Finance Bill, 1972 ( Certified Money Bill ): Second Stage.

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

Parliamentary Secretary to the Minister for Finance (Mr. Lemass)

When drawing up the budget for the current financial year, the Government were confronted by competing requirements. The strong upward trend in prices indicated the desirability of adopting a cautious budgetary stance which would in no way run the risk of adding to the prevailing inflationary situation while, on the other hand, the overall position of the economy called for the tackling of the problems of unemployment, slow growth and excess capacity in an imaginative and courageous way.

The Government considered that the economy required a further stimulus, additional to those provided in the preceding October and January. While the steps taken during the previous half year had not worked their way fully through the economy, it was clear nevertheless that some further relation of the economy was necessary.

To an opening deficit of £8½ million, I added £26¼ million by way of tax reliefs, improvements in social welfare payments, extra assistance to agriculture, parity to State pensioners and further help to old IRA veterans. These measures widened the current budget deficit to £34¾ million. To finance part of the gap, I decided to bring into the Exchequer a £7 million exceptional once-for-all receipt of surplus income of the Central Bank. This sum represents the build-up which resulted from the arrangements hitherto operating whereby the surplus income of the Central Bank was paid to the Exchequer three years in arrears. After account was taken of this receipt, a balance of £27¾ million remained to be financed. The budget, therefore, released additional spending power of about £35 million and will, I estimate, have the effect of adding 1¾ per cent to the growth rate of the economy over the coming 12 months. As well, the expansionary capital budget will also have a beneficial effect on employment and growth. To the extent that the budget adds to the value of the gross national product, there will be additional buoyancy of revenue. This, in turn, will reduce correspondingly the borrowing requirement and will reflect the success of this year's budgetary policy.

At this point, I would like to mention that the adoption of a deficit budget this year was in response to the special requirements of the economic situation and that it does not represent the beginning of a continuing practice to be adopted as a matter of course.

There are indications already that the budgetary strategy is proving successful. Foreign confidence in our economy has been consistently high over the past year as the level of the capital inflow reflected in our strong reserves position indicates. I am satisfied from the broad favourable reaction to the budget that our fiscal policy this year will reinforce this confidence and, by ensuring a higher level of employment, will provide a domestic fillip leading to a more buoyant economy better equipped to face the challenge and reap the benefits of EEC membership.

Sections 3, 4 and 5 of the present Bill provides for increases for all persons aged 65 and over in what is the equivalent of minimum earned income relief and for substantial increases for taxpayers generally in personal allowances and child allowances. These measures alone will cost some £11 million in the current year but, apart from according significant relief to all taxpayers, they will, in addition, remove some 50,000 people from the tax net.

The tax reliefs provided in the Bill for industry should also help to boost investment and output, namely, section 10 restores full deductibility of corporation profits tax payable by companies in determining profits for income tax purposes and section 42 ensures that the full cost of capital expenditure incurred between 1st April, 1971, and 31st March, 1973, on new plant and machinery can be written-off for tax purposes in the first year even though the asset has not been brought into actual use within that period.

While the remaining income tax reliefs provided in Chapter 1 of Part I of the Bill are not of the same general application as, say, the personal allowances, nevertheless they are of considerable importance to individual taxpayers. These include the raising, under section 6, of the income limit for the purpose of the dependent relative allowance to £295 which is the annual equivalent of the maximum non-contributory old age pension following the social welfare increases announced in the budget; and the removal, under section 9, of the upper limit of £500 health expenses that a taxpayer may claim in respect of each qualified person. In addition the provision, in section 2, for deduction, before subtracting any tax-free allowances from an employee's gross emoluments under PAYE, of the amount of the employee's superannuation contributions, obviates the need to effect subsequent adjustments of tax-free allowances in thousands of cases and ensures that employees are accorded relief for changes during the tax year in superannuation contributions which in many instances vary with income.

Apart from section 11, which enables the Central Bank to pay interest on reserve bonds without deduction of tax, the remaining sections in Chapter 1 of Part I of the Bill are of a technical character.

Section 1 imposes, as is customary, income tax and sur-tax at percentage rates corresponding to those for last year, but provides, as I announced in the budget, for the changing of both taxes on a permanent basis. One beneficial effect of this change will be that, in a year in which no variation in the rates of tax is proposed, it will not be necessary either to introduce a Financial Resolution or to include a provision in the Finance Bill for the charging of these taxes. Section 12 effects certain amendments set out in the Third Schedule to the Bill consequent on the charging of income tax and sur-tax on a permanent basis. Finally, both sections 7 and 8 are consequential on the raising of the limits of jurisdiction of the Circuit and District Courts by the Courts Act, 1971. The limit specified in section 485 of the Income Tax Act, 1967, which deals with the recovery of tax by a sheriff or county registrar, and in section 486 of the Act, which empowers authorised officials of the Revenue Commissioners to sue in the courts for the recovery of the tax due, are being raised in section 7 and 8, respectively, in line with the new court limits.

The purpose of Chapter II of Part I, together with the First Schedule, is to provide a single and more liberal code of tax to deal with superannuation schemes for employed persons in lieu of the three existing separate codes enacted in 1921, 1922 and 1958.

Pensions are increasingly coming to be seen as deferred remuneration and it is reasonable therefore to accord relief for tax purposes in respect of contributions made out of current income to secure a future pension which is chargeable to tax, like other income, in the hands of the pensioner. Relief in respect of contributions, by both employers and employees, to fully approved superannuation schemes is accordingly provided under section 16 of the Bill. Section 17 provides a corresponding relief in respect of employee contributions under a statutory scheme. As there is no reason why tax relief should not also be allowed where a commuted payment in lump sum form falls to be made in respect of superannuation contributions to either a private scheme or a statutory scheme, relief for such lump sums which may be apportioned over a number of years is accordingly provided for under sections 16 and 17. Relief will apply, under section 16, from the date of approval of a scheme under the new code and, under section 17, from 6th April, 1973.

I should also draw the attention of the House to the relief provided in section 25 of the Bill. Under existing law, relief for lump sum contributions is restricted to certain private schemes and to statutory schemes providing benefits for an employee but not for a widow or dependants. A similar restriction has applied up to the present for the purposes of giving relief in respect of the ordinary annual contributions under statutory schemes but relief for such contributions has been allowed, since 1968, on a provisional basis pending the enactment of appropriate legislation. This arrangement is being put on a proper legal footing in section 25 of the Bill in which relief corresponding to that under sections 16 and 17 is, in equity, also being extended to lump sum contributions made since 1968 under both private and statutory schemes.

A suitably devised superannuation scheme can, however, be a handy device for income tax and sur-tax avoidance. Some restrictions are, therefore, necessary in order to strike a reasonable balance between the legitimate interests of the Exchequer and those of beneficiaries under occupational pension schemes. Section 15 sets out accordingly the general basic conditions, namely, the "prescribed conditions", which, if a scheme complies with them, will entitle the scheme, as a matter of right, to approval. The section also confers discretionary power on the Revenue Commissioners in the interest of flexibility to approve schemes even though they may not comply with one or more of the prescribed conditions. If a scheme is not approved by the Revenue Commissioners, the charge imposed under section 18 will come into play, unless the scheme is set up either under statute or by a foreign Government for the benefit of its employees. The exclusions from the charging section are contained in section 19. The rules of existing retirement benefit schemes may need to be amended in connection with an application for approval, by the Revenue Commissioners, of the schemes to enable them to come within the gambit of the new code. Section 24 enables this to be done.

Sections 21 and 22 provide for the imposition of a uniform charge of 10 per cent on superannuation contributions refunded to employees and on the excess of lump sums paid to employees in commutation of pensions over the maximum amount which the employee would be entitled under the ordinary rules of the scheme. The Minister for Finance is given power under both sections to vary by order the rate of tax charged, subject to the order being laid before Dáil Éireann. Repayments made to an employer from a fully approved scheme are to be treated, under section 23, as a receipt of the employer's trade or profession and charged to tax accordingly, but only to the extent that relief was allowed in respect of his contributions to the scheme.

Sections 13 and 14 are concerned with questions of definition and interpretation, while section 13 in addition gives effect to the First Schedule which contains administrative, transitional and consequential provisions, and also widens the scope of the tax exemption under existing law in favour of life assurance companies in respect of that part of their investment income which is referable to pension schemes approved for tax purposes.

Finally, the application of PAYE under section 20 to pensioners paid under any scheme approved under the new code will obviate the necessity for some pensioners to make repayment claims in order to recover balances of tax due to them.

The new code will be of universal application with effect from 6th April, 1980. In the interim, new schemes established from 6th April, 1974, or existing schemes materially altered from that date, will be required to comply with the new code. On the other hand, an existing scheme and a new scheme established before 6th April, 1974, will have the option of adopting the new code as from 6th April, 1972.

Part II of the Bill, which deals with death duties, contains two anti-avoidance provisions: section 30 provides that all foreign debts must be deducted, for the purposes of estate duty, from all foreign property, and not merely from foreign personal estate only, before any balance is deducted from the Irish estate; while section 32 replaces section 21 of the Finance Act, 1965, which is being repealed under Part III of the Fourth Schedule of the Bill, with a new section to deal as comprehensively as possible with avoidance of estate duty through the medium of discretionary trusts. The remaining death duty sections afford additional reliefs.

Section 26 imposes a new scale of estate duty rates, as set out in the Second Schedule, which in effect abolishes the duty on estates up to £7,500 and reduces the rates of duty charged on estates in excess of that amount and up to £11,000. Section 27 increases, from £5,000 to £7,500, the general exemption limit for legacy and succession duties, and a consequential increase from £5,000 to £7,500 is made in section 28 in the special exemption for death benefits payable under superannuation schemes. Section 29 increases the widow's and dependent child's abatements to £2,000 and £1,000 respectively from the existing figures of £1,500 and £750. Section 31 increases from £500 to £50,000 the jurisdiction of the Circuit Court in cases of appeal against decisions of the property arbitrator in relation to the value of lands or house property for estate duty purposes. If the value of any other property is in dispute, there is already a right of appeal to the Circuit Court up to £50,000 in value. In relation to the value, for estate duty purposes, of non-quoted securities, however, I am providing in section 33 of the Bill for a right of appeal, in the first instance, to the Appeal Commissioners.

Following the provision, in section 33 of the Bill, for the right of appeal to the Appeal Commissioners in regard to the valuation of non-quoted securities for estate duty purposes, I am providing, in section 36, that the same appeal procedure should operate in the stamp duty field. The two other stamp duty provisions are in section 34 and 35. Section 34 exempts from stamp duty loan stock issued by a State-sponsored body where payment of interest on the loan is guaranteed by the Minister for Finance and section 35 provides for the extension to group pension policies of arrangements for the payment of stamp duty by way of composition. All three stamp duty sections are contained in Part III of the Bill.

I now turn to Part IV of the Bill which deals with corporation profits tax. The exemption from corporation profits tax of certain public utility companies, building societies and the Agricultural Credit Corporation is renewed under section 37 for a further year, pending completion and consideration of the report of the inter-departmental working group which are examining the position of building societies.

Section 38 abolishes with effect 19th April, 1972, which was of course budget day, the exemption from corporation profits tax in respect of companies precluded by their constitutions from distributing profits among their members and a new exemption in favour of companies permanently precluded from distributing profits to members is provided for in section 39. This is being done by adding to section 43 of the Finance Act, 1922—which already exempts certain companies from corporation profits tax—two new classes of company.

The first class is a registered company that by their constitution are prohibited from distribution profits to members and are required, in a winding up, to dispose of their surplus property to the Minister for Finance, a charity or another company with similar provisions in their constitution and, finally, are prevented from altering these provisions without the consent of the appropriate Minister of State. If a company were, before budget day, exempt from corporation profits tax under the old exemption they will be allowed a period of grace, up to 19th April, 1973, to amend their constitution in order to comply with the addition requirements that I have just mentioned.

The second class of company covered by the new exemption provision are statutory companies. As it is the intention that these companies should continue to enjoy exemption from corporation profits tax, the new provision is so worded that the necessity to amend their constitutions for the purposes of the exemption will not arise.

Finally, I come to Part V of the Bill which contains the annual provision, in section 40, fixing the annuity for the redemption of the debt incurred on voted capital services in 1971-72 and fixing provisionally a new annuity to redeem the estimated debt in 1972-73. Section 41 provides for the winding up of the Capital Fund and the transfer of its assets to the Exchequer.

Section 43 exempts a credit union, with effect from the date of its registration, from income tax and corporation profits tax on all their profits. Section 44 provides relief from death duties, stamp duty and customs duty for illegitimate children inheriting property from their mother as if they were legitimate, and section 45 provides similar relief in respect of children adopted abroad if the adoption laws in the foreign country have substantially the same effect in relation to property rights as our own Adoption Acts. Section 46 is a repeal provision. Section 47 and 48 are self-explanatory.

This Bill makes a serious attempt to alleviate the burden of income tax and of estate duty and, at the same time, to encourage initiative, enterprise and economic growth. However, Government action on its own cannot suffice. There must also be a full response from the community at large, particularly as we are now on the eve of membership of the EEC. I am confident that such a mature reaction will be forthcoming.

I commend the Bill to the House for a second Reading.

An Cathaoirleach

I should like to remind the House that we are taking Motion No. 17 in conjunction with this Bill.

Mr. Alexis FitzGerald

Restricting my remarks to the Finance Bill, in considering it we are, in effect, considering budget proposals in so far as they lead to proposed amendments in what is largely direct taxation. Before I make any general comments, I should like to ask the Parliamentary Secretary when he is replying to this debate to enlighten me as to why each year, when we are awaiting a recess or when the Dáil is in recess, we are presented with this Bill and told it is a necessary Bill? I am quite sure it is a necessary Bill but I should like to know what would happen if we continued to talk throughout the months of August and September and the Government did not introduce a closure measure and we did not enact a Finance Bill? I should like to know what would happen in such a case and why it would happen.

Would it be possible—I noticed during the Parliamentary Secretary's address he referred to fundamental alterations in regard to the structure of income tax—for us to make any change which would make it possible for us to have these debates without pressure. Let us introduce a section in some Finance Bill which would have that effect and if that is not possible let us have some form of constitutional provision.

The whole structure of our fiscal code ought to be continually under examination. We do not properly conduct such an examination unless we remind ourselves that in looking at the Income Tax Act, 1967, we are looking at a text which has been written, rewritten and rewritten over a period of 160 or 170 years. Many of the sections of the Income Tax Act, 1967—the same could be said, possibly, of the estate duty code— owe their existence to particular historical circumstances, where sanctions were drafted to meet puzzles that were then presented to the Chancellor of the Exchequer or the Minister for Finance who had charge of such affairs at the time. We should look at some of those sections and see if they are reconcilable with each other or reconcilable with the circumstances of life in Ireland today.

Perhaps a historical curiosity might make my point best for me. I wonder do Senators who are in employment realise that under Rule 3 of Schedule E they are entitled in their income tax returns to the cost of keeping and maintaining a horse, if the employee in question is obliged to incur this cost by the intelligent arrangements his employer will make for him. There are few employees who are under this obligation at the moment and few employees making this claim. I only mention this to illustrate that the rules of Schedule E—which themselves are proper to be criticised and which I shall criticise—came into existence at another time and give some particular kind of interpretation to a trend of judicial opinion which pushed the practice in a particular direction. It may well be that these rules might now be revised in an enlightened way. I am just taking that as one example.

There is another example which illustrates to me why it is a matter of justice that the whole code ought to be constantly revised, not necessarily altered in structure as much as intelligently re-appraised as to its significance and effect. For example, section 139 of the Income Tax Act gives an allowance of £100 for a relative or another person taking charge of the children of a widow or a widower. That £100 was last revised 11 years ago. If £100 was right in 1961, surely it should be a much bigger figure in 1972.

Section 140 provides an allowance for a relative taking charge of an unmarried person—a brother or sister. It was last revised in 1949. In section 144 there is an exemption and marginal relief for small incomes of £240. That figure was introduced in 1954, 18 years ago.

There is another similar section that is worth examining. It is section 115, which provides an inadequate figure as it was at the time of its enactment— a freedom from taxation for a post-employment gratuity of £3,000. We took the British procedure, cut the British sum of £5,000 down to £3,000 —less valuable Irish pounds—but we did that in 1964. If £3,000 was a fair and just figure to be free from taxation in 1964, it should be a different figure now.

Before I leave this aspect of the subject I should like to give one other example of an anomaly. Anomalies like those discovered by prospectors are capable of being mined to the advantage of the rich—an anomaly, for example, where there is provision that the property is put on an accumulating trust, the income on which it to be accumulative for the benefit of a child upon the attainment of the specified age of the child or upon his marriage. If that income is not in excess of the personal allowance that the child is entitled to have, it can be recovered by that child on attaining adult years. I have no objection to that, it encourages savings.

However, I should be interested to know the historical background to its introduction to our code. It is a system which is only of use to people who are so well off that they can afford to push over their property to be accumulated for their children and who can do without the property in question. What about the position of a man who is accumulating but has not accumulated? He cannot do this until he has made the accumulation. He cannot make covenants for accumulation, for example. These are savings just as real as the savings made from property that is settled on children. Why should it favour the man with the money and the accumuiation? Why should the tax code encourage him and not encourage the other? I see no justification for this. It is good news for well-off people. It may well be good for the economy because it may well produce a movement in favour of savings such as is desirable to have. I am not criticising its existence but I am criticising the absence of a corollory provision in favour of the man who has not yet made his accumulation because he must think of his own or his wife's future years and cannot afford to transfer away from himself his property or part of it.

Generally speaking it is difficult to make it otherwise, but direct taxation in fact favours the rich, although there is a progressive element in death duty and in surtax. There are a number of reasons for this. The first is probably the most obvious. It is that the rich can afford to pay the people whose talents must be energised into devising the schemes and who can get the means which are proper to be adopted by them to secure avoidance measures. The other reason is that without a gift tax for the very rich, estate duty is largely a voluntary tax. They can give away their property. There are suitable restrictions, trust settlements and provisions to prevent it harming those to whom they want to give the benefit of it. They can have it because they have it to give and are not depriving themselves, having given it. This cannot be done by the man of modest resources who has to retain it to cover the fatalities of his own life and of his wife and who must remain in control of such modest resources as he has. Without a gift taxation, this code does favour the very rich.

There is a further reason. Apart from the fact that they can do without it, they can actually do it without affecting their liquid position. They can give it away because they have resources that lie outside any private business and in this way they do not damage that situation.

We must ask ourselves what sort of a country we want to have here and whether, if some of these facts are inescapable from the nature of circumstances, from the nature of inequality, we have not got to take a look at the impact of rates of taxation on people with modest resources. We should ask ourselves whether, for example, merely because there is a lingering feeling among many in the public sector, which is shared by others in other sectors, the farmers' freedom from income taxation and surtaxation is in itself a type of injustice. The only way one can get back at them is by collecting when they die, but the misfortune of their death is to be matched by the equal misfortune of their widows and children having then to find funds to pay substantial death duties.

Is it right, for example, that the valuation of a farm for estate duty purposes should not be alleviated, as it is in the United Kingdom, by a 45 per cent relief which brings the farmer in question into another level of duty? This should be honestly faced. I do not think this question is dealt with by giving a typical example of somebody dying worth £30,000 and leaving a family of perhaps seven children and having dependant relief. This is not an answer to the question. We are talking about the deaths of people at ripe ages who may not have dependent children.

If the estimates are correct, the most gloomy estimate that I saw of those who favour joining the EEC was that there would be at 1970 prices an increase in farm incomes of 50 per cent during the transitional period. The more optimistic view saw the farm incomes increasing by two and a half times the 1970 figure. A trade that increases by two and a half times increases very substantially your need for capital, and you will not be able to carry on that trade unless you have the capital available.

For building up that kind of a situation, the actual financing of death duties will become a problem. It may have already become a problem in some cases. The effect of taxation on economic performance is highlighted by the immense success dependent on the export tax relief, which has been a crucial factor in transforming and reforming Irish manufacturing industry which is now in a position to face the challenge of the EEC with courage and confidence. People did respond to that tax relief. They respond to tax incentives and the more inflation makes the tax pressures felt, the more the reliefs are sought. If the object of public policy here is to attain high economic growth in a just and ordered society in conditions of change and development, which of themselves are subject to social control, and if the object of public policy is to get the best out of stimulating private energy and at the same time reconciling its expenditure with the common good, we have got to ask ourselves what can we do with the fiscal code to achieve this object of public policy.

With regard to the whole matter of industrial relations, we have fared better over the last few years than they have in Britain. That is very welcome and full credit is due to the unions and workers' representatives and the workers themselves for their stability and good sense. Unless we have a widely felt sense that justice is sought to be done and that reforms are being made to secure that it is done, we will not get the co-operation without which we cannot get the growth or the improved society we want to achieve.

Obvious injustices must be eliminated. I cannot see how anybody in either House of Parliament can justify the situation in which farm labourers have to pay income tax while the farmers who pay them and who are making profits out of employing them do not. I cannot see how it can be just that tax be deducted by farmers out of their labourers' wages which is then applied to giving relief to the farmers for employing the labourers. I am not saying that the farmers should be taxed —that is a matter for public policy. My own view is that they should be, but it is not my concern to argue that. I know that there is an economic argument for not taxing them and that is that the return on investment in agriculture justifies that that return should be let off tax. I am not impressed by that in the new economic circumstances. Whatever treatment the farmers get the labourers working for them should get the same. That is the first point on justice to be made.

I cannot see why it is justifiable that the man who runs a substantial estate and makes no profit should be allowed to set off these losses against his other incomes. I understand why starting-up losses by getting into farming might have been highly desirable at a time when we wanted to encourage people to do so, and to move their money into maintaining a place in the country and giving employment and so on, but it seems to me the stimulus is working in the reverse direction. Instead of encouraging city speculators to go into buying land and setting off their starting-up losses against their other income, we should be trying to discourage them. I see no justification for a continuation in 1972 of a practice that might have been justifiable in 1932.

I want to mention the rigorous treatment of expenses for people who are in employment as compared to the treatment of expenses of the people who are not. I think the phrase in the rule in regard to expenses, which is interpreted as being "wholly, exclusively and necessarily", is too severe in the experience of employees. The wit of the Revenue Commissioners should be equal to preventing abuse by doing, as I understand broadly— I am not attempting to summarise— what I understand to be the American practice. It is a question of whether the expense incurred is a commercially justifiable one and can be shown to be such. In the US they are entitled to 100 dollars allowance unless they can vouch for a higher expenditure and prove that it is a tax deductible item. This is a matter of justice and ought to be looked at. It may have a curious effect on the whole rates of taxation and could even have an effect on wages and prices policy. We should consider whether our code could be amended to introduce keen incentives to get rid of injustices and social evils.

In this land at one time there was a provision for an irrevocable covenant in favour of charity. The position with regard to such a covenant was that, if you bound yourself under seal to pay for a period in excess of six years or during your life £100 per year to a charity and were a surtax payer, you could deduct that £100 from your gross income and that £100 would not be subject to your surtax, because you could deduct the income tax from the £100 on paying it to the charity, and then the charity would recover the £35 deducted. Originally this was to encourage people to be philanthropic and to support charity. For some reason we are not told that that was changed but we know that covenant in favour of charity was deleted from our code. I cannot think of any fiscal measure which would be a more admirable way of applying what is known by socialists as the principle of the subsidiary function. My view is that things are better and more cheaply done by harnessing private enthusiasm by reducing bureaucracy. If things are done by clubs, societies, associations and enthusiastic local bodies then there is less bureaucratic control and an enlargement of freedom by the people who are applying their money in the covenant.

Any amendment which would encourage people by a tax stimulus to give money to assist the blind, the deaf, the dumb, the old, backward or handicapped children, the crippled or any similar worthy object would be a good thing. I am well aware that these covenants in favour of charities are susceptible to abuse. They are abused in America and in the United Kingdom. The existing law allows the rich to make charitable settlements, so I cannot see why the law will not allow those who are accumulating but have not yet accumulated, to tie up by obligation, part of their income in favour of charities.

The Revenue Commissioners do not like to be given discretionary powers, I understand, but they must take them or put themselves in the position of being satisfied regarding these covenants, that there is a bona fide charity, that there is a genuine payment, that there is no “back-hand” going from the charity to the covenantor or his relatives. The principle of these covenants was reintroduced into our code in the case of covenants in favour of scientific research. Why one and not the other? If it was changed because it was thought that too much money was going to the Church let us list the objects which are approved. It is fair that the charities in question should be Irish. If we have a £35 million deficit in the budget, which should provide some flexibility, why can we not gamble another £50,000 and have a pilot scheme by having provision for a covenant restricting the amount that any one taxpayer could claim in relation to such charity or restricting the amount that any one charity could receive from any one covenantor?

Another question of justice relates to industrial democracy. There are all sorts of conservative voices raised in doubt with regard to the value of workers' participation, employee share schemes. Employers cannot hoodwink employees in 1972. Shrouding things in unnecessary darkness merely gives people the impression there is hoodwinking going on, that there is some unjust swag being got as a remuneration for capital. The State have taken no steps towards stimulating employee share schemes. They exist in relation to export tax relief and the IDA draw the attention of foreign investors to the possibilities of such schemes but this is a limited area.

We might consider the incentive of deducting from corporation profits tax such part of an industry's earnings as were appropriated to employee share schemes, whether distributed or not. Safeguards might be required to ensure that this would be related to specific types of activity and could not be used in a closed company situation in order to bring members of the family in to get the benefit. Those who draft these provisions would be well able to think up the necessary safeguards.

It is necessary to make a full disclosure to employees of the performance of the industry in which they are employed. The employee must be made aware, by an employer who is not subject to any guilt about the position, that capital is needed in the enterprise if it is to provide growth in employment and benefit for the employee as well as the employer. Capital in industrial enterprise is properly to be seen as a demand for labour. The insufficiency of capital restricts what could be made available for the labourer. In a prosperous community and in a group economy, profits and wages should be rising simultaneously and should not be moving in opposite directions. Where there is increased productivity, all should share it and the consumer should also have a share by way of some alleviation in prices. If we want co-operation between the two sections of industry, it will be necessary to take a step in this direction.

I should like the Minister to express in terms of domestic interest cost what is the real cost of foreign borrowing. I am with the Minister in opting for growth although I do not like the growth rather than stability alternative. There will be no growth without stability, but if there must be a choice I opt for growth. We will not have this growth unless capital is available. I agree with the Minister that foreign borrowings have to be made if we cannot get savings stimulated sufficiently to provide the money.

The public mind would be clarified on this position if one took the fact that so much of the savings invested by domestic subscribers to Government loans are subject to Irish tax. If we grossed up the return and the cost, it would be a useful measure as to the rate of interest the Minister might have to think about to stimulate at least new savings. I am not ingenious enough to know how reward can be given to savings over a particular flow with a higher rate than would be given to those below that flow, but this was done with regard to the original export tax relief.

Going back to the Finance (Miscellaneous Provisions) Act, 1956, the Minister was faced there with the problem of how in a time of economic stringency, as it was thought, he could afford to give a tax relief where the requirement for a severe budgeting was obvious. The former relief was given in respect of new export turnover. I do not know if it would be possible to justify for new savings some higher rate. There might be some system of locking them up. It would be worth thinking about.

If we had more savings the necessity for foreign borrowing would be less, pressure on prices and balance of payments would be less. The possibility for growth would be greater. There is extravagance by young people who are the great spenders of today. Would it be possible to have a scheme for earnings prior to, say, the age of 28 years which, if put into a trust, might be operated by a trade union, accumulated and expended then on perhaps the acquisition of a home or its furnishing? The estate duty code which we have provides a number of exemptions in respect of small estates, gifts, and so on.

Would the Minister consider an exemption from estate duty for savings which could have been proved to have been made to the satisfaction of the Revenue Commissioners from earnings which themselves bore full taxation? In the code there is a provision whereby the Revenue Commissioners can become satisfied that certain expenditure by a deceased was normal and reasonable having regard to his circumstances. The matter is, finally, to be determined by them. Where normally there would be liability for estate duty arising on gifts made within a period of five years before the death of the deceased they look at the actual operation of the man's affairs and if they become satisfied that this expenditure was normal and reasonable the gifts in question are not dutiable. Obviously some factor would have to be built in whereby this would only be open to someone, the proportion of whose unearned income to his earned income was such that he was not spending his unearned income and saving out of his earned income to get the benefit of the section. This could be placed at the discretion of the Revenue Commissioners.

Section 9 of the Finance Act, 1942, provides certain relief, a sum of up to £5,000 plus, for death duties arising from deaths caused by foreign armed forces. This section, I suggest, should be amended to take in deaths of members of the Army or the Garda Síochána even where such deaths do not result from foreign armed forces but are caused by the operations of illegal organisations or however it may be desired to express the matter. This would be a worthwhile change which I would recommend to the House and to the Minister.

On the question of making available our savings for public development, there is a fair amount of capital coming into the economy. I can understand the Government's hesitation about doing anything to prevent capital from flowing out of the economy. Over 60 per cent of our gross national product is represented by our total for trade and goods. The same thing arises with regard to tourist expenditure abroad. If we stop our people spending their money abroad this has an effect on the inflow of money from foreign tourists. But capital is transferred abroad by Irish domiciled citizens to avoid tax. In Britain there are provisions to prevent this. We may well need something of that kind in our code. If this comes under consideration, I would strongly recommend that a distinction be drawn between persons whose domicile of origin is Irish and those whose domicile of choice is Irish. This distinction is for the first time recognised in our estate duty code in the case of foreign immovable property.

On the justice aspect, the provisions with regard to development profits seem to be the very reverse of what they ought to be. As things stand, if you have a business or are dealing in developing land and make a profit from it, you are taxed. But if you are so careful about yourself that you have not a business and are a wholly inanimate beneficiary of a population growth as it increases in wealth, then you are not susceptible because you are not in business. The developers should be taxed the same as anybody else who makes a profit but there ought to be some type of capital gains taxation of people who are reaping benefits because of the nearness of their property to a growing town, because the economy is getting richer or the demand for what they have got is greater. They have done nothing to justify a tax-free return. Somebody who manages a portfolio has to show wit in buying and selling securities. The other chap sits there and does nothing and at the end of it all gets a tax-free gain, whereas the other person who gets up very early to go to work is taxed on the fruit of all his energies. It does not make sense and it ought to be changed.

With regard to export tax, I should like to know how much of our export turnover gets the benefit of a tax relief? Because of the code and tapering provisions in some cases, either the relief is gone or is at least tapering. There is a good deal of exporting done here which does not generate any tax relief. "Fair do's" is, I think, the expression for the success of the negotiations with regard to that element in the protocol. That is very good. From the point of view of somebody who would like to know exactly what his position is I would prefer to see the language a little bit more lucid, but a benefit was clearly got in so far as these export tax reliefs continue to be enjoyed in some form. We must remember that there are exporters who during the period of the transition and already will not be getting this relief. We must look at our whole tax system and our whole budgetary system to see what we can do to assist them, what can we do to remove obstacles for them?

The Value-Added Tax Bill will come before us for discussion another day. There is relief here from value-added tax in so far as it is exported. Take, for example, hydrocarbon oil which is used in the industry. There should be relief given, to equalise the exporter with his fellow in the Common Market and elsewhere, for the excise duty which is paid on the oil which is consumed in the production of his product. Such relief did exist. I do not know how recent the edition of the book I read it in was, but certainly it did exist in the UK and I am not aware that it has changed. It should be introduced here.

There is in this very Bill a provision which is ameliorative with regard to free depreciation. There is no provision of the kind that the Minister, when he was Minister for Industry and Commerce, said would be introduced on 13th September 1968. The present Minister for Finance, then the Minister for Industry and Commerce, said that—admittedly at a time when the export tax was to taper off in April, 1980; it has since being extended to April, 1990—there would be provision for deferring tax claims for depreciation on plant and machinery. That would mean that exporters and others whose profit situation at the time does not give them the benefit could get this depreciation benefit extended to the time when they came to be subject to full taxation.

The Minister was right when he said that he would recommend this rollup of depreciation in September, 1968, and he would be right if he did it now. It would be beneficial and stimulating to exporters who have not at present any immediate benefit from such expenditure or any benefit to get from such expenditure. In effect it would be a gross cost to them. At the moment it takes 40 years to get expenditure on a factory back. Consideration should be given to extension of free depreciation to industrial buildings.

As we know, the ESB work in accordance with their code and do their statutory duty of producing and distributing electricity. But the ESB does at least provide one important social service—rural electrification. The cost of that social service is borne in the charges for electricity which the ESB must make. Exporters who are buying their current from the ESB are paying what is, in part, a tax and, if we want to put them in a free position to meet the challenge of the community, instead of their paying that tax, there should be a subsidy to the ESB for the cost of whatever is the social service involved.

There is another social service involved which is to be found in the whole cost price situation between Bord na Móna and the ESB. Our whole policy with regard to encouragement of enterprise of that kind and the costs to the exporter ought to be considered. The same exists with regard to the cost of transport. There may even be a case for looking at the position of industrial rating in so far as it may have an effect on the export costs of exporters.

I should like to mention one other matter and that is the position of managers under the Irish tax code. Subject to peace, order and stability, the most important single factor which is going to determine the rate of our growth is the quality of our management. Management, whether it be in the public sector, in the Civil Service, in professional bodies or employed in industry, in the tourist trade, in agriculture or wherever, are the people making the crucial decisions with regard to resources. It is their quality which is going to determine how fast and far we can go. We cannot afford any system of taxation which penalises them in comparison with their counterparts or their opposite numbers in other countries.

People are motivated in different ways. It is clear that some people would not mind if they would have a bigger net income in London or the USA than they would have here. Some people get a joy and satisfaction from the fact that they are doing the job here. But there are people who may not be here at all at the moment or who may be motivated otherwise and who may have to make a marginal decision as to whether they will take up employment in Ireland. They will look and see what their net position is.

I have got some figures—correct me if I am wrong in them. A man with £5,000 a year in Ireland will pay, with a child allowance, according to my calculations £1,298. In the UK he will pay £1,181, in America £709. That is taking the pound at 2.44 dollars. Perhaps I should revise that. I do not think it materially affects the position. If he gets £7,500 a year—and the point here is not whether he has enough; it has nothing to do with it; the point is do we want them here—he will pay in the UK £2,228 in USA £1,316, in Ireland £2,537. If he is a £10,000 a year man, he will pay £3,550 in the UK, £2,055 in the USA and £4,268 in Ireland. I am not concerned with the position of the man in question. I am not concerned whether vis-á-vis other people in the community he is not well enough off. That is not the point, as every intelligent Senator knows well. The point is whether we want a tax structure which will get the best talent made available for the people of this country who are entitled to get the best talent.

I do not know how public policy works on this. I do not know why the 1965 Finance Act contained an attack, as it did, from an estate duty point of view, on the income element in pension schemes. I do not see why that was done. I do not see what the object of the exercise is. We must clarify our minds on it.

The whole treatment of losses of associated companies needs to be changed to facilitate the mergers and to strengthen the competitiveness of Irish industry. Anything which alleviates the expense of mergers is recommended, although recognising that there are mergers which are undesirable but public policy can deal with that problem in another way.

In the estate duty code there are certain sections which undoubtedly could cause serious problems. For example, section 20 (8) of the Finance Act, 1965, could put a company in the position of being theoretically liable for substantial duty arising from the death of a person after a takeover has been completed. I am thinking of a situation in which company A, under the control of one individual, makes a disposition in favour of company B— say, the distributing company—and all its turnover goes to company B. Both company A and company B are in the position that, if the man who controls a loan dies, there would, theoretically, be liability for duty on both companies. There would be no provision for a set-off, no consideration in any estate passing which would cover the liability. It is not for me to be told that the Estate Duty Office would not make a claim. The Estate Duty Office might be expected to apply the law. There ought to be in relation to these taxes, particularly estate duty on intercompany transactions, a saver in favour of transactions which are bona fide commercial transations.

Miss Owens

As the Leader of the House and the Cathaoirleach mentioned, we are also discussing with the Bill Motion No. 17. I should like to thank the Leader of the House for giving me the opportunity to speak on the motion.

The motion was put down early last November, the day after the Interim Report was published. I had hoped that this House would have had the opportunity of discussing it before the Employer-Labour Conference met. But when I consider how long many other motions are on the Order Paper of the House I cannot feel any grievance about the delay in taking this motion. I intend confining my remarks entirely to the question of the motion with perhaps one brief reference to the budget, which is not unconnected, in conclusion.

I should like for the benefit of some Members of the House to set out the chronological order of events which has led us to debate this motion today. The setting-up of the Commission on the Status of Women was not something which happened by accident. It was as a result of a considerable amount of pressure which had built up both in the trade union movement and in the women's organisations, which is an expression of their dissatisfaction with the position of women in our society—economically, socially, politically and culturally. In response to this pressure the Taoiseach, in November, 1969, announced the setting-up of the commission. This was welcomed everywhere but the announcement of its formation was unfortunate in its timing in that it came on the eve of a meeting of a large group of workers and their employers to negotiate equal pay. When they met the following day they were informed that it would then be a matter for the commission. This led to some resentment in certain sectors. However, it is past history now and nothing can be done about it.

The commission was established in March, 1970, and in June, 1970, the Minister for Finance wrote to the commission and asked them, as a matter of urgency, to deal with the question of equal pay with particular reference to the public sector. The commission took until August, 1971, before they issued their report. It was not published for general release until October-November, 1971.

It was immediately welcomed by the Federated Union of Employers with some reservations. The principal reservation was met almost immediately by the trade union side who issued their acceptance in December, 1971. On Budget Day, 19th April, 1972, the Minister for Finance referred to this question in his budget statement. He said that the Government agreed, in principle, with the report and they considered the achievement of this objective a national aim. It is perhaps, cynically, sad that at last week's conference in Galway of the Irish Congress of Trade Unions a woman delegate said that the declaration of the report as a national aim scared the daylights out of her, because we have not been too successful in achieving our other national aims.

I should like to put on the record of the House my appreciation of the work of the commission. Their report is a tremendously fine one. They worked very hard on this interim report. I should like to pay tribute, in particular, to the chairman of the commission, Dr. Theckla Beere. Many of us in the House have appeared before the commission, either as activists in the political field or in another capacity. We have all been deeply impressed at the manner in which they have made their investigations, the way in which they have received all the submissions and the courtesy and efficiency in which the meetings were carried out.

Might I now proceed to talk about the motion which states:

That Seanad Éireann notes the "Interim Report on Equal Pay" by the Commission on the Status of Women and urges the Government to introduce legislation forthwith to implement the recommendations contained therein.

This falls into two parts, one is noting the report and the other asking for action. I do not intend to go through the full report page by page as it amounts to 103 pages. The recommendations are summarised in the last chapter. I should like to refer briefly to each of the nine recommendations. I will have some general comments to make about other matters in the body of the report.

The first good thing the commission did was they interpreted their terms of reference as not having to prove or make a case for equal pay but rather to make recommendations on how it should be implemented. This only reflected the view of all political parties and all sectors of the community that we all accept equal pay in principle. The trouble has been that, having accepted it in principle for over 50 years, we are still making no progress towards achieving that objective.

They went even further when they defined what they meant by equal pay. They chose the terminology and the definition used by the International Labour Office, that was, "equal pay for work of equal value". It is not necessary to point out to this House the difference between "equal pay for equal work" and "equal pay for work of equal value". Suffice it to say that in countries where they have chosen "equal pay for equal work" there is no progress towards a fair and just wage policy. This was the first important decision which the commission made. It is one we all welcome and it must be included in the legislation which the commission also recommend.

The second recommendation in the report deals with what they mean by equal value and the circumstances under which it should arise. I do not think it is necessary to go into these circumstances in detail except to point out that they list them as "where women are performing the same job", "where the jobs are interchangeable", "where the jobs are of a similar nature but contain differences which occur only infrequently" and "where it is established by an equal pay commissioner". They recommend that an equal pay section of the Labour Court should be established.

The third important recommendation, and it is one which is referred to in the motion, is that there should be legislation. Sometimes people wonder, when something is accepted by all sides of the community, why we should need legislation. I suppose any of us who are in active political life long enough recognise the need for legislation but the case has been put to me that as the Government, the Federated Union of Employers and the trade union movement accept this principle it should not be necessary to have it on the Statute Book.

Of course, the commission are quite right when they say we should have legislation to cover it. I believe legislation is important for conditioning people's minds and people's attitudes and, despite that fact that we have had so many resolutions passed by every party on equal pay, some conditioning of attitudes still remains to be done on this question. Secondly, and more important, it gives a weapon to the people who are being discriminated against. If a piece of legislation is on the Statute Book those people can use it and can take the offending parties to court with a good prospect of a fair result.

The commission's report specifies some items that should be included in the legislation. I have already referred to one: that the definition of equal pay must be "equal pay for work of equal value". The commission set out the way in which collective agreements should work and recommend that they should operate from a specified date. They mention the joint labour committee under the Labour Court in connection with the legislation. I would go further in saying that we would also have to have a clause in any legislation which would make it not alone illegal but penal for State companies who do not implement the provisions of the equal pay report. I think it is wrong that semi-State and Government-financed— partially financed or fully financed— bodies should be allowed to break this policy. Therefore, I would suggest that in the legislation we will have to put in a penal clause stating that, where companies persist in refusing to implement this policy Government finance will be withdrawn from them.

The fourth recommendation deals with the settlement of disputes and recommends the setting up of equal pay commissioners to deal with such disputes. I have no doubt that the Labour Court, as presently constituted, will not be able to deal with the number of claims which will arise on the implementation of this report. Therefore, I agree with the commission that a special section of the Labour Court will be required for this purpose. It is immaterial whether they are called equal pay commissioners or not, so long as they are trained, have some expertise and some knowledge of job evaluation and the nature of the disputes which will arise. In this connection, without looking for privilege, I think it will be important that in this section of the Labour Court, which today is almost completely male dominated, there will be a number of women commissioners. If this is done it will go a long way towards allaying some of the fears which women workers will have about going to the Labour Court on matters of this sort.

The commission rightly took into account the question of sex differentiated and marriage differentiated scales of pay in the public service. Indeed, judging from the letter of the Minister for Finance in June, 1970, it seems that the emphasis and urgency of this report was to deal with the public sector. I find it rather ludicrous to try to make a case for or against such matters because a sex-differentiated scale or a marriage-differentiated scale of pay in this day and age seems to be such an anachronism. Wherever I have travelled in Europe I have encountered amazement among workers that this system of remunerating people in the public sector still existed in Ireland.

The history of the implementation of the marriage-differentiated scale of pay in the Civil Service, which goes back to approximately 1927, illustrates quite clearly the reason why it was brought in. It was only another way of preventing women from getting the full rate of pay for a job. In fact, in 1964 in the local authority service, which was the first time it was introduced into the local government service, this was illustrated quite clearly as a result of an arbitration award which gave a maximum of £11.60 for the clerical grade for existing officers and the Minister introduced a new scale giving £11.60 to married men and reducing the scale for women by £1.25. In the Civil Service a single man also suffers from this differentiation. I have always been amazed that single men working in the Civil Service have put up with this situation. Perhaps they intend to get married although this would not fit into the normal marriage statistics in Ireland. I do not know the details about the number of batchelors in the Civil Service but I do not imagine they are any less numerous than in the other sections of our community.

That is the fifth recommendation of the commission. It is self-evident that it should be removed. It is ridiculous and stupid to relate anyone's pay to the fact of whether that person is married or not. It is fairly significant that this trend never moved into the employee sector. It was confined to the officer sector. I do not think anyone ever raised the question of whether the porter should be paid more because he got married. Of course, the fact that the Civil Service do not have any women porters was sufficient to ensure that it did not spread into that sector.

The sixth recommendation of the report is probably one of the most important. It deals with the phasing arrangements. Sometimes I wonder why women generally are so restrained about this matter. Be that as it may, it was accepted, not alone in Ireland but in England and throughout Europe, that the implementation of this right must be on a phased basis. Our commission have gone along with the general practice in other countries and recommended a phasing which would bring us up to 1977. This was a disappointment. When you think back to the chronological order I outlined at the beginning of my speech you will note that the first announcement of this commission was in 1969 and that the final date for implementation is to be December, 1977. We are, in fact, taking eight years in which to achieve equal pay. The phasing in England, which is contained in their legislation, was over five years and will give them full parity by 1975. Even though Congress expressed their disappointment on this matter, I think the phasing for 1977 would be reluctantly accepted if we thought we were getting off the ground.

Already six months have passed since this report was published and no real progress has been made. When we come to legislation, not alone must the final date for the implementation of the objective be in it, but the actual date for the phasing must be spelled out. One of the reasons why I would be insistent on this is that already what is happening in England has shown us the danger of not having it in. They have a phasing arrangement all right and have a final date for 1975. What is actually happening is that almost all employers are putting off the introduction of equal pay until the eve of 1975. There is no need for a crystal ball to imagine what will happen by the end of 1975. All the employers will start weeping about the cost of implementing this in one lump. Therefore, they will probably pressurise Governments for an extension of the final date. If the date in this country is to be 1977, so be it, but it should not go one day beyond 31st December, 1977.

I was anxious to have the debate on this phasing earlier in the year because they make a recommendation in connection with the Employer-Labour Conference. The Employer-Labour Conference are at present meeting after the rejection by the Irish Congress of Trade Unions of the draft proposals for a new national wage agreement. I do not want to say anything which would in any way endanger the rather delicate position in which those negotiations are at the moment. However, I must express my views on what emanated from the Employer-Labour Conference which was rejected, because it is related to the motion.

Firstly, it made some provision and many people felt that it was a fairly adequate provision. Of course, because of the problem of termination dates and provisions that were made, which related to the largest section of the working force—public sectors and other sectors where the termination date goes on until 1973—in fact we could not start our phasing until the end of 1973. Then you might be able to negotiate 15 per cent of the difference between the male and the female rate. It would be 1975 before one could begin to make progress. Certainly there were two rates, one for men and one for women on the flat rate, the £2 and the £2.25, referred to by a woman journalist as "the five bob insult".

I should like to refer to page 14 of the report where they quote a resolution passed by the Council of the EEC on 30th December, 1961. This lays down a timetable for the achievement of equal pay and states the progress and the implementation of the principle of equal remuneration for men and women workers. It was intended to bring an end to all discrimination in the fixing of wages and, in particular, to abolish the application to men only of a compulsory minimum wage or of the fixing of such wages at different levels for men and for women. There is no minimum wage laid down in this country, perhaps unfortunately, but we have a history of fixing different levels of increases for men and for women.

It is not breaking the strict interpretation of equal pay for work of equal value. It positively breaks the whole idea of trying to do something about raising women's earnings from the position they are now in, as again quoted by the commission on page 22. They point out that nine women out of ten had average earnings—this refers to September, 1970—of less than £16 a week, while a similar proportion of men were earning more than that amount. At the lower end of the earning scale only 8 per cent of men had average earning of less than £14 a week as compared with almost 80 per cent of women. Two out of every three men earn £20 or more on average as compared with less than one in 40 women.

If we are to be honest ind sincere and believe in this concept we cannot confine it to the narrow confines of where equal valuation can be defined. It is the whole concept of women's earnings that is involved, not just the narrow areas where it can be proved that equal value exists. When you go into the areas which are confined to women only—we have very many of them in this city, indeed far too many —then unless you are prepared to face the fact that women must get a fair minimum wage, there is no prospect of women getting economic justice in this country.

I do not want to deal very much with paragraph 7, the job evaluation paragraph. I agree that it is one way in which you can achieve this objective. There are difficulties attached to it and it is not an easy one to convince workers of as being fair and just. It requires a great deal of education both on the employer and on the trade union side, but I accept that it is one way in which at least we can make movement towards this end.

The next recommendation deals with what is known familiarly as the marriage bar. Again, I am rather ashamed that, as a politician in Ireland in 1972, know when it was introduced, whether I have to talk about this. I do not it was pre-Victoria or BC I am not sure but that is where it should be. It is not part of the 1970s or indeed part of the 20th century. Why any employer or any Government should decide or legislate that, because a woman chooses to use her natural right to select a mate, or be chosen by one, she should then be deprived of being an economic unit is beyond my credibility. We have had it in this country, particularly in the public sector. In recent years some movement has been made towards the abolition of it, mostly in the private sector. However, I am afraid this has been because of the shortage of a certain category of worker. In his budget statement the Minister stated that he agreed with the abolition of the marriage bar and he hoped that within the two years, as recommended by the commission, the legislation would be amended. I cannot see why it would take two years. In many cases it is not legislation, it is just regulations. We get copies of many regulations through our postboxes every day and it appears to be something that the Minister could do straight away. He could amend the regulations dealing with the Civil Service and with the local authorities. These are the two big areas where the marriage bar still operates, I understand that it has not yet been introduced in the new health boards, and I have good reason to believe that it will not be introduced. We have been depriving the country of a considerable pool of skill. We have many professional people in whom the State has made a big investment in their education and training and who have worked for as little as two or three years.

This is the contribution they have given back to the economy before being deprived of the right to work. It is in some way tied up with the provision in the Constitution which reminds us that the State will ensure that a woman will not have to neglect her family. There is a bit of double thinking there because at the same time we have, through our lack of provision of social service, ensured that a widow with children will have to go out to work and therefore could not devote her whole time to her family. I want to stress once again that I believe the regulations should be altered now and not in two years hence.

I come to the last of the recommendations and they are those ones dealing with restrictions on woman employment, with particular reference to the International Labour Organisation Convention dealing with the employment of women for night work. There is a division of opinion on this, as the commission found out. I am a member of the Statutory Instruments Committee. Each time we meet to review statutory instruments there are at least two applications for exemption from this rule and they always seem to have been arrived at by agreement between the employer and the trade union side. This is as it should be. I do not believe this is an important restriction, I would be just as glad to see it gone, but there are areas where it worries people. The commission's recommendation is probably, in the context of the situation, a reasonable one when they say that an exemption should be by agreement.

Mr. J. Fitzgerald

I wonder if the Senator should continue if this is the type of reception she is to get. We just have a conversation from the Parliatary Secretary and then he walks out.

Acting Chairman (Mr. Sheldon)

It is a matter for the Senator addressing the House whether she wishes to continue or not, and not for anyone else.

Mr. J. Fitzgerald

We should have a quorum at least.

Miss Owens

I am quite satisfied to continue. It will be all recorded and the words of wisdom will not be lost. The last recommendation is in connection with the Conditions of Employment Act, 1936, which enables regulations to be made prohibiting fixing the number of women who may be employed in any particular employment. I do not know if this one is operating at all. I cannot imagine what the conditions were in 1936 which gave any Government the right to put a section like this into an Act. It is something that could be removed from the Statute Book. I do not think that many women are conscious of this, but at least it would lead us towards a climate in this country where women will not be singled out for particular discriminatory treatment.

I was glad to read in The Irish Times two days ago a report of the visit of the Director General of the ILO. Obviously his attention had been drawn to the Commission on the Status of Women and he thought that Ireland was on the way to removing discrimination. I do not share his optimistic view. We are making very little progress and in some places none at all. I hope that when he returns in a few years' time we will be able to prove to him that he was not codded when he was here in 1972.

The Minister stated in his budget speech that the achievement of this objective would be a matter for the goodwill of society. It is an unusual expression to use in the context of fixing anybody's remuneration. It is one which we, as Members of this House, would not be happy about. The goodwill of society was not needed to determine the rates of wages of bank officials. That is one concept which I would bring into the negotiating field with grave doubts. Even if one accepts that it requires a lot more than the goodwill of society, it requires leadership and here I would have to criticise the present Government.

There have been questions in Dáil Éireann for many years asking for the acceptance of the ILO Convention on equal pay. The traditional answer has been that it is a matter for free collective bargaining. When the Minister stated that the question of the implementation of this report was being taken into account by the Employer-Labour Conference and that he would implement whatever they recommended he was equally saying to us that it is a matter for free collective bargaining.

What is the Employer-Labour Conference? It is free. There is nobody standing over them with a gun, there is no legislation waved over their heads at the moment. The conference is collective because there are employers and representatives of the employees, and if they are not bargaining I do not know what they have been doing for the last week or two.

This is not good enough, because the Government have not made a clear commitment. They themselves have always implemented what came out of the national wage agreement and I expected that we would have had a clear, concise and positive statement here saying that in areas where the employer has the control they would take positive steps, that could be seen by the country at large, to implement this policy. Then they would have given leadership and would have gone towards attaining the goodwill of of society. I also expected that at the Employer-Labour Conference the Government representatives would have taken a positive stand on this. Last week it was said in public that there could have been a larger differential between the male and female rate if the trade union side had been prepared to accept it. The trade unions have had severe criticism over that 25p and therefore, although we have accepted it in principle, I do not think principle is enough. We must have the reality, the actuality and the fact.

One of the problems attached to the implementation of it and one which caused great worry is the cost, but I cannot understand why one section of the community should have to bear the burden for the increase of costs more than the other. I want to draw your attention to page 103 of the recommendations where, as a result of an analysis carried out by a lecturer in economics, he points out that the cost of implementing the whole lot, the total effect on prices, would be an increase of between 3.6 per cent and 2.4 per cent. Assuming that the phasing-in period was five years, then the annual price increase due to equal pay would be in the region of 0.7 per cent to 0.5 per cent. That is what it might add to costs, and it is little in comparison to some of the actions that have been taken by this and previous Governments to increase costs.

In conclusion, I should like to stress the second part of the motion calling on the Government forthwith for the legislation. The commission are continuing with their terms of reference— the wider ones and in many ways the more important ones. I believe that they will not have published their final report until the end of this year at the earliest. They still have a considerable amount of work to do and it is to their credit that they are doing it so thoroughly.

From the timetable it will be another 12 months before legislation is introduced and the Government owe it to the women of Ireland and to Ireland, a nation about to enter the EEC, to draft this legislation now. It should be passed through both Houses of the Oireachtas before the end of this year.

With reference to the budget, the Minister for Finance this year fulfilled a promise made by one of his predecessors in granting parity of pension to State pensioners. I should like to compliment and to thank him for this. I should like to add my voice to many others in the community and ask the Minister to look again at the position of the widows of State pensioners whose husbands were deceased before 1968. He went part of the way two years ago in allocating to them a proportion of the pension. These are elderly women who feel they have been treated unjustly. They have good reason for believing this. The Minister is sympathetic but because of other more pressing calls on his finances, he cannot meet their claim. It is wrong that such a small number of people should again have been forgotten in this year's budget. It is up to us all to see that the elderly people among us should be able to spend their last years in some degree of comfort. I should like to ask the Minister for Finance to consider the position of these widows once more.

Mr. Crinion

Senator Alexis FitzGerald said it is unfair to have income tax for the farm labourer and not for the farmer. Every farmer wishes to provide an income for his staff comparable with industry. It is one of the conditions under the EEC that agricultural workers will get the same rates of pay as those in industry. It would be difficult to discriminate between a person working on the land and a person employed in industry in the same conditions. A farmer pays rates on his income. He pays full rates on his house and on all his land. A businessman pays slightly more on his house but it is comparatively small. Industrial rates are paid on buildings only. One balances the other. Where the farm buildings come into the tax net, there is a relief given to the produce of the farmer to compensate for this.

The farmer should be exempt from paying tax on money saved out of earnings he has already paid tax on. The State benefits from the savings of the people. Our capital services could not be met except through the savings of the people. Foreign borrowing is a small percentage of capital financing.

People who have to travel distances of 30 to 40 miles to and from their places of employment should be able to claim expenses. The Revenue Commissioners may feel it would be too difficult to check on the mileage rate. A person in employment gets his P60 at the end of the year showing he has been in employment during that time, and giving the places of his abode and employment, and this would make it easy to check the mileage he has travelled. It might save the Revenue Commissioners some extra work if there were no expenses granted for anything under five miles.

Referring to the Bill in general, some people might think we are calculating for a deficit this year. Calculations were made to see how far the Government could go and what risks were involved. It was justified this year because the economy needs more money in circulation. Of the provision of £35 million, practically all went to the less fortunate people in the community in social welfare benefits and assistance to agriculture. Every penny of this £35 million will be put into circulation and businessmen and industrialists will agree that this will have some effect along the line. A sum of £35 million is a very big injection, and should have repercussions throughout the country. This should help to provide extra employment.

The Minister has realised that the social welfare classes are the people who need the extra money most to keep up with the rise in the standard of living. I expect we can anticipate a further rise in the cost of of living as a result of the floating of the £ because prices tend to rise in sympathy with any devaluation of our currency. Our economy needed something like this to get it moving. Our unemployment was at a higher level than we would wish at the end of last year and in the early part of this year and the Government must be complimented for taking the initiative in putting this extra money into the economy to try to stimulate it.

The Bill contains some other very welcome additions. For the first time persons in the over-80 age group have been brought in specifically. This brought some joy into their lives. It is only right that we should provide free travel for people over 70 years of age. Some encouragement and comfort should be given to people of that age. Even if they have other modes of transport, at that age they prefer to have someone else to drive them. With the heavy traffic in our cities and towns it would be a nightmare for those people to drive themselves.

The provision under which people who are not entitled to a pension but who are over the age limit are now entitled to free transport on our trains and buses is a very welcome one. The provision of free electricity supply to old age pensioners is also welcome. It was thought at first that 100 units would be sufficient to cover the amount of electricity used by a person for cooking and heating. I know of one case where it went well over 300 units. In that case we had to get the ESB to check the number of units used. It was found that those old people were using an electrice fire for heating with the result that they used up to 500 units every two months. In October they were using about 150 units but by February this has increased to 550 units. It is distressing to think that pensioners would be denied extra units for heating during the winter. Perhaps next year we could consider increasing the amount to 500 units for the winter periods. This would have a beneficial effect. People like that do not use electricity indiscriminately.

With regard to the provision for giving relief in the first year to new plant and machinery to be written off in any one year, this should be very welcome in industry. By providing the new machinery it means they will be more efficient. They will be better able to meet competition in the EEC or in our own markets. This would also help to create more employment. It is very seldom that a new machine has the effect of reducing employment.

The figure for the dependent relative allowance has gone up to £295 which is the maximum allowance in respect of the non-contributory old age pension. I raised this matter before. I believe it should be based on the contributory figure and not the non-contributory one. It would be only a question of putting it up by a very small amount. For a son or daughter who is claiming dependent relative allowance the contributory pension of the father is considered full income and nil income in the case of the mother. A dependent relative cannot claim anything for the father. He can get the allowance for his mother. Where they are both getting the non-contributory pension, they are getting practically the same money collectively, but the son or daughter can get two dependent relative allowances for his or her father and mother. A contributory pension is a certain amount for a single man. A widower gets something over £5. A married man gets something more. The tax people should differentiate between the father's pension and that of the mother. In that way the son or daughter gets one full dependent relative allowance and a slightly reduced one for the father. There is a little bit of cheese-paring here. We should do everything possible to encourage children and relations to keep older people. I am not saying that this allowance would be a deciding factor, but it is an encouragement that the State is showing some appreciation to the son or daughter for looking after the old people and not having them living on their own or having to be put into an institution.

Business suspended at 6 p.m. and resumed at 7.30 p.m.

Mr. Crinion

I just wanted to refer to the expenses incurred by those people who wear protective clothing. A strange anomaly is that if a person is a tradesman he will get £20-£25 tax free allowance, while a labourer will get only £8-£10 and girls working in offices and factories receive less. A fitter mechanic should receive an adequate allowance because his job is very dirty but a carpenter receives twice as much as a labourer who works on a building site or with the Board of Works on drainage schemes. The amount of tax free allowance for protective clothing should depend on the type of work involved. The scheme should be reviewed having regard to the cost of living at present.

I discovered recently that the old age pension and superannuation of a man who had been working as a labourer with Meath County Council all his life is taxable. A person on such a low scale of pay should not be liable for tax. This is the first time that this particular man has had to pay tax.

I welcome this Bill because it provides an extra £35 million which will stimulate the economy further and increase employment.

Ruairí Brugha

Anybody going through the Finance Bill in detail is likely to get so bogged down that he becomes totally lost. The Parliamentary Secretary's speech refers to the injection of an additional £35 million. It is very welcome and is a necessary expedient to stimulate the growth in employment during the present year. Judging by the difficulties we are at present encountering, particularly in regard to the North, I hope I am not being pessimistic in saying that I can see some ill-effects developing in relation to employment and earnings, particularly through a reduction in tourist revenue. Fortunately, the budget provisions are helping to offset this trend to some degree. We hope that our membership of the EEC will prove of assistance to us in this regard but I do not think we should be under any illusions about our employment and economic prospects for the coming 12 months.

I should like to welcome the improvement in estate duty exemption from £5,000 to £7,500 and also the reduced rate of duty between £7,500 and £11,000. There is, however, the question which I raised last year in relation to the general situation with regard to owner-occupied houses. I would like to see the efforts of young married couples to acquire a house encouraged as much as possible. There is a disincentive for them in the fact that ownership of a house is included in an estate. Perhaps the Minister would consider whether it would be possible to exclude the value of a house which is owner-occupied in arriving at estate duty taxation. This would be an incentive to people to buy their own homes and should be part of our social policy.

Senator Alexis FitzGerald, in his usual comprehensive speech, referred to the tax levels on management personnel here compared with the United States and Britain. Many people may not be aware that the tax level on incomes here is considerably higher than in other countries. We are trying to expand our economy and in order to do so one of our key objectives must be to retain the best technical personnel possible. It is doubtful if we can retain our best management personnel if our rates of tax on earned income continue to be higher than in Britain and the United States. This problem arises mainly at the sur-tax level. The Minister might consider the advantages to the economy of approaching the question of sur-tax on earned income in a different way to sur-tax as applied to unearned income or dividends. Comparisons between ourselves and Britain do not encourage young management personnel to remain in Ireland. They are a most necessary sector of our community. It should be possible for the Minister, over the next few years, to examine the structure of sur-tax as related to earned income to see if some adjustment can be made so as to balance out that area of personnel taxation between us, Britain and the United States.

I should like to refer briefly to the problems encountered by young people who wish to buy their own houses. I am mainly thinking of young married people who are outside the local authority purchase schemes. At present building and loan societies are not prepared to grant a loan in excess of 2½ times the couple's earnings. As we all know the price of houses, particularly in Dublin, has escalated recently and young people have to provide as much as £2,500 for a deposit on a house. Here again I am referring to the type of young people we need to retain in this country if we are to improve our economic situation. In Britain there has been a noticeable increase in recent times in house purchase by this element in society. I understand that there the banks are now guaranteed by the State to advance up to 80 per cent to this category, to enable them to buy their own homes. This is an area which I would encourage the Minister to study. There are many young people here who do not qualify for local authority housing grants, because their incomes are too high but are in that middle group and cannot find sufficient capital to buy their homes.

Last week during the discussion in the Seanad on that part of the social welfare code which relates to taxation, I referred to those who are retired and drawing pensions. I know of many who are not interested in taking up any kind of work because of the effect of income tax on any additional income. While I agree with the principle, I think that our policy should be to encourage people to work, particularly those who are retired and who have had much experience during their working lives. It may be possible for the Minister to evolve some means whereby a retired person may revert to an earning level at a lower rate of income tax. Apart from the social undesirability of retired persons remaining idle, the community can benefit from encouraging such people to work.

I should like to put a couple of questions to the Minister. One relates to the area of exemptions in connection with the creative or cultural earnings of writers. I am not very clear as to what category this applies to. Does it apply to musical composition?

The other is in connection with the reference in the explanatory memorandum to section 3 which reads:

It also ensures that persons aged 65 or over who are entitled to age allowance will, where their income is wholly earned, obtain the same amount of relief as they would get if their income was wholly unearned.

I understand what that means but I would like an illustration of its effect, because most people are not able to follow it.

I should like to compliment the Minister on introducing the improvements. Although they are an exception in this year, they are very necessary and are most welcome because of considerable difficulty in the areas of employment and growth.

Mr. J. Fitzgerald

I welcome the gamble that the Government have taken in putting £35 million in circulation. We all realise it is a calculated gamble but in the circumstances it appears as if it was the only option open to the Minister for Finance, if we were to try to get the economy moving again.

I notice that much capital has been made of the fact that in the concessions 50,000 people have been removed from the tax net. Many welcome that but it would be interesting to know how long these people will be able to escape the net. Negotiations are at present progressing for pay increases in many sectors and if these come to fruition what percentage of those 50,000 people are likely to be brought back into the income tax net?

I was very pleased to hear a Senator from the Government side making a plea for a tax concession for the many workers who have to travel many miles—in some cases over 50 miles—from their homes to work in Dublin. The speaker was aware of the fact that there are very many people, such as labourers and craftsmen, working on building sites, who must have cars to transport them to their work. It is a strange anomaly that they will not get a car allowance and in 99 per cent of cases a car is a "must", because in many parts of the country there is no public transport. That type of taxpayer is caught in the PAYE net and gets no tax concession whatever for the costs of his car, yet a company director, executive or manager of a firm can all get tax allowances. The Minister should grant a tax allowance to people who must travel long distances by car to their places of employment.

Much has been mentioned in the Minister's brief on pensions. I want to point out to him that in many cases ex-employees of local authorities, who have retired and who have pensions for which they contributed during their periods of employment, are being steeply taxed on those pensions.

I can give an example of a man who retired at 65, approximately six years ago, and despite the fact that there have been many increases in his pension since then he is now getting approximately the same amount of pension nett as he was getting when he retired in 1965 because he is now drawing the old-aged pension together with his local authority pension. The two are put together and he has to pay tax on them. To me that seems to be rather harsh on that type of exemployee, and something which should be discontinued.

In conclusion, I would like to join with Senator Owens in the very elegant plea which she made here this afternoon in asking the Government to introduce legislation to implement the interim report on equal pay. We are subject to wide and justified criticism because of our ineptitude in giving women equal salaries. I hope the plea made by Senator Owens here this afternoon will be implemented quickly.

Míchéal Cranitch

Níl i gceist agam ach cúpla focal a rá ar an mBille seo. Tá a lán ráite cheana féin. Is Bille anafhada ar fad é. Lasmuigh den Sceideal tá idir 40 agus 50 alt san mBille féin. Beidh sé sin faoi chaibidil againn ar Chéim an Choiste, nuair a bheidh gach alt faoi scrúdú géar againn.

Money is the root of all evil, but still we cannot get on without it. I do not propose to go into this Bill in detail, but rather to refer in a general way to a number of points. In his speech, the Parliamentary Secretary said something important in the first paragraph:

When drawing up the budget for the current financial year the Government were confronted by competing requirements. A strong upper trend in prices indicated the desirability of adopting a cautious budgetary stance which would no way run the risk of adding to the prevailing inflationary situation while on the other hand the overall position of the economy called for the tackling of the problems of unemployment, slow growth and excess capacity in an imaginative and courageous way.

I submit that the Minister did that. He faced up to his responsibility in an imaginative and courageous way. We all admire courage and imagination, but we are dealing with a solid commodity—finance. Before we use the money that we hope to get, we must set about getting it. In order to stimulate growth, the Minister arranged that £35 million would be available for spending. He estimates that 1¾ per cent would be added to the growth rate of the economy over the coming 12 months.

The growth rate is an important point. Where there is no growth there is bound to be stagnation. The Minister and his Department are to be commended for expressing that viewpoint clearly and for doing all in their power to put it into effect. If there is a criticism to be made it is what may be called an inadequacy of the concessions made to those who have to pay income tax.

Income tax is one of the greatest scourges of those who have to pay it but, as somebody said to me years ago, if there is one thing worse than having to pay income tax it is not having to pay it, thereby meaning that a person would not be earning enough money to qualify for the payment of income tax. The pound is of such little value now that a major revision will have to be made with regard to the income tax code. As far as income tax is concerned we do not compare favourably with many other countries in Europe. I kept the figures which were given today. It is a matter which we should take cognisance of and see what can be done about it.

One of the greatest problems is that while many people pay income tax many more do not. Many more pay a little income tax by managing to evade paying even a fraction of what they should pay. I have no suggestion to offer because I am not an expert in that field. I know little about it, but something will have to be done to ensure that those who are liable for income tax pay the full amount. There are certain people who have to pay the maximum. Their earnings are easily accessible to Government officials, but there are so many others whose true incomes are never returned. That is the main reason why those whose earnings and remunerations can be easily certified have to pay an unjust share in their contributions towards the national economy.

In view of our accession into EEC our economy will depend to a great extent on our acceptance of the standards accepted in Europe generally as far as work, workmanship, dedication to work and conscientiousness are concerned. We have a lot to learn from Europeans. They enjoy working; they receive good remuneration but they give good value for it. There is a philosophy in this country that half doing a thing is good enough. It will be seen in the future that this will not do. We, as public representtatives, should bring before the people that accepting low standards in work at all levels will not help us to prosper.

The concessions given in allowances in income tax are welcome. There is a list of those concessions on page 1 of the Explanatory Memorandum. For example, section 3 increases the minimum age allowance from £150 to £175 for single and widowed persons and from £250 to £300 for married persons.

I should like to make a special plea for those engaged in musical activities. The cost of instruments and accessories is very high. Those who pursue art in the form of music, especially those in the classical and traditional veins, should get some concessions. Taxation on those instruments is very high. We have a great potential for music and song and all that can be done to further this deserves great encouragement.

In the last paragraphs of his opening speech the Parlamentary Secretary stated:

This Bill makes a serious attempt to alleviate the burden of income tax and of estate duty and at the same time to encourage initiative, enterprise and economic growth. However, Government action on its own cannot suffice. There must also be a full response from the community at large, particularly as we are now on the eve of membership of the EEC.

This is very true. We must all play our part to the best of our ability and it is only by doing this we can create real wealth. If we do that we can succeed and please God this time next year we may have a better if not a bigger budget.

Mr. A. O'Brien

This Bill is welcome in so far as it alleviates the burden of income tax and encourages more economic growth. I should like to refer to the first paragraph of the Parliamentary Secretary's speech and refer to the two items mentioned there:

The strong upward trend in prices indicated the desirability of adopting a cautious budgetary stance which would in no way run the risk of adding to the prevailing inflationary situation.

There are circumstances outside the control of the Government of this or any other country which tend to make prices rocket. In so far as the Government are responsible for increase in prices of essential commodities, the Minister and the Government must share the blame. It was a mistaken policy to tax the essential of life such as bread, butter, tea, sugar, clothing, etcetera. This has contributed to the spiralling of prices, and reduced the purchasing value of the few pounds earned by those in the lower income group.

The housewife is unable to purchase the essentials for herself and her family. The pressure is put on the husband to demand that his union seek an increase in wages to meet the increase in the cost of living. There is general unrest and in the long run there is an increase in the price of the product produced in the factory where that particular man is employed.

The second point covered in the Parliamentary Secretary's speech states:

The overall position of the economy called for the tackling of the problems of unemployment.

The Minister has taken steps to remedy this situation, but he did not go far enough in the budget. There should be more capital investment which would result in an increase in employment and at the same time increase national productivity. The Minister would get quick results if he were to embark on an accelerated programme of arterial drainage. There are tens of thousands of acres of land which are grossly under-productive, and this will continue unless there is large-scale arterial drainage followed by minor drainage schemes and the application of fertilizers. This would increase employment in the knowledge that the work being done would in a short time add greatly to the national productivity.

The programme of reafforestation is not moving fast enough. Large areas of land have been acquired by the Department of Lands for reafforestation but the work itself is proceeding at much too slow a pace.

An Cathaoirleach

May I interrupt the Senator? This debate is essentially on finance. It is confined to taxation, general expenditure, financial policy and other matters in so far as it is connected with financial policy. Matters of administration would not arise.

Mr. A. O'Brien

I accept your ruling. I thought I was entitled to refer to the second point in the opening paragraph which calls for tackling problems of unemployment. I thought I would be entitled under that heading to offer my opinions.

An Cathaoirleach

I think the reference is to the Finance Bill.

Mr. A. O'Brien

I do not intend to develop it at any great length but I thought I was entitled to refer to it. While in no way questioning your ruling I am just explaining my point of view.

An Cathaoirleach

The reference is strictly in relation to dealing with the problems of unemployment by financial means in the budget.

Mr. A. O'Brien

I will not develop that point any further. I just wished to refer to the two points mentioned specifically by the Minister as being the items which confronted the Government at the time of the introduction of the budget.

With regard to the operation of income tax. I join with those who have said that it is unfortunate that one section of our people, by virtue of the fact that their earnings are known, must at all times pay the maximum amount chargeable. For example in the case of a road worker his exact earnings are known in the council offices and he cannot dodge the amount levied on him. Professional and business people's incomes are not as well known and in one way or another they manage to escape paying a commensurate amount of taxation in relation to their incomes. It is a difficult thing to prevent. It is impossible to ascertain what some people earn if they charge a fee of two or three guineas and put that into their pockets. It is not registered as income in their books. The more people who evade the taxation they should pay, the higher taxation will fall on those who have no means of escape. Whatever effort could be made to ensure that people in that bracket pay the lawful amounts due under the income tax code would be money well spent. If people knew that others were paying their share there would be a greater willingness on the part of all concerned to pay the amounts due.

Young workers in their first year of employment should be exempted from income tax. If we take the case of a boy or girl who spends five to six years in a post-primary school then starts off in employment and has a lot of expenditure to set himself up in the new life he has embarked upon it is very wrong to deduct income tax from the first week he works. If, in future years, the Minister for Finance could see his way to make further concessions it would be a good thing. In the case of the eldest child in a family, notwithstanding the fact that free education is now available, parents often have great difficulty in keeping that child at school.

Due to the fact that he is still at school he is not on the labour market as early as he would normally have been. That is a good thing, but his parents have very often run into heavy commitments to keep him at school. When he should be in a position to return some of their kindness to him, or perhaps to assist a younger member of the family to come up the scale as he did, he finds himself having to meet taxation which inflicts a hardship on him, and on other members of the family who have helped him.

In the case of people in temporary employment, under the PAYE system income tax is deducted. Although they are entitled to a refund when they cease work this often takes a very long time. There are people who take up seasonal employment which may last from three to five months but they and their employers know that it will not last the full year. As soon as these people start work income tax is deducted.

I should like to support those Senators who have made a case for greater allowances for people who have to travel distances to work. It has been stated here that people have to travel 20, 30 or maybe 40 miles into Dublin to work on building sites. I know of people who have to travel over 60 miles to work in Dublin. They come from Cavan and other counties on the 60 mile perimeter. Very often these people are running a small farm as well and a relatively short period of employment in the city enables them to improve their livelihood. If we take into account the fact that they have to run a car or pay for a seat in someone else's car some concession should be made. It is a new development that people travel such very long distances to work. It did not occur at the time the income tax code was being drawn up. It is only justice to ensure that people be given a car allowance based on their mileage. It would be relatively easy to draw up regulations to meet these cases of hardship. It is a hardship for a person who cannot find work in his area and has to travel between 60 and 70 miles to get it to find he has to pay the same rate of income tax as if he lived 100 yards away from the place of his employment.

I should like, if permitted, to make a very brief observation with regard to the cutting down of grants on local improvements in this year's budget. That was a retrograde step. I hope it will be undone as soon as possible.

Parliamentary Secretary to the Minister for Finance (Mr. Lemass)

The Minister and I are gratified that the lack of controversy in relation to this Bill indicates its general acceptance by the House as a whole. The Minister expected that this debate would continue until tomorrow and he was anxious to reply to the various Senators himself.

The 1972 budget has been well received generally, not just in the Houses of Parliament. As Senator Crinion said, the £35 million of additional expenditure injected into the economy will benefit all sectors. The less well-off and the income-tax payers as well will benefit since the money will go into circulation, business will benefit and additional employment will ensue.

The debate dwelt on a very wide range of tax matters as well as on equal pay for women which I will refer to in my concluding remarks. I will now answer to the best of my ability some of the points made during what has, I think, been a most constructive debate.

Senator Alexis FitzGerald raised a number of interesting points on the question of death duties and dwelt somewhat on the point that savings from earned income should be exempt from estate duty. Estate duty is the only real capital tax in our fiscal system. If we are to have a capital tax, as such, all forms of capital must be made subject to the tax.

Senator FitzGerald was concerned with what would happen, as regards the provisions of the Finance Bill, should the Seanad decide to discuss its provisions in depth into the months of September and October. Indeed, this is the very first point he made. It is customary to have the Finance Bill passed by both Houses of the Oireachtas before the 5th August each year, up to and including the present year. This is legally necessary in order to comply with the provisions of the Provisional Collection of Taxes Act, 1927, which gives a statutory life of four months from the date of effect of Financial Resolutions moved in respect of temporary taxes such as income tax.

However, section 1 of the Bill proposes, as is customary, income tax and sur-tax at the same rates as last year with the additional provision for the charging of both taxes on a permanent basis. One effect of this change will, therefore, be, in a year in which no variation of rates of income tax or sur-tax is proposed, that it will not be necessary either to introduce a Financial Resolution or to include a provision in the Finance Bill for the charging of these taxes. In such circumstances it would not be legally necessary to have the Finance Bill passed before the 5th August as is now the case.

If, however, the Finance Bill included provision for the imposition or a variation in any duty or tax on foot of the Financial Resolutions which, on Budget Day, had been effected under the provisions of the Collection of Taxes Act, 1927, that resolution would lapse, unless the Finance Bill was passed within four months from the date of coming into operation of the date of the resolution passed by the Oireachtas. Apart from the statutory time limit mentioned, the question of the time that the House would take to discuss the Finance Bill is a matter for determination by the House itself.

Senator FitzGerald listed some of the allowances, such as the dependent relative allowance, which have not been increased for some time and suggested that they should be reviewed. I do not think the Minister, and I certainly will not, disagrees with his suggestion and obviously everyone would like to see the various allowances being increased regularly and indeed substantially. However, increasing the income-tax allowances is a costly exercise and Senators will recall that, in the Minister's budget statement, he pointed out that the cost of the increase in allowances given in the Bill before the House now will be £11 million this year and £13 million in a full year. Because of the heavy costs involved, it will be appreciated that the provision of further increases in income tax reliefs, including the dependent relative allowance and other such allowances, must be considered in the budgetary context. I have, however, noted for the Minister the points which have been raised by the various Senators and I will ask him to give them careful consideration in framing his budgetary proposals for next year.

Some Senators also were concerned about the allowances given for expenses and suggested that these allowances should be more liberal and that such expenses should be deductible for tax purposes under Schedule E. The Senators will appreciate the main difficulty in this field when they realise that to give each Schedule E taxapayer a flat rate minimum expenses allowances of £1 per week would cost the Exchequer about £5 million a year.

I think it was Senator FitzGerald who advocated that covenants in favour of charities should be allowed for tax purposes. This is a little complicated, but it is worth dealing with and I will do the best I can. Section 439 of the Income Tax Act, 1967, provides generally that any income which by virtue of a disposition, namely a trust, covenant, agreement or arrangement made by any person, and that includes a body corporate, is payable to any other person, such income is deemed to be the income of the person making the disposition, and not the income of the recipient.

In general, therefore, income paid under a disposition does not enable the recipient, if he is not taxable, to reclaim from the Revenue the income-tax paid by the benefactor in respect of that income.

There are two exceptions to the general rule and these are (a) dispositions made for a minimum period of seven years to an individual other than an infant of the disposer and (b), dispositions made for a minimum period of three years to enable any university or college in the State to carry on research or to teach the natural sciences. When dispositions are thus drawn up, payments thereunder become, legally, the income of the recipients who, if they are not themselves liable to tax, such as a body whose sole purpose is the furtherance of education and which is therefore treated as a charity may reclaim the appropriate tax from the Revenue.

Before 1940, taxpayers who had been in the habit of subscribing to charitable organisations, conceived the idea of making their yearly subscriptions contractually over a period of years. Because of the serious loss of revenue arising from the practice of making these covenants, it became necessary in the Finance Act, 1940, to put a stop to it in the manner I have already described.

I have a great deal more information on this question but that explains the broad outline. Perhaps when the Bill goes to the next Stage, if some of the Senators wish to pursue it further, I may be more forthcoming.

I now turn to a suggestion made by Senator Crinion that the income limit for the purpose of dependent relative allowances should be increased to a figure which would enable the full allowance to be given where the relative's income does not exceed the amount of the old age contributory pension. The income limit of a dependent relative for whom the full dependent relative allowance may be claimed has been amended for some years past to keep it in line with the maximum amount of the old age non-contributory pension. Where the relative is in receipt of income, whether by way of old age, non-contributory pension or otherwise, which is in excess of the amount of that pension, the dependent relative allowance of £60 is not wholly withheld but it is reduced by £1 for every £1 of that excess. If the limit of £295 which is proposed by section 6 of the Bill and related to the new annual rate of the old age non-contributory pension were to be increased to £317 to cover the new annual rate of old age contributory pension, the cost involved would be approximately £300,000 in a full year. For this reason, it is considered that the income limit should not, for the present year at any rate, be further increased.

Senator FitzGerald and other Senatars suggested the desirability of increasing domestic savings as much as possible. The Minister, each Member of this and the other House and all members of the Government will be entirely in agreement with him on the desirability of this proposal. The Minister has made a number of changes in existing saving schemes in recent times in order to make them more attractive. For instance, he introduced the National Instalment Saving Scheme which provides a very effective 9 per cent tax free rate of return to small savers.

I should like to assure the House that the Minister will keep under constant consideration the possibility of modifying existing schemes and introducing new ones. In this regard he will welcome new ideas for savings. I should like to thank the Senators for their helpful suggestions.

The other major point was raised by Senator Owens regarding equal pay for equal work. The Employer-Labour Conference are again in session and are at present engaged in discussions which cover, inter alia, the arrangements for application of equal pay. The Minister, in the circumstances, does not wish to elaborate on what he said in his Budget statement, except to point out that it indicates the Government's intention to introduce legislation on foot of the report as soon as it is practicable. Progress however depends on the will of the community. There will be legislation but, unless all concerned show their determination to make the equality of women a practical reality, legislation alone will not be the answer.

This is an extensive and technical Bill and other points which have been raised might be better dealt with at the next Stage.

Question put and agreed to.

Acting Chairman (Mr. McDonald)

Next Stage?

Tomás Ó Maoláin

Now.

Mr. A. O'Brien

I have been asked to request that the other Stages be left over until next week.

Tomás Ó Maoláin

We have a pretty hefty programme next week and the week after. I thought we might complete the Bill now. We got through the Second Stage so well because there does not seem to be any radical objection to the Bill.

Acting Chairman

It is entirely a matter for the House.

Mr. A. O'Brien

Other Members of my party are engaged elsewhere.

Tomás Ó Maoláin

It is not my fault they are not here. If they are absent it is too bad. I suggest that we should finish it at this time. There is no radical objection to anything it contains.

Mr. A. O'Brien

I should prefer if the Leader of the House could meet our wishes in this regard.

Miss Owens

From the Labour Party's point of view we have no objection to taking the remaining Stages tonight but, as Senator O'Brien has some representations to make, it would only be fair to give him the chance. If we are sitting tomorrow we could continue it rather than leaving it over to next week. This might meet the wishes of both sides of the House.

Tomás Ó Maoláin

If the Senator wishes to prolong the sitting of the House into August I do not mind. I am prepared to take the next Stage next week.

Acting Chairman

Would the Leader of the House specify which day next week?

Tomás Ó Maoláin

On Tuesday.

Senators

Agreed.

Committee Stage ordered for Tuesday, 18th July, 1972.

Seanad Éireann díospóireacht - Wednesday, 12 Jul 1972