——the Chair, quite rightly, said that as I had contributed already he would call another speaker. I was not trying to evade Deputy Callanan's question. I never would, and never have tried to, denigrate Deputy Callanan's contributions in this House. I recognise his objectivity.
In regard to Deputy Sherlock's point about the increase in the price of petrol effectively reducing the workers' living standards, particularly workers in rural Ireland, and referring back to the quotation by Deputy Leyden of my speech, I must admit quite clearly that it does. There is no avoiding that. I also admit, with equal frankness, that this poses a bigger problem in rural areas than in urban ones. Those points are correct.
I am surprised that the Opposition have obviously no contribution to make to the debate, but have had to rely in almost all their contributions on what I said in response to their Finance Bill. I am somewhat surprised to hear the Opposition referring to hypocrisy. I would have thought that this word might have been capable of being applied to them but I will not apply it as there is no point in trading that type of epithet across the House.
The position, of course, is that the total increase in petrol price in this budget is 13.4p, an increase of 4p in July 1981 and of 9.4p in September 1981, in situation of unprecedented economic seriousness, when the Government were forced to take quick action and could not turn to other means of taxation and, for reasons which I have explained, had to rely on indirect taxation. That is, effectively, the only kind of tax which one can enforce in the middle of the year. In contrast with that, the previous Government in the normal annual budget, in January 1981, when they had all the other choices of revenue raising possibilities available, not just indirect taxation, imposed an increase of 15p — significantly greater than our increase in July. In the previous year, in February 1980, they imposed an increase of 20p, even greater still. Their present concern seems to be, shall we say, less than a fair reflection on their record. Furthermore, the best way of measuring the impact of Government action in regard to the price of petrol is to look at the proportion of the total price of the product that the Government is proposing to take in tax.
The result of the budget of July 1981, after the full effect of all the increases taking effect in September 1981 when VAT had been increased, is to bring the total tax taken by the Government on a gallon of petrol to 49 per cent of the price, whereas the previous Government in February 1980 brought the tax taken to 50 per cent of the price and in January 1981 to 51.1 per cent of the price. In proportionate terms to the price of petrol, the imposition in this budget — which I recognise as very difficult and imposing a real diminution in the living standards of many — is, in fact, considerably less in real terms than that of either of the last two budgets of the previous Government. This needs to be put in context against the speeches which we are now hearing from the other side of the House.
In both of the Opposition's previous budgets, in February 1980 and January 1981, they had other choices available to them. They had the whole range of direct taxation from which to choose. They chose those substantial increases in the price of petrol at that time. Our July budget, on the other hand, gave us a much more limited range of choice because we were effectively confined to indirect taxation which very often has this redistributive effect which is detrimental for the reasons explained — mostly by quotation from my speeches by people on the other side.
Deputy Sherlock, Deputy Callanan and others may well make the point that surely it could not be right for a Government to introduce any taxation which has the effect of reducing people's real living standards. I am afraid that the situation is such that we are faced with little option. We are running the largest balance of payments deficit in Europe. What is a balance of payments deficit? It is, in plain man's language, spending more money abroad than you are taking in or, in the language of a household, living beyond your means. There is no way, if one is living beyond one's means, that one can start moving towards living within one's means without, somehow or other, reducing one's standard of living. Anyone who tries to pretend that you can by some magic solution, or fooling around with the tax rate, or economic wizardry, get into a situation where, having been living well beyond your means — 15 per cent beyond it in our case, because that is our balance of payments deficit — you can get back into balance without hardship, without diminishing your standard of living, is trying to fool people. I do not believe in fooling anybody, if I can avoid it. That is the context in which the whole thing has to be seen.
The point will be made with some force by speakers in this discussion that in regard to this increase on petrol and in regard to other increases, because it is relying on indirect taxation and not direct taxation, it has a disproportionate effect on one section of the community rather than the other, because it is rightly argued that the poorer you are the more of your income you have to spend to live. People on the breadline spend 100 per cent of anything they get on purchases, most of which are taxed. On the other hand, if you are well off you can afford to spend perhaps only 70 per cent of your income and not spend 30 per cent of it and that 30 per cent is not affected by any purchase tax. That is why it is said that indirect taxes are regressive.
Nobody can argue against that case. However, as I have demonstrated, because of the timing of the budget, because it had to be introduced in July, we could not, in view of the structure of the tax system, have recourse to anything but indirect taxes. It will be our aim over the period of our tenure in office between now and the next general election in four years' time, to adopt a tax programme——