Financial Statement, 1974: Motion (Resumed).

Debate resumed on the following motion:
That Dáil Éireann takes note of the Financial Statement made by the Minister for Finance on 3rd April, 1974.
—(Minister for Finance.)

I wanted to deal with the recent decision by the Parliamentary Secretary to the Minister for Local Government on a planning appeal in which he revoked an imposition of something over £100,000 in lieu of car-parking facilities on a centre city office block developer. I took it as a very unusual and uncalled for decision. Such a levy was actually a watering down of a previous practice where the developer had to provide car parks on the premises. It was felt, in view of the development of traffic in the city, this should not be done. Therefore, a sum of money had to be paid to the corporation. They received quite a lot of money in this way and funds did not have to be provided from the budget to deal with parking problems in this city. The Parliamentary Secretary stated that this was a change of policy by the corporation. This is a retrograde step.

The Donegal County Council asked the Minister to receive a deputation to discuss the fuel problem and especially the remedy for it in that county and in other counties as well. The Government should have provided money in the budget for local authorities to enable them to develop roads into bogs so that people in the counties on the western seaboard could cut their own turf. This would satisfy their own fuel needs and they could sell the surplus to people in nearby towns. It is not enough for the Minister for Transport and Power to say that he is encouraging Bord na Móna to increase their hand-won turf production. He should also encourage small farmers to obtain plots in local bogs and provide their own fuel.

It is a pity, immediately the fuel crisis developed, that the Government did not take immediate steps to encourage people to cut turf to satisfy their own fuel needs. During the last war nearly every small farmer had his own plot in the local bogs and was able to supply his own fuel needs. At that time they had to work under very great difficulties because there were no roads to those bogs and transport was very uncertain. I appeal to the Government to take steps, even at this late stage, to encourage people to cut turf. As far as I know the Minister for Local Government has not yet agreed to meet the deputation from Donegal County Council.

I was asked, and so were others, to make representations to the Minister to receive the deputation. I wrote and others wrote. It is three or four weeks since I wrote and I have not yet received a reply. I have not got a decision from the Minister for Local Government. So much for the picture of an energetic Minister the Government are trying to portray to the country. This does not show any serious worry about our power and fuel resources. It does not show that the Government, as they try to pretend, really care for the people. If they cared they would provide the money to enable people to provide their own fuel needs and a surplus for sale as a commercial proposition.

There is a gross lack of progress in the field of farm-modernisation. Since 1st February a full stop has been put to the grants for development, such as land reclamation, drainage and so on. The fact that the farm modernisation scheme is not in operation means that someone is saving money. Who is saving money? The Government, because no grants have been paid and neither will they be paid for a long time to come. We have tried to raise this matter by way of question here. I have tabled questions on Directive 159 to the Minister for Agriculture and Fisheries and on Directive 160 to the Minister for Lands. That is the directive under which the older farmers can give up their holdings and draw pensions. There are people who want to avail of the financial provisions set out, but I have failed, despite all my efforts, to get details about either of these two schemes.

The farmers are completely at sea as far as the farm modernisation scheme is concerned. Would the Minister for Agriculture and Fisheries get cracking and get this scheme off the ground? I know he is in dispute with the officials who will operate the scheme. He has not even clarified the position for them. Some of the work they will have to undertake will be over and above their ordinary duties under existing schemes. It is time the Minister sat down around the table with his officials and straightened matters out. This is the time of year when farmers are busiest on reclamation, drainage, liming, fertilising, scrub removing and other farm improvements.

We should have made a better case to the European Community. I admit the directive was issued when the previous Government were in office, but some alterations should be sought now. Why is there a full stop to farm improvements? If the new scheme does not dovetail into the old scheme who is to blame?

I hesitate to interrupt the Deputy, but the Deputy is going into detail on matters appertaining to agriculture which would be more appropriate to the Estimate for that Department.

I am seeking to have the moneys provided in the budget used by the Minister for Agriculture and Fisheries. I am not talking about details. I want to ensure that the deadlock will not continue and that the Minister for Agriculture and Fisheries will sit down with his officials and iron out whatever difficulties exist. One difficulty is the keeping of farm accounts. Eighty per cent of our farmers are small farmers and keeping accounts is a stumbling block where they are concerned. If that is not removed the deadlock will continue. The Minister for Finance, who is providing the moneys, should ensure that these moneys are spent by his colleague, the Minister for Agriculture and Fisheries.

With regard to the income tax concessions, these are like the rating position. Many people are under the impression that they will only pay £6 instead of £8 to the £ valuation and they overlook the fact that this extends only over a nine-month period. In the same way in the budget, the personal allowance was increased to £500 for certain categories but the earned income allowance was discontinued. It is not a question of a net gain of £300. In one of the newspapers today there is a good article setting out the actual gains; it is about £59 for some categories and £79 for other higher categories.

This is a net gain for someone who has no commitment in regard to housing loans. When I was speaking last week I said that any benefits had been eaten up in the increases for electricity and other items. The people had a feast for a month but they will have to wait for another eight months until the new financial year which starts on 1st January. They will have to starve for the eight months; if there is a supplementary budget in the autumn its only purpose will be to increase taxation.

Let us consider the case of a person who has a net gain of £59 because of income tax concessions and the fact that he is paying only 26p in the £ instead of 35p. It must me remembered that the man who had an SDA loan was allowed all interest repayments at 35 per cent, whereas now he will be allowed only 26 per cent and, as a result, he will lose. The same situation applies with regard to insurance premiums; the allowance he got last year will be much less this year.

One of the papers that commented on the budget was quite accurate. The roses appeared on the top and looked quite good but when you dug down the thorns were more numerous and more prickly than usual. This describes the budget quite perfectly. It was well thought out; it appeared to give a lot but on a second look it was obvious it did not give much and, in fact, it took a lot.

Last week Deputy Tunney made a fine contribution with regard to children's allowances. He referred to the claw-back that took place, when people earning over £2,500 per year found that the children's allowance payments were included in income tax liability. People could not believe that any Government would ask the civil servants to send out new children's allowance books, to tot up what each family was entitled to get, that the recipient would have the books cashed at the post office, while in another set of offices officials would calculate the husband's income tax, would verify from the Department of Social Welfare how much children's allowances had been paid and then add that sum to the man's income tax liability. This was an exercise carried out by civil servants on the instructions of the Government—a useless, wasteful, frustrating exercise for any civil servants, and especially frustrating for the families who did not get the benefit of the allowances. In fact, in many cases when the husband got his income tax bill he could not understand the additional tax liability. It was only then he discovered the Government were fiddling him, as well as the finances of the country by instructing the civil servants to carry out this useless exercise.

Can the Deputy say how he would have done it? We need not quarrel about the principle at the moment. Assuming some justification in the principle, that people who have an income over a certain limit should not have the benefit of children's allowances, how would he have dealt with the matter?

The answer to that is that we told the Government at the time we would not have done it.

The Deputy is ducking the question. I am asking him how he would have done it.

We would not have carried out that operation. The Government admitted we were right because they did not do it this year.

The Deputy is ducking the question. He made the point that the whole business was an administrative nonsense.

Let us get back to the debate.

The Parliamentary Secretary is asking me if Fianna Fail were mad enough to do a job like this, how they would do it. The answer is we would not do it.

The Deputy, by making reference to the civil servants, said that the operation was administrative nonsense. Assuming the principle was correct, which we need not debate, how would the Deputy have done it?

There is no other way, if one were stupid enough to do it.

We cannot have a debate by argument and cross-talk. I would ask Deputy Cunningham to resume on the budget without interruption. Let us get away from this argument.

If the Governwent want to cut their throats a good way is to use a razor. There is no other way. This year the Government admitted the folly of their ways; they did away with the claw-back. Having listened well and wisely to the advice we gave them they said to themselves: "Fianna Fáil were right. This is a lunatic effort. We will do away with it". They gave the ordinary person with under £2,500 a year 30p a month or 7½p a week for each child.

Having felt that they were justified last year in paying no children's allowances to people on £2,500, £3,500, £10,500, £20,000 a year and upwards, they decided this year that they were entitled to the same amount of children's allowances as everybody else. Where they gave 7½p per week to the ordinary person under £2,500 a year, they gave the full amount, 180p, and so on, in respect of each child to those on the higher income levels. People regard this as sharp practice and they do not like it. I would urge on the Government that things like that should not happen.

The same thing is happening in the case of the Department of Health. That Department have a scheme which we are providing for in this budget to give hospital treatment to all-comers irrespective of income. The sky is the limit. I would advocate that some of the money provided in this year's budget should be provided for existing medical card holders who have problems when their children are not getting proper school dental, aural and ophthalmic treatment, and who have problems when their children have to have tonsils operations, and very many other problems as well. I would urge that some of the money provided in the budget should go to the lower income group, the medical card holders, and to the middle income group to improve their health services. We should have a very good health service for people with up to £2,500 a year and then we can decide to include other people.

That is all I want to say about the budget. There are many other items in it which could be attacked. The lack of effort to use the budget to deal with the problems of fuel, food and the everyday needs of our people is a glaring example of the lack of concern on the part of the Government for the people who are faced with price increases. The Prices Commission who issue their monthly list or litany of price increases are now deciding that, since last Saturday week it took three-quarters of a page of a newspaper to carry the full list of price increases, this is expensive and this practice is to be abolished I gather. The public who have not got access to the reports of the Prices Commission will be in the dark and will not be able to compare high controlled prices with other prices which are charged and which are not the controlled prices at all.

The public will be in the same situation as they were in up to January, 1973.

They will be in the same situation as Deputies who get these reports when they are out of date and when the next range of price increases are already on the way.

The Minister deserves the greatest possible congratulations on the fact that he was able to bring in a budget without increasing existing taxation in a year in which we had major difficulties due to the energy crisis, inflation and other outside influences. Many people expected increases in taxation. It was widely rumoured that the prices of the old reliables, tobacco, beer, spirits and even petrol would be raised. We were so conditioned to the fact that this was on, that since it did not happen people are now saying he was foolish not to have put on an additional few pence here and there on these items. This would have brought in quite an amount of money.

The Minister's action was really a masterstroke because, with the possible exception of petrol, it leaves us in a reasonably competitive position for the tourist trade. If he could devise some means by which tourists could get cheaper petrol here we would be on a pretty good winner. The tourist trade which had been building up to a very satisfactory figure has had to face heavy going since the troubles in the North became so critical. Yet, we have managed to keep it going at a reasonable pace.

There is an enormous potential there. We hope that peace will soon be restored in the North and that the flow of tourists will build up to what it was before the troubles started. We now have an opportunity to extend the tourist business further than ever before. I would hope that whatever funds have been allocated to the Department of Transport and Power for tourism will be used to the best advantage. We may not be using those funds to the greatest advantage in regard to the extension of hotel accommodation. Rather than extending hotels we appear to have been closing them. Especially here in Dublin quite a number of hotels have closed down due to the difficulties they were experiencing. This is a tragedy. They should be kept available for potential customers.

On the social welfare side I doubt that the Minister could have done more. He made a very fair division of the cake and all recipients are extremely grateful.

One section of the community overlooked every year by every Minister for Finance and really hard hit are the women who through no fault of their own remain at home to look after a father or mother. By the time the parent dies these women are too old or more frequently are not qualified to take up positions and earn a living. When it comes to that stage they are typical examples of the saying: "To dig I am not able; to beg, I am ashamed". Every member will know many people in that category. It is very sad to find them. Most of us who know them try to help and one must do it very carefully because they may be offended if they think you are giving charity. If they were to be recognised by the State I am sure they would be most grateful and the Minister would relieve a burden which weighs very heavily on those people before they reach pensionable age. Possibly some of them would not accept State help if they have other means and can carry on, but many of them have no private means because when the old folks go to their reward what is left scarcely pays the funeral expenses. The daughter is left to fend for herself. I ask the Minister to bear this in mind in future budgets and if anything can be done in the meantime I am sure he will do it.

The Government deserve tremendous congratulation on their housing achievements but I would ask the Minister to point out to his colleague in Local Government that housing is just one aspect of a very big problem because unless amenities are available for young and old in housing estates housing can eventually be a negative operation. Time and again we have seen, as I have in my own constituency, large housing areas with no facilities for recreation for young people. I have pointed out here before that the regulation governing the allocation of 10 per cent of a building site as an amenity area is not sufficient. In most cases it is only suitable for toddlers and prams and when children get beyond that stage they have nowhere to go and the end result is delinquency and its consequences.

The Minister would be doing a great job—and I am sure he has it in mind —if, when the housing problem is solved, he could make some provision in this regard. Housing must come first. We have had agitation for years for swimming pools in my constituency. This is very laudable and those pools that have been provided have been used fully except during the energy crisis when we had to close them. At present if we had houses instead of swimming pools. I think we would be better off. Both developments should go hand in hand and I hope this will be the future trend and that the extension in each case will continue.

The same applies to money provided for security. Today security conjures up protection along the Border or along the sea coast but it extends much further than that. It extends to everybody's home because it is rapidly becoming a fact that nowhere is safe. I am not referring to the £8 million or £10 million paintings stolen over the week-end quite near me but to people in their own homes, particularly old people who are raided and who are sometimes accosted by thugs on the street and robbed of their meagre savings. When the offenders are caught they are treated far too leniently. Some of the money provided in the budget for security could well be spent in dealing more severely with them—and I have my own ideas on how best to do that.

What the Deputy says is of interest but it is difficult to relate it to the budget proper.

I accept the ruling of the Chair but I was dealing with money devoted to defence and security that, I imagine, would come under that heading. However, I shall move on from that point. The only other item to which I wanted to refer was the proposed income tax on a section of the farming community, those with a poor law valuation of over £100. I have never met anybody who welcomes taxation but if the Minister had decided to increase the tax on tobacco, beer and spirits, I would say: "More luck to him". We are not compelled to drink or smoke but we are more sensitive in the case of other items.

In my constituency of Kildare some time ago the major farm organisation, the IFA in the constituency, incurred the wrath of their superiors by announcing that they would welcome income tax provided rates were done away with. The rates were relieved each year since the Government took office. A very major contribution is being made by the Government to the entire community in the savings on rates which would otherwise have been borne by the ratepayers to provide for the health services. I believe that the Minister, when the health charges are removed altogether from the rates, will be able to extend the removal of rates over a given period. I know that the costs will be enormous. The farming community in paying income tax and rates are in a difficult position vis-á-vis our friends in the North who do not have to pay rates but pay income tax. If the Government announced that they intended to phase out the rates, especially on agricultural land, then that would be a tremendous incentive to the farming community and would make income tax acceptable to all.

In his budget speech the Minister touched on the subject of farmers with a PLV of over £100 paying income tax. Stud farms should get special treatment. There is nobody in this House more anxious than I that the bloodstock industry be preserved, extended and not hindered in any way. When the wealth tax proposals are being finally formulated, I hope they will be given special treatment. It would be disastrous for that industry if they were to be evaluated in a similar way to the other categories in the farming world.

From the point of view of income tax I do not think that there is a greater risk between the stud farm or the farmer who keeps a couple of brood mares and the man next door who has a herd of cows which can contract brucellosis overnight. The value of the brood mares can be very high, indeed, but if the owners have no income from them they do not have to pay income tax. Similarly, if the herd of cows get brucellosis the farmer is in dire trouble. As I have said before, when the wealth tax proposals are being finally formulated, I hope that the bloodstock industry will get extra special treatment because of the fantastic amount of money involved and because a brood mare or a very costly sire could become valueless in a short space of time.

I wish to extend to the Minister my congratulations on a wonderful job well done. I hope that the reliefs and other benefits which he provided this year will continue in the years to come and for as long as he is Minister for Finance.

I would describe this budget as a placatory one because it does not show any indications of long-term economic thinking. It is not inappropriate for a member of the Opposition to mention the points which are welcome. There was an improvement in the social welfare payments which were badly needed. There were also changes and improvements in the categories of social welfare. The Minister indicated his intention to deal with the tax evasion. Those who pay tax will go all the way with the Minister in this. He says that one of the reasons our rates of taxation are so high is that so many people who ought to pay tax pay little or none at all. If the Minister can, in the coming 12 months, improve that situation, he will be making a great contribution to our economy.

The Minister stated in the early part of his speech that while inflation continued to be a matter of major concern there was a welcome rise of 6,000 in the total numbers employed in contrast to a drop of 9,000 in the previous year and that the services sector rose by 6,000 in each case. Perhaps at that time the Minister was merely able to quote these figures. The figures published today indicate that the difference between the level of unemployment last year and this year is now down to about 800.

As I said, I regard this as a placatory budget. The Minister has taken, to a considerable extent, the easy road in order to please his Labour colleagues and their followers. The objecttive seems to be political in the short-term. I approve of the increases in social welfare in so far as they will not encourage inflation. I refer to this because of the very large current deficit upon which the Minister is relying. This suits the Minister's Labour colleagues because the social welfare increases look spectacular, especially when taken out of the context of inflation. There were percentage increases from 20 to 28 per cent for social welfare improvements. But if one takes the rate of inflation for 1973 and adds to it the rate of inflation for 1974, as estimated by the Minister himself, one arrives at a figure of 28 to 29 per cent. While Social Welfare increases are welcome they are only meeting the situation for those classes. I would argue that the level of expenditure envisaged in the budget will ensure that the value of those social welfare increases will not be retained because they will be followed by inflation which is being encouraged by the Minister's fiscal policy. The sort of policy being followed is one which, perhaps, suits an atmosphere of increasing social welfare payments and increasing wages but it does not suit those on fixed incomes or those who cannot get increases on their pensions.

The budget appeared to give income tax reliefs but does not do so on any sort of worthwhile scale except for the £300 to £500 single person. By encouraging spending, which is where the emphasis lies in this budget, the inflationary effect serves to increase the tax yield itself. The previous speaker said there were no increased taxes in the budget. You could not very well have many increased taxes because the number and rate of increased taxes in last year's budget was so great that nobody could visualise any addition. The inflationary effect of the VAT increase in itself works out in a very interesting way. The estimated cost of the removal of VAT from food last year worked out at around £17 million but the increased yield on the increased VAT over all the range of goods led to an increase of 50 per cent or £45 million yield, that is, approximately a two-and-a-half times increase in tax on VAT over and above the amount that was deducted for the VAT on food.

The present deficit budgeted for of £66 million amounts to somewhere around £100 per worker of the working population of the State and since it is on current budget and not on capital this means that each worker will have to earn that additional £100 or the taxpayer will have to pay the interest on it indefinitely. This sort of over-expenditure leads to inflation which creates other problems such as overspending and import deficit which can place a Government in the position of having to introduce control which itself dislocates trade and leads to unemployment.

That is the picture that is coming from this budget. Last year some of us criticised the budget on the grounds that it had a tendency to inflate, that the deficit being aimed at seemed rather high although in the event it did not work out so high because of the increased yield on VAT. Nevertheless by November 1st, before the oil crisis hit us, there was an inflationary rate of 7 per cent. I would argue that a considerable amount of that 7 per cent arose from Government policy, the budget policy of last year.

This year the Minister states that in addition to the £66 million deficit on the budget he anticipates a trade deficit of £140 million. A reasonable calculation in relation to Britain would be that a comparable trade deficit for Britain would be £2,500 million. I do not know whether the Minister for Finance realises where this sort of policy will lead him and his Government. If one takes the recent economic history of Britain, the conservatives tried deficit budgeting, they tried to increase spending so as to increase the growth rate, but the increased spending led to a trade problem and to a wage problem and this policy had to be changed. Last autumn the British had two choices. One was to reduce Government spending, the other was to keep down wages. This is the sort of problem every Government comes up against if its budgetary policy is foolish. The British Government went for wages and that Government fell apart. The Minister should be aware that when a Government increases spending over and above what the economy can provide a situation is created where it is virtually impossible to slow down on that spending. Eventually, the social welfare sector, the ordinary working people, people on salaries, have to pay through inflation.

I should like to deal with the tax position. People were expecting an improvement in the earned income situation, particularly workers. At first glance the yellow paper produced by the Minister seemed to indicate an advance but when one came to examine it one found that there was very little. A few weeks ago I checked a wage card to see what would happen in the case of a single person with a wage of £29.80 per week. The tax at 1st April at £29.80 for a single person was £5.51 less some welfare allowances. The reduction under the Minister's proposals works out at approximately £2 per week but then one has to add back £1.50 earned income relief bringing it back to a benefit of 50p per week. Then you have to include a pay-related stamp at 29½p per week leaving a single worker earning £29.80 a week with an advantage of 20½p.

I will not go into the effect of inflation on other salaries but the same picture is reflected all the way up. It is a curious thing that the person with a salary of £2,500, who is married, does somewhat better than the single person at the lower level. I believe we need a substantial improvement in the earned income level and the Minister has not provided this. After the first few days people realised they were not getting much from the budget. I am afraid it is the old story that in an inflationary situation the sufferers are not the wealthy but the social welfare section and the less well-off people.

The budget does not indicate fundamental thinking or planning. I believe it is on a day-to-day basis because the Government have not got long-term plans. The Minister and his colleagues fail to realise that the object of a budget in a developing economy should be, as the Leader of the Opposition said, when he spoke on this debate, to signpost future development and expansion. In 1973 we warned the Minister against overheating the economy and against the price spiral which would follow the increase in VAT and the increase in a dozen other taxes. These price increases would have come about even if we did not have the oil crisis. They might not have been as large but we certainly would have had them because that is the type of budgetary policy the Government are following.

The fiscal policy of the Government this year is the same as that enunciated last year when the Minister in the budget abolished the £70 tax-free deposit with the major banking system. We regarded this as a major blunder. Although it might not have been known at that time, the building societies were feeling the shortage of money and the effect of this pronouncement by the Minister was to cause money to leave the country. By the time the Minister brought in his Finance Bill he had withdrawn the abolition of the £70 tax-free deposit system but the damage was done.

The 1974 budget is following along the same lines. There is a deliberate stimulation of expenditure which will cause further inflation and an increase in the trade deficit following the increased purchasing power on the part of the public. When the Minister for Foreign Affairs spoke in the budget debate some weeks ago he said the advice on the deficit came from the Department of Finance. He sounds rather like the Minister for Justice who blames the staff in Mountjoy. When things go wrong you blame your advisers. It is the Government who have to take the decisions and they are responsible for their decisions on the budget.

The next mistake made by the Government in relation to tax policy was the sudden announcement of the tax on mining. I would not oppose tax on mining because I believe they should make their just contribution to the economy. However, unilateral announcements of this kind, when one has the personnel of the IDA overseas trying to encourage firms to come in, is not a responsible way to behave. This was followed earlier this year by the introduction of a White Paper, a badly put together document and one which encourages people to believe there will be great increases in taxation on property. One member of the Government says it is only a discussion document but another says it is a firm commitment by the Government.

I believe this White Paper was introduced by people who are totally ignorant of the facts of life of a small economy and one which is still developing. The Government seem to be obsessed with the idea that our economy is at the level of highly-industrialised countries with the benefit of full employment and all the other things these countries enjoy. They are blind to an intelligent understanding of the principle that the creation of wealth can be a good thing for all and to discourage it or drive it away is to reduce the economy to economic stagnation and cause emigration. To tax speculative profit, share manipulation, land and property speculation and easy money is necessary and wise and I am sure everybody on the Opposition side will welcome any steps the Minister may take in that area because the easy money that has been made in this economy in recent years through these means is the sort of thing which creates unease and jealousy but there is no sanity in a policy of taxing energy, enterprise, endeavour and honest thrift.

The way the White Paper reads to people is that the result of years of effort may be taxed. This discourages the will to survive in an economy and is against the interests of our economy at the present time because it is an expanding one—we are trying to arrive at full employment—and I believe it is also contrary to the beliefs of most intelligent Fine Gael supporters. I do not believe the trade unions in this country want anything like the sort of policy set out in the Government White Paper. I believe it has already done damage to our economy at a time when we badly need capital.

I believe this budget is not a long-term, well thought out document but is mainly a window dressing operation designed to pay lip service to socialist lobbies. The result is that our economy will get the worst of both worlds in order to hold the present Government together. I am afraid the Minister's eye is on the electorate and not on his duty to our economy.

I listened to three ex-Ministers in the Fianna Fáil Party talking about this budget—the Leader of the Opposition, Deputy Lynch, Deputy Colley and Deputy Haughey. One of the three will in due course be able to turn around and say: "I told you so" because all three spoke with different tongues. Some of their arguments bore some semblance of similarity, but others were completely divergent.

Deputy Brugha said we should not have gone for deficit budgeting. Deputy Haughey agrees that we should. Deputy Colley described the budget as a fraudulent budget. Deputy Haughey appreciates that prices have risen throughout Europe and in this country also as a result of our entry into the European Community. As well as that, we have to meet prices in countries outside the European Community. As the debate progressed, the tone changed somewhat.

I congratulate the Minister on this budget. I congratulate the Minister on what he has done since he came into office. He has certainly got guts. He is not afraid of change. There has been practically no change in the pattern of taxation since 1908. Deputy Burke used to say in this House: "Great things have happened in our time." I believe that quotation is very apposite at this moment. Year after year the old reliables were taxed—petrol, beer, whiskey, cigarettes and tobacco. Where drink is concerned we are one of the highest taxed countries in Europe. Fianna Fáil were always afraid to do what the country wanted. The Minister has now introduced a tax on very wealthy farmers. Most farmers admit that, if they make money, they should be taxed. Most people object to paying taxes or rates when they do not make money.

The Minister introduced a White Paper on capital taxation for discussion. Fianna Fáil are trying to persuade the people that this is the law already. There has been a great deal of talk about prices. Deputy Haughey did not dwell on these because he understands this is a worldwide pattern. However, those who followed him could not refrain from flogging this dead horse. Would the position not have been much worse had VAT not been removed from food? We took VAT off food. In our first year in Government we had a growth rate of 7 per cent and this budget is designed to ensure a growth rate of 3½ to 4 per cent.

Over eight years Fianna Fáil gave an average of about £7 million a year to social welfare. In our first year we gave £52.5 million, a very big difference. Total expenditure has amounted to £132.4 million, an increase of 43 per cent. We have given an increase of £44 million per year in the two budgets for which we have been responsible so far. We reduced the qualifying age for pension to 69 last year and we reduced it by another year to 68 years this year. It had not been reduced since the State was founded. Social welfare benefits have been provided for unmarried mothers and handicapped children. There have been improvements in home care and other welfare services. We have abolished the limit for social insurance and introduced a scheme for pay-related benefits.

In 1974, increased social welfare benefits will amount to £50.14 million: £37.62 million to March 1975 and £25.13 million to the end of 1974. The Exchequer will take up 75 per cent of that. Deputy Brugha spoke about the burden on employers and employees but, as I said, 75 per cent will be taken up by the Exchequer. A married couple over 68 years will now get £15 per week as against £12.35 prior to this budget. A window with three children will get £15.45 as against £13.05. A deserted wife with three children will get £14.50 as against £12.15. Children's allowances have increased by 30p and State pensioners will get parity as from 1st July. These are worthwhile improvements and are to be commended.

Wives of long-term prisoners have been brought into social welfare for the first time. The prisoners get three square meals a day. They are probably fed as well as they would be if they were at home and their wives and children suffer and struggle. This situation will not be allowed to continue as a result of this budget. The Minister is giving £100,000 for an investigation into poverty. During the election I canvassed a new corporation area and I met women there whose husbands were in jail. They did not know what to do or whom to ask. They did not know where to go for information. If they are put in touch with the proper authorities they will at least get that which will feed them even if it does not clothe them. If a woman in this situation is a smoker she will be inclined to smoke more, if she drinks she may drink more. She will do this because she may be worried but if she were sure of getting the money she would be better able to look after her family.

Extra provision has been made for unmarried mothers. If a social welfare beneficiary dies, his widow is paid for six weeks after his death. There will be no gap between the death of the husband and payment to the widow. This is an example of the thoughtfulness displayed in the budget, of the cutting of red tape. There is a great feeling of humanity displayed towards the needy.

Since I became a Member of the Dáil in 1963 there has been much talk about equal pay for equal work. However, nothing was done despite much talk in Dáil Éireann about the Treaty of Rome and so on. This Government have taken steps to ensure that there will be equal pay by 1975 and, this year, there will be an improvement in the situation in that 50 per cent of the differential will be abolished.

I have referred to the grant of £100,000 towards the elimination of poverty. I realise it is only a drop in the ocean but at least it is a start. It is a pity it was not done many years ago. As the Parliamentary Secretary pointed out some time ago, we did not discover poverty, it has been with us for a long time. Although there is less poverty than 50 years ago, at least 20 per cent of our people are living below the breadline. I understand that a nun is taking charge of the programme on poverty and I wish her every success in her work. Perhaps next year the Minister for Finance may be able to give greatly increased benefits or introduce schemes to cater for people about whose problems we know very little now.

There has been an increase in the capital budget of £64.7 million. This includes £18.7 million for construction, half of which is for local authority housing. Prior to the National Coalition Government taking office, local authority house building in Dublin had reached an all-time low and local authority financing for private house building was in the same situation. The ceiling for loans was disgraceful. In my constituency there were housing schemes built but very few people could apply for a local authority loan because their incomes were above the limit. On the other hand, they were not able to put down the huge deposits necessary. The Minister for Local Government increased the ceiling limit and now many people who have building society loans, where the interest rate fluctuates, want to get local authority loans. This cannot be done because it is too costly to change and the money is needed for future work. In any event why should this Government be blamed for something Fianna Fáil did not do when they were in office?

There was another problem regarding the question of bridging loans from banks and what the building societies had to pay to people. In two years I have had at least 20 applications for bridging finance. I am not saying the 20 applications were solely the fault of the building societies; there could have been certain snags on the part of the people concerned. Much of this has now been cleared up. I am sorry the money cannot be given at a lower rate of interest. It is now given at 11 per cent, but on the money market in England one can get 22 per cent while the commercial banks are giving 16.5 per cent for short-term money. If possible the building societies should not increase the rate for the first two or three years. When a person purchases a house he has many expenses and the repayments are particularly difficult in the first few years. Taking wage increases into account he should be able to pay the going rate after a period of three years.

A sum of £8.3 million has been allocated for sanitary services and State building. Although there was a considerable amount of rainfall last winter, after a week of dry weather we were told there was a shortage of water. This shows how much money the previous Government spent on a water supply for Dublin. One would have thought there was enough water to last for a considerable time but after one week's dry weather we were warned about a shortage. This illustrates the neglect shown by Fianna Fáil during their years in office.

The cost of land in Dublin city has increased tremendously. Inflation may be blamed but one of the major reasons is the lack of serviced land. A sum of £9.5 million is provided for the ESB. I agree with Deputy Haughey when he says that the amount of money required by the ESB in future will be considerably more. With the advent of nuclear power and the number of new factories in the country we will be talking in tens of millions of pounds rather than amounts of £500,000 as we did some years ago.

It is estimated that there will be 40 per cent more spent on the telephone services. This is bady needed. We are in the EEC and communications, both road and telephonic, are as important as capital. A top executive must be assured of efficient and swift telephone services; a matter of 30 minutes could mean a large order for this country. During the years there was no real thinking or planning by the Fianna Fáil Governments on this matter.

It is amazing the difference there is when you are in Opposition as against when you are in Government. We had contributions from three ex-Ministers for Finance. Deputy Haughey suggested that we should plan five to ten years ahead and not just for one year. Deputy Lynch said we should charter a course for a year ahead and for a reasonable period in the future. It is not so long since we had a budget before an election in June and another in the autumn. Either they could not budget for six months or they did it to win an election.

As reported at column 1779 of the Official Report of 5th April, 1974, Deputy Haughey said:

Some years ago in the Departpartment of Finance a scheme of long-term capital budgeting was initiated.

He did not give the year. He went on:

The Minister has made no mention whatsoever of this in his budget speech. This is becoming one of the most important areas in economic programming and economic planning. The idea that one can put forward a capital budget for a period of 12 months on its own is now hopelessly out of date. Any sensible approach to economic planning must, I think it is generally agreed, be based on long-term budgeted capital investment. Increasingly our capital programmes must be looked at over five or even ten-year periods. The amounts involved are becoming enormous, and the period of years involved in capital investment is also becoming very considerably extended.

I remember saying the same thing when I was in Opposition when we were having two budgets per year or, if we did not have two budgets per year, something was slipped in by way of financial resolution, and so on. I said that any businessman, not a very big one, must plan ahead and decide whether he will diversify or stay in one business and keep all his eggs in one basket. I agree with Deputy Haughey that a period of five to ten years is right but Fianna Fáil, who never even budgeted for one year, now have the gall to ask us to budget for five or ten years all of a sudden, when prices are in a state of flux.

The Kennedy Report was not mentioned by Deputy Haughey but Deputy Lynch wants it accepted. Deputy Colley mentioned it in a non-committal manner. Deputy Lynch wants it adopted immediately. Deputy Haughey said we should do something about the interest rate as it is as important to a business as capital, or the working force, or the management. The dearer the rate of interest the more expensive it is to produce items. He said it is as important to a business as raw materials. I agree with him on that. We should try to bring down the interest rate, but it is very hard to bring down when you can get 20 per cent on the money market and bank interest is 15 per cent. We should try to bring down the rate to a more reasonable figure. I do not think we will ever get back to 5 per cent because there is a scarcity of money for development throughout the world. Let us bring it down to ten per cent or even 11 per cent, rather than 15 per cent or, perhaps, up to 19 per cent for term money.

As reported at column 1513 of the Official Report of 4th April, Deputy Lynch said about mortgages:

... No attempt has been made to deal with the problems of these people in any way.

He was speaking about purchasers of houses. He said:

The combination of higher house prices and interest rates puts house purchase out of the reach of many, not only newly married couples but married couples who have been saving for many years to buy their own homes. For example, repayments at the present time, on a very modest house, have risen by about 50 per cent, from £40 to £60 over the past few years. To deal with this certainly there should be a large increase in the size of the grants. As well as that, I believe there should be a large increase in the size of mortgages. Given that building societies may not be expected to advance the full amount of these mortgages, the Government should have a mortgage guarantee system—and they had a year in which to do this— available for those unfortunate people who now find house purchase beyond their capacity.

Deputy Lynch wants an increased grant. I think it was during the period in office of the inter-Party Government in 1954-57 that the grant was £275. The purchase price of a house at the time was somewhere in the region of £1,800. During that period of approximately 15 to 16 years Fianna Fáil increased the grant by £40 and the prices of houses jumped from £1,800 to £5,500 or £6,000. We are in office for one year and we are asked to increase the grant by 50 per cent. My feeling is that the giving of grants is nearly outdated. For the first four or five years after he buys his house, what a person wants is a grant to subsidise his interest. This is of more importance to him than what he is paying out of profit, rather than the few pounds he might owe at the end of the 35 years repayment. Deputy Colley has nothing to say about that kind of interest rate. He does have something to say about tax on loan interest. At col. 1486 of the Official Report of 3rd April, 1974, Deputy Colley said:

I have mentioned the Government's decision to restrict loan interest as a set-off against income tax. This was supposed to be directed against speculators but the real speculators have a way around it. There is no major problem in getting around it and it has improved the position of speculators from the UK in this country who are given an advantage over Irish citizens in this matter.

This is not true. He goes on:

One effect it has had is that it has crippled a number of Irish executives who have no wealth but their salaries.

He goes on to say that building societies will only give £7,500 of a loan so that there is no place they can borrow. If the Deputy would look at what the Minister said in introducing this he would see at column 1442 of the same report where the Minister said:

I have already announced that as from 10th January, 1974, the Finance Bill will restrict to a maximum of £2,000 a year the amount of interest on borrowings allowed to qualify for tax relief but that borrowings for genuine business activities will not be affected. In the light of the examples I gave, in last February's debate, of people with incomes of £13,000 and £24,000 a year claiming relief in respect of interest payments of £14,000 and £33,000 respectively, I think, Sir, further comment is hardly necessary.

I think they are both right. I think the Minister's idea is correct. A few professional people are willing to buy property and make nothing out of it if they can cover interest. They do not have to pay any tax, the interest covers the tax. They have capital appreciation and they are quite happy. It is mainly professional people who are doing this. I think Deputy Colley was right because when you take what the Minister said, that £7,500 was the maximum purchase price of a house in respect of which building societies would give a loan, it means that the person who wants to buy a house for, say, £20,000, at the old rate at which a building society lent which was 10 per cent, or 11 per cent now, approximately, he would be allowed £2,000 on that £20,000. But what happens today is that you cannot get a loan through the building society. You can get it from a financial house. I may be slightly wrong in the figures but the first two are correct: they give the money at 19 per cent over a 15-year period. He must take out an insurance policy which will cost about £1,000 and he has to pay about £2,000 a year back on which he will get no tax allowance. I think there is something wrong here and that this is something that should be looked into. In this case we must look at what top executives are paid. Very often the top executive is the person who can be the making or breaking of a company more so than the chairman or the principal shareholders. He can be No. 1 in the business. Unless we can give him a fair chance to buy a house and to make sufficient money for his time and effort and see that he will not be overtaxed, we will not get him. We have seen how top scientists in England have all gone to America because of better incentives and bigger money. We should look at this £2,000 limit on relief of tax on loan interest particularly when the building societies will not give loans on houses costing over £7,500.

Again, to show the difference between the financial experts who spoke in regard to income tax allowances, Deputy Colley said that the workers had been had. Deputy Lynch criticised the income tax allowances much in the same way as Deputy Colley and mentioned a speech in the chamber of commerce. Deputy Haughey said nothing of any significance on that matter, just making a passing reference. Speaking on April 3rd at column 1479 of the Official Report, Deputy Colley said:

In referring to the fraudulence in regard to income tax allowances and the way the workers have been had, I would draw the attention of the House to the fact that in the 1972 budget, the last budget introduced by a Fianna Fáil Government, there were increases in income tax allowances. Merely to restore the position as it was after that budget one would need to increase income tax allowances by approximately 25 per cent. The Minister has not made any provision for automatic adjustment of income tax allowances in the present situation of raging inflation under this Government.

He picked out 1972 but how many years was it before that that there was a change in personal allowances? But what he did not mention in regard to 1972 was the claw-back, the taxes that were put on to cancel that tax allowance. On this occasion we got a tax allowance and there were no taxes to take away from it, no claw-back.

Deputy Lynch, as reported at column 1510 of the Official Report of 4th April, 1974, said, in reference to the Minister:

... He knew as well as that, because of the successful negotiation of the recent national wage agreement, substantial tax allowances had to be given. He has failed miserably to match up his performance with his promise.

That is not true. We gave something and took nothing back. Most governments give with one hand and take back with the other. This is where most Fianna Fáil people stopped criticising the budget and realised they were getting nowhere. They had a feedback that the people accepted it as a good budget. At column 1510, Deputy Lynch said:

In a speech last Monday to the Dublin Chamber of Commerce I referred to the type of increases that ought to be made available. I said that because of the overall increase in our growth of 6 per cent caused by our entry into the EEC, on that basis alone without taking any account of inflation, the income of the lower groups, and particularly the social welfare groups, should be increased by 8 to 10 per cent. When I add to that inflation, which I estimated at that time to be 13½ per cent—the Minister said 14 per cent yesterday and I think we are entitled to anticipate without any exaggeration that it could be 15 per cent—the Minister should have raised social welfare benefits not by 18 per cent but by 25 per cent.

That statement was made four or five days before the budget was introduced. When I was in Opposition and I thought that 10 shillings were to be given to old age pensioners, I would say that they should be given £1. I exaggerated. I am sure Deputy Lynch did the same thing. He was not about to say 8 per cent when he thought we would give 12 per cent but he said 25 per cent. He made a big mistake when he said that because he did not realise that we were giving 18 per cent to the end of the year but it would be 24 per cent for the full year. Therefore, we gave more than he anticipated.

Deputy Haughey said he would have given more. This is where the Fianna Fáil ex-Ministers for Finance disagree. Deputy Colley and Deputy Lynch intimated that there should have been taxes. If so, I agree that tax-free allowances should go up, but there were no taxes. Farmers are being taxed. Deputy Colley made no reference to this. Deputy Lynch said that some farmers would be paying £500 and that £20 million would be taken in rather than the £4½ million mentioned by the Minister. In column 1515 of the Official Report, volume 271, Deputy Lynch said:

It is estimated by the Minister that 9,000 farmers only will be caught in the first instance. An estimate was given, I think, in one of the comments last night that each of these would pay an average of £500, making up an income of £4½ million. The Minister said yesterday he was unable to make any assessment of it and he ignored this completely for the purpose of his budget. I think it is not unreasonable that this £4½ million—if it is an accurate figure and I have no reason to doubt it—would rise quickly to, say, £20 million or £30 million in a year. Let us look at that and see what is fair and just...

That figure was taken out of the air. Deputy Haughey said it would be £40,000 or £50,000 and he spoke at length on this. He cried for the small farmer whose wife is out working. There is no intention to tax the small farmer. A farmer's wife could be earning £30 or £40 a week working as a nurse or teacher and she gets her money free of tax, whereas a single person or a married woman not a farmer's wife must pay full tax. Deputy Haughey mentioned the figure of £40,000 or £50,000 and if there are more than 9,000 such farmers here then there are a number of moneyed farmers who do not know just how wealthy they are.

I am more worried about wealth tax than income tax. It is very hard to tax a farmer in a particular year. One year he could have a loss and the next year he could have a huge profit because of the sale of cattle. I should hope that his good year will be levelled out with his bad year by the Revenue Commissioners. A farmer can sow a crop and spend all his time working but the profit for that crop would not be shown until the next year.

I could not believe what I read about mining. It was said that we were breaking our word and robbing the miners. They were going to take two or three billion pounds out of the country in lead, zinc or whatever they were mining. We were told that we were left wing. It is surprising that when the feed-back comes to the people how things can change. Deputy Lynch in the Official Report, Volume 271, column 1512, said:

... I will give the Government credit for this though not much credit—we have seen the new mining tax legislation.

Since we promised to introduce mining legislation every Fianna Fáil man said that we were breaking our word and taking money from the miners. We were not fair to them. We, on this side of the House, felt that they were not going to dig a big hole here and then take the wealth to another country. Deputy Haughey at column 1791, Volume 271 of the Official Report said:

What intrigues me is that in the piece of legislation which the Government are now bringing forward I find all the proposals, solemnly set out, with which I was confronted at that time. I am quite prepared to speculate that the result of this piece of legislation ultimately will be almost exactly the same as mine and that when all the allowances set out in the Bill are given effect to no income tax will in effect be payable by most mining concerns.

Deputy Haughey said it is exactly the same as his. Up to this budget I did not hear a Fianna Fáil person speaking for it. In fact, the ex-Ministers for Finance should tell their colleagues they had better stop talking about it around the country because they said the opposite in Dáil Éireann.

Deputy Lynch wants no inflationary measures, wants no budget deficit. Deputy Colley at column 1492 of the Official Report for 3rd May said:

This Budget should have been moderately expansionist, as I indicated. I would have thought, taking the best view of the situation, a deficit of £20 million to £25 million would have been tolerable as allowing for growth related to the capacity we have for growth in this coming year and still not lead us further into inflation. Instead of that we have had this unbelievably irresponsible Budget Statement by the Minister, backed by every member of the Government, of a £76 million deficit in circumstances in which no reputable economist could possibly justify such a deficit.

Deputy Lynch wants no deficit. Deputy Colley wants £25 million and Deputy Haughey at column 1797 Volume 271 of the Official Report said:

I know that the Minister in his outline of his budget strategy has indicated that in his view the increase in prices with which the economy would have to contend was serious enough without his adding to them by increases in taxation and, therefore, he went for a budget deficit rather than attempting to balance the budget by the necessary taxes. I suppose that at this stage we have no option but to accept the fundamental decision by the Minister in his approach to the budget this year but it is as well on this side of the House that we should indicate our apprehension about the Minister continuing with deficit budgeting of this sort.

We had Deputy Haughey warning that you cannot do this for ever. We all know you cannot do this for ever.

The Opposition have been talking about price increases. Prices have risen. They have risen in every EEC country. Wages have risen in every EEC country by 12 to 20 per cent. They have risen in most countries outside it at a greater rate. Prices inside the EEC have risen continually over the last 12 months but in latter months there has been a slow down. In some cases food prices have come down and our farmers are now cribbing about this. Outside the EEC prices are going up at a faster rate.

We are a great country for promising the people of Africa or of South America that we will do this and that for them but we did nothing for them. All we did was to get cheap food from them. England bought the cheapest food that she could get and she kept our prices down. Now those countries have got their independence and are emerging. I read the other day that we will no longer get cheap tea from India or Ceylon which control 90 per cent of the tea imported by Europe. They will look for their pound of flesh. The nuts from which margarine is made are dearer. In whatever country they are grown their price will be pushed up. Margarine is now within 3p per pound of the price of butter, whereas a couple of years ago it was half the price of butter. Perhaps this will be good for the farmers. Citrus fruits and other seasonal fruits are grown in some wealthy countries but mostly in developing countries. They are looking for top prices. The western world is fully developed and has many luxuries which they do not have in those countries. Why should the western world be subsidised by those who are in poverty? Let us take the example of oil. We were getting oil at a very low price, for practically nothing. The big oil combines took their cut and when we got it to western Europe we hammered it to get all the tax we could out of it and gave it out in social welfare. Why should the people in those countries not get a cut out of it and give it out in social welfare there? This is what we would do. There are many resources in these underdeveloped countries which have not been tapped. Imports from those countries will increase in price every year. If a country had enough money they could stockpile. Those countries will say now: "Who will give us the biggest price?" and they will get it on the world market. They are entitled to get it and we are going to pay for it.

We will no longer get cheap raw materials or cheap food. We depend a lot on imports and re-exports. Our wages have gone up which means that with the increased wages in these countries and the increased prices which the Third World are getting we have to pay increased prices. Our farmers sell foodstuffs in Europe and have to get increased prices in order to pay for the increased price of oil.

Prices have certainly gone up but there has been a levelling off. We promised to take VAT off food. We did that last year. If Fianna Fáil were still in office VAT would still be on food and prices would, therefore, be much higher. As well as increased prices there is the important factor that we are tied to the £. British Governments in recent years have not done much to keep the value of the £ steady. It is now a floating £. Most European countries have a currency which is of much better value than the £. There have been increases in costs in Germany as well as increased unemployment but so far as we are concerned the £ will not buy as much as it used to.

These are all causes of inflation. Fianna Fáil go around trying to fool the people. They will probably try it again before the local elections. They will not succeed because the people read the newspapers and they know the prices in various European countries. Deputy Haughey mentioned prices as well as some other points. He mentioned the capital budget and long-term planning. Fianna Fáil only planned for six months but this budget plans for a year. He mentioned interest rates and I agree with him that if at all possible they should be tied to the money market and the scarcity of money for developing business.

Deputy Haughey said that some of the Ministers who spoke had more to say about the 70,000 unemployed than about anything else. I have heard many budgets being introduced since I came into the House in 1963, and even before that, but I never heard a Fianna Fáil Government mention unemployment in a budget statement. They kept far away from it and it was often greater than 70,000. The Deputy also spoke about the western seaboard. I have heard references to the Irish language, to the Gaeltacht being kept, to this that and the other being done for the west, in budget speeches. Nothing was done then but now we have the Minister for the Gaeltacht doing something about the west.

The budget, after Deputy Colley's speech, was in many ways praised by the Opposition. They said less about the budget and more about other things. Deputy Colley spoke first and you would think we had given him arsenic. The next speakers did not say so much about it. They said nothing against it. In some instances the budget was actually praised by the Opposition. Most of the attack came on the White Paper on capital taxation. Members of the Fianna Fáil Party have spoken about the White Paper at various cumainn meetings around the country. They have supplied scripts to the papers. Deputy Haughey, in Volume 271, column 1788, of the Official Report said:

Yesterday the Parliamentary Secretary to the Taoiseach attacked me, I understand, for stating that the proposals will mean the end of private property. He suggested that I would have to backtrack on that statement. I have no intention of backtracking on it. I want to reaffirm emphatically that it is so. Ultimately, if these proposals go through in their entirety as outlined in the White Paper, it will mean the abolition of ownership of private property in this country. If there is a taxation mechanism which is designed to annex 2½ per cent of the property of every member of the community every year surely it is a simple mathematical calculation to project that after 40 years the entire property of each individual member of the community will have been appropriated.

Deputy Haughey is an accountant and should know that not alone is that wrong but it is mathematically impossible. If you take 1/40th from 100 you are left with 97½ and if you take 1/40th off that you are left with something more than 95. You will never be left with nothing. This is what the Fianna Fáil Party are saying to the people. If they are criticising the White Paper they should be honest about it. They should say what is good or what is bad about it. The Minister for Finance asked people to tell him what they thought of the White Paper.

Deputy Haughey said there was no profit in the country. If that was the case we would have no foreign companies here. The White Paper was sent out as a discussion paper. Every professional group and every business group in the city have accepted the Minister's statement. They are all sending their views into the Minister. Some of them have even met him. Various business organisations have sent in their impressions of the White Paper to the Minister. Every business is different. A business with a big capital outlay may have a small profit and capital gains built in over the years. Another business may have an import business with very little capital but big profits. You must look at the whole picture before you make a decision. Fianna Fáil are trying to make political capital out of it.

There are three main taxes in the White Paper and they are open for discussion. The first is a capital gains tax. I have met no business people who have objected to this. They have all said it is fair and should be done. No man should get away with a capital gain of £100,000 and certainly he should not get away with £1 million on one deal. One person can make this type of money and another person can go through life without any chance of making any profit at all. A huge profit like this should certainly be taxed. Such profits should have been taxed 40 years ago. They should have been taxed under Fianna Fáil for a hell of a long time and had that been done, particularly in relation to building land in the last ten, 12 or 14 years, there would be very little inequality in wealth at the moment because that is where most of the wealth was made on capital gains.

Capital gains taxes here should not be any greater than they are in England. Perhaps they should be a little less. I am 100 per cent in favour of a capital gains tax but there are a few aspects I would like the Minister to consider. One is the case of the sale of a private house; in nine cases out of ten the person who sells is putting the money back into another residence. That person should not be brought into the net. The situation is different where the house is sold for development purposes, a block of flats or an hotel, which may net a huge capital gain. There the position is quite different.

There is a little ambiguity in paragraph 90 especially in relation to family businesses. There is a possibility of what amounts to double taxation as between a company and its shareholders and the provision being made to eliminate this hardship. This could arise in the case of liquidation. Assume an asset is purchased for £8,000 and subsequently sold for £20,000. In the first instance it is owned by an individual and, in the second instance, by a company which disposes of it in the course of liquidation. The computations are as follows: when the asset is owned by an individual the sale price is £20,000, the cost price £8,000, capital gains £12,000, tax of 35 per cent £4,200, net proceeds by the owner £15,800; where the asset is owned by a company and sold in the course of liquidation the sum received by the liquidator is £20,000, the cost price £8,000, capital gains £12,000, capital gains tax at 35 per cent £4,200, net proceeds £15,800. Assuming this was a family company in which all the shares except one were held by the owner and his wife, the shareholder would receive from the liquidator the net amount secured on the sale of the property: net proceeds of sale £15,800 and from this would be deducted the original cost of the shares to the shareholders, £5,000, carrying subject to capital gains tax in the hands of the shareholder £7,800, which, at 35 per cent is £3,700. The shareholders receive eventually £15,000 minus assessable capital gains £3,782. Therefore the transfer represents £12,000 in one case against £15,000 in another case, the same money.

There are also cases where capital gains could arise in groups of companies transferring property from one to another. It is really a matter of transfer without a sale being involved and with different shareholders only. They might be caught under this. I do not see why they should be caught. There are three main taxes suggested and the companies are against them all. They think the whole thing is wrong. I think it is a good thing. I believe it was time it was brought in.

The inheritance and gift taxes are very fair and very lenient. I would say too lenient. Take the case of a married man, like myself, with six children: he could leave each of those six children £150,000 free of tax and he could leave his wife another £150,000. That would be £1,050,000 free of tax. Under the former system death duties on that amount of money would amount to approximately £450,000. On £2,500,000, the tax would be £500,000; under death duties it would be approximately £1,260,000. These are rough calculations. I may be out a few thousand. I always disapproved of death duties because very often those who died young were caught and a widow and children could be left with practically nothing when the debt to the State had been paid. Death duties were most unfair. The new tax is a much better idea. It must be remembered, too, that the number caught for death duties was always pretty small. The number is getting smaller. One has only to take up the paper to read about all the trust funds that have been established. Before they start in business people have a trust fund practically set up so that they cannot be caught for taxes and one cannot blame them. In fact, I had a trust. It was not solely for my family but also for the considerable number of people involved in the business. In any business there is more than one person involved. If the owner lives until he is 55 or 56 years it is not unlikely that his employees range in age from 40 years to 60 years. If the owner leaves more than £200,000 55 per cent is paid.

I am citing my own example to show how bad was the system. I employ about 300 or 400 men. If I were obliged to dispose of some of my property and let go some of my staff, some of whom are 50 or 60 years of age, the Government might find they would have to pay a considerable amount to them by way of benefits. If I died, although the Government would collect quite an amount of money by way of revenue, they would also have to pay social welfare benefits to the men who might not obtain employment. I have always been in favour of profit-sharing, of employees having an interest in business. No matter who he is, the fact that one person dies should not mean the entire staff is victimised.

In the new inheritance and gift taxes one would not have to pay at the rate of 55 per cent despite what Deputy Haughey said. It may be that there will be a change in the income tax rate every year; this is something that should have happened during the years.

Farmers can charge half the valuation of their estates, from £200,000 down, for death duties. Unless a farmer has 2,000 or 3,000 acres, I cannot see him paying any death duties. However, he should pay something every year, rather like an insurance policy. In the old system of death duties it was necessary to have an insurance policy of £500 or £600 to cover death duties, which was added to the estate. It is not too much to ask them to pay a small amount each year.

The night after the White Paper was introduced I had to go to a function for the Mater Hospital, which many business people and doctors attended. After the introduction of the White Paper I was not surprised there were some remarks made but the only people who made any comment were the doctors, not the businessmen. I attended another function some time later and the only people who were cribbing about the wealth tax were those who had not got it or would not have it for the next 20 years. They were interested only in pretending to their neighbours that they were worth that much money. Those who were wealthy kept their mouths shut, probably hoping to get away with it in the future. I am not saying that the wealth tax is 100 per cent right.

With regard to the inheritance and gift taxes, the trust fund is no longer of use. Whether one gives money away when one is alive or leaves it to somebody, if it is in excess of £150,000 it is necessary to pay tax. Prior to this wealthy people could have a trust fund for seven years, they could leave £8 million and not pay one penny to the Government. The amount the Minister has set is extremely liberal; I think he would have got away with £100,000. It is not a hardship to ask these people to pay something during their lifetimes. There should be a maximum. It should be no greater than the old surtax, 80 per cent. In Sweden you can pay a maximum of £104 on £100 income. If you are paying 80 per cent of your income it is a lot of money. A lot of thought should be given to this. When I talk about companies I mean private companies. We are different from England and the big industrial countries where they are all public companies and wealth tax is tax on dividends. In our case my fear is that we will be taking money out of reinvestment which gives employment. This should be looked at very carefully.

I do not think that private residences should be subject to capital gains tax or gains from insurance policies. The Minister said he would not do that. The disposal of assets by a trading company will attract tax. This would have a very serious effect on the cash flow of a company. If a company has suffered trading losses and sells some property to provide working capital, the money left after the sale will be reduced tremendously when capital gains tax is taken off. It may not be 25 per cent, as suggested, but the purchase price will come off it too. People may say I am looking after the rich and that in most cases I have mentioned taxes which hurt me personally.

If a person with money wants to go on three or four holidays a year he can spend £2,000 or £3,000 in Europe and the money is not spent in this country where it was made. If a person elects to make a gift rather than wait for somebody to pay inheritance tax the amount of tax is cut by 25 per cent. This should be encouraged so that parents especially in the farming community will give the younger people an opportunity to get the business going and have a proper transition of the business while the parents are alive instead of somebody being thrown in at the deep end.

My fear is that this tax might take money away from private investment and private enterprise and investment credit enterprise which produce a lot more capital profit than the State bodies who have a social element. People domiciled in Ireland have to pay this tax. It is the same in Denmark. If a person goes to America for five years and still has Irish citizenship, when he returns he is liable to wealth tax for that period so far as I can read this. This is wrong. There is also provision that residents have to pay wealth tax. This means that an American multi-millionaire will have to render an account to the Revenue Commissioners here of all his world-wide assets. No matter where he has property, he must give a complete record of it to the Revenue Commissioners. This means that any American who has £2 million invested in Ireland and is worth about £25 million in America will pull up his stakes and clear out of the country.

Hear, hear.

I do not think that is the intention. I have not got the White Paper here. This applies in Denmark and it was probably copied as a discussion paper. I agree that if he has a profit in Ireland he should pay some tax. If he pays his inheritance tax and this tax, and has his head office in Ireland, and assuming we have the right double taxation agreement, I think he should pay the wealth tax here but I do not see why he should be taxed on property outside the country.

Hear, hear.

During the last few weeks we had political speeches. Every party, I suppose, will play politics but I do not think that there is much political gain in this case. Most business people will look at this budget and say what is wrong and right, what they agree with and do not agree with. I agree with 90 per cent of it. I know only a certain number of businesses that would find the wealth tax very difficult; to others it would be no trouble. The sort of talk indulged in mainly by Fianna Fáil is frightening people who have not looked at this taxation. I think 90 per cent of the taxation is fair. It will not affect profits being ploughed back into business. The hotel industry have had a bad season for the past couple of years and to my knowledge their average profit was about 1.4 per cent per annum. They cannot pay much out of that. Their best would be about 12 or 13 per cent. You do not know how that will vary from year to year. Perhaps the threshold for the wealth tax is wrong: I do not say it is. Perhaps there should be different ranges in it.

In general, death duties have been taken out of the way and a fair form of inheritance and gift tax provided and a means left for each individual who is left money to pay something during his lifetime as a sort of insurance policy. Take, for example, a man with two sons. One has brains and becomes a doctor, a solicitor or barrister and makes a lot of money. The other fellow has no brains but if he is left £60,000 he pays wealth tax. The doctor who got the education can earn £50,000 a year and pays nothing on it unless he buys a house or property. I know that the prices of pubs and property in Dublin are mad but, take a publican worth £55,000 who has a house worth £14,000 or £16,000, plus a car and furniture and he would be in the £80,000 or £90,000 bracket and, if he is married, would have to pay wealth tax on £30,000. He makes a profit on his business of 6½ per cent or 7 per cent at present, with controlled prices, but he has to pay wealth tax on £30,000. When Deputy O'Malley was over here he had £8,000 a year plus a car and he had no wealth tax.

It was £6,000. Your Ministers put them up for themselves.

You were about to do it in any case. The position can be that a person with an income of £10,000 does not pay it while a person with £5,000 does and while it may be only 1 per cent if he has to pay that out of £6,000 it is unfair. Income has always been taxed to the maximum while capital has not. Capital should be taxed in a big industrial country. I am a little scared about it here. People speak of the tax situation in England but as regards those in the £5,000-£10,000 bracket they are not nearly as well treated here as in England. I am not suggesting we should upset the whole law for these people but you must get top management. If you do not, England will have them or America.

In all businesses in the EEC countries there is a bigger mark-up, bigger than in Ireland or in England. I wonder if the wealth taxes are related to the higher margins. When I mentioned that private houses should not be included for wealth tax purposes I omitted to say that this would be good in many ways but in one way in particular. If a house is included for wealth tax people who are now living in big houses and maintaining them in good condition—in some cases very good Georgian houses—will no longer look after them and these houses will go into decay as many houses in Dublin did in the 30s and 40s because nobody was willing to pay the rates on them even though the price was low enough. We should encourage people to keep up these houses. In France, I knew of a place beside Notre Dame built in the seventeenth century which was put into very small and expensive flats. The Government took a huge deposit and inspected the houses when they were being let so that these houses would be kept in proper condition in the old tradition and help tourism. Our old Georgian and Victorian houses—I do not know a lot about them—certainly look a good deal better than the types that have been built in recent years.

The wealth tax could be tied in with the capital gains tax because although they are not the same they are somewhat similar. The Minister abolished death duties. This was very good. It was wrong to saddle a widow with these debts while she was trying to educate and rear her family. The threshold for a married couple is £50,000 or £60,000 and on the death of a husband this drops to £30,000 or £40,000. This is very wrong. If anything it should be raised to about £70,000.

As I said earlier, there is no maximum mentioned in the White Paper as to the amount to be paid in wealth tax. There should be. A lot of property is being let today with seven or five year breaks. There are some properties with a lease of 21 years. If such a property was rented, say, 17 years ago at a rent of £300 a year, in four years' time one will be free to up that rent to the market price. If the property is in one of the best streets in Dublin one might get £8,000 for it in four years' time. Its value today would be minimal at £6,000. With seven or five year breaks thereafter one could probably get £90,000 for it.

There are cases of importers who do not pay capital tax. They use an accommodation address, import the goods and send them by rail to various retailers. They make a great deal of money but do not pay capital tax. Farmers must pay tax now and every successful businessman should do likewise. I am not saying that there are some businessmen who do not escape but, if they do, they will not escape for very much longer. If they try to fool the income tax people somebody will get wise to them and they will not last very long. Every businessman keeps accounts and pays taxes. I believe the wealth tax is the only way to catch everybody who gets ready money into his hand. We all know of people who get money into their hands but do not pay tax on all of it. Every businessman should pay his fair share of taxes, as every worker does with PAYE. That is why I approve of the wealth tax.

Some hotels have, over the past few years, had very bad seasons. If we had a maximum of 80 per cent for the wealth tax, and it got out of control, we could force hoteliers into selling parts of their hotels even though the Government had probably given them a great deal of money to build in the first place. Many businesses run into bad periods say, one in five or one in ten years. Very often a business may have a good clear run for ten or 12 years. Then they may get two or three bad years. In such a case, if a businessman has to pay 2½ per cent without taking profits into account, I do not see how many businesses could last. In future I think there will be a rising market because the price of oil will prevent people from going abroad and, therefore, more of them will holiday at home. Of course, our prices will also go up because of the cost of oil.

One cannot blame Fianna Fáil for saying—although many people might believe it—that Labour forced Fine Gael to take this step. It must be remembered that the Fine Gael manifesto promised to abolish death duties and substitute a wealth tax. As shadow Minister for Labour, I was the first to suggest the abolition of death duties and the substitution of a wealth tax or an equalisation tax. I always felt that it was better to pay something when one was alive than to burden people when one had died with death duties. One is making money but when one dies it is cut in half. With a wealth tax one can pay as one goes along. One can say: "I have gone far enough. If I go any further I will be building only a house of straw. This business will collapse as soon as I die and then people will be sacked." If one pays a certain amount now it will be possible to cut costs in the future.

In regard to the wealth tax we have different styles of business. We have private companies and public companies. Public companies are not affected. It is only when a company is in private hands that it applies. There are about ten different styles of business. There is a business like a hotel with a huge capital and, at the moment, bad profits. A hotel can have good profits at times. You can have a hotel that makes money because there is a restaurant or bar attached to it. You can have a bar business with a huge turnover and a big profit or a small profit. If a wealth tax is introduced it is very hard to have price control because then you are controlling at both ends. I do think that is on.

The White Paper has been criticised by Fianna Fáil. Very little was said against the budget. Deputies spoke more against the White Paper. Fianna Fáil speakers have gone out and spoken against the White Paper in toto. I think the capital gains tax is correct and should have been brought in 40 years ago. If it had been brought in we would have less worry about wealth in certain hands not being divided among the people who have worked hardest for it. People made the money with a couple of quick deals. I am 100 per cent for the gift and inheritance taxes. They are fantastic taxes. They are fair and good, a lot better than the death duties we had up to now. To cover the money lost by the abolition of death duties and the introduction of the gift and inheritance taxes something on the style of an insurance should be paid to compensate for the death duties and for the wealth tax. Two points I am very worried about are that it prevents money from being reinvested in business for employment and for development. Another point is that the maximum would not be above 80 per cent.

To say that I am disappointed with the Minister's budget proposals would be an understatement. To say that I am disappointed is as far as I will go because I cannot say I am surprised with the inadequacy of the proposals. I would like to be fair to the Minister. The budget is consistent with the Government's performance to date. It is another step in a line of broken undertakings. When the budget was introduced last spring the plea was made that the Minister had had little time to prepare it. Last spring he had an additional £30 million from agricultural subsidies.

With a year to prepare this year's budget it can have satisfied nobody. I do not think it has satisfied the most loyal Government backbencher. Far from doing anything for the people receiving social welfare benefit the budget does not even maintain the purchasing power of pensions and allowances. Let us take some examples. A retirement pension was increased by £1.30 per week; an old age contributory pension—68 to 80 years—personal rate was increased by £1.30 per week; an old age contributory pension—age 80 and over— by £1.40 per week; widows contributory pension—under 80 years—increased by £1.20 per week. Disability and unemployment benefit was increased by £1.20 per week and children's allowances by 30p per week. This is what we are getting from a Minister and a Government who claim they have a social programme. Does the Minister think that the increases I have listed restore the purchasing power of the pensions and allowances of the recipients? The Minister must know that they have lost ground due to inflation which has been taking place over the last 12 months. The Government have proved totally inadequate to handle it. The Minister must surely see injustice where there is an increase of £1 per week in unemployment benefit and where you have workers seeking an increase of the order of £8 to £10 per week.

You would think that the poor and the unemployed had some cheap source of food. The increases given are almost gone in the price of coal or gas, for instance. The price of coal increased during the past 12 months by £1 per cwt. In the light of the raging inflation we have experienced in the last 12 months this budget is a very poor effort. It is a lesson to those who listened to the election promises of the Coalition Government. I do not know how anyone could justify a £1 increase to an unemployed man. The £1 increase for that unemployed man must certainly take its place along with that other infamous Cumann na nGaedheal—one shilling per week cut in the old age pension.

The Minister did not attempt to balance his budget. I suppose in the circumstances of the reduced financial year that was probably unavoidable but he must be challenged about the extent of the gap. With the present rate of servicing such a vast deficit a massive burden is thrown on the taxpayers. We have to realise that burden has to be met in the future. One would get the impression that this Government are a Government of tomorrow's men as far as meeting their debts is concerned. It was not good thinking to budget for a deficit.

A number of Government Deputies mentioned the increases given to farmers. They stated they were in the region of 32 per cent. At first glance this looks a massive increase in one's income but when one relates it to the cost of production and looks at the type of farmer who has got that 32 per cent one finds it is mostly the large farmers who have got it. An increase was given in milk prices because of our entry into the EEC and the large milk producers benefited greatly. An increase was given to the tillage farmers but they are only a small minority of the total farming community.

When you look at the small farmers and those who are dependent on pig production you certainly cannot find any increase in farm incomes. The cost of fertilisers has increased by almost 100 per cent in some instances. There is also up to 100 per cent increase in the cost of fuel oils and large increases in the cost of seeds. The price of building materials has also greatly increased. Before the last spiral of increases it was mentioned here in answer to a Parliamentary Question that there was an increase of over 40 per cent in the cost of some building materials. When you relate that to the increase of 32 per cent in farm incomes you see that the small farmers have not received anything. Any farmer who wants to put up extra buildings has to meet the extra cost in the price of building materials. Small pig farmers have received no increase. Those who have suckling herds on the poorer land have received no increase over the past 12 months.

Drainage is also a big problem with farming land. It is a matter of vital importance that money should be provided for arterial drainage. An allout effort should be made to get an increased allocation from the EEC for this work. In reply to a Parliamentary Question today in relation to the flooding of rivers the Minister said he estimated that 12,000 acres of land around two rivers were flooded. That gives some idea of the urgency of this problem. Some of the land in the areas surrounding those two rivers is a complete write-off. A lot of this flooding is caused by the delay in the implementation of arterial drainage programmes. In that 12,000 acres of land you could have 100 viable holdings. This will give an idea of the importance of arterial drainage.

Much was said about the farm modernisation programme. That programme is at a halt. The Government should make an effort to have this dispute solved. There are many farmers who have applied for grants and they do not know if they will be rated as development farmers or transitional farmers and, therefore, men who intend to increase their herds, buy equipment, build silos or milking parlours have no indication from anyone when this farm modernisation programme will get under way. There seems to be no communication at all between the Government and the farmers. There should be some directive and some explanation about when they may expect the dispute to be resolved and they will be classified in whatever category they fit under this farm modernisation scheme.

Again, there is the question of retirement pensions. There is complete silence about these also. The Minister for Lands should issue some communication. This is the time of year when farmers begin to think about selling their farms and retiring from the land. Their families have grown up and gone. They cannot get labour. Now is the best time to put property on the market. But the farmers must be told when this retirement scheme is to come into operation. I appeal to the Minister to have Directive 160 clarified.

Another matter relating to my area is the payment for bomb damage in Clones. I asked a Parliamentary Question about this some weeks ago but I got no satisfaction. It is almost three years since the damage was done and those affected by it, business men and others, are paying very, very substantial interest to the banks on the money they had to raise to repair the damage. The cost of the damage was over £250,000. That shows the amount of damage done in that small town. I appeal to the Minister to pay compensation without delay.

With regard to industries in Border areas greater incentives will have to be given to encourage industrialists to establish industries in these areas. As a result of the Border troubles there are not the same inquiries now from industrialists. I would appeal to the Minister to ask the IDA to try to persuade industrialists into these areas through the medium of additional incentives because of the special conditions that have developed in these areas.

I am grateful to Deputy Leonard for letting me in at this hour particularly as he, like myself, had to wait for two hours listening to Deputy Patrick Belton tell us in one breath how he agreed with the budget and, in the next ten breaths, how he disagreed with the White Paper on capital taxation. It was interesting listening to Deputy Belton. I shall come back to this again tomorrow.

One of the most interesting things he said was: "I want to take my own personal case" and then proceeded to congratulate himself on the fact that he could leave personally to each of his six children and to his wife £150,000 each, a total of £1,050,000 free of inheritance tax.

That is an extremely mean comment on a very generous and courageous speech and entirely worthy of the Deputy.

Entirely worthy of Deputy Belton.

Entirely worthy of Deputy O'Malley. The Deputy's mean comment on a courageous and constructive speech is entirely worthy of the Deputy.

I am grateful that I got even one minute so far before I was interrupted by the Parliamentary Secretary.

The Deputy had his own back bencher under orders to sit down and let him in so that the Deputy could get the coverage when the debate resumes.

Are we to assume the Parliamentary Secretary had Deputy Belton under orders to speak for two hours and keep us out?

Could we have debate now without interruption? Deputy O'Malley, without interruption.

He said nothing mean about anybody.

Order, please.

I want to deal with an aspect of the budget which has not so far been referred to, an aspect which does not have a direct and obvious bearing on the ordinary man-in-the-street but which is of considerable long-term economic and financial significance; I refer to the capital budget which is published shortly before the budget proper.

I thank the Chair. I shall leave the rest of what I have to say on this particular point until the next day on which I can speak on the budget in the hope that the Parliamentary Secretary to the Taoiseach will not be present and I will be able to speak, as Deputy Belton was, without the slightest interruption of any description, for two hours.

There are some very interesting figures in Table I on page 10. What are described as residual borrowings for the purposes of the capital budget are usually a small proportion of it and consist for the most part of foreign borrowings or borrowings of a short-term, temporary nature, small in quantity and amount. The estimate in the budget for 1973-74 was that residual borrowings should amount to 37.7 per cent, which is approximately 10 per cent of the proposed capital budget. In fact, the out-turn for 1973-74 showed that residual borrowings amounted to £99.8 million. The most interesting thing about this is that some six months before the end of the last financial year Deputy Colley forecast in this House that, if things continued as they were, the likelihood was that the residual borrowings which would have to be resorted to by the Minister for Finance would amount to about £100 million in the last financial year. As it happens, he was £0.2 million out—not bad going, to say the least of it. It is interesting to note how that £99.8 million, which had to be frantically resorted to towards the end of the financial year to balance the capital budget, was obtained. We are told £8.8 million was got from the European Investment Bank of the World Bank. Fair enough. We are then told the rather mysterious figure of £35.4 million was got from what is described as "other foreign borrowing". We are not told what that was and neither are we told in the budget what the terms of that borrowing were.

Debate adjourned.