their profits in expansion and in re-equipment. Effectively, the free depreciation provision amounts to reduction of expenditure on particular pieces of equipment and machinery in the year in which the relief is given by 58 per cent. This, I think any Deputy will agree, is a very substantial and worthwhile inducement to companies which are prepared to reinvest their profits and these are the companies in which we are interested, these are the companies which in my view deserve special consideration. Companies which are not doing this have to be treated in the same way as anybody else and their fair share of the burden imposed on our whole economy especially arising from the inflationary situation in which we find ourselves. If one takes account of that and of the already existing allowances, such as the export tax relief and other allowances which exist I think it will be found that companies operating in this country which are ploughing back profits are not by any means being badly treated or are lacking in inducements to expand.
In connection with death duties, I said in my opening speech that there is, in effect, virtually no tax on wealth in this country except by way of death duties. Consequently, I was somewhat amazed at the welter of criticism from the opposite benches when I proposed to make this one tax on wealth effective. Because of avoidance and evasion, there is every reason to believe that our death duties are only marginally effective on the distribution of wealth here. In addition, our maximum rate of 40 per cent is so significantly less than the combined rates of estate duty and gift tax in other countries that it is significantly less than what is chargeable in many other countries.
In Britain, the maximum rate of estate duty is as high as 80 per cent. In general, the new rate proposed in this Bill is lower than the corresponding British rate. Except for a narrow band, and where the property does not pass to a widow, whether she has or has not dependent children, our rates are lower than in Britain. As Deputy O'Higgins pointed out, the rate of estate duty charged on agricultural land in Britain is 55 per cent of the ordinary rate applicable to the ordinary estate but in this country there is a special method of valuing agricultural land by reference to its rateable valuation under which the land is not assessable to estate duty if when it is valued on the artificial basis the net value of the estate does not exceed £2,000.
I do not wish to refer to the position of farmers in Britain but the position in this country, certainly according to the evidence available to the Revenue Commissioners, is that duty was on average in recent years paid in respect of not more than 100 farmers' estates annually. That is to say, that less than 4 per cent of the average number of cases in which estate duty was charged in recent years were farmers. I do not think we could be more generous to farmers unless we were to treat them as in the case of income tax and provide that they do not pay estate duty either.
The Minister knows what the value of an acre of land is in most parts of the country.
The Deputy must not have realised what I said about artificial valuation. It is 25 times the poor law valuation less the redemption value of the annuity less any debts due by the estate. A man can have a substantial overdraft and he can get away without paying any duty on an estate worth £80,000 or £100,000.
If he does not have any money and wants to sell any part of it in a short period after the death, what happens?
The whole principle involved in estate duty legislation is that in the case of land there is a strong case for encouraging its continued use, and that is precisely what we are doing. Is there any good reason why somebody who inherits or is given a gift of land and decides to cash in on it, to sell it at a high market value, should not have to pay estate duty? Does not everybody else pay?
If he gets a gift of land and has no money, surely he must get money from somewhere, he is stuck and the Minister knows it.
Anybody else who has property like this, first of all, will not get the benefit of the artificial value and he will pay on the market value. Whether he sells or not he will have to pay. I do not see why somebody who gets land left to him or has a gift of land and who is not prepared to work the land but sells it at a high market value should not pay. He is cashing in at a highly increased market value. Unlike anybody else, he would not have to pay unless he sold the land.
At the price land is making at the moment a concession of £2,000 is not much.
The provision will not apply if the land is not sold within six years. There were a number of references to section 40 in connection with a gift on marriage and I was somewhat disappointed, in view of the various references that were made on the Financial Resolution, and the criticisms outside the House, that Deputies did not give their opinions. Frankly, I have a reasonable mind on this. I would prefer to be flexible on it. I said, when introducing the Bill, that there were a number of factors involved and I expected that Deputies would attempt to answer the points I made. I am not aware of anybody who did so and, consequently, I am at the disadvantage that I do not want to repeat what I said, but the suggestion some Deputies made, that the proposals in the Bill in relation to marriage gifts will discourage parents, farmers in particular from making gifts is simply not true. Subject, of course, to the various generous exemptions announced, parents will have positive encouragement to transfer property at an earlier age, when they can expect to survive the five year period. When it is realised that the number of gifts made annually in consideration of marriage is so small, about 80, and that the bulk of those fall within the proposed exemption limits, it will be accepted that the proposal will not impose hardship on farmers or others. We are dealing with a very small number.
Small but very important.
If they are that important should they not be far more numerous?
There is no question that a case has been made inside and outside the House that they are a very important section and the Minister knows it.
I have a reasonably open mind on this but the fact is that there are only about 80 gifts in consideration of marriage each year and the vast bulk of them would be exempt. Therefore, it is a very small proportion. I find it difficult to accept that this is an important matter but, perhaps, on Committee Stage Deputies will give me a little more information. I should like them then to deal with the arguments I made earlier.
Is the Minister not aware that there is difficulty about getting a bank mortgage on a gift because of this proposal.
I would say that is a possibility. One thing that has occurred to me is that, perhaps, there are many gifts in consideration of marriage which never come to our notice at all. I think it is clear from the figures in relation to marriage gifts and the number of farmers' estates on which duty is paid that there must be a great deal happening that does not come to the notice of the Revenue Commissioners, but we are working along that road slowly but surely.
Deputy Bruton complained that estate duty did not differentiate between successors who were closely related and those not related and, therefore, whose inheritance might in some way be regarded as a windfall. This is taking estate duty in isolation from the whole death duty code. Apart from the generous abatement of duty for widows and dependent children a very progressive feature of our estate duty legislation, which does not exist in the North or across the water, the legacy and succession duty provisions, in fact, provide for the type of differentiation to which Deputy Bruton referred. It was also suggested by Deputy Bruton and, I think, by Deputy FitzGerald, although I am not quite sure of that because I came in as he finished on that particular point, that the time the death was a very bad time at which to levy tax because at that time the ownership was in transition and the new owner is dislocated and facing a difficult time. I think there is a very strong case to be made for saying that the time of death is a very good time at which to tax wealth because the man who owned the property has no further interest in it and the person who is getting it normally, no matter what tax he pays, ends up better off than he was before he got the property.
Elementary my dear Watson.
He would feel the tax imposed at any other time more than he would at that time.
If he gets a house and then has to sell it, how is he better off?
He is better off, is he not, than if he did not get the house?
How is he if he has to sell the house?
Is he not better off than if he did not get the house?
How is he if he is living in it and has to sell it according to the regulations the Minister is introducing?
Do you mean if he is a tenant in it and then he is left it?
Yes.
If I were in that position and had the choice of continuing as a tenant or getting it and paying duty I know what I would choose and I know what Deputy Tully would choose too.
What would you choose?
Of course, I would choose to get the ownership of the house. Would not any fool? Of course, if he is a tenant in possession he would not have to sell it at all. He could raise the money.
Where? Who would raise it for him?
Anybody can do that.
I am afraid the Minister is not in touch with things.
I am afraid I am more in touch than Deputy O'Connell who has not a clue.
The former Minister for Finance sold a bit of land and was charged £64,000 by the Revenue Commissioners.
Deputies who have spoken should allow the Minister to speak.
The time of death is a time when money has to be collected in by the representatives of the deceased in order to pay debts and also a valuation usually has to be made of the property for the purpose of distributing it either in accordance with intestacy or whatever the provisions of the will are. It seems to me that this is an appropriate time for duty. The alternative suggestion was made that there should be an annual or, perhaps, a five yearly assessment of the value of the property and that it should be taxed each time. This probably would be more expensive to administer. It would be likely to cause greater disruption than a tax imposed on wealth once only in a generation. I certainly feel that the people paying the tax would feel it a great deal more than those who pay it once when they inherit the property.
The question of value added tax does not, as the House knows, appear in the Bill. I am mentioning it because some Deputies asked why the Bill did not contain any reference to it. As I mentioned in the Budget Statement, the Government issued a White Paper on Value Added Tax at the end of March last. This document set out the draft scheme of the tax for the information of the public and all interested parties. Everybody concerned was asked to make any relevant suggestions they had concerning the scheme to the Revenue Commissioners. Many people and bodies have done so. While it is now past the deadline for that, I want to say any further submissions received will receive careful consideration.
The proposals are designed to enable a changeover from the existing turnover and wholesale taxes to the value added tax with as little change as possible in the incidence of the tax. I consider it desirable not to have any significant shift in the incidence of the taxes at the time of the changeover. When the new tax is fully operational we will give very careful consideration to its operation to see what changes or modification might be feasible or appropriate but in the meantime I think by far the simplest thing is to reduce to a minimum any changes in the incidence of taxation on the changeover.
If your present tax system expires on the 1st December surely you should have explained what is to happen from the 1st of January on in this Finance Bill.
I am sorry, I do not follow the Deputy.
The present tax system, according to the Minister, will cease on the 31st December and the value added tax starts on the 1st January, 1972. How can you propose to cover the period from the 1st January until the new tax comes in?
I was coming to that. The reason there is no reference to it in the Finance Bill is that it will be the subject of separate legislation. I expect to be able to introduce the special Bill dealing with the value added tax before the end of this session and to circulate the Bill during the recess.
Another Finance Bill?
A Value Added Tax Bill.
A thistle by any other name.
No. Deputy Tully ought to realise that this Value Added Tax Bill will be very much in favour of honest taxpayers. It is very unpopular with people who are evading tax at the moment. I am sure Deputy Tully knows that.
Will it be applied to registered marts?
I am coming to that too. This point was raised in the course of the debate and also its method of application with regard to the building industry. Deputies will be aware that there are discussions going on at the moment between various interested parties and the Revenue Commissioners on these various points. I feel quite sure that solutions to the problems raised will be found. I do not think I should at this stage try to anticipate the debate on that Bill by going further into them. The indications are that solutions can be found in so far as problems raised are genuine problems. There are quite a number of genuine problems raised but I would remind Deputies of what I said. The value added tax is extremely unpopular with some people who are at present evading tax. Bear that in mind.
Will the Minister give some examples?
I do not think it is necessary. I am sure Deputy O'Connell, who thinks he is very closely in touch with people, will be able to give you some examples.
Will the Minister assure the House that value added tax will not levy extra taxation on the people?
I have indicated a number of times that the intention is that the incidence of value added tax should be the same as wholesale and turnover tax together. There will of necessity be certain minor variations but the intention is to have it as close as it is humanly possible to get it to the same incidence of taxation.
Can the Minister assure the House there will be no extra taxation?
I told the Deputy in precise terms and I cannot put it any more precise than that. Several Deputies suggested there was not any need to introduce the value added tax certainly so soon because they said that other applicant countries for membership of the EEC had not done so.
I should like to make it clear, first of all, that it is true that in Britain they are planning to introduce the value added tax in 1973, but the remaining applicant countries, that is, Denmark and Norway, already have it. Denmark has it since 1967 and Norway has it since last year. I would further point out that we have the turnover tax and wholesale tax which are quite similar to the value added tax and make its introduction relatively easy. In Britain their problems will be far more difficult in introducing it and they will need a longer time.
What happens if the referendum goes against the Government?
Deputy O'Connell had better start worrying about that.
It happened to them twice before.
(Interruptions.)
Deputies should allow the Minister to conclude.
Comment has been made by a number of Deputies on the rapid growth of taxation and Government expenditure. Deputy Bruton referred to this and compared last year's outturn with the projections of the Second and Third Programmes. All I can say about that is I think we are both agreed that Government expenditure has been rising faster than desirable in relation to our general economic and social position. Indeed, I have devoted no small part of my Budget speech this year to expressing the Government's concern over this problem and outlined the steps which we are taking to align Departmental expenditure plans more colsely with our sources over a period of years.
However, the problem should not be exaggerated. It is important to realise that the level of taxation here in Ireland, including social insurance contributions and using OECD definitions, was 27.7 per cent of GNP in 1968. The percentages for our nine prospective partners in the EEC range from 30.5 per cent to 38.2 per cent. It will be seen from this, therefore, that we are below any of them. This does not mean that we can afford any degree of complacency because taxation levels here have been rising quite repidly and we have no desire to be ranked among the more highly taxed countries. Therefore, effective action will be necessary over the next few years to level off this upward curb of expenditure and as we work up towards a higher level we will operate it in relation to increased growth in our economy.
There were a number of references to the Anglo-Irish Free Trade Area Agreement. I dealt with this at length in the Budget debate and I do not intend to do it now but there are a couple of points I want to repeat. First, would Deputies realise that if any factory closed down which was geared to the export market, whatever the cause of its close down was it was not the Free Trade Area Agreement. By definition it could not have been affected by it. Secondly, they should realise also that while imports from the UK have been rising considerably the rate of increase is not remarkably higher than the rate of increase of imports from other countries.
You have been importing and importing.
Would the Deputy propose to stop that and, if so, which imports and how? It is a pity he did not tell us that when he was speaking.
There was an adverse trade balance of £33 million in the first five months of this year. That is very serious for this country. What does the Minister propose to do about it?
Let me worry about that.
The country must worry.
That is the trouble. You will not be there much longer.
You said that too often before. We are getting tired listening to that one. I will be here all right. I may point out, if not modestly, at least I hope with some truth that I am doing something to get our economy on its feet and that the contribution from Deputy Collins was not very helpful in that regard.
(Interruptions.)
Would Deputy Collins resume his seat? Would the Labour Party members please give the Minister a chance to reply?
The economy is down and down very badly.
Would the Deputy like to take a bet on that.
Some 70,000 unemployed. Fixing of the figures brings it down to 50,000.
There were 100,000 unemployed when you ran away.
What was the emigration at that time?
60,000 a year.
Do the Deputies know what it is at the moment—7,000?
We know the Minister has to talk until half past ten but let him not waste the time of the House.
He is watching the clock.
I want to make sure I do not go over my time. When talking about the free trade area agreement I should like Deputies to remember that there are many firms in this country who have substantially increased their exports to Britain. If you look at the overall balance you will find it cannot be said by any means that the balance of advantage is with the UK. I would remind Deputies also of the terms of the agreement which provide adequate safeguards for the protection of firms and industries which are threatened by the agreement. Following the general review of industries which is going on in discussions with the British authorities, we may exclude from the operation of the agreement goods accounting for 3 per cent by value of total imports from the UK in the year ended 30th June last.
How will that help us?
Somebody might explain it to the Deputy.
What about textiles?
There are also provisions which enable us to take temporary steps to deal with problems as we did, say, in the case of Dunlops. I merely reminded Deputies of the facts. I know that Deputy O'Connell does not like the facts, but he is going to get them anyway. The Deputy talked about footwear and textiles. Does he know that the textile industry throughout the world is suffering badly at the moment? Does Deputy O'Connell know this?
Of course, he does.
Good.
I have learned a lot from the Minister.
Then maybe he will not allege that the textile industry in this country is suffering as a result of the free trade area agreement. If the Deputy looks at the record for the footwear industry he will find that quite a number of factories closed and people were put out of work in the footwear industry in this country at a time when we had a very strict quota which allowed in roughly 5 per cent or less of the total consumption of shoes in this country. The reason for that has nothing to do with the free trade area agreement at all. This was happening under virtually solid protection. It is due to the nature and structure of the industry. It does not make life any easier for those who are being laid off, but do not let us mislead them by saying it is due to the free trade area agreement.
I hope the Minister is around when all the factories are closed. He is marvellous. He will justify everything in the Common Market.
Maybe the Deputy does not like the facts. I have just given them to him. If he can controvert them I shall listen to them. If he cannot, let him stay quiet.
The Deputy advocated the closing of Player Wills.
Of course I did and I would advocate it again.
What about the unfortunate people who were employed there?
(Interruptions.)
The Deputies who are interrupting have already spoken.
There are a few specific points with which I want to deal. First of all, Deputy Tully referred to "lumpers". Deputy Tully was talking about "lumpers" who were engaged in the delivery of materials to building sites or whose activities were confined to cutting the grass or refuse collection and who were subjected to the deduction of tax. The Deputy said that this was so particularly in the case of local authorities. The position is that unless the sub-contractor participates in the actual carrying out of construction operations payments which are made to him are not subject to the deduction of tax.
Does the Minister tell me that?
May I finish please? We have explained this to local authorities who apparently did not understand it.
Your Department did not understand it at first.
It is not my Department.
Is the Minister aware that despite the Bill in connection with the "lumpers" which we spent so much time on his Department are refusing to issue certificates to people who are only labouring—the real "lumpers"?
I am coming to that. That particular complaint on which the Deputy is speaking was well founded not only in his own county but in a number of counties because apparently there was some misunderstanding on the part of the local authorities. It has been explained to the local authorities. I understand it should not happen again.
With regard to the other point raised by the Deputy, I would remind him that substantially "lumpers" were people supplying labour only. These were the people at whom the section was directed. They were the people evading tax. Consequently the broad policy is to refuse a certificate to "labour only sub-contractors" who in general are more or less itinerant tradesmen operating from their homes or from lodgings or who move around frequently. Generally, they are refused the certificates. There are some cases where certificates are granted where, for instance, the sub-contractor has been charged to tax under Schedule D on the basis of regular returns or where the business is on such a scale that there could be said to be an established base of business. The effect of the policy which I outlined is that thousands of "labour only sub-contractors," particularly in Dublin, Cork and Limerick, have gone back into the PAYE system where they should have been in the first instance. They are now stamping cards and there are not the same problems with them as before. I do not wish to quote any figures although I will be able to do so at the end of the financial year. Deputies will be surprised when they hear what the effect of all this has been. They will be surprised when they learn of the extent of the revenue which would be lost as a result of our failure to get after these people.
The Bill about "lumpers" passed through this House. There is no section in the Bill which says that "labour only sub-contractors" will be refused a certificate. A number of them are suffering hardship. A number of workers have gone back to England because they would not work when the employer held 7s in the £ of their money. If the Minister could make them stamp cards that would be a great move but those working the system should not be included. They are simply emigrating.
These are the people at whom the provision was directed. They are the people who should have been under PAYE and stamping cards. They devised this method of avoiding tax and avoiding the social welfare contributions. This led to many problems when they became sick.
A number of these people who are sub-contractors hire a group of people to do their labouring work. These people are being refused certificates and are leaving.
May I remind the Deputies of the provision in the former Finance Bill under which they can get their refunds regularly? I have heard of no delays.
They must wait a month. One can afford that if one has an income behind one.
These people are trying to evade the ordinary liabilities carried by their fellow-workers.
A Bill has been passed to cover these people and now they are being excluded. That is my objection.
We passed a Bill to bring them into the tax net and we have been very successful in this.
This Bill was passed for the "lumpers". The Minister is excluding the "lumpers" now.
Deputy Bruton raised a query as to whether sections 16 and 17 of this Bill were for the first time providing that over payments of tax arising on the determination of an appeal by the Appeal Commissioners of the Circuit Court would be repaid with interest at the same rate as applies to overdue tax. The answer to the query is "Yes". This is a new provision. It is a fair one. Anything that operates in favour of the Revenue Commissioners as regards interest should also operate in favour of the taxpayer where the positions are reversed. It is on that basis that I introduced these two sections.
Some Deputy queried the cost of removing the charge to stamp duty on bills of exchange and cheques. I understand that the cost would be somewhere between £500,000 and £600,000.
I hope that I have dealt with the main points raised. As a number of Deputies have said there are some points which can more appropriately be discussed on Committee Stage. By and large, I have dealt with the main points raised. The more specific points can be better dealt with on Committee Stage.
One final question on the issue of certificates. The Minister said that in almost every case they are refused.
In most cases, certainly.
Is that because they have not headed billheads?
No.
What magic formula have some people who can get certificates while supplying labour only?
An established place of business. That does not mean a fellow in digs somewhere using that address. It does not make any difference whether he has headed notepaper or not. People can avoid a great deal of trouble if they would make returns in the normal way.
Is the Minister aware that most of these people are people who take on a job on a building site and work on it for a month or two months in a group of six or seven with one ganger and they split up the money? If one-third of the money is retained by the employer and passed to the income tax people what they have left is two-thirds of the money and this is not enough to pay for a man's keep and to keep his family at home as well. Surely that should be covered by the Bill passed in this House?
They were the people at whom the section was directed. The section is operating successfully. It makes people go into the PAYE system.
It will be a good idea to get them back to stamping cards.
That cannot be done without having them under PAYE.
Question put.
The House divided: Tá, 56; Níl, 48.
Tá
|
Aiken, Frank.Allen, Lorcan.Blaney, Neil.Boylan, Terence.Brady, Philip A.Brennan, Joseph.Brennan, Paudge.Brosnan, Seán.Browne, Patrick.Browne, Seán.Burke, Patrick J.Carter, Frank.Childers, Erskine.Colley, George.Connolly, Gerard C.Cowen, Bernard.Cronin, Jerry.Crowley, Flor.Cunningham, Liam.Davern, Noel.Delap, Patrick.de Valera, Vivion.Dowling, Joe.Fahey, Jackie.Faulkner, Pádraig.Fitzpatrick, Tom (Dublin Central).Foley, Desmond.Forde, Paddy. |
Gallagher, James.Geoghegan, John.Gibbons, James.Gogan, Richard P.Haughey, Charles.Healy, Augustine A.Herbert, Michael.Hillery, Patrick J.Hilliard, Michael.Hussey, Thomas.Kitt, Michael F.Lalor, Patrick J.Lemass, Noel T.Lenihan, Brian.Lynch, Celia.Lynch, John.McEllistrim, Thomas.Molloy, Robert.Moore, Seán.Noonan, Michael.O'Kennedy, Michael.O'Malley, Des.Power, Patrick.Sherwin, Seán.Smith, Michael.Smith, Patrick.Timmons, Eugene.Wyse, Pearse. |
Níl
|
Barry, Richard.Begley, Michael.Belton, Luke.Belton, Paddy.Bruton, John.Burke, Joan.Burton, Philip.Byrne, Hugh.Clinton, Mark A.Cluskey, Frank.Conlan, John F.Coogan, Fintan.Cooney, Patrick M.Cosgrave, Liam.Creed, Donal. Kenny, Henry.L'Estrange, Gerard.Lynch, Gerard.McLaughlin, Joseph.McMahon, Lawrence.O'Connell, John F.O'Donnell, Tom.O'Donovan, John.O'Hara, Thomas. |
Crotty, Kieran.Desmond, Barry.Dockrell, Henry P.Dockrell, Maurice E.Donegan, Patrick S.Dunne, Thomas.Enright, Thomas W.Esmonde, Sir Anthony C.Finn, Martin.Fitzpatrick, Tom (Cavan).Flanagan, Oliver J.Fox, Billy.Governey, Desmond.Harte, Patrick D.Jones, Denis F. O'Higgins, Thomas F.O'Leary, Michael.O'Reilly, Paddy.O'Sullivan, John L.Ryan, Richie.Taylor, Francis.Thornley, David.Timmins, Godfrey.Tully, James. |
Tellers: —Tá: Deputies Geoghegan and S. Browne; Níl: Deputies L'Estrange and Cluskey.
Question declared carried.
Next Stage?
Could we order it for next Tuesday and let the Whips agree on the most convenient date?
The Minister will circulate his amendments?
Yes.
Committee Stage ordered for Tuesday, 29th June, 1971.
The Dáil adjourned at 9.50 p.m. until 10.30 a.m. on Wednesday, 23rd June, 1971.