Dáil Éireann díospóireacht -
Tuesday, 17 Nov 1981

Vol. 330 No. 12

Adjournment Debate. - Wives' Tax Allowance.

Mr. Gene Fitzgerald

I regret having to drag the Minister for Finance into this House tonight. I appreciate he has had an extremely difficult and busy day. Honourable man that he is, unfortunately he is the sufferer in this mad crazy tax package Fine Gael initiated in May last year. No doubt the Minister may have been one of those who contributed to the preparation of that outlandish document, but I have no doubt that being more sensible than many others, he would not have been the person who would push that type of proposal furthest.

Last Thursday I put down a question asking "the Minister for Finance the total cost of the £9.60 tax allowance for women in the home as promised in the Fine Gael Election Programme; when it will be introduced; and the groups of women who will benefit". The Minister's reply was linked with a question put down by Deputy Blaney. He said:

With the permission of the Ceann Comhairle I propose to take Questions Nos. 23 and 24 Together.

The essential principle underlying the proposed payment is that it is tax linked and involves a transfer of half the married tax credit to the spouse at home. The figure of £9.60 corresponds to one-half of the full credit. If this payment were increased, then the credit entitlement of the working spouse should logically be reduced pro rata. This, I consider, would be inappropriate.

Not one word in that reply answered my question; one would say it replied to Deputy Blaney's question. Will members of this Government continue to insult Deputies with that type of reply? The last sentence of the reply could be taken as making some effort to answer my question. The Minister said:

Details of the scheme are being finalised and I intend to make an announcement in the immediate future.

I said I was sure the advertisements would appear shortly in the newspapers but the Minister did not comment. Last Sunday the advertisements appeared in the papers. I did not hear all the Government's sponsored programme at lunch time last Sunday. I heard a number of Ministers but cannot say if the Minister for Finance contributed to that programme or appeared on television later that evening.

Mr. Bruton

It was at night.

Mr. Gene Fitzgerald

He was asked how much this scheme would cost and he said about £24 million. Nobody knows how he reached that figure. Three days previously he was not prepared to give an approximate figure to a Member of this House. Yet he gave this information to the media. This is typical of the Coalition. They live by publicising their good points and underplaying their bad points. There is a story going around in newspaper circles that if the Taoiseach or his Ministers think something happened in this House which is not to their credit, their emissaries are sent out with a message to kill the story before it sees the light of day.

Mr. Sheehan

Actions speak louder than words.

Mr. Gene Fitzgerald

The Deputy will get his opportunity later.

An Ceann Comhairle

Deputy Fitzgerald without interruption. He has only 15 minutes left.

Mr. Gene Fitzgerald

The Minister gave more information to RTE last Sunday than he was prepared to give to a Member of this House last Thursday.

I want to ask a number of questions and I expect the Minister to give honest replies because Government backbenchers would also like to have this information. I know one Government backbencher who is being very badly criticised by his constituents because nobody can establish who will benefit from this £9.60 allowance. Certain amendments were made to the proposal when it reached the floor of the Gaiety on that famous occasion of the Sunday frolics. Those amendments were welcomed because they made a mad tax package less mad. I refer particularly to the wife of the lower paid worker who may not have been entitled to the £9.60. If I understood the tax package correctly — and very few people did — she benefited from the frolics at the Gaiety.

Not long ago I had experience of the Finance portfolio. Is it not true that the Minister for Finance is under a great deal of pressure from the Revenue Commissioners and the trade unions because of accommodation, inadequate staff numbers and other pressures? Yet last Sunday he decided that all interested wives could apply for the £9.60 allowance. He is asking very searching questions in the circular, questions Deputy Sheehan's constituents might not like to answer. These people may be very concerned when they realise the hidden threats and implications in the advertisement.

Mr. Sheehan

The Deputy is afraid these allowances will be paid.

Mr. Gene Fitzgerald

I sincerely hope no party would so dishonour their commitments as not to pay these allowances. If these allowances are paid, they will cost the Deputy's constituents and mine an enormous amount of money next year and in the following years.

Mr. Sheehan

We have certain ways and means of doing it.

Mr. Gene Fitzgerald

They still have not surfaced. From the advertisement it appears that already one decision has been taken. It is in regard to the 25 per cent tax band, although today the Taoiseach refused to be drawn on it when questioned by Deputy Haughey. It seems clear that that decision has been taken.

If that is the case, would the Minister tell the House honestly what this move will cost? When I was Minister I pursued the question of inadequate office accommodation in the Revenue Commissioners. I must confess it was of great concern to me while I was there. Some progress was made, and I hope it has been continued. However, how can the Minister reconcile the present position with the attitude adopted by some of the unions concerned? I believe they have adopted this attitude because they are feeling the enormous work-load this will mean in an already overtaxed system.

All Deputies are aware of how overworked the income tax area generally is. We have had deputations in our constituencies, and I am not saying that was not the case before the change of Government. There were problems then but at the moment tax offices are inundated with requests and representations. I want the Minister to tell us if he is prepared to give extra staff even in face of the embargo imposed on civil service recruitment since the change of Government. In a critical speech on the civil service, and the public service generally, Deputy Kelly, Minister for Trade, Commerce and Tourism, referred to non-productive staff. I want the Minister now to spell out clearly what that means. I want him to tell us if, where they are needed, extra staff will be made available. If he agrees to do that, how does he reconcile it with the decision that recruitment will be stopped?

Commentators have stated quite clearly that this £9.60 will not benefit any family. They have also stated that the cost of the package will be enormous. How does the Minister propose to finance it? Will it be by indirect taxation? I will quote a person who should be a supporter of the Minister and of Government policy, Mr. Brendan Halligan, former Deputy and Senator, former General Secretary of the Labour Party. He said that his only regret was that in the campaign leading up to the general election he did not say what he believed to be the implications of this package in money terms because he believed it would have harmed the Labour Party.

Will the Minister tell us if this will increase the CPI by 8 per cent? Will he say what the cost of the scheme will be and where the money will come from? Last Thursday I asked him who the beneficiaries will be. What about the wives of the self-employed? I understood the Minister to say on television that the wives of farmers whose valuations are less than £40 will not benefit because such farmers are not in the tax net. Wives of farmers with valuations of more than £40 will benefit if they are in the tax net. There is an anomaly: the wives of poor small farmers will not benefit but those of wealthy farmers will. What about social welfare recipients? They will be entitled to the usual increases in benefits but the wives will lose this £9.60. Is that not class discrimination?

These are all serious problems created by the architects of the Fine Gael pre-election document. A commentator recently pointed out that the euphoria immediately after the election because of all these packages has turned to serious problems for the Government and the country. We were told this afternoon that in another Finance Bill we could discuss all details of these proposals before Christmas. Now we know this cannot be done, that we will have to wait until after Christmas.

This morning, the newspaper which Deputy Sheehan respects as much as I, the Cork Examiner, had a leading article headed “Divisive Legislation”. The article explains in detail why the proposals are divisive.

Mr. Bruton

Did the Deputy see The Irish Press this morning.

Mr. Gene Fitzgerald

I could quote many other newspapers but the time available to me is short. This leading article states among other things that discussions are to be initiated as a matter of urgency between the Revenue Commissioners and the civil service unions who have indicated that they would not cooperate with proposed income tax reforms. It goes on:

The present impasse is related to the Fine Gael election promise to give a weekly stipend of £9.60 to wives working at home — a vote-pulling benevolence considerably at variance with the reality now presented.

Indeed, the most the Minister can say about the scheme is that under it wives would be getting their share of the allowances obtained on their behalf and which, in the Government's view, they had always been entitled to.

Mr. Sheehan

Why is the Deputy so much against women?

Mr. Gene Fitzgerald

I have referred to a paper which I believe the Deputy has some respect for also. I sympathise with the Minister because he is carrying the can for the economic madness of a package introduced by some whiz kid with no experience of the difficulties involved or appreciation or realisation of the cost. The people and the Opposition are entitled to some frank answers now because it appears that this will be the only occasion that the House will have an opportunity of debating this matter before Christmas.

Minister for Finance (Mr. Bruton)

While I am not in a position to agree with much of what Deputy Fitzgerald said, I appreciate the courteous manner in which he introduced his comments. I wish to acknowledge that. The Deputy referred to the fact that I did not give in the Dáil the cost of the programme as far as the £9.60 scheme is concerned. I should like to quote what I said on that occasion and it may prove helpful to the Deputy in recalling what I said:

The tax credit as such, in so far as it involves simply a conversion into a cash payment to the wife of a tax credit which would otherwise be available to the working spouse, would have no net cost whatever. However, as the Deputy will also be aware, there is a proposal to extend it to people who are not in the tax net. That has a net cost and I will be announcing, in the relatively near future, the decision the Government will take in the matter.

I stated later:

However, I assure the House that the net cost, given the total tax collected, will be relatively modest.

And so it is. The net cost arises from the fact that the Government programme includes a commitment to introduce marginal relief to ensure that all married workers in full-time employment will have an increase in family income of at least £4 a week even where current income is below the tax threshold. Where current income is above the tax threshold there is no net cost, because all that is happening is that there is a transfer of half a credit against the husband's tax into a payment to the wife. The net cost arises in respect of the implementation of the part of the programme which, as Deputy Fitzgerald correctly pointed out, was negotiated after the election in the course of discussions between the Labour Party and my party.

At the time the Deputy tabled the question here a formal announcement had not been made by the Government and I was not in a position to give the exact answer as to the precise cost of that part of the programme. That part of the programme was announced in the advertisement in Sunday's newspapers. I should like to draw the Deputy's attention to the first part of that advertisement which states:

In addition the legislation will provide that, where the family taxable income is £2,000 or more and below £4,000, one-half of the married personal tax credit (£9.60 a week) will be paid in full to the wife working in the family home notwithstanding the fact that the husband will not be liable to pay an equivalent amount in tax. There will be marginal relief where the income is not greatly in excess of £4,000.

That is where the net cost arises. As I said on television, the net cost of that part of the £9.60 scheme is as follows: the family income supplement and the marginal relief will cost approximately £17 million in 1982 and £24 million in a full year. The reason it is not the same cost in 1982 as in a full year arises from the fact that it will be introduced only from 1 April and, therefore, the cost is diminished by not applying the first three months of the year.

I should like to say something generally about the £9.60 payment. The introduction of the £9.60 scheme to home-working wives is, in my view, a major innovation in our tax system. For the first time wives working at home will have their contribution to national welfare directly recognised by the State. Hitherto their contribution has always been indirectly recognised either through their husbands in the form of increased tax allowances for the husband or, if he is on social welfare, through giving him, not her, an increase in his social welfare benefit or, indeed, through their children in the form of childrens' allowances; but never until now has the contribution of the wife working at home been directly recognised by a direct payment to the wife in her own right by the State.

Mr. Sheehan

Hear, hear.

Mr. Gene Fitzgerald

The Deputy will live to regret that, "Hear, hear".

Mr. Bruton

The scheme will also help in difficult cases where husbands simply do not look after the financial needs of their wives. I received a letter yesterday from a woman whose husband has an income of £15,000 a year and who, she claimed in the letter, made no cash contribution whatever towards her upkeep. He did buy some of the groceries but he made no direct cash contribution. Most Members will find it hard to believe that such cases exist because, obviously, if that is happening, people do not go out in the streets and start boasting about it. They do not write letters to the newspapers, signing their name, and stating that this is the situation but the fact is that such family situations exist. The £9.60 payment will make a small — let us be honest, inadequate — response to such situations but it will be something that has never been done before. The Opposition do not seem to be able to make up their minds about the scheme. Do they believe that cases such as the one I mentioned do not exist? Do they believe that a wife is not entitled to at least have the option of her share — I repeat, her share, — of the family credit paid directly to her? It is only an option and if she does not want to claim it she does not have to do so, but do the Opposition contend that she should not even have the option of getting half of her husband's tax credit paid directly to her? It is time we asked the Opposition a few questions. Are they for or against the scheme?

Mr. Gene Fitzgerald

Deputy Bruton is the Minister for Finance and he should give us the answers. That is bluff.

Mr. Bruton

Are the Opposition against the scheme? Obviously, any new scheme involving as this one does as radical a departure from previous practices will have teething troubles. Tax officials must get used to the operation of a new scheme and the Government must work out the exact method of operating a new scheme. There may be difficulties with it now and I am sure that in the future there will be more; but there are always difficulties with any major innovation in the tax system. In every Finance Bill introduced here we have a section correcting something that was done the previous year or closing a loophole that was opened the previous year. There will always be difficulties with any tax scheme, but the important thing is to be moving in the right direction with a clear sense of purpose.

I have no doubt, notwithstanding the attempts by others to find fault with individual aspects of the scheme, that we are moving in the right direction with a clear purpose in introducing a scheme, which is nationally acceptable. Deputy Fitzgerald quoted from The Cork Examiner and I should like to quote for him from a paper which is perhaps even closer to his heart, namely, The Irish Press which, after acknowledging that there were many valid criticisms of the scheme, stated that the proposal, whatever its merits, had widespread public support among the country's housewives and was unquestionably one of the factors that helped bring Fine Gael to power. The newspaper stated that, now that the Cabinet had decided to implement the plan from

April, that should be the end of the debate at least until the next election.

Mr. MacSharry

The bluff of the century.

Mr. Bruton

That editorial recognised a reality, that the public support what the Government are trying to do in this area.

Mr. MacSharry

They do not understand it.

Mr. Bruton

I should like to deal with the questions raised by Deputy Fitzgerald. In regard to accommodation, I have authorised the Revenue Commissioners to enter into discussions with the tax officials with a view to providing additional staff, if that is necessary. I will have a sympathetic review of any such claim. Obviously, where a completely new scheme such as this is being introduced, if extra staff are necessary to implement the Government's decision, extra staff will be provided, but that has to be discussed in detail in a friendly way with the tax officials concerned. We will ensure that that is the case. Unfortunately in the first six months of this year a number of vacancies in the Revenue Commissioners were not filled and that left the Revenue Commissioners in a difficult situation when the embargo on the filling of vacant posts was introduced. We will do all we can to overcome whatever difficulties there are in order to get what we believe to be a widely supported scheme into operation.

The Deputy asked about the position of the person who is self-employed. The wife of a person who is self-employed will, like any other housewife, be eligible for this payment if she does not have an income in excess of £1,040 and the family taxable income is £2,000 or more. There will be no restriction on the self-employed. In regard to full-time farmers with a valuation of more than £40, as they are in the tax net their wives will, if they meet the general criteria of the scheme, have the option of applying for this £9.60. In respect of wives whose husbands' valuation is less than £40 they are obviously not in the tax net and, as this is a tax credit, it would not be appropriate in my view——

An Ceann Comhairle

The Minister has exceeded his time.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, 18 November 1981.