Dáil Éireann díospóireacht -
Tuesday, 1 May 1990

Vol. 398 No. 1

Finance Bill, 1990: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Dempsey

The most important section of this Bill is section 9 which exempts local authorities from paying income tax on investment income. Because this measure could save local authorities millions of pounds, particularly for the period 1974 to 1983, ratepayers and residents in each local authority area could also save substantial amounts of money. Until 1983 many local authorities had substantial sums of money in capital accounts. This money was lodged in investment accounts because it could only be used for very specific purposes outlined by the Minister for the Environment. The interest earned on those accounts at that time would have been quite substantial. I am aware, for instance, that relatively small local authorities in various parts of the country had been served with income tax assessments and threats of court action in respect of sums running into hundreds of thousands of pounds. If this section had not been included in the Bill and if local authorities had to meet these demands there would be a huge increase in rates on commercial properties or service charges or a combination of both.

I thank the Minister for including this section in the Bill because I have been conscious of this problem for a number of years and have made representations on the matter. I approached the Minister's predecessor about this matter and referred to it in a debate on a previous Finance Bill. I am pleased that my representations have borne fruit. I wish to pay tribute to the Minister for seeing the logic of the argument that the system as it existed penalised thrifty local authorities and acted as a discouragement to proper investment by them. It was also ludicrous that the Department of the Environment on the one hand were paying money to local authorities in the form of block grants, road grants and various other grants while another arm of the State was taking it back in this manner.

I welcome the move because it is an indication of the influence backbench Deputies can have on Government policy. By and large the work they do, particularly the work of a Government backbencher, is ignored. However, the inclusion of this section in the Finance Bill underlines the fact that any Member of this House can and does influence the shape of legislation. The tax amnesty of a few years ago was also suggested by a backbench Member.

Having thanked the Minister, let me push my luck and suggest that the exemption should be extended to cover the DIRT. This is specifically excluded under section 9. While I realise this would have revenue implications, the same principle applies to both income tax and the DIRT, one arm of the State gives money out to a local authority while another takes it from them. In the case of the DIRT, the local authorities would be happy to have this apply from 1990 with no retrospection, unlike this provision which is back-dated. This would be a most welcome move and would encourage better investment by local authorities.

During a debate on the Finance Bill our minds are focused on the specific measures being introduced, changes in taxation and the general changes in the method of collecting and assessing taxes but we do not tend to look at the revenue collection system and the role of the Revenue Commissioners. It is only fair to give credit where it is due. Therefore let me say that changes have been made during the past few years which have improved our system of tax collection, but the general feeling among practitioners, tax officials and the general public is that the system simply does not work well. We can collect and are collecting taxes from compliant taxpayers but we do not seem to have a system which gets at the black economy.

Of all the amnesties introduced in the past, only one has really worked and that was the last one which realised a total of abour £700 million; the Revenue Commissioners estimated that it would only raise about £30 million. We all know what happened and now it is being hailed as a great move. Some estimates indicate that only about 5 per cent of that £700 million came from the black economy, the rest coming from taxpayers who had fallen behind and who had been charged larger sums in interest. If that figure of 5 per cent is correct, and it has been quoted to me by a number of sources, it is a very small amount and shows just how far we have to go before we have a proper system of tax collection and targeting of those who avoid and evade paying tax.

The perception many people have is that the morale in tax offices is not very high and personnel feel they do not have enough manpower or the necessary resources or leadership to do the job well. A certain amount of this is rhetoric. I do not know any Government Department or semi-State organisation who will say they have too many personnel. Therefore, we have to take some of that with a grain of salt but there is evidence of dissatisfaction and low morale. An indication of this is the number of high quality staff leaving the tax area to set up in private practice or to return to private business. Given this problem — some may call it a crisis of morale within the Revenue Commissioners — I ask the Minister to consider recommending the appointment of a Minister or Minister of State with sole responsibility for revenue and taxation. If a Minister were appointed in this area, it would give the taxation and revenue area a voice at the Cabinet table. It would raise the status and morale of tax officers and those working in the tax system and would give direction and leadership to many of the fine people we have working there. In addition, it would give the Revenue authorities a much tighter department and the commissioners would have tighter control and better liaision with the various sectors under their control. I cite particularly Customs and Excise and the areas of stamp duty and capital taxes. There seems to be little or no cross-reference between the Customs and Excise service and the income tax people. In the area of capital taxes not everyone who purchases a property has to account for where he or she got the money. That applies particularly to sales of property valued at under £50,000. It strikes me as strange that that stipulation about making returns would not apply to property under £50,000.

A revenue department with sole responsibility for collecting taxes would be better able to organise itself, offer incentives to staff or recruit more staff if necessary to meet specific targets set by the revenue annually. It is no longer justifiable to have an embargo in this area of the public service. Would it not be more productive all around if they were in a position to bargain for more staff in exchange for greater productivity? That way everybody would gain.

Finally on this point, it is fair to say that among practitioners there is a feeling that although the Revenue Commissioners have improved administration considerably there are still serious administrative difficulties which cause delays, foul ups, evasions and avoidance. There is a simple one which affects the taxpayer seriously at the moment. That is the large backlog of income tax repayments due for the year 1988-89. The Revenue Commissioners have acknowledged this and are trying to tackle it and it has arisen basically as a result of the change over to the self assessment system. I accept what the Revenue Commissioners say in relation to the difficulties that this has caused but surely this should have been anticipated before they introduced the system. We all know the audit programme for self assessment has been very slow to get off the ground and that the number of audits carried out was as low as 85 in the first year. That again is an area that could and should be tackled. If the revenue were to be reorganised in the manner I am suggesting, or even if the administrative structure remains the same, there are several improvements that could be made. For example, in New Zealand, they have a tax education office with a manager, technical and secretarial staff and a board, all of whom are drawn from the private sector. This tax education office publishes newsletters, organises seminars, disseminates tax information and gives general advice to tax payers on their tax affairs. Alternatively, instead of setting up such an office local taxation units could be set up to concentrate on dealing with people who may find themselves in difficulties meeting tax requirements. I believe that such a move, either one, would prevent another build up to a tax amnesty situation which, I believe, is growing again with huge backlogs to be cleared.

A second suggestion I would make in this area is that the Revenue Commissioners should publish details of all the non-statutory practices and procedures they have. Everybody knows that there are various practices of a non-statutory nature that have grown up over a period. If these were all published everyone would know the approach being adopted and this would cut out a lot of unnecessary paperwork, correspondence and investigation by accountants and so on to elicit information and it would expedite things.

A third area we should consider is setting targets for the revenue each year. Again this would be desirable, particularly in years when new systems are introduced like the one this year in the Finance Bill, the change to current year tax proposals. Targets should be set for the collection of revenue from this particular system in the year and should be published so that we will be able to judge the performance in relation to the objectives that were set. A lot of the red tape could also be cut out if rulings were issued in advance of proposed business transactions by the Revenue Commissioners. In New Zealand and Canada it is the practice to make such rulings but they are not necessarily binding. They do, however, give business people an idea of what tax régime they will be under and cuts out a lot of unnecessary paperwork later.

Let me turn now to the question of the sub-contractors' authorisation. This is contained in section 17 of the Finance Act, 1970. I mentioned on a previous Finance Bill that it has become increasingly difficult to obtain a certificate of authorisation while the scope of what is termed construction operations has widened. Anyone who has not got a fixed place of business, like an office or a workshop, will not be given the certificate. Somebody who operates from a house-cum-office, and many smaller contractors do this, must at least own the house before he will be granted a certificate. If he is renting the house there must be a formal lease for inspection by the Revenue. An example that I came across was of an individual who was carrying out a lot of plumbing for the county council. He needed an employee and had to meet a wage bill every week. He had his own van, his own equipment. He was single and lived at home. When he went looking for the certificate it was refused on the basis that he had not got a fixed place of business. After a lot of hassle they agreed to issue the certificate provided a formal lease was drawn up between himself and his father for the use of part of the house. If that individual had not obtained the certificate he could not have carried on his business and could not have maintained employment for the employee because his cash flow would not have allowed it with the deductions that are made. In cases where a large amount of materials has to be supplied by a sub-contractor a certificate is vital and that was so in this case. Even if a person is passed on this fixed place of business rule the legislation states that his tax affairs must be in order for the three year period prior to his application.

Another case I came across was where a taxpayer was refused a certificate on the grounds that everything was not up to date during the entire three year period in question. That means that if everybody in the CIF adopts this attitude anybody who is even one day late in a three year period in lodging any type of tax form could be refused a certificate.

A further point on this aspect of the legislation is that it allows no right of appeal in the event of a refusal. I believe this is wrong and unconstitutional and I cannot understand why it has not been challenged. It is certainly against the spirit of the charter of rights issued by the Revenue Commissioners in the past few months which states that a taxpayer has a right to object to a charge to tax or duty if he thinks the law has been applied incorrectly and to ask for the case to be reviewed. If the matter cannot be resolved by the Revenue officials to the satisfaction of the taxpayer, he should have the right in law to an independent review. This is not the case.

I will cite another anomaly in the taxation systen. The rate of tax applicable to deductions on non-registered sub-contractors is 35 per cent, but this was introduced when the standard rate of tax was 35 per cent and I think this should now be reduced in line with the recent reductions in the standard rate of withholding tax on professional fees and the DIRT. I cannot understand why the rate of tax in this case has not been reduced. It seems to be extremely harsh to be deducting tax at the rate of 35 per cent from the VAT inclusive figure billed by the sub-contractor. This contrasts with the deduction of withholding tax, which is deducted from the professional fees paid by Government Departments, where the rate of tax deducted is calculated on the amount before VAT is added. If we do a bit of arithmetic, we see that on a bill of £10,000, there is a difference of £1,375 between the amount paid to a sub-contractor and that paid to an accountant or solicitor. I do not think it is fair that sub-contractors, who are expected to pay VAT on their overheads, have to wait a long time for the repayment of 35 per cent tax. I know this is causing severe cashflow problems. I am confident that the Minister will do something about this as a matter of urgency.

I would like to deal very briefly with the matter of the taxation of elderly people. As I have said before when speaking on social welfare Bills, I am a great believer in making life as easy as possible for our senior citizens, as indeed is everybody else in this House. I believe that our tax system could show a little more regard for them, particularly those who have given life-long service to the State in either the public or the private sector. I have noticed that, because of the substantial increases in social welfare over the past number of years, those in receipt of a private pension in addition to a State pension are now in receipt of a much smaller tax-free allowance because their social welfare pension has been taken into account. While the income exemption limits are very substantial for a married couple over 75 years of age, I think they could be increased a little more for the single widowed person and I would particularly like to see the exemption limits increased for the old aged single person.

There has been quite an amount of discussion of the Government's measures to tackle poverty in the Finance Bill and assertions that the budget did nothing to tackle poverty. The Conference of Major Religious Superiors outlined their three major criticisms of the budget: first, despite appearances social welfare was not given the priority it deserved in the budget; second, there was no commitment to implementing the recommendations of the Commission on Social Welfare; third, the budget was anti-family. I have heard those criticisms repeated in this House by members of the Opposition. I cannot let that go unchallenged. I am very surprised that a body as responsible as the Conference of Major Religious Superiors could lend their weight to such inaccurate and misleading views. I am not happy with them. This Government, more so than most, have accorded the highest priority to social welfare, as can be seen from the substantial increases in the levels of payments as compared with those obtaining in 1986. Long-term unemployment assistance has increased by 42 per cent; the long-term rates for married persons with children have increased by 30 per cent. The cost of the increases implemented over the past few years has been in excess of £175 million.

I do not think anybody could claim that they are the actions of a Government which do not give a high priority to social welfare and to the poor. In his budget speech, the Minister for Finance devoted 12 pages to social welfare, the elderly, the disadvantaged, which comprised 20 per cent of his budget speech. I dare say that is a record in this House and shows the Government's commitment in this area. It is possible to misuse statistics to show that the proportion of the total budget allocated to social welfare has declined in 1990, but it is ludicrous to suggest that this indicates that the Government are not committed to improving the lot of the poorer sections in the community. The truth is that the Government have made great strides in reducing unemployment and improving the delivery of social welfare, which have freed resources which now have been used to give substantial additional benefits to social welfare recipients without imposing additional burdens on the taxpayer.

With regard to the Conference of Major Religious Superiors' second point, the Government have made substantial progress in implementing the recommendations of the Commission on Social Welfare. In addition to improving benefit levels within the scope afforded by the Government's finances, many changes and improvements have been made to the social welfare system as recommended by the commission. These include improvements in the basic level of payments, improved child income support, broadening the insurance base, improvement in the delivery of the service. In this Finance Bill, the introduction of a carer's allowance and the setting up of a new appeals system are in line with the commission's recommendations. The criticism is ill-informed when one considers that the commission's report states quite clearly that their recommendations on the priorities should be implemented over time. The Conference of Major Religious Superiors stated there was no commitment to implementing the recommendations in the Commission on Social Welfare's report but I would ask if they have read the report, when they make a statement like that? There are 65 recommendations and four areas of priority listed in the report and I do not think anybody could argue but that the four priority areas are being followed by the Government at this point in time. In addition 40 of the 65 recommendations have been already fully or partially introduced by the Government, indeed many of them can be introduced only on a gradual basis. Among the recommendations which have not been implemented as yet are the phasing out of the living alone and age allowances, the taxation of short-term benefits, the removal of the ceiling on PRSI contributions and the abolition of the PRSI-tax allowance. I would ask the Conference of Major Religious Superiors if they are advocating that these changes should take place immediately?

Their third criticism was that the budget was anti-family but I can list the increase in the child dependant payments, which have increased substantially over the last three years; child benefit has increased, a new carer's allowance has been introduced and a clothing allowance will be introduced in September. There have been increases for adult dependants and the age limit for child dependants in full-time education has been increased. The free fuel scheme and the free travel scheme have been extended. There have been substantial income tax changes and major improvements in the family income supplement. If that is anti-family, I think many people would be asking for more. As I said, the criticism is unjustified and very unfair.

While I am on the subject of poverty and wealth I would suggest that the introduction of a charitable donations covenant might be a good method of using the tax system to redistribute wealth. This could operate in the same manner as the present education covenant scheme, in other words, a firm or individual could make a formal covenant with a charitable organisation and could claim tax relief on that. We are one of a few countries in Europe that does not have such a system in operation. Such a scheme would have advantages for the taxpayer but it would also benefit many charitable organisations and the people for whom they work. At a time when many charities complain that the national lottery, which is basically a State organisation, is affecting their fund raising efforts, the introduction of such a scheme would be of enormous advantage.

This Finance Bill furthers the economic policies of this and the previous Government, which have proved so successful since 1987. In his speech the Minister referred to the Programme for National Recovery and the benefit that has accrued from it. To have a consensus approach has been of enormous benefit. The role of unions and employers should be recognised and praised. The Government have definitely kept their side of the bargain in relation to tax and pay. They have tackled the national debt and they have looked after the less well off through the social welfare system. The workers have also kept their side of the bargain, sticking by the moderate pay agreement that was reached at that time, but I am not 100 per cent convinced about the employers. They probably have kept the letter of the Programme for National Recovery, but I am not sure about the spirit. Their profits have increased more substantially than the employment they are giving and I would like to see an improvement in employment in the coming year.

Mr. Nealon

Our spokesman on Finance, Deputy Noonan, has dealt extremely well and trenchantly with the major national issues of the Finance Bill and the budget. I agree with his major thesis that the Finance Bill and the budget were a disappointment, an opportunity lost which unfortunately may not be repeated in the immediate future. The country had come through the various tough preliminary rounds and a difficult campaign which was greatly facilitated by co-operation from this side of the House. Now that we have moved into what could have been the final stages of recovery, I feel we have not carried it through, not because of lack of co-operation but because of the failure of the Minister to come through with imaginative proposals which we expected on this occasion.

I propose to confine my remarks to matters of particular concern to my constituency of Sligo-Leitrim. The first concern there, and indeed all over the west, is the future of farming as we now know it, that is, if there is a future for the small farmers in the west. I am delighted that sitting in the Minister's chair is the Minister of State at the Department of Agriculture and Food, Deputy Joe Walsh, who comes from south-west Cork an area not totally dissimilar to my own but with certain advantages that we do not have. One of these is having a Minister of State to look after their needs, as was very evident when the distribution of the eight million gallons surplus milk levy was being considered. That was very good for them but very bad for us.

The present position and the outlook, both medium and long-term for the small farmer are disastrous. Dairy farmers in my area are facing a cut of 10p to 15p a gallon, even taking account of any relief that might result from the Brussels price round. That kind of cut might be sustainable in the short-term by the big producer but in the west, we are not talking about big producers. The average quota in the north Connacht area, where there is a very big co-op, is under 10,000 gallons and for many suppliers it is under 5,000 gallons. What would the average industrial worker, with considerably more in his wage packet than the farmer, think if asked to take a 10 or 15 per cent cut in wages? That is what the dairy farmers in the west have to endure this year.

It is not just the dairy farmer who is involved; the small farmer who is not in dairying is even worse hit. As the Minister of State very well knows, it has been a disastrous year as far as cattle prices are concerned. Generally speaking, farmers lost money on the average animal and that left them in a very vulnerable position. Unless something dramatic is done, the small farmer is on the way to being wiped out, and that is even before we start talking in terms of GATT and what it may bring. In the interests of everyone, a major debate should be opened up very soon. The dangers lurking in the GATT round can be colossal not just for small farmers but for all farmers. I am sure this is something the Department of Agriculture and Food and the other Ministers involved are very much concerned with. I have no doubt, indeed I have the utmost confidence, that they will fight their case in the interests of the farmers to the very end.

At present what farmers are getting from the Government are no more than platitudes. We are getting waffle about rural developments, about the new era of agri-tourism and what this can do, but as far as the majority of farmers are concerned, even in a beautiful area like Sligo with its slogan: "Land of Heart's Desire", in Leitrim and south-west Cork, which is a great tourist area, agri-tourism and the crock of gold that is supposed to come with it, has as much substance as the talk about the leprechaun at the end of the rainbow. There is nothing for the ordinary small farmers. The people involved in tourism, the planners in Brussels and the people dealing with rural development seem to envisage hoards of visitors moving across the meadows bringing piles of money with them, be it dollars, ECUs or whatever, to the farmers but that is a myth. The small farmer will not gain from that tourism because he cannot cash in on it. I cannot see that being the answer. If these tourists come they will be visiting something like a national park, with guides to tell them about farming patterns. That may seem to be an exaggeration. I am not blaming the Government for this, it is a confluence of circumstances that is making matters extremely difficult for all farmers. Never have I seen a period where all elements in farming at the same time are under attack. In the past, dairying could be doing well while beef or cereals or some other area was doing badly, but at the moment all areas of farming are under attack because of world circumstances, of EC circumstances or cutbacks of one kind or another. I am aware that the Minister for Agriculture and Food and the Minister of State are in there defending us but in world terms our farmers are experiencing difficulties, particularly small farmers.

I am appealing for practical help for these farmers to get out of their immediate difficulties. A start can be made in that respect in one very simple way, and this is only fulfilling an obligation, by paying out the remainder of the headage money immediately. My phone did not stop ringing any day last week with farmers asking when their headage money would be paid. This is headage money which was supposed to be paid before Christmas. I have no doubt but that the story is the same in all constituencies and for all Deputies. The fact that the inquiries are coming through in such volume also indicates that the headage money is very late. Unfortunately, as I understand it, those concerned may have to wait another month or two unless the Minister goes back and says we must do something about it. This is a further indication of the dire straits in which these farmers find themselves so far as cash is concerned. They need money at this time for inputs of one kind or another and may have been relying on these headage payments.

The same applies in respect of payments under the farm improvements grant scheme and the various other construction and anti-pollution schemes. It is absolutely essential that money should be paid out as quickly as possible. This is money to which the people concerned are entitled; we are not asking for anything extra in that respect. What I am talking about is a stop gap situation. I am sure the Minister of State would like to see the matter cleared up and that he will take whatever steps are necessary in that respect.

The only immediate way I see of helping the small farmers is through the headage grant vehicle — if you like to call it that — where 70 per cent or 75 per cent is recoverable from the EC. I am talking about a disadvantaged area where headage is now applicable. If it is extended to other disadvantaged areas good luck to them but there should be an immediate doubling of the present headage payment. This scheme was designed as a family farm income supplement. It was not designed to create greater production, which the EC wants to see phased out at present. If the Government deliver on this they will only be delivering on a promise made from all the platforms at the last election that they would double the headage payment. That was the promise for last year. I would like to hear some evidence from the Minister for Finance in his reply to this debate that he realises the difficulties that exist for small farmers. I hope also that he will outline his present intentions in regard to helping them.

During the last few weeks the ICMSA have run a very vigorous campaign for farmers to get the same personal allowance as PAYE taxpayers. The original justification for the difference, which dates from the 1980 budget, was to take account of the fact that the self employed generally had the advantage of paying tax on the previous year's income. That has evaporated to payment on the current year's income. Now that the farmers are moving up on to that position the justification for the difference has evaporated. That case has been built up clearly and logically and I hope it will be taken on board by the Minister. I understand that our own spokesman, Deputy Noonan, will be putting down various amendments in this category and I hope that the Government and the Minister for Finance will find it possible to react to them.

Several of my Dáil colleagues including, I am very glad to say, a number of backbenchers on the Government side have discussed during the course of this debate the threatened closure of sub-post offices and the implications that would have for rural Ireland. My information is that the postal authorities have identified some 800 sub-post offices, put them on a hit list, as it were, for closure and are expecting to effect about 700 closures. There are in the region of 120 to 130 sub-post offices in counties Sligo and Leitrim. Because of the nature of these at least half of them would go on the basis of what is proposed. This mass attack on the sub-post office network will devastate many areas, particularly in Counties Sligo and Leitrim where we have a very high dependency rate and where, because of the demographic situation, there is a large number of old age pensioners, many of whom are living on their own. In many cases they are on their own because of current emigration levels. As the Minister of State at the Department of Foreign Affairs is well aware, the families of these people are in such places as America, New York and Australia. Also because of the economic situation we have more than the usual proportion of people depending on social welfare. Because of the topography of both Countries Sligo and Leitrim, with their mountains and lakes, we have many areas that are isolated. That is another reason that closing sub-post offices in these areas would have a detrimental effect as far as convenience is concerned.

An Post is a common carrier with an obligation to provide a standard service in all parts of the country. What will happen to the old age pensioners I have been talking about? Will they move along four or five miles to the next sub-post office to collect their money? What happens if they do not have transport to do that? What happens if they do not have readily available the money to pay for transport to take them to the nearest sub-post office. I can envisage that in parts of County Sligo and of County Mayo, for example, in the Ox mountains, it could cost a person, a £1 or £2 to have a letter posted, considering the cost of the journey and of the stamp if the sub-post office network is decimated or virtually liquidated as we understand the proposals.

The approach of An Post in seeking these closures is a defeatist attitude. When An Post were established one of their proud boasts was that they had a massive network of sub-post offices which were very useful and had great potential for generating wealth. Unfortunately, they failed to make use of these in an imaginative way, so now they have said that they will close them down. It is a very defeatist attitude. In their present difficulties they have picked on the softest target available to them. Mind you, I do not think there is very much money to be saved in that respect. They could employ them as a useful vehicle of revenue generation for themselves, but where are all the massive new ideas as far as electronic transmission and so on are concerned, which could bring the remotest post office in the country in direct contact with headquarters by just the push of a button or pressing a switch?

Much more is involved overall here than just the commercial aspect, even though losses may be incurred, but I understand that is not where the real economies can be made. The real economies can be made elsewhere, without specifying. I understand it is only minor economies, considering the basic wage paid to the postmasters. Despite the fact that there are sub-post offices all over the country, there is no such thing as a sub-postmaster. Despite the fact that you are in charge of a sub-post office you are technically a postmaster. That is the phraseology I have been using in that respect, but the sub-post offices are part of the total social fabric of the rural communities along with the church and the schools and we cannot say they are losing money, £1 million or £2 million or £3 million, and we must wipe them out.

I have no doubt, having listened to the Government backbenchers who have spoken here and a number of people who have not yet spoken but who have discussed the matter with me, that this is something the Government parties will take on board and nothing will happen in that area without very serious deliberation and consultation, taking in everything, the commercial aspect and the effect the closure of these would have on the rural communities which are under attack anyhow. If we add this further dimension we will be accountable for it. If you have the knocking down of an old building of historic value you rightly have a protest. If you have the ruination of part of our heritage anywhere, for instance, any vandalism in the various discoveries in the Ballycastle area, you will have major protests, rightly so. Also part of our history, part of our heritage is the post office in the rural area, having played a part down the years in our emigration, our communication with the people who have gone abroad and in the service of providing and delivering pensions which were the only substantial incomes coming in in hard cash at one stage in these areas. We must look to that before we say "gone" in the interest of progress. If it was a question of the survival of An Post and we had to close down these post offices that would be one thing, but I understand it is only a minute part of the whole problem and that the answer is elsewhere if the Government would go to tackle it elsewhere. It is much more difficult to tackle it there, so they have picked on a soft target.

I accept there are good things in the Finance Bill and the budget, but the Minister for the Environment in particular and the Government broadly have failed very badly as far as housing is concerned, or rather the lack of local authority housing in recent times. Since 1987 in the Sligo Corporation area we have built only one unit with six apartments and nothing else, despite the fact that before the Fine Gael Government left office the tenders were out and the builder appointed for 101 local authority houses which were badly needed in Maugheraboy area. Nothing has happened since. This year some finance has been made available for the first time but only to permit the building of 28 of these houses. The result is chaos. They will now have to go to tender again for a new builder, creating a further delay, despite the fact that we have a housing list of 250 or 300 and growing. With the abolition of the £5,000 surrender grant nothing is coming on stream and there is no mobility as far as houses are concerned. In Sligo at the moment we must await these 28 houses. The situation is chronic and needs urgent action. All Sligo County Council have got permission for on this occasion is to build 50 houses. Since 1987 they have built virtually nothing except a few very nice old person's homes — I congratulate the county council on the design and location of these — and a few SI rural cottages or houses, nothing else. This time all they are getting is for 15 houses of whatever type and it will be totally taken up in SI rural houses.

I put on record that that is not the total scene in the west. There are some bright spots and the bright spot from us is directly across the border in Mayo where a total of £1.636 million, obviously not enough for Mayo, has been given to Mayo County Council. On top of that, Castlebar, Ballina and Westport have got over £800,000. All those three urban areas would fit neatly into some suburban and a little bit of the centre of Sligo, but those three urban areas have got the same amount as or a little more than the entire allocation for houses for Sligo County Council and Sligo Corporation. That is not to speak of the fact that Mayo County Council have got £1.636 million. I am not suggesting that the Minister for the Environment would have any personal interest or that he would treat County Mayo any better than he would treat the other counties for any reason, but I am just giving the facts of this year's housing grants, and I am allowing the facts to speak for themselves.

Mr. Calleary

One new house in the Ballina urban area, very badly needed——

Mr. Kenny

Very badly needed.

Mr. Calleary

The rest is the renewal of old buildings.

Mr. Nealon

I am not saying they have got what they want. I am giving the facts of the money they have been allocated. If the Minister of State has a gripe — I am glad to hear him say he has a gripe — can he consider the gripe we have when these other three urban council areas have got as much as or more than the entire Sligo County Council and Sligo Corporation for an area much larger than Castlebar, Ballina and Westport?

Mr. Kenny

Send for the commissioner.

Mr. Nealon

The Minister of State at the Department of Foreign Affairs, Deputy Calleary, from Ballina — the headquarters is now in his town of Ballina and good for them — might suggest to the Government that because of the very severe weather we had up to now they might consider extending for a month or two months the 31 May limit on construction work and handing in the papers for the old house improvement grant scheme. For much of the early part of this year, as the Minister of State, who is a civil engineer, will know very well, it was virtually impossible to do any outside construction work. Therefore, I suggest that just for a mopping up arrangement and to help out a number of people who are badly caught now and may find it difficult to get a builder.

We have heard a great deal in the recent past about how the country was emerging from its difficulties and the great new future that lay before it, but around my constituency I see no evidence of that on the ground. This is particularly true in regard to jobs and emigration. We had figures last year of maybe 40,000 or 60,000 leaving the country, but I believe the present level of emigration this year is greater than that of the previous year. I accept that you do not hear as much talk about it. It is no longer a topic of discussion. Previously it was very much, "Who has gone away? Where have they gone? Is it the USA, Australia, Great Britain or the Continent?" Now it is rather the contrary. The wonder is that he or she has not gone away. What is keeping them at home? The whole thing has become routine and we have gone back to the type of thinking that existed in western areas at the time of mass emigration in the fifties — it has gone back there with a vengeance.

The Government had a great opportunity in the Finance Bill to create jobs and, consequently, to stem emigration. They missed that opportunity. We put forward a number of suggestions that would have generated many jobs. The economic climate was such, and the finances of the country had been brought to such a degree of balance that that could have been done. It is regrettable that it was not done. We will try to make amends by introducing a variety of amendments to the Bill. While there were some good features in the budget overall, it was a good opportunity lost.

Mr. O'Dea

I have considerable respect for Deputy Nealon as a Member, a spokesman for his party and in his former career as a television presenter. However, listening to his contribution I wondered if we were living on the same continent, let alone in the same country. I am as active in my constituency as Deputy Nealon, or any Member, and the feedback I get is of an economy on the mend, of an improvement taking place and of the economic and commercial life of the country improving tangibly. Deputy Nealon presented a rather lurid picture which would be more appropriate to the slums of Calcutta than the plains of Sligo.

It was amusing to hear him chiding, admittedly doing so gently, the Minister of State, Deputy Walsh, for allegedly distributing largess in his own constituency. I recall a "Today Tonight" programme immediately preceding the 1987 general election during which Deputy Nealon was congratulated on securing his foothold in Sligo by virtue of the fact that he had twisted the arm of the then Taoiseach, Deputy FitzGerald, to provide an extra hospital wing for Sligo. As I recall that had not been provided for in the Estimates prepared by his Government.

I do not wish to be excessively moralistic about this but one thing that brings this House into disrepute is Members who, when they cross the Floor of the House, with moral indignation, speak about alleged activities on the part of the Ministers which they, as Ministers, pursued in the full glare of national publicity.

This is the eighth Finance Bill on which I have had the privilege to contribute either on Second Stage or Committee Stage. Before I was elected to the House I had occasion to study the annual Finance Bill in another context and I can say with absolute conviction that in terms of what Finance Bills should be about, the 1990 Bill is the best I have read. It imports a large degree of equity, logic, consistency and modern thinking into our tax laws. It closes a number of obvious loopholes which in turn creates tax equity by distributing the burden of taxation more equally throughout the community. It applies concepts like stamp duty to activities, such as activities in the financial services sector that were undreamt of in 1891 when the basic legislation was passed. The Bill introduces concepts to impose taxation on modern financial structures which have arisen because of our entry into the European Community and developments in commercial life.

Indeed, there have been so many changes and improvements to the income tax system, and so many new concepts have evolved since the basic income tax legislation was introduced in 1967, that the time for consolidating the income tax laws is now upon us. There is a benefit to be gained from consolidation, apart from the obvious one, and it is one that might not be obvious to the outside observer. If the task of consolidation was given over to a special committee of the House, income tax legislation would have to be considered in some depth.

Each year I have decried the way the House debates the Finance Bill. I am not accusing any party of failing to do the right thing. All parties who sat on Opposition benches are guilty. We have spent all our time on Committee Stage debating the first ten or 12 sections of the Bill and, as a result, 90 per cent of what are usually the most important provisions go undebated. People constantly decry the fact that accountants, tax avoiders, lawyers and others find loopholes in income tax legislation, but is it any wonder that they can do so when the House does not allow itself time to consider the technical details of that legislation on Committee Stage?

I should like the Minister to indicate whether there is any constitutional, legal or other prohibition to passing consideration of the Finance Bill to a special committee of the House, as happened in the case of the Companies (No. 2) Bill and the Child Care Bill. If we do not set up a special committee to consider the Committee Stage of the Finance Bill we will have to extend the time for consideration of Committee Stage so that we can reach the complex provisions. Last year I argued that some of the general tax avoidance sections in the 1989 Finance Bill are and will prove to be unworkable and I have not changed my mind. It was not the Minister's intention to introduce unworkable legislation but we could have removed the anomalies if we had had an opportunity to consider them on Committee Stage.

I should like to compliment the Minister on his record in the Department of Finance in the last two years. He has been a reforming Minister as far as taxation is concerned. He has modernised and reformed tax law. When people refer to reforming taxation what they mean is reducing taxation and that is a different matter to reforming it. The Minister's record in regard to reducing taxation has been outstanding. Since he was appointed Minister for Finance, Deputy Reynolds has reduced the standard rate of income tax by 14 per cent and reduced the top rate by more than 9 per cent. Simultaneously, he has increased the bands of income on which people pay the standard rate by more than 14 per cent. The result of this programme of tax reduction is that the percentage of taxpayers paying tax at the standard rate — we should remember that it is 14 per cent lower than when he took office — which was 56 per cent of all taxpayers in the tax year 1987-88 has been reduced to 63 per cent in 1989-90. That position is maintained by the budget and the provisions in the Finance Bill.

People will argue that the Minister was only doing what was necessary in the sense that the basic rates of income tax here were too high, but if one examines the economic and social backdrop against which the Minister managed this reform, one can set his achievement in context. The Minister has brought about this tax reduction against the background of unemployment which has remained stubbornly high. He has brought it about against the background of a country whose demographic structure, as Deputy Nealon mentioned, implies a high level of dependency on the people who are working and paying tax. The Minister has done so against the background of a national debt the interest on which is consuming 27 per cent of Government expenditure or, to take another statistic, is consuming more than 80 per cent of the Government's main source of income, income tax. Against that background the achievements of the Minister for Finance and the Government in reducing taxation are nothing less than monumental.

A few technical difficulties in relation to the Finance Bill were mentioned by members of the Opposition. Deputy Nealon referred to the £800 allowance. I also had representations in regard to this, not just from the small farming community, but also from the self-employed. People paying tax under the PAYE system have an extra allowance of £800 which is not available to people paying tax under other systems. I am talking mostly about the self-employed, which includes farmers. That special allowance — I think about £400 — was introduced in 1980 and the Minister for Finance at the time said in the Official Report, Volume 318, column 73, that the justification for the special allowance for PAYE workers was "to take account of the fact that the self-employed generally have at present the advantage of paying tax on a previous year basis".

The argument now runs that, as self-employed people are being brought on to a current basis of taxation, that justification no longer applies and, of course, that argument is correct. However, the people advocating this approach and advancing this argument would do well to bear in mind that while their argument is based on morality and the Constitution — because I seriously question the constitutionality of the position as it stands — there are more ways than one in which the Minister can solve the problem. For example, he could solve it by simply abolishing the special £800 PAYE allowance or by reducing it to £400 and giving a £400 special allowance to the self-employed. It is doubtful whether he will solve it in that manner, but I am simply making the point.

As the self-employed section of the community are now on a current year basis of taxation, there seems to be no justification for distinguishing between them and the PAYE sector from the point of view of allowances. The same argument applies to the £286 PRSI allowance which was given to the PAYE sector to compensate to some extent — of course it does not compensate entirely — for the fact that they were paying pay-related social insurance which was not paid by the self-employed. That situation has now changed although admittedly the self-employed in the current and next tax year will be on a lower rate of pay-related social insurance. However, they are also subject to certain levies which bring them up to the top rate of social insurance which is 7.75 per cent on the first £17,000, or thereabouts, of income. Consequently, there seems to be no justification for distinguishing between PAYE taxpayers and the self-employed from the point of view of the £286 special PRSI allowance. If the problem became a constitutional issue it could be solved in the negative way I mentioned but one hopes that that will not be the case.

One or two minor anomalies remain under the heading of allowances. I notice, for instance, looking through the list of personal allowances that a widow or widower with children are given the same allowances as a single person with children, whereas a widow or a widower without children is given something like £400 more per annum than a single person who does not have children. There is no obvious reason for that. I am not suggesting for one moment that the Minister should take this special allowance from widows, I am simply saying that, from the point of view of allowances, there is a distinction for which there is no obvious justification.

I welcome the provisions in the Bill which put self-employed people and certain categories of unearned income on a current year basis of taxation. That is a logical extension of the self-assessment system. When that system was first mooted by our predecessors in Government between 1982 and 1987, there was a view that there would be a huge drop in revenue. However, that was a mistaken view and it is full steam ahead with self-assessment. The provisions in the Bill to put self-employed taxpayers on a current year basis of taxation is a logical and necessary extension of that system and it is achieving genuine self-assessment.

A number of changes for the better will be introduced to the income tax code which will enable people in receipt of income from two sources — PAYE and Schedule D — to use one return of income instead of two as heretofore. In so far as interest is concerned it will eliminate the anomaly which at present exists between income which is subject to deposit interest retention tax — or DIRT — and another interest which is subject to DIRT and which is, of course, taxable on a current year basis whereas other interest is not. It will also harmonise the position between one form of unearned income — namely interest — and another form of unearned income — rent. From that point of view it is welcome, logical and necessary.

Section 20 of the Bill brings about this change and it will become known in the profession as the 100 per cent rule. Under the new rules a person who is in receipt of income from an unearned income source or who is self-employed will pay income tax in a year which runs from April to April, on 30 November of that year. If that person is unable to assess what his profits will be for that year a difficulty will arise because when the person is paying preliminary tax on 30 November it will have to be equal to 90 per cent of his ultimate agreed liability, otherwise he will be subject to penalties. Naturally a difficulty will arise when the person on 30 November is unable, for various reasons, to calculate his total income between the preceding 5 April and the current 5 April. To get over that difficulty the parliamentary draftsman is saying that the person has an option: if he cannot work out his income he simply pays 100 per cent of the tax he paid in the preceding tax year to avoid the 90 per cent rule. On the face of it that looks like a concession but it will, in practice, give rise to difficulties. It is based on a mistaken assumption that the profit from a self-employed source of income is a constantly rising graph.

If the person in that situation cannot calculate his income for the current tax year — and if his profits have fallen dramatically compared to the preceding year — it will not be a consolation to tell him that if he cannot calculate his total tax in the current year he will avoid penalties by paying all the tax as a preliminary payment which he paid in the preceding year. This is especially true in relation to a person who has cash flow difficulties, and in the example I used the person will, more often than not, have cash flow difficulties. I ask the Minister to look at that and perhaps he will consider replacing the 100 per cent rule with an 80 per cent or 75 per cent rule or something else that would meet that difficulty.

I welcome the changes in stamp duty which are quite extensive. The present system in relation to stamp duties which operates is complex and — to the lay man — extremely difficult. This stems from the fact that the basic provisions on stamp duties are to be found in the Stamp Act, 1891. In 1891, activities which are now described as financial services activities were not only unknown but were undreamt of. This Bill contains provisions to apply stamp duty to those types of activities. This is necessary and overdue.

There are 14 different rates of stamp duty at present, ten of those rates apply to transactions where the value of the property passing is £10,000 or less. This is illogical in this day and age. This Bill replaces those 14 rates with six new rates of stamp duty which will simplify and clarify the system. This change is not only necessary and desirable but has been long overdue. Indeed, I would argue that further simplification is needed in the stamp duty code.

I want to refer to section 100 of the Bill which contains an anti-avoidance measure to catch transactions where a house is being built to order. At present solicitors transfer a site by way of a separate transaction and then draw up a building agreement. The Revenue Commissioners have a rule whereby they agree that the value of the site for stamp duty purposes will be one quarter of the value of the total product, in other words, it will be one quarter of the value of the site when the house is built on it. Section 100 contains provisions to counter that anti-avoidance device.

In case we do not debate this issue on Committee Stage, I want to put a question to the Minister now. Section 100 (3) (b) provides that when a site is being transferred and it is impossible to ascertain accurately the value of the completed house, the Revenue Commissioners can put a multiple of ten on the site as being the value of the completed house on which the person ultimately has to pay stamp duty. However, it also provides that if a taxpayer can provide the Revenue Commissioners with information that the house when ultimately built on the site will not be ten times the value of the site, the Revenue Commissioners have the option of applying a lower multiple to the value of the site, but it will not be less than five. I want to ask the Minister if the Revenue Commissioners have the power under section 100 (3) (b) to insist on a multiple of ten regardless of what they are told. From my reading of the section it seems this will be at the discretion of the Revenue Commissioners. If, for example, I build a house on the top of a mountain and I can prove incontrovertibly to the Revenue Commissioners that the final multiple will only be four, can the Revenue Commissioners still insist on a multiple of ten? I can see a certain logic in enabling them to do so because if the completed property ultimately turns out to be more valuable than they had originally anticipated, then they will have to bear the loss of any revenue foregone once the deed is stamped and lodged for registration. I should like the Minister to advert briefly to this question.

I welcome the changes in Part V in relation to residential property tax. The child allowance relief for the purposes of residential property tax was abolished by the Government in 1986 at the same time as the abolition of income tax child relief. The abolition of both those reliefs seemed to have a spurious uniformity but one form of taxation related to income while the other related to capital and, as such, they have nothing to do with each other. The abolition of that relief was not significant at that time because property prices were low in 1986. However, property prices have soared since then and the reintroduction of this child relief for residential property tax purposes is to be welcomed and will have effect in practice.

I should like to raise a query of a technical nature with the Minister. Section 112 (b) gives a new definition of the word "child". Obviously it refers to a natural child, an adopted child and, as I read the section, an illegitimate child. However, on a broad reading of the section, it seems to refer to a person who is not a child or who is not in any way related to the taxpayer. I wonder if this was the Minister's intention. If it was not his intention to include such a person in the category of child in respect of residential property tax, perhaps he will ask the parliamentary draftsman to have another look at this section.

I welcome the reduction in the top rate of capital gains tax, which applies to transactions which occur within 12 months, from 60 to 50 per cent. This is in line with the reduction in the top rates of income tax. Experience has shown us that it is preferable to have some degree of uniformity between the top rates of capital gains tax and the top rates of income tax. This will avoid a great deal of time and unproductive effort by accountants, tax advisers and others in trying to bring income into the category of capital or vice versa. It is necessary and desirable to have some broad uniformity between the top and bottom rates of those forms of taxation. Section 72 reduces the top rate of development land tax from 60 to 50 per cent. Is there any separate justification for doing this?

I welcome, section 92 which increases the flat rate of value-added tax repayable to farmers to 2.3 per cent. This will, in effect, compensate unregistered farmers for not being able to claim value-added tax on the VAT inputs which they purchase for the purpose of carrying on farming. I welcome the provisions in section 96 (c) which takes certain periodicals out of the 23 per cent rate of VAT and puts them into the 10 per cent rate. Why is the definition confined to "fortnightly" publications? I know of a number of excellent publications which will be excluded from the provisions of this section because of the fortnightly provision. The section provides that if the quantity of printed matter is of a certain type the publication will qualify for the lower rate of VAT. If a publication or periodical contains mainly pictorial material and illustratious but only a few pages of printed matter, will it be automatically brought into the lower 10 per cent rate?

The Minister has reduced the standard rate of VAT from 25 to 23 per cent. Despite all the talk about the need for quicker harmonisation of our VAT rate with those of the rest of the EC, this will be a costly process. Even a 2 per cent reduction in the 25 per cent rate of VAT will cost the Exchequer £125 million in a full year.

I welcome the changes in relation to corporation tax. The yield from corporation tax in 1989 was £303 million, which was low by European standards. However, it must be said that the continued phasing out of accelerated capital allowances will increase the yield from corporation tax. The emphasis now is on reducing the top rate of corporation tax from 43 to 40 per cent. This will also benefit capital-intensive industry. However, the tax incentive is being shifted more away from the capital-intensive industries and will apply equally to both types of activities.

I want to refer to the 10 per cent rate of corporation tax applicable to manufacturing. I hope we discuss this issue on Committee Stage because the number of industries excluded from the definition of manufacturing is too great. I hope to demonstrate this in more detail on Committee Stage. If interpreted literally probably it will exclude certain forms of manufacturing activity with which I will not deal here but which I know the Minister does not intend to exclude.

With those few suggestions which I know the Minister will take in the spirit intended I have no hesitation in heartily commending the Bill to the House.

Mr. Ferris

As the Minister said, the Finance Bill gives legislative effect to the budgetary proposals. The intervening period between the introduction of the budget, the vote on its proposals and the publication of the Finance Bill and its debate usually is one in which any Government, in particular any Minister for Finance, affords himself an opportunity to listen to the views expressed by various groups having analysed the implications of the budgetary proposals on any one sector of the community. It will be realised that there are anomalies in this Bill as there usually are in Finance Bills.

We gave the budgetary provisions a cautious welcome in that we could see immediately that further anomalies were being created by way of tax exemptions, limits and their implications, welcome though they may be. Indeed this was confirmed by the previous speaker on the Government side of the House when he identified certain areas as being inconsistent. He went so far as to say that probably they were unconstitutional as they have developed. The chairman of the Labour Party and our spokesperson, Deputy Taylor, went so far as to say that the Bill itself is flawed, that it is a dangerous document. He went on to elaborate his reasons for so saying. If one analyses the implications of the provisions of this Bill for different sectors — the "haves" and the "have nots"— one must then ask what its provisions mean to the ordinary man in the street. The nationwide consensus view was summed up this morning by the leader of our party, Deputy Spring, when he addressed the gathering at the grave of James Connolly at Arbour Hill and said:

In this new era life is going to be very good indeed — for some people. It will be good for people in highly-paid employment; it will be good for the financial services sector; it will be good for multinational enterprises. But it will not be good for others. This new era in our development will have damaging consequences for people with a mental handicap, who have already been forced to march the streets of Dublin in search of rights that are being steadily eroded. It will be bad for young people who cannot afford to buy a home of their own, as local authority housing stocks become steadily depleted and less habitable.

It will be a bad time for people who do not have the means to buy health care as our health services become more and more run down. It will be a bad time for all of us who believe that education breeds equality, as our education system gears itself more and more to prepare people for emigration.

Deputy Spring went on to say that after five years of Tory Government in Britain one of its supporters, Lord Young, said:

... the next five years will be very good indeed — for those of us who are in work.

The pattern being followed by this Government in this Finance Bill is that which has been followed in Britain throughout the ten years of Mrs. Thatcher's rule. It is ironic that what is taking place here is what is beginning to die even now in the United Kingdom. People have begun to realise that, whether at Government or any other level, people cannot continue to look selfishly at their economy, at their lack of concern for those in need, that is those of us with a social conscience about the needs and rights of the under-privileged, those who have been marginalised in our society, who look to Government for sustenance in times of difficulty.

Of course, it is a good time for the financial institutions. Their profits and those of the banks have been referred to by many speakers already — in the region of £470 million to £480 million in accordance with the most recent figures disclosed by them. At the same time it must be remembered that loan repayments of mortgagors — people who try to acquire a home of their own which is everybody's aspiration — have escalated three or four times within the past 12 months alone under the nose of the Minister, rendering it increasingly difficult for them to maintain their repayments or eliminate the risk of eviction by local authorities which has happened in my council area and others throughout the country. These are evictions of people who had begun to be independent, to be in a position to borrow and repay mortgages in the hope that this Government somehow had addressed the problem of our foreign debt so that loan repayments would be kept at a certain level. This Government have failed to do so because over the past 12 months alone such mortgage repayments have escalated beyond anybody's expectations or wildest fears.

In addition to ignoring that fact this Government now propose reducing the income tax relief applicable to life assurance premiums to 50 per cent of the amount paid in 1990-91 and subsequent assessment years. Such life assurance policies are taken out by people in order to insure against various family risks, be they mortgage repayments or whatever. Such people taking on that responsibility are now to be penalised. That concept will damage the general life assurance industry which plays a major role in financial institutions but also in the lives of individuals and their responsibilities to their families. The least such people should expect is to be able to claim income tax relief on life assurance premiums paid in respect of such policies.

It has been contended in the course of this debate that Government policy has been good for the building industry. There was a debate in this House on the crisis pertaining to local authority housing when the Minister refuted any accusation that the Government had been remiss in the area of house building and/or provision. Twice on that occasion the Minister mentioned local authority dwellings. He dealt with all the houses being provided by the private sector, by speculative builders, by various developers, by those involved in section 4 planning applications. While we have witnessed all these improvements in the building industry, with regard to those people unable to provide their own homes — all local authorities being dependent on the Minister for the Environment who, in turn, is dependent on the Minister for Finance to provide sufficient moneys in the Public Capital Programme— a lesser amount is now being allocated to local authorities for the provision of that very important social need, that of local authority housing. Within the past hour some Members have identified towns and counties where one or two houses will be built by local authorities this year, whereas a few years ago they were building between 50 and 100 houses. This is true in the case of Tipperary County Council, Tipperary Urban District Council and Clonmel Corporation, all progressive housing authorities who in the past had records second to none, of which we were all proud, but now they are being constrained by Government policy. It seems the provision of local authority housing is no longer a priority of the Government. If we take the failure to carry out repairs, rent increases and the anomalies in the differential rents scheme together, we can see that ordinary working people and indeed the unemployed are now paying more for inferior housing and that young married couples have no hope of being housed by the local authority within a reasonable period. The allocation to Tipperary County Council is only about 10 per cent of the sum required to meet the housing needs of that county. Thirty houses will be built this year in the county whereas 300 are needed. Therefore, how can the Government say they have turned the economy around given the lack of commitment to those in need of State assistance?

They also need a proper health service but no attempt is made in this Bill, apart from the provision of a minimal allocation — the Minister has not yet decided how this will be spent — to address the problem identified by Deputy Spring in the area of mental handicap. Neither is any attempt being made to reduce waiting lists or address the scandal of the closure of sub-acute and district hospitals throughout the south-east region. Let me give a few examples of waiting lists throughout the south-eastern region.

The out-patient waiting list at Waterford Regional Hospital rose from 2,797 at the end of 1988 to 3,672 at the end of 1989. The waiting list at St. Luke's General Hospital, Kilkenny, rose from 363 in 1988 to 671 in 1989. We can also see that the waiting list at St. Joseph's Hospital, Clonmel, the county medical and gynaecological hospital, rose to 191 at the end of last year with the out-patient waiting list remaining at the same level of approximately 200. Likewise, at Our Lady's Hospital, Cashel, upwards of 200 people are awaiting admission to acute surgical beds and acute gynaecological beds. In Kilkenny, up to 1,200 people are awaiting admission for orthopaedic operations while 300 people are awaiting hip replacement operations.

These lists were not published by the Labour Party or any political gurus in back rooms but rather by the South-Eastern Health Board in January of this year at almost the same time as the Minister was presenting his budget in which he outlined what was going to be done in the area of health. As highlighted in the debate on the health service, there is still a major problem in the health area which is not being addressed by the Government in this Bill. While improvements have been made in the social welfare area they only represent a tinkering with the system. The carer's allowance has been increased but the people whom we wish to see receive this allowance will not get it. A start has been made but we still have much to do given the need to care for people in their own homes and to compensate those who provide such care.

No attempt is being made to help those who find themselves in the poverty trap. All of the professionals now admit that many people find themselves caught in this trap. While we can speak about the good things contained in the Bill there is also a responsibility on us to point out that there are anomalies. The tax thresholds are being increased. Single or widowed people with incomes of up to £3,250, an increase of £250 and married couples with an income of up to £6,500, an increase of £500, will be exempt from paying income tax. These increases are welcome. Once people's earnings go above these thresholds they will pay tax at the normal rates, taking into account the PAYE allowance they will be entitled to receive.

These tax thresholds should be linked to those exemption limits below which people would be exempt from paying tax and above which they would pay tax. If the Minister fails to address this anomaly, in the case of the PRSI exemption on incomes of £60 a week or less, people will find themselves locked at £60 a week in the employer's mind, while in the case of the allowance for adult dependants, the increase in the threshold from £50 to £55 represents a disincentive for a spouse to earn more as they would cease to be an adult dependant. I can see problems arising if no attempt is made to link exemption thresholds with tax-free allowances. If we fail to do so, families on low incomes will immediately face problems.

In talking about anomalies in the tax system it is only appropriate that we should point out that Members on the Government side of the House have admitted that a particular anomaly exists which has been identified by the ICMSA in their document Justice for the Farm Family a copy of which has issued to each of us. This is a good document which is based on fact. It points out that there is no reason why farmers and the self-employed should not receive the £800 allowance given to PAYE taxpayers. This document concerns itself with farm families and it must be our responsibility to ensure that family farms stay intact. Deputy O'Dea suggests that this is a constitutional anomaly. We would ask the Minister to address this problem and we will assist him in every way possible. We will assist by way of appropriate amendments which may not be the right way to do it; I would certainly prefer if the Minister responded positively to this anomaly that we have highlighted in the light of the Irish Commissioners attitude to the whole concept of rural development.

In this regard I want to address the concern of a Member of this House who was today totally confused about whether the Government had applied to Brussels for an extension of the disadvantaged areas scheme. Last week the Tánaiste said that the application had gone. Today there was silence and the Minister responsible was smiling. Smiles do not appear on the record of the House but negative actions do. It is time to come clean with people living in disadvantaged areas. These people are happy to live there but if we do not do something to keep them there they will come down to the villages and towns looking for jobs that are not available and creating further problems for those who are already on the scrap heap of the unemployed. One way to help these people to stay where they are is to avail of the incentives in the EC so that income will flow from this source to the poorer farmers in disadvantaged areas of the country.

The Minister has realised that the business expansion scheme has been abused by the private sector and I am glad that he is addressing the problem. Nobody will shed any tears about a procedure which was set up to be a benefit to people and was suddenly abused by various sectors at the expense of the taxpayers. The Government must have as a priority the welfare of the less well off and there are people, in the health area, in the local authority area, in the social welfare area for whom more needs to be done. Needless to say that will mean spending more money and money can be got by broadening the tax net so that more people pay their fair share. There are many ways to make people conscious of their responsibilities. In other countries people who make donations to charities get tax relief for them. That is a concept we should promote because there are entrepreneurs who want to do that but they just need an incentive. One area where help is needed is in the hospice movement. Those of us who have been touched by the trauma of death will realise the importance of providing specialised nursing or specialised units such as hospices for the dying. Would the Minister not consider that money donated by people who have a conscience——

An Leas-Cheann Comhairle

The Deputy seems to be concentrating very much on matters which are not in the finance legislation we have before the House. One can express a certain regret about what does not appear but maybe passing references rather than sustained indulgence in these other matters would be more appropriate.

Mr. Ferris

I would not like to dwell too long on the importance of remembering those who are dying, so I will take your advice. I hope that the Minister has also taken my view on board.

An Leas-Cheann Comhairle

The Deputy may be misinterpreting my kind reminder to him that, for some time, he has been out of order. His imputing to the Chair what the Chair did not say does not add to his acceptance of that reminder.

Mr. Ferris

I would not do that for anything.

An Leas-Cheann Comhairle

The Deputy will continue with his contribution on the Finance Bill.

Mr. Ferris

The Finance Bill is an opportunity to address these areas but it has failed to do so. That is a view that is shared by many. It is one of the few instruments available to the Minister for Finance, who controls all the other Departments, to improve health, social welfare and farming incomes and to introduce improved indexation for PAYE taxpayers so that there is fair play for all. These are all intrinsically linked to the finances of this State. It is appropriate that on May Day when we commemorate those who founded this State our party Leader identified some of those areas of need and the people who will not benefit from the improvements predicted by many speakers, not only on the Government side but on other sides and by economists in the media and elsewhere. They have identified some of the courageous steps that have been taken by the Government from time to time which have been taken at no small cost but at the expense of people who were not in a position to speak for themselves because they had relatively little political muscle. When it was pointed out that there were people still in the poverty trap here there was resentment by the Government and by Ministers of all Departments who depend for their total allocation on the Minister for Finance. That is to be regretted. All of us would like to see in this Finance Bill a stimulus for employment to stop the drain of our highly educated young people from our shores at a rate of 30,000 to 40,000 a year. What is in the Finance Bill for the unemployed? Even those who have jobs are losing them. Throughout my constituency in Waterford, Cork and Clonmel people are on the streets fighting for their right to jobs. I see nothing in this Finance Bill that will give them any hope that this Government are serious about job creation. Every day I hear the Government coaxing the trade union movement towards another programme of financial recovery without which many of the things that have been achieved could not have been achieved. Without the spirit of co-operation from the working trade union movement here the Government could achieve nothing. Here was an opportunity to advance a reason that the trade union movement should enter into another programme for continuing recovery. Ministers have said there are jobs, that there are 15,000 social employment jobs or otherwise.

Initially we gave the Finance Bill a cautious welcome, but I expressed our concerns about anomalies in it. I suggested that we would assist the Minister by tabling amendments on Committee Stage which would improve the Bill. We have done that and we will continue to act in a constructive manner. I hope the Minister will respond constructively and positively to our suggestions.

Mr. Martin

I was intrigued by the contributions of the Opposition speakers to the Finance Bill. It must be clearly understood that the Finance Bill alone cannot solve all the ills of the country. It is time the problem of job creation was tackled head on. The Fine Gael spokesperson on Finance, Deputy Michael Noonan, said the Bill was unimaginative and did nothing for job creation and Deputy Ferris said more or less the same. They appear to have a strange double-think towards employment creation.

From time to time people call on the Government to create jobs. We hear the Opposition spokespersons bemoaning the lack of jobs, the large numbers unemployed and how the Finance Bill is unimaginative and does not respond in any serious way to these very important matters. At the same time — and I have witnessed this in Cork, Galway and Limerick, centres to which Deputy Ferris referred — Labour and Fine Gael politicians are objecting to economic development. People have objected to fish farming, hotel projects and the building of houses in areas which are zoned for housing, and there appears to be a double-think on the question of jobs.

Mr. Ferris

No Fianna Fáil politicians were objecting.

Mr. Martin

The people objecting to the location of a chemical industry at Ringaskiddy are the very same people who are objecting to the lack of jobs and are calling on the Government to do something about it. It is my view that we should have a forum, along the lines of the New Ireland Forum, to consider employment creation. I do not honestly believe there is a collective will in the community to deal with job creation. I have witnessed politicians on the other side objecting to substantial investment projects in Cork city in order to satisfy a sector of the electorate in their own bailiwick. If we are genuinely concerned that employment creation should be the number one priority in the community, then all the other matters which we put before job creation should be put to one side. I would ask the Government to consider having an economic forum on the model of the New Ireland Forum to try to generate a consensus among the community at large on employment creation. Various sectors of society would make submissions to the forum on employment creation and on the environment versus job creation. When canvassing during general elections politicians witness how many people are without jobs and hear of the numbers of young people who have emigrated, yet they tend to go back to the local authorities or other spheres of influence and object to job creation projects.

Once the necessary environmental protection measures are in place, there should be no genuine reasons for objecting to the creation of employment. In the chemical industry alone 12,000 people are employed yet some people are saying there should be a moratorium on the chemical industry. These same people come into this House and say the Finance Bill is making no effort to generate employment. I believe an economic forum could help us to arrive at a consensus. We could order priorities and agree on the parameters within which we could proceed towards job creation. We could also establish guidelines to which we would adhere.

In my view Bord Fáilte and various tourist organisations are objecting to certain fish farming on what are spurious grounds while the Department of the Marine are issuing licences for fish farming on the other hand. That is an appalling conflict between State agencies and it should not be happening. I think that a lot of objections are based on spurious grounds and ill informed lobbyists do not know the full facts pertaining to the industry, yet they readily object to the first thing that moves in relation to job creation.

In this Finance Bill, the Minister has continued along the path that the 1987 Fianna Fáil Government took in regard to taxation measures. We have seen major improvements in the area of income tax with a reduction in the top rate of income tax from 56 per cent to 53 per cent and the 32 per cent rate was reduced to 30 per cent. It looks likely that we will achieve the tax rate of 25 per cent by 1993. The reduction of the standard rate of corporation tax to 40 per cent will help job creation in the services sector. This is particularly welcome. I believe that the services sector will require more attention to the taxation front in future years because in the world major economies, such as America and Japan, the services sector provides large numbers of jobs. In North America, 74 per cent of jobs are in the services sector. While our industrial policy has tended towards providing tax relief for the manufacturing industries with a view to export, we will have to have a major review of industrial policy with a view to creating major tax reliefs in the services sector because that is where the jobs will be in the future. I believe the Minister is going down that road.

The extension of the 10 per cent rate for manufacturing industry to the year 2010 is another welcome step because that will allow investors certain securities in the longer term and should help them when making vital decisions on their investments. This Bill also confirms the extension of the urban renewal package until 1993 with all the incentives that entails for various rural and urban centres. Today, the Minister for the Environment announced the details of the extension of that programme. I welcome the designation of the extra 27 acres in Cork city as a designated area. This will attract major projects to those areas within the next three years and I am very confident that we will see major developments as a result of the Minister's announcement today. That gives the lie to the Opposition's claim that the Bill is not directed towards job creation, because it most certainly is.

The designated areas scheme has proved to be a very useful tool for releasing investment in rundown inner city areas which have been neglected and which have lain derelict for many years. We have seen very attractive, environmentally and architecturally sensitive projects in the inner cities of Dublin, Cork, Limerick and Galway under this scheme. As a result of today's announcement we will see even greater benefits in future years.

The Minister is attempting to curb a number of abuses in the business expansion scheme. While this is welcome, I would like to place on record that the business expansion scheme has provided a useful mechanism for releasing much investment into the economy. Many people who would have considered such investment marginal prior to the introduction of the scheme are now prepared to invest in projects. The extension of the scheme to the tourism area in the past number of years has been very successful, despite a number of abuses. The thrust of the scheme is to release investment in certain areas which investors hitherto considered marginal. This results in increased numbers of job being created and an increase in economic activity. That is to be welcomed. I urge the Minister to keep the scheme going at all costs.

The previous speaker referred to local authority housing and the failure to provide adequate finance for it. We need to take a much more analytical approach to the question than Deputy Ferris's knee-jerk reaction of "give us more money to build more local authority housing". The 1987 tenant purchase scheme resulted in a considerable number of local authority houses being sold. In Cork city alone 1,500 houses have been sold. We have to question the wisdom of the Department of the Environment and the local authorities building new local authority houses and selling them two years later at literally half the price it cost to build them.

If we are committed to the owner occupier concept, in other words if our objective on the housing front is to have as many people as possible owning their own houses, the Minister, as well as the Minister for the Environment, should give consideration to bringing in a scheme which would basically place people in an owner occupier status at the commencement of their taking over a house or a tenancy. There is very little point in allocating a house to someone and selling it to them two or three years later for half the price. That does not make financial or economic sense. The Government will have to give serious consideration to initiating housing policy which would bring about the desired position of having owner occupiers almost from the very beginning. The Minister has indicated that that is the approach he is anxious to adopt.

I am somewhat disappointed that a number of community groups who organise sheltered housing projects for the elderly in particular and also for the homeless are still subject to VAT on construction costs and on the overall expenditure on a housing project. The Minister should consider in future Finance Bills giving total VAT relief to any community group involved in a construction programme for sheltered housing. After all, these community groups are in many ways doing the work of the State in providing badly needed housing for the disadvantaged and for people who for one reason or another are living in sheltered accommodation or living on the streets and so on. These groups are providing a good service and the Minister should help them by making the necessary amendments to the Bill to allow them VAT relief on the construction of housing. That would be of great benefit to them. The representations these people have made to the Minister in that respect should be taken on board.

I would like to refer to the whole question of, as Deputy Ferris called them the "haves" and the "have nots" in society. We have adopted for far too long a simplistic approach to this question. I would like someone to give me the definition of "the ordinary man in the street", as Deputy Ferris would have him described. I do not think there is any such person. The question of class differences and segregation of classes is much more complex than many speakers would have us believe. The complexity of our taxation and social welfare systems makes it difficult to come forward with the type of simplistic notions we have heard from the Left wing of the House on this Bill. There is a clear need for a more enlightened approach to the matter, for more clearheaded thinking on it.

Deputy Ferris referred to the lack of educational opportunity today and said the Finance Bill does nothing to improve that position. We must give credit where credit is due and point out that nearly 95 per cent of all students attending third level VEC colleges are in receipt of grant aid from a combination of national and EC funds. That is an outstanding achievement. It is utterly ridiculous to have to listen in this House to the nonsense that there is a lack of opportunity in education. That is not the case. I would concede that improvements could be made in certain university sectors. The Minister for Finance should give consideration to perhaps giving tax relief to PAYE workers whose offspring attend university, particularly where two students in a family are attending university and where they are not in receipt of a grant.

Tax relief for university students should be introduced. That is something on which I will continue to lobby the Minister. It would not cost very much and it would go a long way towards ensuring a greater degree of equity in the whole grant system. There is a perception abroad that the PAYE sector are losing out in the whole area of education grants in that the self-employed and the farming community have greater control over their returns to the Department. I am aware that this area has been tightened up considerably in recent years. The Departments of Finance and Education know quite clearly what a person on PAYE is earning so their case is very often clear cut. A tax relief scheme would help alleviate the sense of grievance of the PAYE sector on that front.

One of the more significant measures in the Finance Bill is the reduction in the standard rate of VAT which has already taken effect and is helping to reduce inflation considerably. The Government have been very conscious of keeping the rate of inflation down. The reduction in VAT will have almost 0.75 per cent impact on the inflation figures and that is to be welcomed. It will also give a modest boost to consumer spending which will increase activity in the retail sector and help to maintain jobs in the services sector. It is a beginning. As Deputy O'Dea pointed out, a 2 per cent reduction in the VAT rate, from 25 to 23 per cent, was quite extensive and indicates the gradual approach that must be adopted if we are to maintain the progress we have made on the financial front.

The Finance Bill represents further confirmation of the success of the Minister and of previous Ministers for Finance in reducing the level of Government borrowing and reducing the current budget deficit to the extent that in two years' time it will be eliminated. If we cast our minds back and reflect on the despair and gloom over the public finances a short two or three years ago, we will realise that the recovery has been somewhat miraculous. The Minister deserves credit for this. He is quite right in insisting that there can be no slippage on the public finances front. Despite Deputy Ferris and other speakers wanting us to throw money at everything, at schemes which are inefficient and so on, that obviously is not the way to proceed. The overall thrust of the Bill is correct. It is aimed at lower taxation levels and lower VAT rates and creates incentives in the various sectoral areas for job creation which is what we want to release further investment for the country as a whole. I would asked your permission, a Leas-Cheann Comhairle, to share the rest of my time with Deputy Tom Kitt.

An Leas-Cheann Comhairle

If the House agrees to it.

Mr. Kenny

I agree to sharing the time with Deputy Kitt who is a member of the British-Irish Parliamentary Association.

An Leas-Cheann Comhairle

Deputy Kitt has less than ten minutes.

Mr. T. Kitt

First, I would like to thank my colleague, Deputy Martin, for sharing his time with me and secondly I thank Deputy Kenny, my colleague on the British-Irish Parliamentary Association, for being so co-operative and courteous.

The first point that strikes me about this year's Finance Bill is its sheer size. At 130 pages it is the longest Bill that I, or indeed any of my colleagues to whom I have spoken, can remember. Closer examination of the Bill shows that its size is not in any way misleading as to the range of issues addressed by the Bill. In fact, since the Bill's publication I have canvassed the views of a range of tax specialists in both legal and accounting circles and every single one of them has been unstinting in his or her praise for the sheer volume of work which has gone into the drafting of the Bill. Unusually complex matters have been addressed.

The Minister for Finance has long had a reputation for being a man who did not let the grass grow under his feet. The manner in which issues such as the change in basis of assessment, thought by many specialists to be too complex a matter to tackle — a view which the UK authorities have shared for many years — is a classic example of the willingness of both the Minister for Finance and this Government as a whole to tackle issues which were previously considered too intractable to handle. Other than well paid advisers, the system of taxation which has applied in this country for the self-employed was understood by few, given its different rules for taxing different types of income and granting allowances, some by reference to income or allowances of the current year, others by reference to the previous year. This meant that virtually no one knew his tax liability. It could not be computed without reference to at least two income tax returns. I have always thought it outrageous that individual business people should have such great difficulty in determining their actual tax liability. In addition, compliance costs have escalated considerably, imposing an unfair burden on businesses.

The Minister has already presided over the introduction of self-assessment for individuals. Companies are now included under this heading. This reform is dramatic in terms of the administration of the tax system. The further progress which is encompassed in this year's Bill, with its dramatic changes regarding the basis of an assessment for individuals, represents more than a sweeping away of the cobwebs attaching to our ramshackle tax system. To my mind, it suggests that a lot of the old walls on which the cobwebs were comfortably nesting are now being dismantled.

I am convined that the steely determination to radically alter our tax system and to make it more equitable, as witnessed by the changes in personal taxation and the improvements in social welfare benefits announced in the budget speech, can and will be translated into further reforming measures.

The skill and difficulty of the tasks currently being tackled can be assessed to some extent, by comparing our position with that of the UK. For reasons which were largely out of our control, the Irish tax system is very strongly influenced and indeed, uses much of the same legislation, as that in the UK. Having been an industrialised nation for a considerably longer period than Ireland, and with a much greater technical resource available in terms of tax expert civil servants, the UK has been unable to introduce self-assessment or, indeed, to rationalise their prior year basis of assessment for the self-employed. For many years, we tended to copy UK legislation in the tax field. We are now leading the way.

Before I turn to other issues, I would like to comment on the amount of drafting, some of it extremely complex, involved in this Bill. The Department of Finance and the Revenue Commissioners are entitled to feel proud of their efforts in producing what is, in general, a very well crafted product. Several tax advisers have told me that the Revenue seem to be getting on the ball in no uncertain terms. Having said that I would welcome an examination of the man hours involved in drafting the Finance Bill and, perhaps, an interdepartmental committee might be set up to report on the delays in drafting legislation for other Departments. I am aware of the fact that the parliamentary draftsman deals with the workload for those Departments other than Finance and I am concerned that legislation which could have critically damaging effects on the Exchequer finances if even small mistakes were made in drafting is capable of being drafted in such volume at what seems relatively short notice while other measures go through what seems an inordinately long gestation period before they see the light of day.

The massive amount of work achieved in attempting to rationalise the tax system is indeed deserving of praise but the country is still burdened with excessive bureaucratic procedures and with a tax system which is so complex that if we were faced with the order to create such a vast edifice from scratch nobody would believe it was possible.

Our educational system, which is proving a substantial bonus in attracting industry, and our natural creativity, have resulted in a highly sophisticated financial services back-up structure. Irish lawyers, accountants, financial analysts, stockbrokers and others who are concerned in the financial services sector have shown themselves to be second to none in the world. The great skill of many of these people has caused many headaches for the Department of Finance and almost certainly will continue to do so. The real skills of these individuals are too absorbed in dealing with the essentially artificial burdens imposed upon them by the need to mitigate the effects of what are perceived as high tax rates on the individuals and companies that they advise. It seems to me to be highly desirable that these individuals' efforts should be directed more towards arranging matters so that the real economic consequences of business deals can be concentrated upon rather than issues such as taxation which are essentially extraneous to the main issues on which these professionals are advising their clients.

The Government have not yet tapped the large reservoir of resources potentially available to them through the financial services sector. Lawyers, accountants, all those directly involved in the financial markets and others working in the financial services sector are the individuals dealing with many of the complexities imposed on business by the tax system. While an understandable degree of caution must govern the dealings of Government Departments with these individuals and their firms, a more open approach could be adopted.

In discussing the Finance Bill specifically, I welcome it as a positive package and proactive step on the part of the Minister to create an environment conducive to real investment, economic growth and employment creation. I also welcome the additional incremental steps taken by the Minister in the area of personal taxation reform.

But tonight I would like to focus on two important aspects of Government policy, the encouragement of investment in industry and ultimately jobs and the changes made in relation to the administration of the tax system.

In relation to these aspects of Government policy I would like to highlight, in particular, the anti-abuse adjustments made to the business expansion scheme which was carried in the Finance Bill. One of the major characteristics of an expanding economy is a buoyant source of venture capital available to entrepreneurs in the development of new business ideas. Unfortunately in Ireland there has been no real tradition of risk capital being made available for entrepreneurial ideas where the risks may be higher but which offer the individual or institutional investor a correspondingly higher return on their investment.

I would have to concede that the application of Government industrial policy through the IDA and NADCORP has gone some considerable way towards taking up the slack in this areas, but the performance of the private sector has left a lot to be desired. Admittedly many financial institutions have now moved into the risk capital area operating specialist venture capital designations, but by applying strict lending criteria they have not made it any easier for the budding entrepreneur who because of his or her age, background or lack of a track record may be unable to match these rigid criteria.

In other economies where a stronger tradition of venture capital exists the individual would be able to tap into a non-institutional source of start-up funds in return for an equity stake. The business expansion scheme was established as a tax efficient vehicle for encouraging risk capital.

Unfortunately the operation of the scheme since its inception has led to considerable abuses, and in many ways has drifted away from the spirit of the actual scheme itself. The introduction of those measures banning all guarantees and the abolition of the 'put' option in relation to the purchase of BES, shares is a signifiant step in the restoration of the spirit of the scheme itself.

These changes will lead to a significant reduction in the amount of money flowing into designated funds or individual ventures, but any further investments on the part of individual investors will surely be genuine risk capital and eliminate competition for investment capital between guaranteed `ventures' and high risk ventures.

It may also encourage individual investors availing of the tax breaks under the scheme to consider ventures which up to now may have been marginalised or excluded completely by the established financial institutions of State agencies operating in the area, because of the inherent risks involved in the project.

I refer in particular to the film industry and community-based enterprises who by and large have had to operate outside the established financial world. The exclusion of 'bogus' ventures will provide promoters of projects in these areas with much more scope for raising both seed and development capital.

Mr. Kenny

I have listened with interest to many of the contributions on this 1990 Finance Bill during the past two weeks. I am not sure that the Minister for Finance or, indeed, the parliamentary draftsman and the officials in the Department of Finance have any real interest in listening to the advice or comments made by Deputies so far as they impact upon what is contained in this Bill. I do not believe for an instant that the 1990 Finance Bill, was drafted in the context of the Department of Finance and this Government, which was formed as a temporary arrangement and I do not think they have a clear vision of where our country is heading. We are in the midst of our Presidency of the EC. It is obvious that the Finance Bill does not contain any major controversial issue. With the Government in exile, globe trotting and attempting to solve everybody's problems but our own it makes common sense that there should not be a series of controversial political issues in this Bill. The Minister for Finance, Deputy Reynolds, drafted the Bill carefully and gave out certain concessions not only on a countrywide basis but also presumably on the basis of holding certain elements within his own party very close to himself.

We speak on the Bill at a time of unprecedented historic movement throughout Europe. We are all very grateful for and pleased with many developments, but I am not quite sure that there is a vision or work and progress towards where all the consequences of this kind of movement will place this country in the next decade, because we will be further away from the centre of activity. Our geographical position on the fringe of Europe will be even more isolated than heretofore. This will call for unprecedented political co-operation and activity on this island if the next generation are to make an impact and have the facilities and the ability to eke out a living here. The NESC report published recently indicated that, for instance, Ireland has the lowest population density, the highest birth rate, the highest rate of natural population increase, the only significant rate of emigration, the highest dependency ratio and the second highest unemployment ratio in the EC. Where or in what areas and with what impact does this Finance Bill, 1990 reach out to address those fundamental problems which have both social and human impact? Where are the answers in so far as this temporary little arrangement is concerned?

I would like to refer to some specifics and generalities in this Bill in the few minutes available to me. In his budget contribution the Minister for Finance indicated that VAT increases in ESB and telephone charges would be abolished by both organisations. He has not spelt out the mechanism or facility by which this is to happen. If an individual, a company or an organisation are properly registered that individual or company can legitimately claim back VAT expenses and charges in respect of ESB, telephone, telex and fax charges at any rate, but if the person concerned is an ordinary member of the public who consumes electricity and has telephone charges, where in this Bill is the mechanism spelt out by which both Telecom Éireann and the ESB are to absorb the increased charges referred to in terms of VAT? If there is no such mechanism this will undoubtedly lead to an inflationary trend and will be a retrograde step economically.

I understand from the Taoiseach's comments this week that the British Prime Minister is working diligently towards the completion of the Internal Market. The Internal Market will remove all the tariff barriers we have at present, physical, fiscal and technical. How far does this Finance Bill reach out to address those fundamental changes? The Irish Insurance Federation, for instance, have recently circulated all Deputies with details of the reduction in the life assurance premium relief and they make the point that the reduction in savings in a personal sense has contributed in no small way to the decline and the economic difficulties in which our neighbour across the water now finds herself. On one aspect of that, many of our major life assurance companies have adopted a policy of blanket selling mainly useless insurance policies to a great number of people. There seems to be an internal policy with some of these insurance companies to sign on new sellers of insurance on a very frequent basis. This indicates to me that these policies are being sold by way of personal contact in a very small circle and that when one seller has reached his or her quota a new seller is brought in to further the extent of personal contact in this regard. This will have a serious effect with insurance brokers inside a number of years. High commission is now paid on these short term policies, but they are in the main useless. People will find after a period of years that they are not what they wanted so the integrity, to a degree, of some of these insurance companies is called into question. I would like to think that matter would be addressed.

Many speakers have addressed the issue of the depopulation of rural Ireland and the effect our having no formal land policy in operation is going to have. The Land Commission, set up 70 odd years ago, had a tremendous impact in one way or another on rural Ireland. There was not a village that was not affected to some degree by the impact of the commission. One recalls the stories, which are legion, of, in particular, Fianna Fáil Ministers for Lands dividing estates in the quiet of the local cumann meeting, the ashes on the hearth, and if the cumann secretary had not been given the field he wanted they could start all over again. That is now totally reversed and there is no restriction whatsoever either on the purchase of land — I understand that is the position legally within the context of the EC — or upon its fragmentation. There used to be strict adherence to consolidation of land and the necessity to have it registered under one folio number. This has now gone out the window and one could divide one's holding of land into ten separate and fragmented pieces. The ICMSA produced a document recently which indicated that 40,000 people from farms of under 30 acres left the land in the past 15 years. They reckon that inside the next decade that size of farm unit, uneconomic as it is, will disappear from the face of rural Ireland entirely. What, then, is to happen to that ground? Is it being bought up by multi-national corporations or by a new form of landlord or is it being taken by agencies for plantation purposes or whatever? Where did these 40,000 people go? Are they now PAYE workers? Are they on FÁS schemes? Are they on SES? Have they in some cases taken the long, winding road to cardboard city across the water, as some unfortunately have? This Bill in the context of impact on the agricultural economy goes no way to address this most serious social problem.

The recent Land Commission High Court case relating to commonage division will also have an impact both on the visual amenities available to people where commonage exists and on the type and quality of usage of that land in the times ahead. I would like to think that careful consideration will be given to that development. While I support it certain difficulties may arise in terms of access for the public, if it goes that far.

In terms of industrial achievement and the creation of jobs, the Bill is no different than any other Finance Bill. It has tinkered with the mechanisms and incentives available for individuals and organisations. There has been an extension of the urban renewal scheme to 1993 and an extension of the corporation tax benefit. The theme of the IMI conference in Killarney was that, irrespective of one's geographical location and provided there was proper planning, the right facilities were made available and that people had the necessary motivation, Irish industry in the next decade will be capable of meeting the challenge of the new Europe and of the Americans and the South-East Asian region.

The statistics issued in the last 12 months indicate how Fianna Fáil in particular judged the mentality of the Irish people. When we were in Government some years ago there were howls of indignation on the publication of the labour statistics each month. Crocodile tears were shed in abundance about the thousands who were emigrating. Our young people are still emigrating and yet Ministers tell us that the rate of unemployment and emigration has slowed down and they tell us that as a consequence the number of jobs created is on the increase. It appears that everything in the garden is rosy while Fianna Fáil's temporary arrangement continues.

There has been a drop in the number of children per family and graduates from our third level institutions are anxious to travel abroad. The consequences of involuntary emigration, particularly from centres that did not suffer from emigration, are of monumental proportions. The Finance Bill does not create the proper incentives or provide the motivation for companies and individuals to try to stem the flow of emigration. In my native county in 1980, 6,500 people were involved in the manufacturing industry and in 1990 that number had reduced to 5,000. What does that say for the Finance Bills produced by the many Governments in the last ten years? Areas outside the eastern pale are no longer privileged. They do not receive any extra grants to establish industries. They do not receive any assistance to help them meet the additional transport charges they must pay. The IDA are empowered to give extra grants to firms which set up business in the far west but that is not being done. As a consequence firms anxious to establish in Ireland drift towards the areas with a higher density of population and closer to mainline markets. That has had a devastating economic effect on small villages and townlands in the west. Our people are leaving and we cannot encourage them to stay.

In the course of the debate Members referred to housing grants. In this context I should like to refer to people who are being discriminated against by the Government. If my memory serves me correctly, in January 1987 all applicants who had applied for reconstruction grants were notified of the Department's approval in principle of the work and were instructed to go ahead and spend their money. They were told that if the work complied with specifications the grant would be paid in due course. On a change of Government the new Cabinet ended that scheme but many of those who had spent their money did not receive the grant. The reason was that inspectors of the Department did not have sufficient time to inspect the work done. Several hundred genuine applicants have completed the work. It would be a humane gesture for the Minister to consider those applications and, if the work is up to standard, to pay the grant. To date we have not seen much evidence of a caring Government, although they try to project that image.

Like other rural Deputies I have been inundated with representations from farmers who have waited 12 months for payments to be made under the headage scheme. I fail to understand why if some years ago a double headage payment could be made it cannot be repeated now. The mechanics of decentralisation to Cavan and the tapping in to the computers of the newly extended disadvantaged areas have delayed those payments. This has gone beyond a joke. There are many people on extended credit from co-ops, hardware shops and so on, who should have been paid their grant six months ago. It appears that the Department officials are unable to accept telephone calls from those applicants or their representatives.

Where do all the answers lie, according to those involved in the temporary arrangement in Government? According to them our future lies in the promotion of the tourist industry. It is their view that if we succeed in bringing more tourists to Ireland everything will be grand. They tell us that we have clean air, blue skies, that we will plug the ozone hole, improve our roads and clear away the litter but we find that if we are to succeed in doubling tourist figures it will have to be done in the off-season. We do not have the necessary accommodation to cater for more tourists in the high season. Some people tell us that we are doing fine as far as tourism is concerned, that we are ahead of all targets and they wonder why more money is being spent trying to attract tourists. In my view we must do something urgently about car hire charges, particularly for those who take short breaks in Ireland of one week or ten days. For most people the cost of car hire is prohibitive. Coach hire expenses are exorbitant and those operators cannot compete with their counterparts from across the water. Prices must be kept reasonable. It should be remembered that when an entrepreneur or a person coming back from a foreign country wishes to spend, say £5 million, if he builds a hotel in Dublin he can fill it on the night it opens but if he builds it on the west coast it will take many years before he even goes some way towards recovering his outlay. There is a serious division between east and west in relation to population density, the method of funding and the advantages of coming over here.

We are still awaiting decisions on Structural Funds and, if tourism is to be a major factor in our economic development over the next decade, these funds should be pumped into worthwhile projects. I know that decisions will be made in this area in the near future.

There should be a more open debate on the environment and natural resources. The Government say that we must develop our natural resources, mining and mineral rights, fish farming and so on. However, they also said that we must protect our environment to attract tourists. There must be a common denominator in that debate, whereby the development of natural resources can take place without undue interference with or disruption of the environment. People become quite emotional about this subject when they do not understand or do not have the full facts available regarding the development of natural resources. I can speak from the first hand information in regard to mining issues on the west coast. We will be watching the Minister's decisions very closely in so far as the issue of mining leases is concerned, if and when an environmental impact analysis has been assessed and agreed by his Department. The Valoren project in terms of wind energy development should be taken to a new plane and although the ESB were very much opposed to this over the years there is now a project, referred to by the Minister for Energy quite recently, which is a forerunner of what may well develop over the next decade. I should like to think that that programme would be given priority in regard to incentives.

I do not want to echo the words written by Dr. Eoin McKernan in an article some time ago when he said "Anois is uaigneach Eire", "now is Ireland desolate". I would like to think that every manager who leaves this country on business, and indeed every person who leaves Ireland, would be an ambassador for the good points of this country. Think-tanks should be set up, if necessary, by those competent in business to portray our advantages so that those who work in inferior environments in other countries would have the opportunity to come here to sample what we have on offer.

I should like to give at last three minutes of my time to Deputy Garland.

Mr. Garland

Is it possible for me to continue until 7 o'clock?

An Ceann Comhairle

I appreciate that the Deputy's time is very limited. Commence your speech and we shall see how we get on.

Mr. Garland

The budget was a great disappointment to the Green Party, Comhaontas Glas, in that it did very little for the environment in terms of making funds available for essential improvements. As far as fiscal incentives were concerned, the only item of relevance was a proposal to increase the rate of VAT on electricity from 5 per cent to 10 per cent.

The Green Party favour a system of taxation based on taxing resources such as energy and land rather than a tax on income and indirect taxation such as VAT. Pending the adoption of this much more rational method of taxation we are stuck with the present system of income tax and PAYE. Bearing in mind that income tax is fundamentally flawed, nevertheless considerable improvements could be made therein to render it more equitable, rational and more evenly distributed. There are still far too many tax breaks for the corporate sector and the large private investor. In order to further widen the tax base I should like to see the end of section 23 relief on investments in residential housing.

The business expansion scheme is clearly being abused in many ways and should end. The continuing very nominal taxation of unit-linked insurance funds should also be ended. While I welcome the reduction in personal taxation rates, the burden of PAYE and PRSI on employees is still extremely severe. In particular the exemption limits, while they have been raised, are simply too low. Apart from anything else, there would be a considerable saving in administration if the money spent on reducing the rates was spent instead on increasing exemption limits to — at the very minimum — £4,000 for a single person and £8,000 for a married couple.

The changes in the basis of assessment for business profits, interest and rents require very careful consideration to ensure that small businesses and family farms are treated equitably. There is no longer any excuse for differentiating between wage and salary earners on the one hand and business, professional people and farmers on the other regarding PAYE and PRSI allowances, especially now that PRSI is levied on non-employees. Accordingly, I contend that an equitable PAYE-PRSI allowance should be granted to business and professional people and farmers.

The question of mortgage interest relief and relief for insurance premiums also needs to be looked at. Instead of restricting the amount of relief which can be claimed, as was the case, thus treating high and low income earners equally, the 100 per cent mortgage interest relief and 50 per cent of life assurance relief should be restored. However, that relief should only be given at the standard rate of tax which would resolve the problem of high income groups using it as a scheme for tax avoidance.

Considerable disquiet has been expressed about allowing tax relief on VHI premiums. It is an outrage that the general taxpayer has been subsidising the Blackrock Clinic and the Mater Private Hospital. Tax relief should be limited to the appropriate premium on plan A, that is the cost of maintaining a patient in a public hospital. Additional cover would, of course, be at the discretion of the insured but should not be allowed for tax.

There is a continuing failure to provide support for the family through adequate payments of child benefits and/or children's allowances for tax purposes. In view of the totally inadequate child benefit, I recommend the reintroduction of children's allowances at, let us say, £300 per child. I would, nevertheless, restrict relief to the standard rate only.

In this era of free trade it is essential that VAT rates should be reduced in order to safeguard traders, especially in Border areas. In view of the many shortcomings in the Finance Bill I cannot support it.

Mr. Callely

Many difficulties face this country and one of the most serious, which has put this country into a straitjacket, is our national debt, £25 billion. This debt will not go away and indeed it will affect our budgeting for many years to come.

We witnessed our country on the verge of bankruptcy in the early and mid-eighties when there was no control on our public finances. Since Fianna Fáil returned to Government in 1987 we have witnessed courageous government, ability, imagination and flair. Putting the national interest of this great republic first, controlling inflation and public expenditure and creating a confident climate for sustained economic growth, we can develop a society which offers a good quality of life to all our citizens. To achieve this the policies and fiscal management of the Government which took office in 1987 must continue. We need to be clear on the importance of the Finance Bill and its contents. This Bill will implement the provisions of the budget which, given our financial position, has been recognised as a good budget. This Bill shows the Government are continuing their endeavours to get the finances of our State right, to get out of the strait jacket we were in and to balance our expenditure with our receipts. I want to refer to the Fine Gael-Labour Coalition Government of 1986.

Debate adjourned.