Deputy O'Donovan may be interested to know that subsection (2) has been drafted on the basis of a complaint which he made at this stage on the Finance Bill last year. It is designed to meet with his objection.
Committee on Finance. - Finance Bill, 1971: Committee Stage.
Question proposed: "That section 1 stand part of the Bill."
Thank you very much.
Question put and agreed to.
SECTION 2.
I move amendment No. 1:
In page 4, lines 32 and 33, to delete the words "or any subsequent year of assessment".
Before I discuss the amendment would the Minister indicate the amount of money involved in relation to section 2?
About £5½ million.
Section 2 is a taxing section which alters the Financial Resolution we passed this time last year when relief was given to people in the lower income tax bracket. It provived that the first £100 of taxable income would bear a lower rate of taxation and 12 months later this is now being removed. The Minister has said the involvement is in the region of £5 million. This means that in effect a poll tax of roughly £1 per month is being imposed on every single wage earner.
It has been an aim of taxation, although bureaucracy at times has prevented this, that taxation should have an impact in accordance with the means of the taxpayer to pay. This is a classic example of a breach of that convention because under section 2 the richest man in the land pays precisely the same amount of additional taxation as the lowest paid worker within the income tax net. I do not understand the basis for this section. If it was a fair and proper amendment of our law to introduce this last year why after 12 months experience should the benefit being given in particular to lower paid workers be ended? Is it indicative of a change of social policy by the Government? In the 12 months we have had a change of Minister; does the disappearance of the former holder of this office mean that we are going back to a position in which the Revenue Commissioners, having had a concession passed by Dáil Éireann last year, are now back in control?
We have had in relation to Finance Bills over the last five or six years much evidence that successive Ministers for Finance have been so many puppets on a string, more or less induced to operate and to speak a language which is the operation decreed and the language prescribed by the Revenue Commissioners.
I should like an explanation as to why section 2 is put into this Finance Bill, why a concession given universally to taxpayers last year is now repudiated and ends and why we embark now on the imposition of a capitation tax which applies irrespective of the income, irrespective of the fortune or the property of the taxpayer concerned. My constituents in St. Maelruan's Park in Tallaght and my constituents who live in Ardilea and Mount Merrion each will be presented with exactly the same tax bill. I think it is socially unjust.
Except, as Deputy O'Higgins said, that it was a different Minister who introduced it, I cannot understand why this change should be made. We all remember the song and dance made about the concession last year. We remember that the Taoiseach, who introduced the Budget, felt that it was good social legislation to introduce something like this and if it was good social legislation last year, the reversal of it this year must be bad social legislation.
A number of figures have been given by the Minister in the House in relation to this and other taxation. He must remember that yesterday during Question Time he said that the figure which represented the extra amount of money which would be saved would be, if I remember correctly, the same as he said in the Budget—£6 million. He now says over £5 million. In regard to the amount of concessions which have been given, which, in fact, was being used as an excuse for taking this away, he corrected me; I said it was £2 million; he said £1 million. I take his word for that. So that, if my argument is correct the workers of this country are being fined a net £5 million because the Fianna Fáil Government changed their Minister. That appears to be what has happened.
There were a number of other figures given by the Minister, including the number of extra people who would be out of the tax net as a result of certain concessions given but, no matter how we look at that, they represent only £1 million in taxation. I am sure the Minister knows of all the people who have come into the tax net because of wage increases last year and the year before and this year. I am sure he will take my word for it that as a trade union official I have negotiated wage increases on the bare amount necessary to keep a family in frugal comfort. It is no comfort to these people to be told that because the Minister for Finance decided so, they will be paying between £11 and £12 extra taxation this year. It is rather stupid that this sort of proposal should be made and to say that it is to continue, as if it were just an experiment last year, an experiment that failed. It is entirely wrong. If the amount coming in in income taxation were dropping or re-remaining static I could see some reason for an effort being made to bring people back into the net or to force those already in to pay more but, again if my figures are correct, last year the figure had risen to £129 million and it is estimated that in the year 1971-72 the amount which will be taken in income tax will be £141 million. Yet it was decided to take away this minor concession of £11 to £12 per person paying income tax.
Again at Question Time yesterday, there was a query to the Minister about the impost this was on people who had not been notified for approximately a month about the extra taxation and the Minister asked what have they to complain about, that all they have to pay extra at the end of a month is £2.93, forgetting that this was in addition to the taxation they were already paying. To my knowledge many people have been paying over £3 per week and £2.93 on top of that brought their income tax deduction for one week to £6 out of a wage of £18 to £20. Then they could pay their rent and their fares to and from work and pay for their meals out and for replacement of clothing and for the tools they are using. They certainly would not go to Bermuda with the balance. It is wrong that the Minister should have introduced this section and if at all possible the section should be taken out of the Bill.
Deputy O'Higgins and Deputy Tully profess not to understand——
We understand all right.
——why this was done. They know very well, as Deputy Tully said, but for the record let me just remind them of what I explained at considerable detail in the Budget Statement, that was, that the reliefs involved in the Budget cost £29¼ million approximately; it was necessary to find the money to pay for these reliefs. For the reasons which I outlined at that time, I was obliged to find the main portion of this additional money from income taxation. That being so, effectively, the choice with which I was faced was either to do what is involved in this section or to increase the standard rate of income tax. I—not the Revenue Commissioners but I— decided on balance that this was the better course for a number of reasons which I do not think I need detail now. But, although Deputy Tully made a passing reference, Deputy O'Higgins made no reference at all to something that must, of course, be taken into account when considering this matter, that is, the increases which were announced in the Budget and provided for in this Bill for the minimum earned income relief, age relief and small income relief, the effect of which is to benefit the lowest income taxpayers and to take out of the tax net altogether about 20,000 people and to reduce tax liability for 40,000 people, all of whom are in the lowest income bracket. If one is talking about social policy, one cannot in all honesty talk about it without referring to these facts.
Maybe Deputy O'Higgins or Deputy Tully would think that rather than do this we should have omitted a number of benefits in the Budget. Perhaps they would like to tell us what these benefits are that should be omitted or, alternatively, if they think we should have had these benefits, perhaps they would tell us what alternative method they would see by which this sum of money could be raised.
The late Deputy Lemass said that it is the Government's job to bring out the Budget and the Opposition's job to criticise.
In the absence of such suggestions it is quite clear that dealing with the practical situation with which we are faced there was no alternative to this.
Of course there was an alternative. What is the Minister saying? There was an alternative and that was to put this burden on those best able to bear it and it is a matter for the Minister for Finance and his advisers and the Government to work out that policy. It is socially wrong to impose on every single person irrespective of his means, his property or his fortune, precisely the same level of taxation. It is socially wrong.
This was a concession given last year and there is no other example that I can recall in recent years of a concession given and with the rejoicing scarcely ended the concession being withdrawn by the Minister.
The Minister fiddles with figures in respect of the numbers paying income tax. He talks about having taken 20,000 people from the income tax net. In other words, he says there will be 20,000 fewer people paying income tax this year. Of course that is not the case at all.
I did not say that.
Of course the Minister did not say it but he inferred it.
The Deputy is putting words into my mouth.
The fact is that many more people are paying income tax this year than heretofore because, despite the fall in the value of money, there have been no changes in the allowances; on the contrary, the allowances have been reduced this year. This is a discreditable manoeuvre. The Minister asks from where he would get the money. Let me tell him what would be my favourite target——
I would be interested to hear from where we could get £5 million.
Without the slightest trouble, this revenue could be got from those big farmers who run racehorses and own Mercedes cars. I am not keen on taxing people who cannot afford to pay tax and there are many people now paying tax who cannot afford to do so, for instance, women working in laundries or, say, girls working in shops and who are well below the subsistence level. Let the Minister not fool himself because he and the Revenue Commissioners must be well aware of the fact. It is outragous that income tax should be levied on people whose incomes are, roughly speaking, equivalent to an income of about £2 before the war. In 1939 nobody would have dreamt of taxing people with an income of only £2 per week. The allowance then was £3 per week. Why cannot the Minister and the Revenue Commissioners be honest and have some decency in this regard? The concession given last year —the first for many years—was introduced with a fanfare of trumpets but this year that has been taken away under the pretence that there is no other source from which the revenue could be collected. The Government are engaged in such colossal wasteful expenditure that it was not sufficient for them that income tax, as shown in the White Paper, was up from £112 million to £132 million and, according to the Minister, is now up to £140 million.
£141 million.
In this context, £1 million does not concern me unduly.
If the Deputy does not want £1 million he can give it to me.
The Minister who, in many ways, is an honourable and honest man, knows very well that this imposition of income tax is shameful. Why, then, can he not get his Department to control the expenditure of Departments in the way in which it was controlled when the Department of Finance were only one-third of their present size so that income tax might be levied with some regard to the capacity of people to pay?
Our income tax situation must give rise not only to inflation but also to demands for increased wages that might not otherwise be made. The expenditure of extremely affluent people in a community gives rise to disturbances and dissatisfaction within that community. I am not suggesting that the Minister bring big farmers within the income tax code simply because they are big farmers, but I am suggesting that he tax those big farmers whose incomes are big. In our party policy statement we said that we would expect farmers, having a valuation on their land of more than £100, to make returns. We did not say we would tax them. Was that not reasonable? What would be the income of a good farmer whose holdings were valued at £100? If he did not make an income of £20 per £1 valuation, he would not be a farmer at all.
I remember some years ago giving a lift to a boy from Waterford who told me that he was a veterinary student. I asked him what was the average size of farms in Waterford and he told me that the average was 100 acres. In reply to my question as to what farmers would make per acre he said that if they could not get a return of £15 an acre, they should give up farming altogether. Of course, the land around Waterford city would not be nearly as good as the land around Dublin city, for instance. There is a continual increase in income tax in respect of the person who must work manually, in respect of those who work in shops and in respect of the junior clerk in the Civil Service or elsewhere. I take it that the compensation they get is in all cases related to the increases in the cost of living and this means that the value of their net incomes is decreasing. The concession given last year was a feeble effort but at least it was something. However, it has been taken away this year.
I cannot understand how this Government think as a group of men. Of course, the Minister has taken into the income tax net this year more people than were in it last year. He says he has taken 20,000 people from the net but he caught 50,000 more people. Therefore, there are an extra 30,000 people paying tax.
The point made by Deputy O'Donovan is perhaps the most significant in relation to this matter, namely, that this change will put pressure on that section of the population that are most likely to demand increases in wages to compensate for this new pressure. Part of the battle against inflation is psychological warfare. To hurt the people who can and will shout the loudest is inept politically and unjust socially. It was characteristic of this Budget that this lazy way of getting revenue was taken. It is very simple to say "cut out this extra allowance; we have £X more". The Minister accepts that income tax is unjust and that if any other way of raising revenue could be found, such would be preferred. It is implicit in that confession by the Minister that this was a simple way of getting revenue. It was a confession, too, that the Minister was bankrupt of ideas for raising the equivalent in some other way.
In my Budget speech last year, and again this year, I suggested that it was time we considered the introduction of a wealth tax. This form of taxation is desirable socially because it affects people who are best able to pay. It is not a novel tax and neither could it be called a radical tax. It is a form of taxation that is popular in the more extreme capitalist countries of western Europe. It is applied also in the majority of the American States. It is a tax that can be assessed and collected easily. It is a tax that would be difficult to avoid. It could always be checked at death and if it was found that there had been avoidance during the life of the deceased, the matter could then be rectified. The returns from it should be calculable in advance from the records available already in the offices of the Revenue Commissioners. It should be easy for the Minister to assess how much revenue such a tax would bring in. If this tax is practicable, and I see no reason why it is not, it is definitely to be preferred to a tax which hits the weaker section of the community proportionately the hardest.
Section 2 is regressive and bad taxation.
We are on the amendment.
The amendment seeks to nullify the effect of the section and I think that an objection to the section would, therefore, be relevant.
I think the amendment seeks to confine the relief to the present financial year.
The reason for the confinement surely is the bad nature of the tax imposed by the section. It is important to realise that this tax is falling most heavily on that section of income tax payers who have the smallest income and who are least in a position to pay. It falls equally on all taxpayers in relation to the first £100 of their income. Obviously the first £100 of income will be a much more important matter to a person with a small income than it will be to a person with a large income. Therefore, effectively when we are taking the same amount from all taxpayers we are proportionally taking more from the smallest taxpayers because the £100 is a much larger proportion of their total tax and of their total income than it is in the case of the larger taxpayer. This is regressive taxation. It is taxation which is taking proportionally more from the smaller income. Therefore, it is bad taxation.
It is taxation which is the mark of a Government who are not concerned with social justice. The Minister I know comes into this House quite frequently wearing the mantle of a social reformer, a crusader for rights for those in poor conditions. When it comes to practicable proposals we see him in his true light. This is a proposal which shows up the social conscience of the Minister.
It is important to recognise the muddle in Government thinking which is revealed in this section. It is a mirror of many aspects of Government policy. They decide on a measure one year and go back on it the following year. This is a Government who do not know where they are going and are changing their minds from year to year. If the concession was worth giving last year surely it is worth retaining this year? The situation has not changed all that much. If there are difficulties why were they not foreseen when this was being introduced? Clearly there were no difficulties in administering this concession It is merely because the Government ran out of money through their own fault.
It is important to recall the Minister lauding this concession in the House last year. The same Minister comes back this year and withdraws it. The Minister at column 281 of the Official Report of 1st July, 1970, said:
Others have suggested increasing our income tax but far from wishing to increase income tax, which now falls on a comparatively small section of the community and hits persons with low incomes, the Government were satisfied that the time had come when some relief from income tax should be afforded and it was for this reason that the reliefs by way of minimum earned income relief and reduced rate of tax were provided for in this year's Budget.
If those reasons were important enough for the Minister to employ them in his speech on 1st July, 1970, surely they have not lost their force by 1st July, 1971? The Minister again at column 1049 of the Official Report of 14th July, 1970, said:
The two-third reduction is costing £7 million. The Deputy mentioned that he did not think much of the release of about 50,000 taxpayers from the net. He thought hundreds of thousands should be released. I would like to be able to do this but we must be realistic. This country has to be run.... We must find money for all these things. I do not think it is unreasonable. We have made this improvement. It is some saving for many people. It releases 50,000 people from the net altogether.
There is the Minister trenchantly defending his social conscience and defending his proposal which one year later he comes into this House to withdraw. Surely this is the stamp of a Government who do not know where they are going?
This is regressive taxation falling on the least well off section of taxpayers. It is the withdrawal of something which was granted last year. It indicates that the Government do not know where they are going and are foostering—having a proposal one year and withdrawing it the next year.
My objection to this section stems from the way it is operated.
We are dealing with the amendment, Deputy, at the moment.
I shall wait for the section then.
Is the amendment withdrawn?
Does the amendment go before the section?
The amendment goes before the section but there can be a division on the amendment if the House so wishes.
What I was trying to solve in the amendment is that this imposition would only be for this year. I suppose we can take it on the section.
The Deputy can reasonably expect the Minister to change his mind again next year.
We are presuming the same Government will be there and that is a very big presumption.
That is a fairly safe presumption.
Amendment, by leave, withdrawn.
Question proposed: "That section 2 stand part of the Bill."
Amended income tax forms were sent out to employers and this resulted in hardship in so far as a relatively large proportion of people's wages were deducted last week. The Revenue Commissioners took all the back tax since the beginning of the financial year in one fell swoop. That was very penal. It should have been spread over a number of weeks so as not to cause workers hardship. The people most affected were single people because it was they who bore the brunt of increased taxation.
Apart from that, I disagree with this section. It is penal, it is retrogressive and it is a regressive form of taxation with which I do not agree.
Question put.
The Committee divided: Tá, 54; Níl, 46.
Tá
- Andrews, David.
- Boylan, Terence.
- Brady, Philip A.
- Brennan, Joseph.
- Brennan, Paudge.
- Briscoe, Ben.
- Brosnan, Seán.
- Browne, Patrick.
- Browne, Seán.
- Burke, Patrick J.
- Carter, Frank.
- Carty, Michael.
- Childers, Erskine.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard C.
- Cowen, Bernard.
- Cronin, Jerry.
- Crowley, Flor.
- Cunningham, Liam.
- Davern, Noel.
- Delap, Patrick.
- de Valera, Vivion.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzpatrick, Tom (Dublin Central).
- Forde, Paddy.
- French, Seán.
- Gallagher, James.
- Geoghegan, John.
- Gibbons, James.
- Gogan, Richard P.
- Healy, Augustine A.
- Herbert, Michael.
- Hillery, Patrick J.
- Hilliard, Michael.
- Kenneally, William.
- 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'Leary, John.
- O'Malley, Des.
- Power, Patrick.
- Sherwin, Seán.
- Smith, Patrick.
- Timmons, Eugene.
Níl
- Barry, Richard.
- Begley, Michael.
- Belton, Luke.
- Belton, Paddy.
- Browne, Noel.
- Bruton, John.
- Burke, Joan.
- Burke, Liam.
- Burton, Philip.
- Byrne, Hugh.
- Clinton, Mark A.
- Conlan, John F.
- Coogan, Fintan.
- Cooney, Patrick M.
- Cosgrave, Liam.
- Cott, Gerard.
- Coughlan, Stephen.
- Creed, Donal.
- Crotty, Kieran.
- O'Higgins, Thomas F.
- O'Reilly, Paddy.
- O'Sullivan, John L.
- Pattison, Séamus.
- Dockrell, Henry P.
- Dockrell, Maurice E.
- Finn, Martin.
- Fitzpatrick, Tom (Cavan).
- Governey, Desmond.
- Harte, Patrick D.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Kavanagh, Liam.
- Kenny, Henry.
- L'Estrange, Gerald.
- Lynch, Gerard.
- McLaughlin, Joseph.
- McMahon, Lawrence.
- Malone, Patrick.
- Murphy, Michael P.
- O'Connell, John F.
- O'Donnell, Tom.
- O'Donovan, John.
- Ryan, Richie.
- Taylor, Francis.
- Timmins, Godfrey.
- Tully, James.
Tellers: Tá, Deputies Andrews and S. Browne; Níl, Deputies Begley and Kavanagh.
Question declared carried.
SECTION 3.
I move amendment No. 2:
In page 4, before section 3, to insert a new section as follows:—
"Notwithstanding anything contained in section 54 of the Income Tax Act, 1967 profits or gains arising from market gardening shall be deemed for the purpose of section 18 of the Finance Act, 1969 to arise from farming."
The Minister will be familiar with this type of case. No doubt he is aware that on several occasions in this House I brought a case to his notice and I was supported by many other Deputies in the matter. It gave rise to a situation where a small horticultural producer was assessed retrospectively.
I pointed out to the Minister that in this instance a man by his industry and hard work had saved sufficient money to buy five acres of land. He had no horticultural qualifications and could be described as a labouring man who had gained experience by working in a part of the country where there was a considerable amount of market gardening carried out. The man and wife worked very hard for a number of years. In addition to producing vegetables the man kept a number of pigs. After much hard work the man found he had sufficient money to buy 32 acres of land and immediately this happened the Revenue Commissioners assessed him retrospectively over a number of years, as they were entitled to do under section 54 of the Income Tax Act, 1967.
As the Minister is aware, under section 54 of the Income Tax Act income from market gardening is treated as income earned from a trade and the man to whom I have referred was treated as though he had earned his income from a trade. In this instance the man achieved everything by his own efforts, he did not receive any grants from the Government or any other source, and this is how he was rewarded.
On the other hand, a farmer can sell 500 acres of wheat and he is not taxed. The person to whom I have referred had a quarter of an acre under grass, and the Revenue Commissioners insisted that he must pay up.
I am asking that provision be made for such people so that they may be encouraged in their efforts to improve their way of life. They should be encouraged to invest in their land and make it viable. They are being deliberately prevented from doing this by our Finance Acts. The Minister may make the case that you can have a very large horticultural concern with large areas under glass and, perhaps, a nursery, but there should be some way to reach the major producer without hitting the small man. A man should be allowed to earn from this kind of work a decent income on which he can rear his family. He is denied that possibility by this type of legislation. I know the Minister is familiar with this case. I know that it should not be necessary to press him any further on it and that he should see and accept the wisdom of the proposition I am making. I hope the House generally will support the plea I am making in this amendment.
Some 12 or 18 months ago I discussed in this House a somewhat similar case to the case Deputy Clinton was talking about except that in this case the amount of land which the man owned was one acre. He did not actually own it, his father owned it. He had been working some distance away from home as a gardener. His father became ill and he went home to look after him. He put up a glasshouse and started in a small way to grow fruit and vegetables. Subsequently he enlarged the glasshouse. When his father recovered he worked with him. After ten years the Revenue Commissioners sent him a bill for £1,000 arrears of income tax.
There was no way in which the assessment could have been made except by their deciding what would be a reasonable amount to tax him for growing and selling these vegetables. Personally I think this was mad. The funny thing was that, since he had worked and been paid as a farm labourer, he could not understand why he should have to pay income tax on what he was earning from the garden. The amount he was earning was roughly the same as what he had been earning when he was working as a gardener and being paid as a farm labourer. He was maintaining his father and, in my opinion, he was doing a very good job and a job which people should be encouraged to do. Despite all the pleas put forward by me and others, and despite the fact that we had questions on it in this House and it was discussed here, he had to pay a very substantial amount of money as arrears of tax.
Deputy Clinton has said reasonably something which Deputy O'Donovan said in another way earlier on. If a farmer who can sell the produce of 500 acres of land does not have to pay income tax, does it not seem terribly unreasonable that a man with an acre or a few acres on which he is growing fruit and vegetables should be treated as if he were engaged in a trade and taxed? Deputy Clinton said that the Minister is aware of this case and that it was not necessary to press it any further.
That it should not be necessary.
I wonder is the Minister aware of the actual situation? If he grasped it he would really understand what we are trying to come at. There is absolutely no reason why, if the big farmer does not have to pay tax, the small farmer should have to pay it. This man is a small farmer. He is a small market gardener. He has to pay tax on only a fraction of what the big farmer has. I know that a few other people who were engaged in this work actually had to give it up and start working as builders labourers in Dublin. They found that it paid them better. One of them said to me that they were never out of trouble with income tax when they were trying to run their little market gardens. At least when they were working as builders labourers PAYE took care of the deductions and that was that.
It is a terrible thing to be paying lip service to the encouragement of industry of this kind and then taxing these people into the ground. Surely it is ridiculous that grants are being paid to these people to put up glasshouses, to heat the glasshouses, and do all the things necessary to try to give them a start, and then they are treated as operating a trade or a business rather than as agricultural employees or small farmers as they actually are. Would the Minister have a look at this and see if he agrees in any way with the point of view which we have been putting forward. This is taxation. This is the only type of agriculturist who is taxed and that is wrong.
Deputy Clinton is right when he says I am familiar with the kind of situation he describes. The decision was made some years ago that market gardening should be treated as a trade. Generally speaking it will be so regarded for the purposes of income tax if three conditions are fulfilled: first, that it is a defined area; secondly, that it is permanent, that is, that it is cultivated as a market garden from year to year; and thirdly, that the method of cultivation is intensive.
The description which was given by both Deputy Clinton and Deputy Tully of a man, if you like, pulling himself up by his bootstraps and building up a business of this kind is one which I think is certainly accurate of a number of people involved—not by any means all, but a number. People of that kind are fully deserving of any encouragement we can give them. Deputy Tully referred to the fact that they may get grants which is true, and this is a form of encouragement that is given. In the same way grants are given to people who start up a small industry. Anybody who does this—whether it is the establishment of a shop or a business or a small industry or a market garden or whatever it is—and who works his way up from scratch is to be commended and is the kind of person we need. It does not follow that he should be exempt from income tax.
It seems to me that it is reasonable that a market gardener should be treated in the same way as somebody who starts a small industry or a shop. That is the way they are treated. It is true as Deputy Clinton said—and Deputy Tully made a similar point— that this man saves money and invests it in this. This is true and it is to be encouraged. He is encouraged in so far as he gets the same deductions for income tax purposes from his profit in respect of capital expenditure on machinery and plant as other traders get and, in addition, he enjoys an initial allowance of 10 per cent and an annual allowance of 10 per cent in respect of capital expenditure on market gardening buildings.
I do not think that there is a case for treating him differently from other people of the kind I have described. The argument made that farmers as such do not become liable for tax is another question altogether. The fact is that market gardening is really a business and, if it should be exempt from tax, other similar kinds of businesses should be exempt from tax. Clearly this could not be contemplated and for that reason I am afraid I cannot accept the amendment.
I think the Minister still does not comprehend what is involved here. I should like to ask him what is the difference between growing turnips to feed animals and growing turnips as vegetables for human beings. The two men have to perform exactly the same work. They have to be out in the same weather. The only difference is that the man who supplies vegetables to a town or a city usually has to be up at a very much earlier hour in the morning to load his vegetables and, still out in the weather, get them into town. Does the Minister not accept that in addition to the fact that it is unfair to tax this man, he is placing an additional burden on the consumer because this must increase the price of vegetables as well as everything else? Cabbage is grown for feeding to animals too. It is the same process exactly and the same effort must be put in in order to produce a crop. One man pays no taxation; the second man pays taxation. The Minister says he gets all the grants. What grants, I ask the Minister, does a man get who buys five acres and crops that five acres intensively without glass? What grants does he get? The Minister says he gets grants in the normal way, the same as the man who sets up an industry. I am not aware of any grant that he gets. In fact, he gets no grant and it is not fair to compare him with an industrialist. It is not fair to treat him as if he were getting this money from a trade. There is a discrimination here which, in my view, makes it almost unconstitutional because you have two people doing exactly the same work being treated differently from the point of view of taxation.
I am amazed the Minister cannot see it in this light and provide an opportunity for people to find employment for themselves. That is what these people are doing. We know what it is costing us to put people into employment in industry. Here is a man who is asking nothing from the State to provide employment for himself and, in some cases, employment for wives and families as well; there could be five or six jobs in this. There could be ten jobs provided at no cost to the State. We know, when we set out to provide employment opportunities in industry, what that costs the State. I think the Minister is completely unreasonable if he cannot see a good case to be made for this amendment and I will be amazed if he turns it down without any further consideration.
I am afraid I must be unreasonable because I cannot see the case.
Amendment put.
The Committee divided:—Tá, 45; Níl, 54.
Tá
- Barry, Richard.
- Begley, Michael.
- Belton, Luke.
- Belton, Paddy.
- Bruton, John.
- Burke, Joan.
- Burke, Liam.
- Burton, Philip.
- Byrne, Hugh.
- Clinton, Mark A.
- Conlan, John F.
- Coogan, Fintan.
- Cooney, Patrick M.
- Cosgrave, Liam.
- Cott, Gerard.
- Coughlan, Stephen.
- Creed, Donal.
- Crotty, Kieran.
- Dockrell, Henry P.
- Dockrell, Maurice E.
- Donegan, Patrick S.
- Finn, Martin.
- Fitzpatrick, Tom (Cavan)
- Fox, Billy.
- Governey, Desmond.
- Harte, Patrick D.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Kavanagh, Liam.
- Kenny, Henry.
- L'Estrange, Gerald.
- Lynch, Gerard.
- McLaughlin, Joseph.
- McMahon, Lawrence.
- Malone, Patrick.
- O'Donnell, Tom.
- O'Higgins, Thomas F.
- O'Leary, Michael.
- O'Reilly, Paddy.
- O'Sullivan, John L.
- Pattison, Séamus.
- Ryan, Richie.
- Taylor, Francis.
- Timmins, Godfrey.
- Tully, James.
Níl
- Andrews, David.
- Boylan, Terence.
- Brady, Philip A.
- Brennan, Joseph.
- Brennan, Paudge.
- Briscoe, Ben.
- Brosnan, Seán.
- Browne, Patrick.
- Browne, Seán.
- Burke, Patrick J.
- Carter, Frank.
- Carty, Michael.
- Childers, Erskine.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard C.
- Cowen, Bernard.
- Cronin, Jerry.
- Crowley, Flor.
- Cunningham, Liam.
- Davern, Noel.
- Delap, Patrick.
- de Valera, Vivion.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzpatrick, Tom (Dublin Central).
- Forde, Paddy.
- French, Seán.
- Gallagher, James.
- Geoghegan, John.
- Gibbons, James.
- Gogan, Richard P.
- Healy, Augustine A.
- Herbert, Michael.
- Hillery, Patrick J.
- Hilliard, Michael.
- Kenneally, William.
- 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'Leary, John.
- O'Malley, Des.
- Power, Patrick.
- Sherwin, Seán.
- Smith, Patrick.
- Timmons, Eugene.
Tellers: Tá, Deputies Begley and Kavanagh; Níl, Deputies Andrews and S. Browne.
Amendment declared lost.
I move amendment No. 3:
In page 4, before section 3, to insert a new section as follows:—
"Notwithstanding anything contained in the Income Tax Acts income derived from the export of tomatoes shall not be taken into account for the purpose of assessment to tax."
I suppose the Minister will be inclined to describe this amendment as an old chestnut because I have had it up not once but twice before and while it got a sympathetic hearing from at least one Minister for Finance I know the present Minister rejected the same sort of amendment last year.
I am not going to dwell at length on this amendment. I made the case for it before fairly exhaustively. I explained why I felt it was important that this type of tax exemption should be provided for tomato growers. I explained that mushrooms have this exemption. The cultivation and growth of mushrooms is almost exactly the same as the cultivation and growth of tomatoes. Both crops require houses, one a glasshouse and the other a mushroom house. Both crops have to be sown and grown and they are packed in almost identical containers when they are being exported.
The situation is that mushrooms have this exemption and tomatoes do not. The products of fish farms also have this exemption and here again there is no processing, it is merely a question of growing, packing and sending them out. Most other industrial products enjoy exemption from income tax on exports and it has always been a puzzle to me why tomatoes were not included in the list.
When I raised this before I explained that the tomato industry had reached a fairly critical period in its development. The Government, as the Minister will appreciate, have spent large sums by way of grants to encourage the development of the tomato industry. We have reached the point where for most months of the year we are able to supply our own requirements and in certain periods we have a quantity in excess of our own requirements.
We have reached the stage where, for further expansion of the industry, it is vital to have organised exportation of tomatoes. The Minister will be aware that the tomato growers have asked the Minister for Agriculture and Fisheries on many occasions to set up a proper marketing board so that they could get into the export market on a sizeable scale. It is necessary to get this scale of production if we are to secure an export market because we must be able to supply the large stores in England and must be able to guarantee continuous supply over the years. The small supplier will not do this. We are dependent on the bigger suppliers to develop an export trade in tomatoes.
I put down the amendment in the hope that the Minister would see the very great importance of it at this time. We are negotiating entry to the EEC. We had a long discussion yesterday about hard bargaining and the hard bargaining that is being struck by the various continental applicant countries. We admire them for making this hard bargain. We have been assured by the Minister for Foreign Affairs that it will be agreed to allow the income tax relief on exports to stand until 1990. That is one of the things that will be of very great benefit to a country in a situation of under development such as we are in. The Dutch farmers, particularly in relation to tomato production get many subsidies and advantages that growers in this country do not enjoy. There is a great case to be made now for giving this exemption to tomato growers so as to encourage production.
The Minister will be aware that grants for tomato houses have been suspended because, I suppose, of shortage of money and will be suspended until the confidence is created that growers will engage in export trade instead of selling their produce on the Irish market to the point where there is a surplus.
This is the sort of encouragement that will cost the State nothing. The State is gaining nothing at the moment. Acceptance of the amendment is the way to develop and encourage production. It will give us a certain advantage that it is to be hoped we will be able to retain until 1990 and will give the producers an opportunity to build up the industry. There is everything to be said for the amendment. I do not want to prolong the discussion on it. A man who grows peas and dries them and exports them gets the exemption. If he does any sort of little processing of vegetables and packs them and sends them to England he gets the exemption. Why should tomato growers be singled out? Why should they not get the exemption? It is all wrong. I hope the Minister will see the wisdom of accepting the amendment.
A similar case to this has been made for other items besides tomatoes, such as cut flowers, day old chicks——
Day old chicks is the one the Minister should be ashamed to mention. We lost £300,000 worth of exports because they would not agree to this.
If this were to be conceded there is no reason why it should not be extended to all horticultural produce. Indeed, a case could be made for agricultural produce generally. That is the first reason why I must oppose the amendment but there are two other reasons. One of them is that in the light of Article 13 of the Anglo-Irish Free Trade Area Agreement very careful consideration would have to be given to this as to whether we were entitled to do it. The other reason is—and the Deputy referred to it—the negotiations for entry to the EEC, the importance of retaining the incentives which we have. There is no doubt about it that at this stage to extend the tax exemption on exports could only complicate and make more difficult, to say the least, our negotiations with the EEC in regard to the retention of the existing tax exemption. So, for all these reasons I find myself unable to agree to the amendment.
The Minister made two statements which I should just like to refer to. He said that he had serious doubt as to whether we could do this having regard to the Anglo-Irish Free Trade Area Agreement. The Minister should know that tomatoes are outside this. Tomatoes are one of the things that did not come within the scope of the agreement. That is the first thing.
Yes, but not this part of it, which is the exemption from tax. It would come into that.
I would disagree with the Minister on this. The second thing is that the Minister talks about its being an embarrassment to bring this in at this time now that we are negotiating terms of entry to the EEC. This is great nonsense in view of the fact that every day we are negotiating new arrangements for industries that will be given this taxation relief. The Industrial Development Authority have not stood still. They are continuing to enter into new contracts. I am deliberately describing them as contracts because the Minister for Foreign Affairs told us a few days ago that the arrangement for this tax relief until 1990 was being regarded by the Government as a contract that they would honour.
If we are doing hard bargaining and trying to develop our own industry and to provide employment opportunities for our people and if the future of the horticultural industry is something we are nervous about, in these circumstances we should be trying in every possible way to assist the industry.
The Minister has said that if the amendment is passed there is the same case to be made for all agricultural produce. I ask the Minister again what agricultural products is he talking about. Surely he knows that none of the agricultural products are paying taxation. If there are any that are paying taxation, I do not know them. I say to the Minister that he has made no case except that he will not agree to any change in existing legislation, whatever the case that is made for it. This is a deplorable stand for a Minister to take, and an irresponsible stand. Simply and solely because a member of the Opposition brings in an amendment that has immense merit by any calculation, it is something to be rejected. The Minister has made no case against the amendment. The same thing happened on the last amendment. He made no case against it. In this case he has failed completely to make a case against the amendment.
We used to have in the Minister's predecessor's time a phrase used by him very often—indeed I was expecting the Minister to use that phrase today: "I agree that there is great merit in the case being made by the Deputy but..."—either it was too difficult or it would be too expensive. This was a stock phrase used for a number of years by Mr. Haughey when he was Minister.
The week before last I had a call from one of the many tomato growers in my area who told me that the price of tomatoes had dropped to 12s a chip, 12s for 12 lbs and that the ones that were substandard—small and badly shaped ones—were being sold by him for about 5p a chip. I do not think they would be bought in the shops at that price. Because there is supposed to be an embargo on foreign produced tomatoes during a certain period there seems to be the impression that the producers are making a fortune and consequently they are fair game for taxes. Like Deputy Clinton, I ask why they should be singled out for income tax? We were defeated in our efforts to have market gardeners exempted. If we want to tax people, let us tax those whose incomes are big and not tax those who may have a good season, as they had last year but who, this year, will not have a good season. The case for the amendment is very strong. The least the Minister might do would be to have another look at it and ascertain whether, on further consideration, it could be accepted.
The case put by Deputy Clinton for this amendment is a valid one and the Minister is adopting a wrong stand on the matter. To say that acceptance of the amendment would lead to complications is puerile even in the context of the EEC. Our main competitors on the British market are the Dutch and they have good subsidies available to them. One of the main subsidies is in respect of oil used in the heating of glasshouses. The Dutch benefit from the low cost oil that they use whereas the oil used here is very expensive. Profits on exported tomatoes should not be subject to income tax. We should be doing everything in our power to encourage growers to export. I ask the Minister to reconsider his attitude in relation to the amendment.
Is the Minister aware of the employment involved in tomato growing—in the packing, the grading and in the haulage and export of tomatoes? The present position is that practically the only export we have of tomatoes is to the North of Ireland. The reason for that is that people from the North of Ireland come with their lorries and collect the tomatoes. This does not involve our growers in any exceptional risk but it would be easy to over-supply that market. There is an opening on the British market but last year at a conference held here we had a representative of the British supermarkets and he stated emphatically that there were no tomatoes on the British market to compare with Irish grown tomatoes. He said that they would be extremely anxious to enter into a long-term contract with Irish growers if they could be assured of a constant supply. Such supply would require organisation. It would require assistance of a nature that the growers are not getting at present from either the Departments of Agriculture and Fisheries or Finance. Surely it would not cost very much to help the growers to establish themselves in the export trade. In any case, they would only enjoy this until 1990. The employment potential in this particular industry is extremely good but the industry must be developed. The grants given up to a year or two ago towards the building of glasshouses were an indication of the desire to develop the industry but these grants were stopped at a time when we were glutting the Irish market. However, there has been failure to do anything about an export market. I have discussed this problem with many growers and they say that it would be an expensive business to establish an export trade and that consequently, the Government should assist them. Again, I appeal to the Minister to reconsider his attitude to this amendment and, if necessary, to bring in an amendment in some other form if he does not think that this particular one is drafted in a way that meets the situation. Personally, I think this amendment, as it stands, could be accepted.
There are a few points I wish to make. First, I should like to refute the allegation made by Deputy Clinton to the effect that I was not accepting the amendment solely because it was put down by an Opposition member. I have never adopted that attitude in this House and I hope I never will. It may be that Deputy Clinton believes all the right is on his side and that I have made no case against his argument. He is entitled to that view but, of course, I would not agree. However, I would ask him to accept that my opposition to this is not simply because it was put down by him or by any member of his party. I oppose it for the reasons I have given.
If the Minister makes a case, I shall accept what he says.
Deputy Clinton has swept aside these reasons but that does not eradicate the difficulties involved. Regarding the question of pressure building up for exemption from tax on profits derived from exports of agricultural produce generally, Deputy Clinton seemed to think this was ridiculous because he thinks that tax is not paid. In fact, companies are still chargeable on profits to corporation profits tax.
How many farm companies have we?
There are quite a number. They certainly qualify for export tax relief. If this were granted they would be entitled to make the case that they should be exempted from tax on profits from exports. I imagine it would be impossible to resist it. In any event, Deputy Clinton has not made any worthwhile answer to the two points I mentioned in regard to the free trade area agreement and, more particularly, to the EEC negotiations. I cannot accept this amendment.
I ask the Minister to tell the House what percentage of total exports of agricultural produce are taxable at present? Has the Minister got that figure? He says there are a few companies involved in farming for the purpose of hiving off tax.
There would be a lot more if this exemption were granted.
The number is very small. The production of tomatoes in volves very specialised work and nobody would rush into it.
They would not be able to buy the farms.
They would not be able to get the personnel required because of the expertise and specialised knowledge that is involved if the job is to be done properly and profitably. I do not agree with the Minister that this exemption would be availed of by a large number of companies as an escape clause.
I did not mean those people engaged solely in tomato growing. If this were granted the pressure would build up in respect both of horticultural and agricultural produce generally and the companies would then be encouraged to avail of the clause.
Can the Minister say if he has figures to back up his argument?
I have not.
This is what I complain of. I accept that the amendment is not being turned down simply because it was put down by an Opposition member but it is being turned down without a case being made for its rejection and without the Minister having figures to substantiate his statements. This is unfortunate. It is stated specifically that tomatoes are outside the terms of the Anglo-Irish Free Trade Area Agreement. That is my answer to that. If tomatoes present a particular embarrassment as the negotiations are in progress, how is it that every fresh proposal for an industry in this country entering into new contracts is not an embarrassment?
Surely the Deputy can see?
Because it is something that the EEC will have to meet and pay.
No, because we have a statute which covers the IDA situation. This involves a new extension. Surely the Deputy can see the difference?
We had no statute last year and we had not started our negotiations and the Minister advanced exactly the same argument. That is why I do not accept that it is a sincere argument. I could not possibly accept that it is a sincere argument. I fail to see that the Minister has put up a point. If I could see even one point on which reasonable opposition to an amendment could be hung I would accept it but I do not accept that there has been a case made by the Minister at all. He had no figures or facts to back his statement.
Amendment put.
The Committee divided: Tá, 46; Níl, 55.
Tá
- Barry, Richard.
- Begley, Michael.
- Belton, Luke.
- Belton, Paddy.
- Bruton, John.
- Burke, Joan.
- Burke, Liam.
- Burton, Philip.
- Byrne, Hugh.
- Clinton, Mark A.
- Conlan, John F.
- Coogan, Fintan.
- Cooney, Patrick M.
- Cosgrave, Liam.
- Cott, Gerard.
- Creed, Donal.
- Crotty, Kieran.
- Dockrell, Henry P.
- Dockrell, Maurice E.
- Donegan, Patrick S.
- Enright, Thomas W.
- Finn, Martin.
- Fitzpatrick, Tom (Cavan).
- Fox, Billy.
- Governey, Desmond.
- Harte, Patrick D.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Kavanagh, Liam.
- Kenny, Henry.
- L'Estrange, Gerald.
- Lynch, Gerard.
- McLaughlin, Joseph.
- McMahon, Lawrence.
- Malone, Patrick.
- O'Donnell, Tom.
- O'Donovan, John.
- O'Higgins, Thomas F.
- O'Leary, Michael.
- O'Reilly, Paddy.
- O'Sullivan, John L.
- Pattison, Séamus.
- Ryan, Richie.
- Taylor, Francis.
- Timmins, Godfrey.
- Tully, James.
Níl
- Andrews, David.
- Boylan, Terence.
- Brady, Philip A.
- Brennan, Joseph.
- Brennan, Paudge.
- Briscoe, Ben.
- Brosnan, Seán.
- Browne, Patrick.
- Browne, Seán.
- Burke, Patrick J.
- Carter, Frank.
- Carty, Michael.
- Childers, Erskine.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard C.
- Cowen, Bernard.
- Cronin, Jerry.
- Crowley, Flor.
- Cunningham, Liam.
- Davern, Noel.
- Delap, Patrick.
- de Valera, Vivion.
- Fahey, Jackie.
- Faulkner, Pádraig.
- Fitzpatrick, Tom (Dublin Central).
- Forde, Paddy.
- French, Seán.
- Gallagher, James.
- Geoghegan, John.
- Gibbons, James.
- Gogan, Richard P.
- Healy, Augustine A.
- Herbert, Michael.
- Hillery, Patrick J.
- Hilliard, Michael.
- Kenneally, William.
- Kitt, Michael F.
- Lalor, Patrick J.
- Lemass, Noel T.
- Lenihan, Brian.
- Lynch, Celia.
- Lynch, John.
- McEllistrim, Thomas.
- Molloy, Robert.
- Moore, Seán.
- Moran, Michael.
- Noonan, Michael.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Des.
- Power, Patrick.
- Sherwin, Seán.
- Smith, Patrick.
- Timmons, Eugene.
Tellers:—Tá: Deputies Begley and Kavanagh; Níl: Deputies Andrews and S. Browne.
Amendment declared lost.
Section 3 agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
I am opposing the section because of subsection (5). The White Paper issued with the Bill says:
The section secures, in the case of any such arrangement—
that is an arrangement about having a loan outside the State and so on—
—that the foreign income so applied will be treated as having been remitted to the State, unless that income was applied before 6 April, 1972, in satisfaction of a loan made before 28 April, 1971.
What the Minister, in fact, is doing is sanctifying what was legal evasion of tax for a further year. I cannot see, in view of the way he treated company taxation last year, how he can do this logically. I think this is pandering to certain individuals and I should like to know how many individuals will benefit from subsection (5) of this section. I take it the Minister understands what I am saying?
I understand it all right. I do not think I can give the Deputy details of the numbers who might benefit from this but I can tell him why subsection (5) is there. It was considered that section 4 ought not operate in a case in which a debt was incurred in 1971-72 before this legislation was announced or foreshadowed in the Budget speech. If the foreign income is applied during the year 1971-72 in satisfaction of that debt provision is made in subsection (5) in this way to avoid any suggestion that the legislation was retrospective because if we did not include this subsection it would certainly be argued here that it was very unfair to get at people in this way who had incurred this debt that would be in question without having any knowledge that the law was going to be changed. What they did was perfectly legal at the time they did it. Notice was given in the Budget speech that it was intended to bring in this provision and the object of subsection (5) is to ensure that people who acted lawfully and effected loans abroad, would not be retrospectively caught by the section.
There is a section in this Bill which equates neglect with fraud. On the other hand, we have here people who live in this country deliberaely taking action to evade tax.
To avoid tax.
Más maith leat.
Running an overdraft.
Yes, running a big overdraft abroad and then paying in the income to pay it off thus avoiding paying income tax either in England or here.
But the distinction is between evasion and avoidance.
This distinction between evasion and avoidance is beyond me. A Revenue Commissioner said to me on one occasion: "There is a legal and illegal evasion of tax." I agree heartily with what he said. I do not like this kind of thing because, in fact, it gives these people an additional year to avoid something that the remainder of us must pay. The Minister may have said it in the Budget——
I did.
I did not notice particularly. I am sorry the Minister said it in the Budget although I do not see any reason why he should have done so. However, since he did say it in the Budget there is a custom that governs these matters. Presumably, we must allow ourselves to be bound by what the Minister said in the Budget, although I do not agree with it.
Question put and agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
Can the Minister state why there should be allowed to be deducted as expenses any fees paid or expenses incurred in obtaining the registration of a trade mark any more than any other item of expenditure in relation to a trade?
That is a six mark question. The Minister told me on Second Stage that he would explain why this was so. I said the amount involved was small.
I told the Deputy that the number involved was small.
I was interested to know what particular reason there was for doing this.
Because it is an anomaly that was not rectified in the past. Similar charges, for instance in regard to the registration of patents, are allowable and have been for many years. Similar kinds of charges are allowed but for some reason this case was overlooked in the past. Speaking from recollection, I think representations were made on behalf of a group such as the chartered accountants that this was an anomaly and should be remedied. What is involved is nominal, both to the State and the people concerned. It is putting all similar charges on the same basis.
Why is the Minister legislating for something which he admits is not important? Surely the Minister should legislate in order to effect improvements in important matters? Can the Minister state if the expenses of registering a company are deductible?
No.
I would suggest this would be a good example for which provision might be made in a Finance Bill.
Does the Deputy regard that as important?
Yes, in so far as there are many small family businesses, either in partnerships or held by individual families, and it has been my experience that when the person who established or carried on the business died without making a will invariably there is a legal wrangle between the family. This could be avoided if the business was made a company because it is much easier to deal with a company for the purpose of estate duty. The Minister should try to encourage this practice rather than legislate on minor points. In this case it appears he is pandering to the Society of Chartered Accountants or some other group who can take care of themselves. The Minister's time would be better spent in trying to help small business to become incorporated and this would help very many people in regard to the administration of estates.
I had a suspicion, and the Minister has confirmed this, that if this matter were not probed too deeply it would appear that some concession was being given. I thought it did not mean a thing but it is written into a section of the Bill and, no doubt, it will be referred to as a tax concession. That was my opinion and what the Minister has said has not changed it.
If the Deputy examines the record he will find that I never referred to this as a tax concession. All it represents is a tidying-up operation of minor importance. I said this from the beginning and I am still saying it. Because it is of minor importance it does not mean it should not be done.
It is not a tidying-up Bill.
If we were to deal only with vitally important matters in legislation and Finance Bills, we would end up with many minor anomalies which would become major anomalies if they were left unattended. In every Finance Bill there are similar provisions that deal with anomalies that have come to light—this is no more and no less than has happened in this instance.
The lot of the Minister for Finance is not a happy one. He introduces a concession in section 5 and he is hit around the head because he is bothering with trivialities instead of giving concessions on the major front. I think we should give the Minister a chance.
I thank the Deputy.
Would the Minister consider introducing a section allowing the expenses of registering a company to be written off?
I do not think so. Clearly that is an expense that is part of the operations of the company but forming a company is not.
Question put and agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."
The Minister dealt with this matter the other day at Question Time and he quoted figures. I hope he will forgive me for pointing out to him that they were different figures. If my memory serves me correctly, it was stated first that there were 280,000 single taxpayers but by some peculiar calculation that figure became 440,000 at a later stage in the day. The Minister always appears to think that I am trying to twist the figures but I assure him I am not. I should be interested to know how the 280,000 became 440,000?
Does the Minister consider that the extensions from £225 to £250 and £125 to £150 are a valuable concession or that they mean very much? In view of the fact that the Minister said that the £11 per year demanded was not a heavy impost, how can he state that the concessions in section 6 are important? Does the Minister not agree that if any worthwhile concession is to be given to income taxpayers it must be given now? If money continues to lose its value, as it has been doing in the past few years, the Minister will be able to say that what will cost £4 million or £5 million today will cost three times as much in the next few years. In a year in which there has been a jump from some £130 million to £141 million, surely this is the time when a decent concession could be given. Does the Minister suggest that a concession of a few pounds will make much difference to taxpayers?
I do not suggest that this will make very much difference and I never have so suggested, but it does make a difference——
What difference?
It is the main item in the concessions, which together amount to about £1 million. This is the main item. As regards the number of taxpayers I am afraid I have not got that figure here at the moment. I do not quite know what the Deputy has in mind. I think we are talking at cross-purposes when we are talking about these figures of the number of taxpayers involved. Speaking purely from recollection from the other day, I think the figure of four hundred and odd thousands related to single and widowed persons.
That was the number of married taxpayers, from my recollection.
No; the number of married taxpayers was smaller. Again, from recollection, I think it was about 175,000. The big number was the number of single and widowed persons.
I asked the Minister for the number of widowed persons separately and he gave me that number separately. The Minister could be correct in that he was adding the widowed to the single people and treating them all as being unmarried.
I am afraid that I am just speculating. I have not got the figures here.
Otherwise there is no explanation as to how it could have jumped from 280,000 to 440,000.
Is the Deputy referring to the figures which I gave in reply to a question, and is he referring to the 280,000 as being given in the reply to that question?
No; 280,000 was the figure given by the Taoiseach in a debate last year as being the number of single persons who would have to pay. He said that a concession of £10 would amount to £2,800,000 in a year. I assumed that that meant 280,000 single people. This year in one of the Minister's statements, possibly in his Budget speech—I will have a look at it tomorrow—he mentioned 280,000 single persons who were taxpayers. What I am trying to get at is this: everybody including the Minister must admit that we cannot continue to have almost exactly the same tax free allowance for single and married persons, as we had 15 years ago.
A single person was taxed at £6 5s 15 years ago when the wages of an ordinary rural labourer were not very much more, if they were any more, than £6 5s. Married persons were then taxed on anything over ten guineas. They are still taxed on that amount but 15 years ago, even with a substantial amount of overtime, they would not have had to pay any income tax and now they have to pay income tax. The minimum amount laid down for subsistence for an ordinary farm worker is about £16.50 in the poorest area in the country. The State will tax him on £6 of that if he is married even though it is laid down by the Agricultural Wages Board that it would take £16.50 to keep him in frugal comfort. I am sure the Minister appreciates what is happening. As this is so, surely the time has come when something should be done about our tax laws and changing our system of income taxation. It is all very well to say that would cost a lot of money, or that it cannot be done this year, but, as each year goes by, it will become more and more difficult to give a decent concession. I suggest, as has been suggested by Deputy O'Higgins earlier, that the Minister should tax the people who can afford to pay and allow those who really need the money in order to exist to earn a decent income without that income being taxed.
I do not think there is anything useful I can add to what I have said before in response to this case.
I suppose there is not.
Question put and agreed to.
Sections 7 and 8 agreed to.
SECTION 9.
There is an amendment in the name of Deputy Clinton.
Deputy Clinton is not in the House at the moment. Perhaps we could deal with it later.
Question proposed: "That section 9 stand part of the Bill."
This is a relief to which the Minister referred in his Budget statement and which he is now bringing in in this section. To understand the position in relation to section 9 it is necessary to have a look at section 139 of the Income Tax Act, 1967. That section provided for a relief in respect of persons taking charge of children of a widower, a widow, or a married man living apart from his wife. The pivotal provision in section 139 is:
If the claimant proves that he is a widower and that for the year of assessment a person being a female relative of his or of his deceased wife is resident with him for the purpose of having the charge and care of any child of his, or he proves that he has no female relative of his own or of his deceased wife who is able or willing to take such charge and that he has employed some other female person to undertake the same...
So, under section 139, it has to be proved that there is a female relative resident with the widower, or that he has no female relative and that he employed a person to take charge of the child.
This section adds a new subsection at the end of section 139 providing that the section shall also apply to a claimant being an unmarried woman who throughout the year of assessment is in full-time employment or engaged full-time in some trade, et cetera. There are consequential amendments. The Minister is proposing to provide for the unmarried mother but under this section, read together with section 139, he is stipulating that she must have a female relative resident with her, or she must prove that she has no female relative and that she must employ somebody to take charge of the child.
I believe this is utterly unworkable. The very moment you stipulate the kind of case you are dealing with you find it improbable that there will be a female relative resident with her. When you provide that she must be engaged in full-time employment you must envisage it as being improbable that she will employ anybody to take charge of the child. I accept that the Minister intends a relief in this respect, but I would suggest that the sensible thing would be to grant the allowance where any person, not necessarily a female, and not necessarily a relative, is called in to take charge of the child. If you read it into section 139, the restrictions built in already make the proposal impractical from the point of view of giving a worthwhile relief.
I am not quite sure that I follow Deputy O'Higgins although I think I do. The intention here is to provide what is commonly known as a housekeeper allowance for an unmarried mother in the same circumstances as it is provided at present for a widower. The housekeeper allowance would not be available unless the housekeeper was a female relative acting as such. I am not sure if I understand Deputy O'Higgins correctly.
Take the unmarried mother with a child. The mother goes out to work. It is not realistic to imagine (a) a female relative resident in the house or (b) that unmarried mother being in a position to employ a housekeeper. What such a person does as often as not is to farm out— I do not say that in any derisory way —the child in a neighbour's house and make a payment to the neighbour to look after the child while the mother is working. That is how this will arise and that, I think, is probably what was in the Minister's mind. Under the section as drafted that unmarried mother would not qualify.
I understand the point now. I should say, I think, that I am quite certain that both of the situations envisaged in the section—that is a female relative or a housekeeper employed—do arise. I know personally of both categories, but I admit the kind of case to which Deputy O'Higgins refers also arises and on the face of it, it might look as if it is not covered by the section. I am advised that the case mentioned by the Deputy is, in fact, covered by the section because the person involved does not have to reside with the unmarried mother in order to claim and the kind of situation in which, as the Deputy said, she farms out the child during the day and makes a payment to the person who looks after it would, in fact, be covered by the section.
Surely not. It could only come within the section if the unmarried mother proved she had no female relative of her own.
No female relative is available.
She must show there is no female relative of her own who is able or willing to take such charge. Would the Minister have a look at it?
I am advised that it is covered, but I will have a look to make sure.
Question put and agreed to.
NEW SECTION.
I am very grateful to the House for permitting me to move this amendment at this stage. I move amendment No. 4:
After section 9 to insert a new section as follows:—
"Section 138 of the Income Tax Act, 1967 is hereby amended by the addition of the following to subsection (3):
‘but where the earned income of the wife is derived from an employment of nursing the maximum deduction under this section shall be £250 instead of £74'."
Under the 1967 Act the maximum deduction was £45 and that was amended at a later date to £74.
Under the Finance Act of 1970.
There is an acute shortage of nurses both in Dublin and throughout the country and I believe this would provide an inducement which would bring married nurses back again into the nursing profession. I have been approached by many married nurses who say that, because of the income tax situation, it would not be worth their while to go back into nursing. Their husbands, of course, are in taxable employment. This is an effort to provide an inducement to married nurses to come back into nursing. In Dublin we have provided beds in hospitals at an enormous cost to the State and we are simply not able to fill those beds because we have not the nursing personnel. Most hospitals in Dublin are completely understaffed because they cannot get nurses. There is no doubt about it, the nurses are there and would come back if they were not faced with this enormous deduction for income tax purposes. I do not have to paint the picture any more vividly. Every Deputy is aware of the acute shortage of nurses and of the desirability of providing the sort of relief suggested here.
While I am in favour of the idea that people who work hard, particularly people who work at jobs like this, should get a higher income tax remission, I am afraid I cannot agree that this is the answer to the problem. It would represent about an extra £1 per week in cash to nurses. I do not think that is the sort of thing that will bring nurses back into hospitals. The responsibility for this falls on another Minister. The Minister for Health is the man who should do the decent thing about married nurses and, if he does, the problem will be solved pretty easily.
There is one objection to this amendment. This would be a selective tax remission and that would not be a very good idea. It has been said again and again that we cannot single out certain sections and give them tax remissions. A few years ago we did, in fact, single out writers, artists and other people like that. I do not know what the idea was. Someone suggested there would be a swarm of these people into the country spending their very big salaries here. They did not come. Subsequently I asked that local authority firemen be included in this tax remission and I was told an exception could not be made. Apparently everybody is equal but some are more equal than others and writers and artists are more equal than local authority firemen. I believe the same answer will be given with regard to nurses. While I would like to see these people treated fairly it does not appear to me this amendment is the answer to the problem. For that reason I could not agree with what Deputy Clinton said.
I want to deal with the point raised by Deputy Tully: this amendment would make a certain category of taxpayer more privileged than others. I would suggest to the Minister that this is a case in which that might be done. I do not see anything wrong in principle in respect of including differentials in taxation if the end which that seeks to achieve is socially desirable and that is the position here. I can confirm that in provincial areas as well as in the Dublin region there is a chronic shortage of nurses. It is a problem of serious proportions in some parts and if a concession of this nature had the effect of enticing married nurses back to working in hospitals—the amendment might need to be tightened up from that point of view—I think it should be acceptable to the Minister.
I am afraid I cannot accept this amendment. There are two main reasons for this. First, there are other categories of people, besides nurses, for whom the same case could be made that they are in short supply and their contribution by way of their work to the community is extremely valuable and desirable. Clearly, if one accepts the principle in the case of nurses there are other cases in which one would have to accept the same principle. That is not the full extent of the problem. The full extent of the problem was illustrated quite clearly by what Deputy Tully said. He said that not alone was this a form of increase in earnings—and, perhaps, the right way to deal with the case where earnings should be increased is not by income tax allowance—but he indicated that in the event of such a concession as is sought here being granted there would be considerable pressure for the same concession to be granted not merely on the basis of people who are in short supply or whose work was particularly valuable but on the basis that there should not be a selective concession of this nature.
I feel very definitely if this concession were to be granted that there would be very great pressure to grant it to all married women who were earning and whose husbands were earning. Any such concession would, of course, run into considerable sums, about £3½ million or, perhaps, a little under that and we could not comtemplate that. The principle involved is one about which I would be extremely doubtful no matter what precedents may exist at the moment for exemption or for a selective application of the income tax code. It seems to me very important to preserve as far as possible the principle that a person's income determines the amount of tax that person pays irrespective of his occupation and any departure from that is fraught with all sorts of difficulties. The solution to the problem outlined by Deputy Clinton is not merely to be found in income tax concessions.
I accept what Deputy Tully says that this does not really meet the problem to any great extent. It is merely a gesture. It is a step in the right direction. In the normal way I would not favour selective taxation but we have precedents for it. All income is not taxed and we would not be departing from precedent in this connection where there is a great need.
One of the things I should like to point out is that in most cases married nurses want to get night work, which is very essential work. The way we are treating married nurses at the moment means that we are depriving patients of proper care because we do not have sufficient nurses to nurse them particularly at night. It is fair to say that this could be put right if the Minister for Health agreed to a higher salary for married nurses than for single nurses but this would lead to its own difficulties and its own problems. It is very difficult to know how this is to be solved without grasping a nettle because it is a nettle no matter how one tries to grasp it. It occurred to me to put down this amendment as I thought it an opportunity to try to do something to improve the present situation.
Amendment, by leave, withdrawn.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill."
I gather that the increased figure now represents the non-contributory pension payable to a single person. Is that right?
Yes.
Could the Minister see his way to increase that figure to the contributory pension receivable by a single person? The relief is just as badly needed in the case of a person in receipt of a contributory old age pension provided he has reached 70 and it is the single person's rate.
The Deputy will appreciate that in the case of a contributory pension people's incomes vary very considerably; in other words, they are entitled to it irrespective of the level of income which they have and, consequently, I think it would be found in a number of cases, if I were to do what the Deputy suggests, one would be giving additional income tax concessions to people whose income certainly would not merit it.
In cases where there would be no income other than the contributory old age pension. The single person's rate is somewhat higher than the non-contributory rate.
What the Deputy has in mind is the case of a non-contributory pension where there is no other income whatever?
A contributory pension.
A contributory pension where the recipient has no other income?
At the moment the relative suffers a deduction.
I am not sure if there will be any such cases but I shall undertake to have a look at it.
Question put and agreed to.
SECTION 11.
Question proposed: "That section 11 stand part of the Bill."
How bad is 6/60 in relation to one's ability to read or see?
If a person cannot with correcting lenses, read the largest letter on the standard chart at six metres his central/visual acuity will be said not to exceed 6/60. Is that of any assistance?
I feel it is a rather harsh definition. Would the Minister not consider allowing a person with a lesser impediment in vision to avail of this relief? I know a number of people who would not come within the present definition but who are for practical purposes blind in the sense that they cannot work or see or walk properly without assistance.
The Deputy will appreciate that this is new and we are trying to find out how it works. I am informed that this definition is fairly generous. It is, in fact, based on a definition which is used in the United States internal revenue code and has been fixed in consultation with the Department of Health. I would suggest we let it operate and see how, in fact, it operates and if it is found necessary change it.
I am not an expert in the matter and I am prepared to accept the Minister's word but I should like to see this type of definition extended to the Social Welfare Acts in relation to the blind pensions.
That is a different matter.
I accept that. I am only making the point that a person has been refused a blind pension because he was not completely blind. I would suggest the Minister recommend this type of definition to the Minister for Social Welfare as it is more appropriate than the present one.
Question put and agreed to.
Section 12 agreed to.
SECTION 13.
I move amendment No. 5:
In page 8, before section 13, to insert the following section:—
Section 251 of the Income Tax Act, 1967, is hereby amended by the substitution in subsection (4) (c) (inserted by the Finance Act, 1968) of "the 1st day of April, 1973" for "the 1st day of April, 1971".
The scheme of free depreciation in respect of machinery or plant which is proposed by section 24 of the Bill provides in effect for accelerated wear and tear. The provisions relating to wear and tear enable that allowance to be claimed only when the machinery or plant is actually brought into use for the purpose of the trade and this applies also to free depreciation. For this reason, a trader who incurs capital expenditure on machinery or plant in the two year period over which free depreciation will operate will not be able to claim free depreciation if the machinery or plant is not brought into use in that period. In this event, under existing law, he could claim only the basic initial allowance of 20 per cent. In order to avoid worsening the position of such a trader, this amendment proposes the extension for a further two years of the period of operation of the increased initial allowance of 60 per cent which applied to capital expenditure on machinery or plant incurred in the period 1st April, 1968 to the 31st March, 1971.
Amendment agreed to.
Section 13, as amended, agreed to.
NEW SECTION
I move amendment No. 6:
In page 8, before section 14, to insert the following section:—
Section 336 of the Income Tax Act, 1967, is hereby amended by the substitution of "£350" for "£250".
Section 336 of the Income Tax Act, 1967, provides that a registered trade union who are precluded by statute or by their rules from assuring a sum exceeding £600 by way of gross sum or £250 by way of annuity are entitled to exemption from income tax in respect of their dividends and interest which are applicable and applied to provident benefits. The purpose of this amendment is to raise the limit from £250 to £350. This has been requested by one particular trade union and the amendment meets their particular request and also allows some room for inflation or similar developments.
At long last there is some admission—the first time I have seen it.
Some admission?
Of the way money is going.
It is not exactly a secret.
It is not exactly a secret but it is no harm that there should be evidence that it has entered the minds of people.
Amendment agreed to.
NEW SECTION
I move amendment No. 7:
In page 8, before section 14, to insert a new section as follows:—
Section 340 (2) of the Income Tax Act, 1967 is hereby amended by the addition of the following paragraph—
"(h) a pension payable under the Army Pensions Acts not exceeding £350 per annum".
The Minister will be aware that section 340 provides for certain exemptions for Army personnel and I was hoping by this amendment to induce the Minister to exempt pensions up to this figure of £350. I recommend this to the House because this applies in the main to men who served in the Army over a long period, who got very small pensions and who were in the Army at a time when it was actually dangerous to be in the Army. They feel they earned this pension and some of them who have left the Army and have since taken up other employment find themselves being very heavily taxed. I have had considerable representations made to me about this by men who are fortunately now in the position of not being afraid to make representations since they are not breaking any rule or regulation by doing so as they are out of the Army.
I have a very long correspondence here and I should like to quote a little from it if I may and if I am in order.
One man writes:
In your capacity as the shadow Minister for Defence of our party, can I ask you to try and have put right something that has for years been crying out to have justice done, namely, the defence forces pension schemes, and income tax?
Now, Deputy, I served with the Air Corps at Baldonnel, now Casement Aerodrome, County Dublin, for 24 years, 44 days, 10 hours, 15 minutes and some few seconds. My discharge book states that I was discharged on the "18th July, 1952. Rank, sergeant; grade, technician; classification, fitter and artificer. Cause of discharge: on pension after 21 years service. Military conduct, exemplary". The testimonial in the discharge books reads in part: "He reached the highest grade in all trades and was promoted on his merits. His employment is recommended as a first class technician and a loyal worker."
This, the Minister will agree, is a fairly decent build-up to a man who had served his country. I quote further from his letter:
I had succeeded in obtaining employment with Aer Lingus Teo, at Dublin Airport, as an aircraft mechanic, which post I entered upon on the 18th May, 1952. Oh, yes, we old soldiers were well treated going out the gate. I got three weeks pay (sergeant's), three weeks ration money and, oh yes, £2 for the "Martin Henry" suit, a superably cut (with a knife) garment, in best Birmingham tweed.
I am ashamed to tell you what my daily rate of pay was for my rank and qualifications. This I can tell you—I was and am blessed to have married a good wife...
I do not want to quote the whole letter. The letter, while amusing in parts, describes in some considerable detail the type of service that these men gave to the country and the type of reward they got for it and the fact that now, having served for a long number of years, they come out with a small pension. All of us know the important part NCOs in particular play in the Army and it is an NCO who is making this particular representation to me. They come out with this very small pension and find they are taxed to such an extent when they take up another job that they might as well not have got the pension. I shall quote a couple of other short paragraphs that I think relevant:
Deputy, I find myself not a whit the better off for the lousy pension I earned the hard way, for I am forced to return it to the Minister for Finance under the income tax. Why, in God's name, should we old servicemen be put in the position that in the autumn of our years, we are taxed to the hilt on the pension that we earned hard in the Army that was not so popular then as now?
The final paragraph I should like to quote is:
Can I request you, please, to do all in your power to see if our "unearned payment" of a lousy pension can be made tax free for us, so that we can now try to enjoy the good things of life and prepare ourselves for our retirement as senior citizens? This for all us servicemen that served before 1932 will help to bring us in line with the people who now retire on a much higher rate of pension and are given a gratuity to help them enter civilian life. I could not even get a bob from the "Army Benevolent Fund" to assist me to obtain a tool kit for my new employment.
The Chair must interrupt the Deputy. By agreement, we are now reporting progress on the Bill to take No. 43 until 8 p.m. At 8 p.m. we will resume discussion on the Finance Bill.
Progress reported; Committee to sit again.