Dáil Éireann díospóireacht -
Tuesday, 24 Feb 1998

Vol. 487 No. 6

Finance Bill, 1998: Second Stage (Resumed).

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

Mr. O'Flynn

I propose to share time with Deputies Wade, Browne, McGuinness and Ryan. Last week I spoke about the broad effects of the Finance Bill. I now wish to concentrate on two issues of concern to me.

With regard to the capital allowance section of the Bill, the lower limit of £25,000 as a proposed threshold is too low and mechanisms should be found to encourage and promote investment. The Minister should consider putting in place a limit of £75,000. That figure may not be acceptable but, during the debate on Committee Stage, I hope the Minister may be convinced to allow the continuation of funding by private individuals of developments and investments through the availability of capital allowances. I hope he will increase the limit.

Of greater interest to me is the current Revenue practice of limiting to 12 or 13 the number of persons interested in forming a consortium to finance developments. There should be no upper limit on the number of those who may become involved in such a scheme. This is further highlighted by the reduction of the lower limit to £25,000 which will make it almost impossible to fund reasonably sized or large projects using the medium of capital allowances to encourage people to invest.

With regard to the urban renewal scheme, I echo sentiments welcoming a further scheme which will prove useful in respect of the renewal of cities and towns and encourage further investment in city areas by individuals. Renewed and refurbished property which is sold to first-time buyers should be exempt from stamp duty. This would allow it to compete with new housing on an equal footing. Where major refurbishment of such properties has occurred, I suggest that proportionate value be placed between the cost price of the property and the cost of refurbishment. A definitive line can then be drawn and the uncertainty in respect of allowances removed.

Three years is too short a period from the time of designation to the assembly of a site, to the application and receipt of planning permission, to the construction stage and finally to the occupation of a premises. This has been highlighted by previous urban renewal schemes where time extensions have always been required. While I do not oppose the use of extensions to prompt people to act quickly, it is unreasonable to have too short a period initially. This Bill acts as a deterrent to the accumulation of sites mid-way through the scheme when the period would have commenced and the time remaining would be too short for the completion of a project. That militates against the success of an urban renewal scheme. Consideration should be given to allowing for a form of registration by the participants in the urban renewal scheme to show their intent at an early stage. When they complete their projects they should then qualify for a period of three years from the registration. This would be better than putting a scheme in place that limited a particular project to a three year period. I will elaborate on this idea to the Minister by way of submission.

With regard to capital gains tax and development land, I understand the Minister's intention to retain the 40 per cent rate for development land while reducing the rate to 20 per cent for other capital gains on buildings, etc. However, I sympathise with the observations of the Construction Industry Federation. It militates against the supply of building land suitable for development in that the proposed vendor will value his land at 60 per cent, which is the sum he will retain. This will keep the cost of development land high and, as we know, this will be passed on to house purchasers.

The reduction by the Minister from 40 per cent to 20 per cent in other categories will stimulate the economy greatly and will be seen as a positive move, particularly in the property market.

Mr. Allen

Deputy O'Flynn's contribution is excellent and some of his ministerial colleagues should hear it. Therefore, I call a quorum.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. O'Flynn

However, as a variation on what the CIF suggests, I suggest an alternative to reducing the 40 per cent rate to a common rate of 20 per cent for other gains. The Minister might consider using the surplus 20 per cent achieved on development land as a fund to be made available for the acquisition of land for public housing and services. In this way two successes would be achieved at once. It would address the needs of the CIF for the availability of further lands and as a direct result of the differential the Minister would also assist local authorities with funds for the acquisition of land for public housing. This is a new idea to which careful thought should be given. I will make a submission to the Minister on this proposal.

I wish to share my remaining time with Deputy Wade.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Wade

I commend the Bill to the House.

The Minister for Finance, Deputy McCreevy, is a man of great courage and vision. His proposals as laid out in the budget and in this Bill, will lead to a fair and equitable spread of resources, contrary to what the Opposition and some commentators have said.

Much has been made in some quarters about the budget being a budget for the rich, a view I contest. About £500 million in personal taxation will be given back to the people, including the elderly, the widowed and the lower paid. The people see the budget as they see the Government — efficient and effective. It has popularity ratings not seen since the 1970s and this has been brought home to me on the doorsteps of Limerick East during my canvassing for Sandra Marsh, who will join me next month on the Government benches. Her campaign was launched yesterday in Limerick by the Taoiseach. I was struck by the enthusiasm and ‘feel good factor' for her, the Taoiseach and the Government.

Mr. Allen

Is the Minister of State, Deputy O'Dea, aware of this?

Mr. Wade

The people realise that in electing Sandra Marsh to the Dáil they will be enhancing the resolve of a Government which has delivered for them. She has worked tirelessly in the constituency and with each passing day she makes a more positive impact on the electorate. Her message is clear — she has a hunger to serve and to be part of a Government which is working locally and nationally. Thousands of jobs have been announced at Dell and more are in the pipeline. Major drainage schemes for Cappamore and the building of a new bridge over the Abbey River are to go ahead. Limerick Regional Technical College has had its status significantly upgraded. There is to be a major investment in a number of schools. There is a dogged fight under way for the retention of duty free sales which will have a significant impact on Shannon Airport.

The people in the constituency are also responding to the cut in tax rates by two percentage points for over a million taxpayers, giving the hard pressed PAYE workers a break. An important step has been taken in moving to a standard rate of 20 per cent and a top rate of 42 per cent or perhaps 40 per cent if the economic climate allows. The most significant changes have occurred in the tax rates but I welcome the changes in the bands and allowances. This Bill is pro-enterprise and pro-worker and all workers will be better off after the changes take effect on 6 April.

The crocodile tears shed by the Opposition for the lower paid do not fool anyone. Many low paid will get more from this budget than they did last year. The whining from the benches opposite appears shallow when one considers that the Minister for Finance, with his so-called ‘rich man's budget' has increased social welfare payments well above inflation and given an extra £5 per week to pensioners. This is in contrast to the paltry increases granted by the last Government. In keeping with this, he placed great emphasis on the long-term unemployed with employers getting extra tax relief for taking on people who have been out of work for more than 12 months who, in turn, will be given an incentive to take up work. For the first time in 20 years our unemployment rate is below 10 per cent and below the EU average of 11.5 per cent. This measure will benefit the long-term unemployed who often find it difficult to return to work.

I also compliment the Minister on reducing capital gains tax from 40 per cent to 20 per cent. This will encourage investment and growth in the economy and, in time, increase revenue to the State from this tax. The 40 per cent rate was penal and a disincentive to investment. Members of the Opposition attacked the Minister for this move by claiming it is a bonus for the rich. Are they anti-enterprise? Can they not perceive the stimulation and growth this imaginative step will give the economy? If, as they argue, it is pro-the rich, why has the Minister cut back on certain tax havens and shelters favouring those on very high incomes and with large amounts of capital with which to play around?

The introduction of tax relief on donations to domestic charities has long been sought by the Irish Charities Tax Reform Group. It is a great shot in the arm for the important work of the many groups working in this area. The Minister for Finance is a sensitive and down to earth person and he has demonstrated this in the Bill by changing the authorised opening hours for betting shops to acknowledge the reality of current betting practices and the staging of sporting events in the evenings and on Sundays.

In the brief time available to me, I have touched on some of the important areas of the Bill, but there are many more which commend it to the House. The Minister has delivered in the Bill and the Government is delivering for the country. In my constituency of Limerick East the budget has been seen for what it is, pro-enterprise and pro-development. It has introduced greater equity in the tax system while at the same time catered for the low paid and disadvantaged. The great Sean Lemass once said that a rising tide lifts all boats. This Bill and the work of the Government is propelling that momentum as the tide of the country's economic success continues to rise. The message has got through that a vote for the Fianna Fáil candidate, Sandra Marsh, in the forthcoming by-election is a vote for stability and the excellent work of the Minister for Finance and his colleagues in Government who produced this Bill. I heartily commend it to the House.

Mr. Neville

I will now make a political statement.

Mr. Browne

(Wexford): I welcome the opportunity to make a contribution on the Bill. There has been a remarkable transformation in our economy and the quality of life of our people in the past ten years. The Celtic tiger is roaring ahead and new houses and hotels are being built throughout the country. Ireland appears to be the in-place in the European world. The economy is booming and we have low interest rates and inflation. It is important, however, that the benefits of the Celtic tiger are spread to all sections of the people. The old, the sick and low income earners must get their share of the booming national cake.

I compliment the Minister on the effective way he introduced the Bill and the measures in it that will benefit the various sections of our community. I am pleased he reduced income tax rates and that more than one million taxpayers will benefit by two percentage points. We must recognise the burden carried by taxpayers for many years when the economy was not booming and we were told we had to tighten our belts. As the workers were the first people who had to tighten their belts, we must ensure they benefit when the economy is booming. The hard pressed taxpayer has paid enough over the years and Governments over the past few years have seen fit to pay them back. The Minister for Finance has continued along those lines. The Minister for Social, Community and Family Affairs has also introduced many measures that will benefit the aged, the sick and the unemployed, those in need of extra income to enable them have a reasonable standard of living.

The Minister for Finance outlined many of the changes he proposes to make as the Bill passes through the House. He recognised the important role played by investors by reducing taxes in that area. We must continue to encourage people to invest in the economy to ensure jobs are created. Many of the measures introduced by the Minister are job orientated and will give people the incentive to invest in the economy. There are currently five or six large cranes along the skyline in Enniscorthy. In the past large cranes were seen only in Dublin, Cork and other major cities. New hotels and houses are being built in small urban centres and much of this is due to the urban renewal scheme.

Mr. Browne

(Carlow-Kilkenny): It is due to the outgoing Government.

Mr. Browne

(Wexford): Various Governments in the past ten years have been committed to urban renewal. That scheme has given a major boost to small urban towns and it must continue to operate. The Minister should extend the scheme in towns where it already operates and approve applications from towns that wish to join. If investors are given some tax incentive they will invest in these areas and thus create jobs. The Department of the Environment and Local Government has stated that towns must meet certain criteria to qualify for urban renewal in the future. A committee in the Department will assess new applications for inclusion in the scheme. The old system whereby applications were assessed by the Minister should continue rather than introduce a bureaucratic nonsense whereby selected people will decide whether, for example, Gorey or New Ross should be included in the scheme in the future or Enniscorthy or Wexford Town should get an extension.

The seaside resort scheme is also proving successful. Approximately 1,000 houses will be built in Courtown Harbour in the next 18 months under that scheme. This proves that if a seaside resort is given a tax incentive developers will invest in the area. Practically all those houses have been sold from the plans. The Minister should forget about the pilot scheme and examine the possibility of extending the scheme to other areas under this Bill. If he does, he will reap the rewards. He should include Rosslare Strand, Rosslare Harbour and other areas of County Wexford and further afield who are seeking seaside resort tax status.

I have been concerned for some time about the exemption of severely and permanently disabled persons from vehicle registration tax and value added tax on vehicles and excise duty on fuel. Under the current system operated by the Revenue Commissioners it is practically impossible for people to qualify and the Leas Cheann-Comhairle, who is a former Minister for Health, will be aware of this. Under Appendix A in Regulation 3 a number of criteria are listed for qualification for this benefit. However, unless one is confined permanently to bed, one will not qualify because of the criteria which have been laid down. Hundreds of people are ruled out who want to acquire vehicles under this system.

Medical people tell me that unless the Revenue Commissioners relax the criteria, nothing can be done and they must use the "mark a box" system. If one is outside a box, there are no half way measures and one does not qualify. Will changes be made in this area on Committee Stage? It is important for those who are disabled and want to acquire independence and the system should be interpreted more flexibly by the Revenue Commissioners. The Minister for Finance is a compassionate man and is very interested in people with disabilities. The Minister of State at the Department of Health and Children, Deputy Mary Wallace, who is responsible for this area, has introduced many initiatives and changes. I hope she also takes this issue up with the Minister for Finance.

I refer to the problem surrounding publicans with six day licences who want to acquire licences for seven days. I am not that interested in publicans but they have a genuine case. Seemingly, in days of yore, people could change from a six day to a seven day licence but a former Minister decided to abolish that provision. However, it affects only a small number of publicans. Will the Minister look seriously at reintroducing that provision to enable people to change their licences?

Mr. McGuinness

As a new Deputy, I welcome the Finance Bill and congratulate the Minister on its introduction. I wish to focus on two points. The first relates to the reduction in the level of investment from £1 million to £250,000 in business expansion schemes. I have already raised this with the Minister. Will he reconsider this provision as a number of advance factories were planned under the scheme? The limit of £250,000 on that type of investment is small. The type of building involved would be the equivalent of a lock-up shop or warehouse which was not envisaged for such investments. The investment could be controlled through the IDA by limiting the number of licences issued for the building of advance factories and ensuring that is the purpose of their issuance. That would ensure the investment was focused towards a particular sector and would be of assistance to the IDA in developing industry and technology parks.

I specifically referred to the investment by the IDA in a 60 acre site in Kilkenny as an example. It is a new site and the only means for developing it is through the BES. If it is limited to £250,000 it will not be possible to drive the development forward. If the Minister sees fit to open and control investment at the same time via the issuance of licences through the IDA, then a £1 million BES would be a great advantage. Presumably, if it is limited and the Minister does not consider the matter, the IDA will enter rent and other arrangements which will cost more money. Will the Minister review that section and provide comfort to community organisations who are trying in partnership with the IDA to develop business or technology parks in which the IDA has invested? That is the way forward and is the future for local government and IDA partnership proposals.

Will the Minister review proposals on tax returns by accountancy organisations? Great strides were made in recent years in terms of co-operation between the Department of Finance and these organisations. The bringing forward of the date for returns will cause serious problems, especially for small businesses. Will the Minister review the section and consult further on it? If it must be introduced, he might suggest a later date for the introduction of this part of the legislation in order to give people an opportunity to develop the idea with accountancy firms and give small businesses the opportunity to get their act together. By doing so, it will cause less harm to the excellent work that has been carried out between small business, accountancy firms and the Department.

Mr. Ryan

I welcome the Bill and congratulate the Minister on his work. He lived up to promises made during the election campaign. We promised to cut taxes and have followed through on that. The budget was well balanced but obviously everything that one wants to cover will not be covered. When in Opposition, Members highlight areas in which money has not been spent, but I will refer to one or two which will hopefully be covered in the next budget. This is not a rich man's budget. It could not possibly be so when it includes a £300 million increase in social welfare spending. Taxes were cut and at the same time the less well off in society have been looked after. The Minister struck a good balance in this regard and people welcomed the increases in social welfare benefits and the decease in taxation. It is unfair to the Minister to say that he is Thatcherite and very right wing. He is not and he has struck a good balance in the Bill.

There has been a great deal of criticism about capital gains tax. In the vast majority of cases, people invested after they paid tax while in some cases the investment has not paid off and the people involved will not receive a tax rebate. The Revenue Commissioners will not give a rebate when one has suffered a financial loss. We cannot forget that money was made and the capital gains tax was cut. There are many people who have invested in shareholdings and who may or may not have made money. There is a disincentive for people to sell shares before the cuts. I expect the amount of money from capital gains tax will increase in the next few years.

I wish to return to the area of child care. The number of people paying for child care has increased enormously. Society is changing and we must address the whole area of child care. Many couples are put to the pin of their collars to pay mortgages and child care even with two incomes. An imaginative package should be put together to help people in this area between now and the next budget.

I congratulate the Minister on his endeavours and I have no doubt this is one of many budgets he will introduce.

Mrs. Barnes

I wish to share my time with Deputies Durkan, Browne and Belton.

An Ceann Comhairle

Is that agreed? Agreed.

Mrs. Barnes

Despite protests from Deputies on all sides there is general acceptance among workers, trade unions and others in society that promises made in the programme for Government have not been met. Unfortunately, that is the reality for many people. Many of us have been present on budget day when it was impossible financially to meet not only the expectations of the poor, the disadvantaged and the disabled but their needs. A huge backpayment was owed to the less well-off because during those difficult years we had to pay off an enormous national debt and cope with high unemployment levels and a vast array of social issues, that can now be addressed in this buoyant economy. We regret that in the first budget when something could be done for those people we did not grasp the opportunity and run with it.

There is a sense of compassion in Irish society. There is almost a sense of guilt in society because of where we came from. When times are good we owe it to those who have not yet made it to help them. This Bill, and the budget, signally failed to tackle this area. It is regrettable that so many people were not catered for in the budget and the Finance Bill. We should all put pressure on the Minister for Finance between now and the next budget to help those people. The projections are favourable, the economy is buoyant and we can afford to plan and spend in a way in which we did not have the confidence to do previously. That reflects the views of the majority of voters. Given that we are a compassionate and caring society, people are prepared to pay tax if the money goes towards what is fair and equitable but they resent high income earners and investors getting a bonus and an opportunity to which they cannot aspire. Based on that assumption the Minister should get the message loud and clear for next year.

A Finance Bill does not exist on its own. The Finance Bill, the budget and tax reform have a huge bearing on society and on the quality of life. It is ironic at a time when more young people are working, incomes and salaries are higher and we have a more educated workforce that they cannot aspire to house ownership. Even with high salaries and job security they cannot raise the necessary deposit or pay a large mortgage. This has implications for the labour market. The tax bands have not been widened to give the low and middle income earners more take home pay to enable them to repay a mortgage or aspire to house purchase. The long-term unemployed and married women must be encouraged to move away from social welfare through financial incentives in the tax bands. Those who are working are contributing enormously to the Exchequer and the buoyant economy.

The issue of stamp duty should be examined as well as the income level towards shared house ownership. Some middle income earners do not have a hope of raising a deposit for a house in view of present high prices. The level of income at which one is eligible for shared ownership, a scheme which has been successful and should be expanded, could be the first step towards house ownership. The rate of stamp duty should be looked at especially for first time buyers. There has been a huge investment in house property by the well-heeled while those who need houses are on modest incomes.

Couples who have been fortunate to get houses are engaged in a high risk work pattern because house prices and mortgages make such demands on their pay packets and on their future security. It is a travesty that the budget did not reduce tax or provide incentives towards child care for parents who are working under great pressure. The pressures and tensions in the household are great and if both partners are to continue working to meet all the expenses of our high class society, they have to pay high levels of child care fees without State recognition, child support or tax consideration. We are forcing women especially, including those who are highly qualified and trained, to give up their jobs, pension rights and career opportunities because it no longer makes sense for them to pay huge transport and child care costs and to suffer disruption to their families. They pay a high and unacknowledged price for the right to work. The Minister of State has been involved in this issue. I hope her influence and that of other Deputies on the other side will help to secure a positive and balanced approach to it on Committee Stage.

The Minister of State has also been involved in the issue of carers, who are underpaid and have been scandalously taken for granted. The crushing burden they carry, unpaid in many instances, has helped to ensure that revenue in the economy is so buoyant. My colleague, Deputy Browne, raised some of the difficulties in recognising the support we should give the disabled.

Carers contribute to a social policy that allows them to continue to care for their parents and relatives who need it. The carers association has recommended that tax relief be extended to include care costs for parents, siblings and children. At present, relief is confined to care for oneself and one's spouse. The Minister should look at this before Committee Stage. It would have huge implications inside and outside the home and for the future of labour and the status of this kind of care in society.

Mr. Durkan

I propose to share my time with two colleagues.

An Ceann Comhairle

Is that agreed? Agreed.

Mr. Durkan

There is always a dramatic contrast between the enthusiasm with which the Government parties share accolades on the budget and the Finance Bill and the scepticism expressed by the Opposition parties. It never ceases to amaze me how two different groups, having access to the same kind of information at the same time, can draw such differing conclusions. Doubtless it is the nature of our business; it is the way things always have been and the way they always will be. I am sure it will not surprise the Government that this Bill, which gives statutory effect to the provisions of the budget, will be remembered for its failure to grasp and deal with problems and to address issues requiring attention.

It will be unprecedented if the financial strategy and fiscal policies — including the provision of tax incentives to those who are better off and the attempt to wind up the top end of the economy — now being pursued at a time when the economy is booming are successful because such an approach has not worked in any other jurisdiction. The position will be clear within the next one to three years. Similar policies when pursued in the UK in 1987 ended in failure. I hope that does not happen here because we cannot afford the luxury of such a failure.

This Bill should have addressed the issue of stamp duty, on which my party put forward proposals, especially with regard to second hand or previously occupied houses. There is a housing crisis, which is not reflected in the budget provisions or the Bill. Nobody appears to care or to know how to deal with the problem. At least 25 people seek to buy every house that comes on the market, be it local authority or privately built. It has been argued that more houses would be on the market if they were not rented. That is illogical because it is immaterial whether a house is rented or owned by the occupant.

I am unable to see how anybody earning less than £25,000 a year can attempt to take out a mortgage. Allegedly, much time and effort has been put into the provision of incentives for the unemployed. It is futile and half hearted to pretend such incentives work if we cannot continue them for those in employment. There are two options — I have seen this in my constituency — open to first time house buyers earning the average industrial wage or less. They can become unemployed, which may give them a chance to get a house, or they can leave the country. No attempt has been made to address this problem in the budget or this Bill. While the Government parties bask in the reflected glory of the Celtic tiger, I cannot understand why they will not consider the plight of this group of people. It may not be too late to introduce amendments which would create incentives to provide housing targeted at this group. Failure to do this will exacerbate the crisis. There is no point in Ministers making oblique references to the matter if something is not done about it. Action and intervention is required.

The issue of respite care and residential care for people with disabilities must be considered. The Minister of State is aware of the extent of the problem which has been identified and growing for the past ten years. Deputies on the other side identified it when they were in Opposition. The problem demands immediate attention. The number of places deemed to be necessary a few years ago are far short of what is required today. They would not even make a dent in resolving the problem. The parents, brothers, sisters and other family members of people with disabilities who have cared for them are finding it increasingly difficult to cope and to get a respite. Given the rampant Celtic tiger their situation should have been addressed.

Neither the budget nor this Bill have recognised cases involving couples who have entered mortgage agreements but who subsequently break up with one of the partners leaving the family home. Previously under the Social Welfare Act and the supplementary welfare Act it was possible for that person to hold on to her home for her family because she received supplementary support from the health board. However, that is no longer possible because there has been a gradual whittling away of her entitlement. If she were to sell her house and leave her children homeless, under the supplementary welfare Act she could get the health board to pay 80 per cent of the rent on a private house, but she cannot receive that allowance for the house she is in at present. I do not understand why that discrimination exists, particularly in respect of married women.

Mr. B. O'Keeffe

The Deputy was a Minister of State at the Department of Social Welfare.

Mr. Belton

And he did well.

Mr. Durkan

That system was interfered with.

(Interruptions.)

Mr. Durkan

It was part of the dirty dozen which the Deputy's party introduced and he should be ashamed to mention it at this stage. He should be ashamed to raise his voice in defence of it because the action was indefensible. It will have to go.

Mr. B. O'Keeffe

I have nothing to be ashamed of. It is the Deputy who should be ashamed. The Deputy when Minister of State and the former Minister, Deputy De Rossa, introduced those anomalies.

Mr. Durkan

The fact that the Deputy does not recognise those anomalies were introduced by his party is an unfortunate reflection of a poor attempt to assess the impact of the legislation the previous Government produced.

Mr. McCormack

Deputy O'Keeffe's party is making a mess of it.

Mr. Belton

Deputy O'Keeffe went against his party.

Mr. B. O'Keeffe

I went with my party.

Mr. Belton

Those were cheap headlines.

Mr. Durkan

I ask the Minister for Finance, the Minister for Social, Community and Family Affairs and the Government even at this late stage to recognise the plight of the women in that category. To give taxpayers better value for their money and to ensure the women in that category have a roof over their heads, they should also recognise some changes should be made to ensure they have parity with others in that category who are not married. That is a simple matter. This is a clear case of discrimination against a particular group in our society. There are many other matters I could raise, but I want to share the remainder of my time with Deputy Browne.

Mr. Browne

(Carlow-Kilkenny): I thank Deputies Barnes and Durkan for sharing their time with me. Any Member could speak for 30 minutes on the Finance Bill. I wish to raise two matters, one of which was raised by my namesake, Deputy Browne, about disabled drivers. It is incredible that a wonderful incentive introduced to help disabled drivers should be hijacked by red tape. A disabled driver in Carlow, who has two artificial legs and who qualified on medical grounds for a disabled driver's special allowance, will not be given that allowance because of car insurance being in his father's name. That is for purely financial reasons. It involves a saving of £500 because the person concerned is young. If he were to take out insurance in his name he would be fleeced. As the car is insured in his father's name that person, who has two artificial legs, is not regarded as qualifying for a disabled driver's special allowance. That is outrageous. I have done my best to highlight this case and I will contact the Minister of State, who has a special interest in this area, about this. It is time such red tape was removed.

I question economic thinking in the Department of Finance. I am not blaming the Minister in this regard. The Department of Agriculture and Food has tried to raise standards in meat plants. It advised meat plants around the country to upgrade their buildings. Ballon Meats in Carlow spent £1.5 million upgrading its plant and it received clearance last November that it had reached the required standard. That private plant is run by a successful and hardworking small businessman. The plant was due to receive an export licence, but that has not been issued because the Department will not appoint a vet due to a cap on appointments. As a result that meat plant cannot export meat to foreign markets. A firm in Italy wants to buy meat from that plant and instead of working out details of the amount of meat he could export the owner is worried about whether he will have to give notice to his workers. He cannot live on fresh air. He invested his money in upgrading his plant and the Department of Finance has been penny wise and pound foolish in its approach. A small businessman was encouraged to spend £1.5 million upgrading his plant, the Department of Agriculture and Food approved a grant to assist him in that work and now it will not appoint a vet which may involve a cost of £40,000. That businessman could make money for the country, keep his workers employed and buy beef from farmers, but the Department of Finance believes it makes economic sense not to appoint a vet.

Fair Oaks Meat Plant in Carlow has requested that an agricultural officer be appointed. The local office has one permanent and three temporary agricultural officers who work according to the demand. The Department of Finance has refused to make an appointment and because of that we are losing money hand over fist. As a result of that 60 workers will be let go shortly and then the Department of Social, Community and Family Affairs will have to pay those workers unemployment benefit which would cover the cost of appointing a vet.

How does the Department consider it sensible not to appoint a vet to oversee work in a meat plant where £1.5 million has been invested in upgrading its facilities? A firm in Italy is seeking orders from the plant which it cannot meet because a vet has not been appointed to give the meat clearance. I wish to share the remainder of my time with Deputy Belton.

Mr. Belton

While canvassing at the weekend I was surprised at the number of people who referred to the budget as being a rich man's budget, which it was. Robin Hood was known to rob the rich to help the poor, but the Minister is operating in reverse, he is robbing the poor to help the rich.

Mr. Kelleher

Friar Tuck.

Mr. Belton

The Deputy has tucked in a few times. I am interested in the upper Shannon area which the Minister mentioned in his budget speech. I hope County Longford will be included in the rural renewal scheme for the upper Shannon. That has been called for over a number of years and it would be an incentive for the area. That scheme operated in some seaside resorts and it is only right that areas of the midlands along the Shannon should be included. They suffer from flooding and any incentive for that area must be welcomed.

I cannot understand why County Longford has been excluded from the hotel incentive scheme, an issue I raised with the Minister on budget day. Five or six counties are included and I am pleased the neighbouring counties of Cavan, Leitrim and Roscommon are included, but Longford has been excluded.

Mr. Browne

(Carlow-Kilkenny): So has Albert.

Mr. Belton

I have the support of Longford County Council, the county enterprise board and the people of Longford on this. Is there a sinister reason the Minister, the Government and the Taoiseach have excluded County Longford from the scheme? I want that decision reviewed to include County Longford. Some colleagues of the Minister on the other benches succeeded in getting him to reverse his decisions overnight on some aspects of the Finance Bill. What I am asking for is sensible and reasonable. My county is one of the few which has battled to gain status as a tourism area but we have been stabbed in the back by this Government. I cannot understand this and there is a lot of anger in Longford at the way the Government has treated us. Fianna Fáil and the Progressive Democrats have let Longford down. The Minister for Finance should immediately reverse that decision and include Longford in the incentive scheme because it is badly needed. I thank my colleagues for giving me the opportunity to raise those two matters, which are of the utmost importance.

Mr. Foley

I wish to share my time with Deputies Kelleher, Brendan Smith, Batt O'Keeffe and Collins.

Mr. Durkan

In due deference to the speakers there should be more Members in the House.

Notice taken that 20 Members were not present, House counted and 20 Members being present,

Mr. Foley

I welcome the opportunity to make a brief contribution on the Finance Bill which gives effect to, among other provisions, the budget tax cuts. It confirms by way of legislation the reduction by two percentage points in tax rates for one million taxpayers, resulting in substantial increases in take home pay for PAYE workers from 6 April next. The Bill also contains many technical and other changes to our tax law. The first part of the Bill deals with income tax, corporation tax and capital gains tax.

Section 37 proposes changes to the self-assessment system which will align the paying and filing dates on 30 November each year, beginning with 30 November 1999. These proposals were first put forward by the Revenue Commissioners early in 1997, following a report in the media. There was a spontaneous negative reaction from a number of accountants and in light of these responses the Institute of Chartered Accountants in Ireland undertook a survey of all practising members. Of 426 completed returns received from individual members and firms, 371, or 87 per cent, indicated they could not support the Revenue proposals, while only 55, or 13 per cent, indicated support. A similar response was given by both big firms and small firms.

The reasons given for this significant opposition were, first, the proposals will effectively reduce by 40 per cent the normal period of September to January available to the self-employed and their tax advisers for the preparation of income tax returns; second, accountancy firms are under-resourced during July and August due to holidays and exam leave, which will mean additional pressures in all offices and severe pressure in those where the majority of clients are self-employed tax payers; third, the changes would not ease the Revenue's difficulties with peak levels of work at particular times — establishing an early filing date will only make the problem worse; and, fourth, other matters in the self-assessment system require urgent attention and should be given priority.

The institute, in its submission to the Joint Committee on Finance and the Public Service, suggested this provision of the Bill should be deleted. The Minister for Finance, in his Second Stage contribution, indicated he would make the relevant section subject to a commencement order in order to iron out problems and allow for a fuller impact assessment to be made before going ahead. The institute believes it will not be possible to conduct a proper impact assessment while the provision remains on the Statute Book.

The institute's opposition to this proposal is shared by the Irish Farmers' Association and the Small Firms' Association. The institute requested the joint committee to give it an opportunity to make an oral submission in which its members would be able to brief the committee on the practical difficulties the proposal would create for 250,000 self-employed persons — including farmers, company directors, etc. — their tax advisers and agents, and the Revenue. On this matter, I have been approached by a sole practitioner. The composition of his clientele is approximately 90 per cent self employed clients and 10 per cent corporate clients. The self employed clients use either the calendar year or the tax year as the basis for their accounts. At present, he schedules the work over a 12 month period to ensure staff have a regular volume of work to attend to. If all accounts were prepared and filed by 30 November he would have no work for his staff in December and January as work would not commence again until February.

Meeting clients, consulting with them and advising them on the payment of preliminary tax in October is a major assignment. He normally devotes the last two weeks of each October to arrange the payment of preliminary tax. Bringing the two deadlines together would make for an impossible situation.

At present he has monthly deadlines for PAYE/PRSI returns, bimonthly deadlines for VAT returns, and annual deadlines for the payment of preliminary tax, filing tax returns and the payment of the balance of tax due. In addition, he has corporation tax deadlines and filing deadlines for company accounts. Furthermore, he has a plethora of compliance requirements under the tax legislation, company law, the insurance Acts, the Investment Intermediaries Act, institute regulations and so on. I appeal to the Minister to look again at section 37 and to take into account the submission he received from the Institute of Chartered Accountants.

There is a technical measure in section 39 in the Second Schedule of the Bill to deal with the proposed introduction of the euro on 1 January 1999. The Government has decided to set out these changes well in advance of that date so that firms and their advisers will be clear on where they stand. This is consistent with the clear and organised euro campaign which the Government has undertaken to prepare the ground for the changeover.

Mr. Kelleher

I thank Deputy Foley for sharing his time with me. The budget was the mainstay of the proposals of the Minister for Finance, Deputy McCreevy, since we came into office. It has been broadly welcomed by most people. It is amazing that the Opposition has acquired selective amnesia when it comes to debating the Finance Bill. The vast majority of people outside this House have broadly welcomed the provisions in the budget which are being cast in legislative stone in this Bill.

For example, the major increases in personal allowances plus the reduction in the tax rates have been welcomed by all sectors of society. More than £5 million has been given in tax cuts to the PAYE sector — a hard pressed group for many years — and this has been very well received outside this House.

The falling rate of unemployment will give greater leeway to the Minister for Finance in the years ahead. It is very short-sighted of some people to comment on the budget and the Finance Bill in isolation. This is a four year programme. The Government plans to introduce many other proposals, as the Minister outlined in his budget statement in December. Taking the budget and the Finance Bill in isolation does not do justice to the Government's work programme, the Minister for Finance or the many people who have applauded the budget.

However, we must be conscious of the issues which people face. While we talk about the Celtic tiger and the rapid growth of the economy, it is very evident that young people who are trying to purchase houses face huge problems. This issue was raised by Members on both sides of the House at today's meeting of the Select Committee on the Environment and Local Government. It will have to be addressed immediately to ensure young people can purchase a house and meet their mortgage commitments. Even couples on good incomes are finding it extremely difficult to purchase a house on which they can comfortably make the mortgage repayments. The Minister, in conjunction with the Minister for the Environment and Local Government, must assess what can be done to achieve a balance and allow young people the opportunity to purchase a house with reasonable repayments and make a start in life.

This has a knock-on effect as it forces more people onto the public housing list. We must acknowledge that a problem exists in that regard. The Minister for Finance must commit extra resources to public housing in coming years. This is a daily problem for all Deputies.

The Opposition castigated the social welfare measures in the budget, although I am at a loss as to why. When the Rainbow Coalition sat on this side of the House it increased social welfare payments by paltry amounts. The Minister for Finance has made provision for substantial increases for those dependent on social welfare. Old age pensioners, who served this country well for many years, fell far behind for a long time. The Commission on Social Welfare made recommendations in this regard to various Governments over the years. At long last, that has been recognised and the benefits of the Celtic tiger have been passed on to those who have served the nation well. Admittedly, every Member would like to see further improvements in social welfare payments. However, this is a part of a programme under which over the next few years all social welfare payments will be far in excess of the recommendations of the Commission on Social Welfare.

It is timely to examine the rates of pay to social welfare recipients. The Commission on Social Welfare was established at a time of high unemployment, negative growth rates and massive emigration and against the backdrop of a pessimistic economy. However, as we surge forward to the next millennium, it is timely to ask the Commission on Social Welfare to review the rates of pay as there is a discrepancy between those on social welfare and those on medium to high incomes. A number of people are genuinely and actively seeking work but are still finding it difficult to be part of the new, powerful economy which has been created because they do not have the right qualifications or must join a training programme waiting list.

I compliment the Minister and the Government on the provisions in the Bill which I know will have a speedy passage through the House.

Mr. B. Smith

The Finance Bill is one of the most important legislative measures enacted by the Oireachtas each year. The decision by the Minister for Finance and the Government to provide £500 million in personal tax reductions for all income levels is to be welcomed. Contrary to what might be said on the Opposition benches, I know from canvassing in north Dublin that those taxation proposals and reforms have been greatly welcomed by the public. There are many other positive features in this forward looking Bill. I congratulate the Minister for Finance, Deputy McCreevy, on its introduction.

I particularly welcome the decision announced in the Budget Statement to establish a pilot rural renewal initiative for the upper Shannon region. This extremely important measure is targeted at areas which need investment and development and which have lost population over the years. The NESC report No. 102, published earlier this year, indicated very clearly that Cavan, Leitrim, Roscommon and Mayo need particular attention. I am glad the Minister has decided to introduce this pilot scheme which will be of the utmost importance to my county of Cavan. I appeal to the Minister, and his officials, to include all parts of County Cavan in that initiative. All areas of the county need development. It is one of the Border counties that has suffered immeasurably in the past 27 years due to the severe political troubles on our doorstep in the province of Ulster. All Members hope those days of violence and disruption are behind us and that it will be possible to attract inward investment to the southern Border counties. This is much needed to create jobs that will underpin the process.

Governments of all political hues and various State agencies under different names gave stock responses to public representatives that it was not possible to attract inward investment and jobs to counties Cavan and Monaghan because of the unfavourable political climate that existed on our doorstep. Now that era is behind us, I appeal to the Government, and particularly the Tánaiste and Minister for Enterprise, Trade and Employment, to target the area for special attention. There has been considerable and welcome inward investment in Ireland in recent years. Unfortunately, none of it has come to the area I represent.

The Minister, in replies to Adjournment Debates and parliamentary questions I tabled, stated that she and the Government recognised the need for special attention for the Border region. I am glad the Minister for Finance, when introducing his budget, stated that the pilot scheme would be aimed at stemming population decline and putting in place the necessary incentives to attract inward investment that will create jobs to ensure people remain in the area. This is particularly important and I appeal to the Minister and his officials to include all parts of County Cavan in the scheme.

The NESC report referred specifically to the relatively unorganised nature of counties Cavan, Roscommon, Mayo and Leitrim, their high dependency ratios and the counties' failure to attract inward investment. The report stated that these counties experienced extreme forms of marginalisation. This welcome step by the Minister is much needed and other measures will be required to attract inward investment to these counties and County Monaghan. Jobs and improved infrastructure are needed. I, the Leas-Cheann Comhairle and other Fianna Fáil public representatives have at every opportunity outlined the specific problems the area faces as a result of the lack of proper infrastructure and the need to invest heavily in this area. There is a need to put in place facilities to help attract inward investment to the counties that will create jobs and stem the population decline that, unfortunately, the counties are still experiencing.

I ask the Government to review the control of farmyard pollution scheme. It should put in place an adequate scheme to ensure farmers who want to install proper pollution control facilities on their holdings receive grant assistance to make that possible.

Unfortunately, in this day and age a large number of people have inadequate accommodation, particularly elderly people in urban and isolated rural areas. Their houses lack basic facilities and I appeal to the Government to advance plans to ensure that everybody lives in the decent and proper houses they deserve.

Mr. B. O'Keeffe

As a result of the budget and the Finance Bill, Fianna Fáil can state that it keeps its promises. The party received a mandate from the people to whom it is answerable to ensure that the commitments made before the election are met during the Government's lifetime. Regarding taxation, Fianna Fáil stated in its manifesto that the top and lower levels of tax would be reduced. Each was reduced by 2 per cent in the budget. The Government has effectively put money into people's pockets. They have been given a little more spending power which will alleviate hardship. I challenge the Fine Gael Party in relation to the middle income group. It does not want it to have the tax breaks it received from the Government because it failed miserably during its time in office to ensure middle income earners received anything worthwhile or meaningful.

I wish to blow the myth that this is a Government or budget for the rich. Fianna Fáil has been conscious of the elderly during all its terms of office. It is the only party that consciously acknowledged the major contribution of elderly people to society in the past. For example, the free electricity, free travel and free telephone schemes were introduced by excellent Fianna Fáil Ministers. Anybody who states it was a budget for the rich is not dealing with reality. Under the budget, everybody will receive a 3 per cent increase. Nobody mentioned that carers who look after the elderly will receive an increase of £5. The elderly richly deserve to be looked after and the caring Minister for Finance, Deputy McCreevy, has ensured that carers, who spend time looking after these people who contributed so much to society, will receive a small increase. This will give them some comfort and it acknowledges their excellent work. Nobody mentioned that pensioners over the age of 75 will receive a free companion pass. All Members who deal with the elderly are aware that a stage comes when old people are unable to travel alone. The caring Minister for Finance has ensured that somebody can travel with them at no extra cost.

It is important to consider other aspects of the Bill. Child benefit, family income supplement and the widow's and widower's pensions have been increased by the Fianna Fáil Minister for Finance. It is important to debunk the myths and to counter the electioneering campaign that has been run by the Opposition. Democratic Left criticised the budget but it should be remembered that Deputy De Rossa when he was Minister for Social Welfare gave the elderly the price of a box of matches a week in his first budget. That is the caring attitude Democratic Left and the rest of the Opposition show towards the elderly.

Other speakers mentioned the reduction in capital gains tax from 40 per cent to 20 per cent. A reduction to 20 per cent will regenerate activity and ensure that an increasing number of people will be willing to trade up and provide a continuing stimulus to the economy. The more activity that exists, the more the Exchequer will gain. Unfortunately, Democratic Left, the Labour Party and Fine Gael have long forgotten about checks and balances.

There is a shortage of land for the development of houses and Opposition Members said much about the rezoning of land. However, everybody must admit now that not enough land was rezoned. This shows the ingenuity Members can display when in Opposition. Labour Party, Democratic Left and Fine Gael Deputies said in the past that the rezoning of land was wrong. However, they must admit now that not enough land has been rezoned and young people cannot afford the price of new homes. This is the type of backward thinking shown by these parties. They were never any good for the country anyway and they never showed any forward thinking.

Families have a difficulty when their land is rezoned for development. For example, if a family has owned land for the past 30 years, it should not be regarded as development land because they are not speculators. They have owned and worked the land over many years. Many of these people are not willing to pay 40 per cent of the money they receive in capital gains tax. We must look at this issue and give some acknowledgement to people who have owned land for so long.

Mr. Collins

I thank Deputy Foley for sharing his time. I congratulate the Minister for Finance, Deputy McCreevy, on his first Finance Bill. The budget was well received by most sectors of society. It was one of the most innovative budgets of modern times and I look forward to the next four budgets which the Minister will introduce.

I welcome the £500 million given in personal tax reliefs. We will all feel the benefits of these in little over a month. Despite the ongoing debate about whether it is better to widen the tax bands, increase the tax free allowances or reduce the level of taxation, the man on the street has given a warm welcome to these reliefs. The reductions will benefit all levels, including the lower paid and the elderly. It has been stated that the reductions will also benefit those on higher pay, but what is higher pay? Is it £30,000, £40,000 or £50,000? In our tax regime, one does not need to receive a massive income to be regarded as earning higher pay. Anyone on higher pay and in compliance with the tax system is entitled to share in these reliefs. A distinction has to be made between the higher paid and the super rich. The Minister addressed this issue in his Budget Statement, with the aim of ensuring that the super rich pay an equitable proportion of tax.

No party or person can claim an absolute right to represent the poorest sections of society. However, the evidence shows that Fianna Fáil always cared for the less well off. It will continue to look after these people. My party aims to represent all sections of society and the all-inclusive approach adopted in the Finance Bill is the fundamental principle on which it and the Government are built. We would all like the lower paid to benefit more but this cannot be achieved without a fundamental reform of the tax and social welfare systems. I urge the Minister to progress the review of these systems as rapidly as possible as the existing anomalies are a major contributor to poverty, social alienation and discrimination. We are fortunate to have a Minister for Finance of the calibre and ability of Deputy McCreevy. If anyone is capable of leading and driving this necessary reform then it is he.

The Government has come in for some criticism for reducing the rate of capital gains tax from 40 per cent to 20 per cent. It has also been accused of being soft on the rich. This is a smokescreen erected by the Opposition parties to hide the good in this change. The ordinary man on the street who has a few pounds to invest will benefit from this change. Companies which accrue large capital gains from the disposal of shares or from property transactions are subject to corporation tax rates, not the 20 per cent rate. It is misleading to say that the Government is giving in to the super rich by introducing this change.

The elderly will benefit from an important provision which is not usually commented on. I am referring to section 17 which introduces enhanced capital allowances for the construction, extension or refurbishment of approved nursing homes. Those involved in community affairs and members of health boards are aware of the lack of proper care facilities for the elderly. We talk about care for the elderly but in Limerick Regional Hospital male and female patients are required to share the geriatric ward. This is not right and it must be rectified in the near future. I will raise the matter with the Minister for Health and Children. The problems in this sector are causing enormous worry and pressure for those requiring nursing care and their families and relatives. The increasing age profile of our society and other issues such as changes in family structures, security, etc., have fuelled the demand for nursing homes. The provisions in section 17 should go a long way towards ensuring that more places are available and that the quality and standard of accommodation and care are acceptable.

I have welcomed enthusiastically on many occasions the £5 increase given to old age pensioners. I look forward to the increases in the next four budgets which will bring the rate up to £100 per week. Many of my constituents who have benefited from the increase have expressed their appreciation to me, and I pass this on to the Minister.

I have received representations about the housing problem. Deputy Durkan referred to the housing crisis. I do not know where this crisis is because if one visits east or west Limerick one will see large numbers of people buying houses. Deputy Durkan also referred to the stamp duty paid on second hand houses by first time buyers. The statement released by auctioneers and valuers last week does not support the points made by him.

I have also received representations on the extension of the opening hours of betting shops. The Minister has a grá for this industry and I ask him to look again at this matter.

Mr. Hayes

I wish to share my time with Deputy Farrelly. During the debate on the Book of Estimates I said that the thumb prints of the four Progressive Democrats Deputies were all over it. Their thumb prints are also all over the Finance Bill and the budget. The tax reliefs given in the budget will benefit the well to do and those who have gained most from the booming economy. The underclass, the underbelly, have not got their fair share.

On budget day the Minister had £520 million to hand out, yet the weakest and most vulnerable in society were once again told they would not get their fair share. If one looks at the proportional increases in incomes in the budget one will see that the well to do supporters of the Progressive Democrats did very well. The Government will rue the day it introduced the budget and the Finance Bill which have the thumb prints of the four Progressive Democrats members of Government.

There is now a clear choice in this House between one set of parties which supports changing tax rates to reform the tax system and another set of parties which wants to widen the tax basis and in particular change the tax allowances. There is a clear choice of tax policy for the electorate not only in elections which will come in the next few weeks but also in a general election in the next few years. More fundamentally, the social partnership which has been developed in recent times will be severely challenged in the years ahead as a result of this budget.

Mr. Farrelly

Debate on the budget and the Finance Bill were, in two areas, taken over by the mistakes which the Minister made in trying to tax the old age pensioners on the few pounds they had saved in the credit unions. It is ironic to think that only a year ago the Members opposite were complaining about the then Government only giving pensioners an increase of £1.50 per week and now they want to take away pensioners' savings.

I agree with my colleague that the lower paid received very small allowances in the budget. When one considers that people on £12,000 and £15,000 gained by about £3 per week and people on £30,000 gained by £15 or £18 per week, this is an unfair division of the spoils of the Celtic tiger.

I am disappointed that the Minister has not addressed in the Finance Bill an item which we raised here at the time of the budget, that is the exclusion of certain areas from allowances for hotel development, especially areas in counties which do not have hotels for the tourism industry. That would have benefited a substantial number of people who want employment.

I am disappointed also to hear that a report is being undertaken about the price of houses. I could tell the Minister a thing or two about the price of houses and why they are so expensive, if anybody on the Government benches cares to ask those of us who are involved in the business.

I am deeply annoyed that there is no proposal to give 50 per cent of the increased capital gains tax receipts on land which the Government is receiving from development land to a fund for local areas to avoid a shortage of facilities, particularly children who will grow up in these estates. There is a need to concentrate one's efforts in trying to ensure that, along with rearing their children, the people in these estates do not spend all their lives looking for lottery money for facilities from the Government of the day. There is so much money being collected in capital gains tax in these developments that 50 per cent of it should be left in a kitty and returned to the local authorities to provide services. If such a policy was implemented, we might save substantial moneys in the long-term on other services which might have to be provided later because children did not have the facilities they required as they grew up.

The proposal my party tabled in connection with stamp duty on second hand houses is a worthwhile one, despite what some of the professional auctioneers have said in recent days. Their statement referred to house prices of over £200,000. The reality is that no first time buyers will be purchasing houses at such prices. There would be a very positive response from first time buyers who want to buy houses between £75,000 and £85,000. If research was undertaken, it would prove that proposal would be very beneficial to the individuals concerned.

I thank the Deputy for sharing his time with me. It will be interesting to see if the Minister intends making any changes to the Finance Bill other than those made prior to his coming into the House following its publication. There were plenty of gaps which still need to be filled.

An Leas-Cheann Comhairle

I am due to call the Minister but Deputy Crawford is offering. Would the Minister like to give two minutes to Deputy Crawford?

Mr. McCreevy

Yes.

Mr. Farrelly

The right man in the Chair.

Mr. Crawford

Thank you, Minister. It is more than the time Deputy Farrelly gave me.

I compliment the Minister on one matter, the allowances for hotels in Border areas. Unlike my colleague, Deputy Farrelly, the measure suits the Leas-Cheann Comhairle and me. Our constituencies will get some benefit from it.

What happened on Saturday night in the Hotel Hillgrove, where a bomb scare put all the people out on the streets, shows that we can do good in this House but those who want to ruin our country can do so with bombs and the threat of bombs. That can do a great deal of damage.

I welcome the Minister's U-turn on the credit union issue. I would hope he would do the same on the issue of bringing forward the date for auditors, which will cause problems in the audit area and with the self-employed. I ask the Minister to look at that issue closely.

The other matter I would ask the Minister to look at even at this late stage is carers for the elderly and the carer's allowance. There has been some movement in recent years in that area, but there is not enough available for those groups. Incentives must be given to allow us to build better homes for the elderly in the private or public sector because it is a growing problem with which we, as public representatives, must deal.

There is a problem in some areas of agriculture due to a shortage of staff. I want to make sure that the Department of Finance does whatever it can to alleviate that, and allows schemes and other issues to be dealt with in a prompt and proper manner.

Minister for Finance (Mr. McCreevy)

I am most grateful for the many contributions which have been made on Second Stage. Most of those have concentrated on a selected number of themes or points in the Bill. There have also been comments and reports on the Bill by several interested bodies outside the House. Some of these comments have been measured; others, unfortunately, have not been so. I will come to these later. I am used to robust discussion, to a fair amount of give and take, and to reasoned argument. I would hope in my reply to redress the balance in the discussion of a number of items in the Bill and to show that there are two sides to every argument, not just the one which is promoted the loudest or without challenge in the media.

The main spokesmen opposite have characterised the 1998 budget as a budget for the rich, as a lost opportunity and inappropriately focused on cutting rates rather than bands or allowances. All this depends on what one terms "rich", as pointed out by my colleague, Deputy Noel Ahern, in his remarks. A cut in the top rate of tax cannot be characterised as a sop to the rich. Single people on £14,000 per annum pay at the top rate. Married couples on £27,000 and over are on the top rate. Are these rich? On the other hand, l have cut back on tax shelters which allow high income professionals to reduce their tax bills substantially by investing in certain tax-favoured properties.

For income earners such as these the extent of some tax breaks makes talk of reducing tax rates versus increases in bands and allowances somewhat academic. When we talk about rates versus bands, etc. we are often talking about whether someone on £12,000 per annum will gain a little more at the expense of someone on £15,000 per annum. That is hardly the great debate on rich versus poor. I do not suggest the Opposition spokesmen are not motivated by a genuine wish to seek a greater equity in the tax system, but let us keep things in perspective. I welcome Deputy McDowell's comments on the generosity of some tax relief schemes, and the support of Deputies Noonan and Rabbitte for the moves to close off tax shelters. I do not suggest that they wish to do other than what I want to do — to ensure that all taxpayers pay a fair amount of tax based on their level of income.

Deputy Rabbitte warmed to the theme of a budget for the rich and quoted at length from the comments of the Conference of Religious of Ireland on the 1998 budget. On the 1997 budget CORI stated:

There is something profoundly wrong with a society where resources are growing dramatically yet it refuses to give priority to tackling poverty, unemployment and exclusion. This is exactly what the Government has done in its Budget for 1997.

Budget 1997 marks the triumph of greed over need.

This Budget aggravates the widening of the poverty gap.

It further stated:

A golden opportunity has been lost. The divisions in Irish society will deepen as a result of this Budget.

and

This year's budget raises serious questions about the commitment of Government to the Common Good.

Mr. Rabbitte

I think the Minister is misquoting the Church.

Mr. McCreevy

In case the Deputy has forgotten, budget 1997 was his Government's budget and that of the three parties opposite, but perhaps I should not be too hard on him. CORI rarely compliments the budget unless it falls in with its view of what the budget should do.

Taxation policy is a matter of political choice. The people ultimately decide in the ballot box how they will be taxed. This Government had a mandate for its tax proposals in the budget which it got from the people last June. I can hardly be faulted for doing what was promised at the election. I would have thought that keeping one's promises was something to be desired. We can debate at length what is the correct tax policy but any such policy has to pass the test of public acceptability.

One area of tax policy which has been sharply criticised is the cut in capital gains tax. Deputy McDowell wanted to know who requested or lobbied for that change and asked me to provide a list of all those who made submissions for a change. The main groups asking for a cut in capital gains tax were Forfás, the Institute of Taxation, IBEC and the Irish Stock Exchange. Deputy McDowell stated: "It is a matter of public record that representatives of the Dunnes trust met officials of the Department some years ago and argued for changes in capital taxation". He went on to ask if I or any of my officials met with or received submissions from representatives of the Dunnes trust. I have not met representatives of the firm referred to in this matter. Furthermore, there have been no discussions with officials since those that were held when Deputy Quinn was Minister. Indeed, the then Minister for Finance gave an extensive reply to a question on these discussions which I put down on 8 December 1996.

On the general point touched on by some speakers opposite that I seemed to be following my own logic some people both inside and outside the House are of the view that Ministers for Finance, or any Ministers, should reflect the views of a great body of people or groups. If that is what people believe a parliamentary democracy is all about, count me out. I do not subscribe to the theory that the Minister of the day is a type of gigantic Hoover of all people's opinions and that he or she cannot take any initiative of their own. Some Members of the House do not subscribe to that view. They have displayed individual tendencies over a period of years, but if the new raison d'e tre of Irish political life is that Ministers should not take any initiatives of their own or put anything they believe in into effect, I do not subscribe to that view. I did not subscribe to it in the past in any other Ministry or when I was on the back benches. If politicians are elected to this House just to put forward everybody else's ideas, or those of lobby groups, without giving matters any analytical thought, I will not subscribe to that. If Deputy Rabbitte wants to make a brief contribution I will listen to him, as I always do.

Mr. Rabbitte

May I clarify if the Minister is saying that Forfás lobbied for a halving of capital gains tax?

Mr. McCreevy

I stated clearly that a number of bodies, including Forfás, have lobbied for a reduction in capital gains taxation. As the Deputy knows, various bodies have lobbied over the years for reductions in capital gains taxation. In the context of this budget, Forfás has lobbied for a reduction in capital gains taxation and it is the job of the Minister for Finance to make up his mind on that issue. If the Deputy had read even a cursory note of what I said over the years he would know I have been of the view for a long time that a high rate of capital gains tax is ridiculous and that more money will be collected by the Exchequer in the long term by a lower rate of capital gains tax. I am not saying that just because I am Minister for Finance. That has always been my view and I have expressed it many times.

Mr. Rabbitte

I accept that is the Minister's consistent view but it is not right that Forfás ever lobbied for a halving of capital gains tax.

Mr. McCreevy

I do not subscribe to the suggestion from the Deputy or anybody else that Ministers should be swayed by other people's views and do as they wish. That is not my belief nor do I suggest is the belief of the majority of Irish people, and I make no apologies for saying that.

Much of what was said in the Second Stage debate centred round the proposals on credit union savings. I have no wish to open old wounds but it is important to be clear on this issue. The point the Irish League of Credit Unions had difficulty with was the reporting of dividends over £500 to Revenue. These dividends have been subject to tax for many years. What they pressed for was complete exemption from income tax of the return from any shareholding less than £15,000 in a credit union. This latter demand I refused to concede. On dividend reporting, the measure I proposed would have affected only a very small number of account holders in a credit union. To a large extent, I was doing what the credit unions asked for in proposing to introduce DIRT on deposit interest. I was not, as Deputy McDowell sought to insinuate, reacting to pressure from the banking sector.

Not all credit unions took exception to my proposals. The Honorary Secretary of one of the largest credit unions in the State has written to me thanking me for the proposals and stating that his credit union disassociated themselves "from the vitriolic campaign orchestrated by the Irish League of Credit Unions against the changes proposed in the Bill on the taxation of credit union dividend/interest". My proposals were described by the credit union in question as fair and reasonable given the current taxation position of individual credit union members and taking into account the new limits on credit union savings introduced in the Credit Union Act, 1997. One might say that is a lone voice but I have reason to believe other credit union members share this view.

Mr. Rabbitte

Not in Naas.

Mr. McCreevy

The most loudly proclaimed view is not always the only view.

Deputy Rabbitte has a great deal of experience of credit unions but if I had asked him for advice before I met the credit unions, I know the advice he would have given me at that time. I am sorry I did not consult him before I agreed to meet them. Despite my invitation to Deputy Rabbitte on Second Stage to give his views, he declined to do so. I take it from his silence on the matter, that would have been his advice.

I plan to say no more on this issue but to proceed with setting up the working group I promised in my statement last week. I share the views expressed by all Deputies on the great good done by credit unions for many people in the State and on the need for legislators to take that into account as appropriate in framing our laws on a fair basis.

I had thought the proposed unification of preliminary tax payment and accounts filing dates, had been addressed by my commitment last Tuesday to include a commencement order to allow the proposal to go ahead when the practical difficulties expressed by some of the professional bodies had been ironed out. I have received expressions of support for my proposal, which is seen as a progressive simplification of the tax system and the over-reaction it provoked in some quarters has been deplored.

I was surprised, therefore, that the Institute of Taxation was still unhappy and claimed the proposal would lead to the collapse of the self-assessment system. I regard this as alarmist and unwarranted. Let us keep matters in true perspective. We are speaking of moving forward by two months a deadline for submission of final accounts to Revenue. A payment date is not being brought forward — the preliminary tax payment date would be put back by one month.

I am prepared to discuss this matter with the professional bodies to ensure any practical difficulties can be dealt with as smoothly as possible. If changes to the proposal are needed for this purpose, the commencement order approach will allow these to be made before the new provisions come into force.

My attention was particularly drawn to one sentence in the statement by the Institute of Taxation as follows: "No other issue has caused such concern amongst tax practitioners in living memory". I do not know if they have forgotten section 153 in 1995 and the upset that caused. I would have thought, judging from the reaction then, that was a far more lively issue than self-assessment filing dates.

A number of speakers referred to the proposal to extend the opening hours of betting shops. I recognise the genuine concerns expressed by many Deputies on both sides of the House about the ramifications of this proposal. In particular, I note the concerns expressed by Deputies Noonan, Power, Lenihan, Carey, Ring and others on the need for consultation with staff who will have to cover the extra hours. I recently met representatives of the trade who asked that the section in the Bill should not come into effect until April 1999 and I will be happy to accommodate that request on Committee Stage. What I am seeking to do is put the trading conditions of betting shops on a modern footing and to review the conditions on opening hours laid down 67 years ago in an entirely different era and society.

A number of other specific issues were raised by Deputies in their contributions. Deputy Noonan indicated that his party would put forward an amendment under which first time buyers of second hand houses up to a value of £100,000 would be exempt from stamp duty. This, it was claimed, would be economically and socially desirable and would knock some steam out of the new house market. No doubt we will discuss this suggestion on Committee Stage, but I note that the Irish Auctioneers and Valuers Institute has come out against it and that the proposal attributed to Fine Gael was described by one property consultant in the media at the weekend as badly thought out and economically disastrous. The article went on to say that the proposal "if implemented, would actually contribute to even more mayhem than usual at the very heated lower end of the second hand residential market". Perhaps the way to take the heat out of the market is to follow Deputy McDowell's proposal to apply stamp duty to new houses for everyone other than first time buyers. This would, however, increase new house prices for those affected by anything from 6 to 9 per cent.

Deputy Noonan proposed an increase in the tax free 15 per cent of income which taxpayers may invest in pension schemes and said that 15 per cent is not sufficient for a person at 30 years of age who wants to retire at 60 or 65. The maximum amount of contribution that is tax deductible for a retirement annuity contribution is 15 per cent per annum or 20 per cent from age 55 onwards. This is an issue in which I too am interested. I am aware the Pensions Board will bring forward shortly a comprehensive report on private pension funding. I will carefully study this report when it is finalised, but we must be careful in the action we take. There is no absolute cash limit on the amount which one can put aside in any one year for a pension once the 15 or 20 per cent limit is not breached. As pointed out in an article by a pension consultant in the Sunday Business Post of last Sunday, were it not that many self-employed cannot afford to make a contribution of 15 per cent of income in the early stages of their lifetime, such a limitation of 15 per cent might not inhibit the self-employed from providing for an adequate pension. My aim would be to encourage and facilitate real pension provision and to plug the gaps which arise due to the new conditions in the labour market. I am not in the business of allowing very generous amounts of tax free income to be put away under the cover of personal pension provision and, I am sure, neither is Deputy Noonan or any other Member of the House. This matter was referred to in my budget speech. It is an issue in which I am particularly interested and I will come back to it again. There are other matters with which I had hoped to deal, but I am sure we will have ample opportunity on Committee Stage to debate them further.

An Leas-Cheann Comhairle

As it is now 6.45 p.m. I am required to put the following question, in accordance with an order of the Dáil of this day, on the amendment to the motion for a Second Reading in the names of Deputies Proinsias De Rossa, Rabbitte, Gilmore and McManus.

Question put: "That the words proposed to be deleted stand part of the main question."

The Dáil divided: Tá, 73; Níl, 63.

Tá

• Ahern, Dermot.
• Ahern, Michael.
• Ahern, Noel.
• Ardagh, Seán.
• Aylward, Liam.
• Blaney, Harry.
• Brady, Johnny.
• Brady, Martin.
• Brennan, Matt.
• Brennan, Séamus.
• Briscoe, Ben.
• Browne, John (Wexford).
• Dennehy, John.
• Doherty, Seán.
• Ellis, John.
• Fahey, Frank.
• Fleming, Seán.
• Flood, Chris.
• Foley, Denis.
• Fox, Mildred.
• Hanafin, Mary.
• Harney, Mary.
• Haughey, Seán.
• Jacob, Joe.
• Keaveney, Cecilia.
• Kelleher, Billy.
• Killeen, Tony.
• Kirk, Séamus.
• Kitt, Michael.
• Kitt, Tom.
• Lawlor, Liam.
• Lenihan, Conor.
• McCreevy, Charlie.
• McGennis, Marian.
• McGuinness, John.
• Molloy, Robert.
• Byrne, Hugh.
• Callely, Ivor.
• Carey, Pat.
• Collins, Michael.
• Cooper-Flynn, Beverley.
• Coughlan, Mary.
• Cowen, Brian.
• Cullen, Martin.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Síle.
• Dempsey, Noel.
• Moloney, John.
• Moynihan, Donal.
• Moynihan, Michael.
• Ó Cuív, Éamon.
• O'Dea, Willie.
• O'Donoghue, John.
• O'Flynn, Noel.
• O'Hanlon, Rory.
• O'Keeffe, Batt.
• O'Keeffe, Ned.
• O'Kennedy, Michael.
• O'Malley, Desmond.
• O'Rourke, Mary.
• Power, Seán.
• Roche, Dick.
• Ryan, Eoin.
• Smith, Brendan.
• Smith, Michael.
• Treacy, Noel.
• Wade, Eddie.
• Wallace, Dan.
• Wallace, Mary.
• Walsh, Joe.
• Woods, Michael.
• Wright, G.V.

Níl

• Allen, Bernard.
• Barnes, Monica.
• Barrett, Seán.
• Belton, Louis.
• Boylan, Andrew.
• Bradford, Paul.
• Browne, John (Carlow-Kilkenny).
• Bruton, John.
• Burke, Ulick.
• Carey, Donal.
• Connaughton, Paul.
• Cosgrave, Michael.
• Coveney, Hugh.
• Crawford, Seymour.
• Creed, Michael.
• Currie, Austin.
• D'Arcy, Michael.
• De Rossa, Proinsias.
• Deasy, Austin.
• Durkan, Bernard.
• Enright, Thomas.
• Farrelly, John.
• Ferris, Michael.
• Fitzgerald, Frances.
• Flanagan, Charles.
• Gilmore, Éamon.
• Gormley, John.
• Gregory, Tony.
• Hayes, Brian.
• Higgins, Jim.
• Higgins, Michael.
• Hogan, Philip.
• Howlin, Brendan.
• Kenny, Enda.
• McCormack, Pádraic.
• McDowell, Derek.
• McGahon, Brendan.
• McGinley, Dinny.
• McGrath, Paul.
• Mitchell, Gay.
• Mitchell, Jim.
• Mitchell, Olivia.
• Moynihan-Cronin, Breeda.
• Naughten, Denis.
• Neville, Dan.
• O'Keeffe, Jim.
• O'Shea, Brian.
• Owen, Nora.
• Penrose, William.
• Perry, John.
• Quinn, Ruairí.
• Rabbitte, Pat.
• Reynolds, Gerard.
• Ring, Michael.
• Shatter, Alan.
• Sheehan, Patrick.
• Shortall, Róisín.
• Spring, Dick.
• Stagg, Emmet.
• Stanton, David.
• Timmins, Billy.
• Upton, Pat.
• Wall, Jack.

Tellers: Tá, Deputies S. Brennan and Power; Níl, Deputies Rabbitte and Stagg.

Question declared carried.

An Ceann Comhairle

I declare the Bill to be read a Second Time in accordance with Standing Order 111(2).