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Seanad Éireann díospóireacht -
Thursday, 21 May 1992

Vol. 132 No. 13

Finance Bill, 1992: [ Certified Money Bill ]: Second Stage.

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

I welcome the Minister for Finance to the House with this important Finance Bill, 1992.

This Finance Bill provides a statutory basis for the taxation measures which I announced in the budget on 29 January. It also contains the legislative basis for provisions which were foreshadowed in the budget, notably in order to prepare for the EC Internal Market and for other tax policy measures which the Government now consider necessary. Overall, the Bill marks a further significant step in the Government's strategy of tax reform as set out in the Programme for Economic and Social Progress and our revised Programme for Government. Before turning to the main provisions of the Bill, I would like to outline briefly the strategy underlying the budget and review the economic prospects for the year ahead.

The central objective in the budget was to maintain the soundly based public finances which are an absolute prerequisite for the creation of sustainable employment. The prudent budgetary policy we have pursued over the past five years has been the correct approach. The reduction of our dependence on borrowing, the control of public spending, the easing of the tax burden and its more equitable distribution, have restored confidence and strength to the economy and enabled us to participate in the narrow band of the European monetary system, to introduce a new climate of low inflation and to unwind the massive differentials which had emerged between the Irish and other European interest rates. It is no coincidence that to date we have been able to weather the current difficulties in the international economy with much less damage than we suffered during similar circumstances in the past.

The convergence criteria set out in the European Monetary Union Treaty put a firm obligation on member states to meet challenging budgetary guidelines. We are now consistently satisfying these criteria but because of the large overhang of public debt still remaining, we must keep our annual deficits low — even lower than those in other EC member states. I should stress, because there was some confusion about this matter in the Dáil, that our target here is to keep national debt moving satisfactorily downwards towards the level of 60 per cent of GDP specified in the draft Treaty. We do not, as has incorrectly been claimed have to meet that 60 per cent ratio in order to be accepted as full partners in the new Europe; what we have to do is simply make consistent progress towards that objective.

This Treaty obligation is entirely in accordance with our own domestic priorities. The fact is that irrespective of European Monetary Union, the overhang of debt must be reduced as rapidly as possible so that we can free more of our national resources for other needs. It is a sobering fact that almost one-tenth of GNP must annually be allocated to meet debt servicing costs before the Government can address the many other spending priorities which are of more direct benefit to the Community.

Gross domestic product expanded by about 2 per cent last year. In view of the difficult international conditions, this was a very creditable performance. Our growth rate was twice that of the world economy. It was all the more impressive in view of the fact that output in our main trading partner, the UK, actually declined by 2.5 per cent. Merchandise export growth was strong in the face of difficult international trading conditions. Exports of goods and services increased by about 5.75 per cent, helping to boost the balance of payments surplus to about 5 per cent of GNP. There was a rise in manufacturing output of more than 3 per cent, with strong growth in the chemicals and electrical engineering sectors. Inflation, at 3.2 per cent, was well below the EC average.

Most important of all, there was every indication that employment held up very well in a difficult year. This view is supported by figures released only last week which show that manufacturing employment continued to rise in the final quarter of last year to reach its highest level for over seven years. For the year as a whole, manufacturing employment rose by 1,500. Average employment in banking, insurance and building societies was up by almost 1,000 in the first nine months of the year. While we will not have final confirmation of the outcome for some time yet, the available evidence suggests that non-agricultural employment expanded last year. It is becoming increasingly clear that the sharp rise in unemployment, by over 29,000 to 254,000, reflected labour force growth — influenced by changed migration patterns.

The limited data on economic trends so far this year are reasonably encouraging. Manufacturing output showed a 9 per cent increase in January. Exports performed well in January and February and the trade surplus in January was one of the best on record. Retail sales, which had been weak for some time were up by 1.5 per cent in January with provisional February data pointing to an even stronger increase.

Tax returns and employment levy receipts to date support the view that an improvement is under way. There were, however, some significant timing factors involved in certain aspects of the tax out-turn for the first four months which explain part of the sizeable year-on-year increase in direct taxes.

These pointers support the widely held view that 1992 is likely to be a better year than 1991, with somewhat faster economic growth, more evenly spread across the economy. Last year, growth was concentrated in the export oriented sectors. This year we are likely to see some strengthening of private consumption and private investment, the main components of domestic demand.

Looking ahead, prospects for the international economy remain as uncertain as ever. Developments so far this year in the major economies suggest that the international economic recovery may be slower and more modest than earlier envisaged. Predictions made at the turn of the year by the main international agencies now look a little optimistic. However, I think we can still look forward to some improvement in our export markets as the year goes on. At home, we should see another appreciable increase in after tax incomes. Assuming broadly unchanged savings behaviour, both consumer spending and investment should show a modest improvement with growth of around 2 per cent in real terms.

Economic growth this year should both be a little better than last year, and be somewhat more employment intensive. However, with unemployment in the UK likely to go on rising for the foreseeable future, and with only modest growth on the Continent and in the US, job opportunities abroad will be scarce. Given the projected rise in our labour force, average unemployment here is likely to rise significantly again this year.

Much attention is rightly focused at present on the continuing rise in the number on the live register. Without wishing for a moment to play down the scale or the seriousness of this problem, I would like to reflect on the background to it. In the early eighties the Irish economy was characterised by a series of massive imbalances: public sector borrowing reached 20 per cent of GNP; inflation also topped 20 per cent; there was a chronic deficit in the balance of payments which peaked at 14 per cent of GNP; and public sector debt was exploding at a rate which was to bring it to 130 per cent of GNP. To cap it all, employment was on a steady downward trend.

Today, things are very different. The consistent pursuit of courageous policies has stabilised the economy and restored our international standing. The public finances were brought under control by a restrictive approach to public expenditure. A programme of positive tax reform was put in place. A national social consensus was established with the agreement of a binding three year wage deal in 1987. This agreement, with adoption of a hard currency option and rigidly improving public figures, brought inflation down. A successor agreement was reached last year which extended the consensual approach into other areas of Government policy. Key elements in the new deal were explicit undertakings in relation to industrial peace and the acceptance by the social partners that both the pay and the non-pay elements of the agreement were conditional on the attainment of specified targets for the public finances in 1993. The perceived commitment of the Government to tax reform greatly facilitated the success of this approach.

The results have been impressive: record rates of output and employment growth were attained; inflation is below the EC average and is in line with the EMS narrow band average at 3.5 to 4 per cent; the balance of payments is in substantial surplus; and the burden of debt is comng down, releasing more and more resources which otherwise would have had to be devoted to interest payments.

The view now taken of the Irish economy by overseas commentators is that very significant progress has been achieved. The Irish experience has been cited as an example of what can be done to stabilise an economy facing serious imbalances.

It is clear that the Government's overall economic strategy is working. The correct policies are in place and they are being effectively implemented. They will provide the spring-board for more rapid growth as international conditions improve.

The first chapter of the Bill deals with income tax and I would like to outline briefly for Senators what the Government's policy is on this tax and how it is reflected in this chapter.

I suppose no tax has been the subject of so much expert advice from outside bodies in recent years as income tax. The Commission on Taxation, the National Economic and Social Council and the Industrial Policy Review Group have all made recommendations on it, as indeed have international bodies like the EC, the OECD and the IMF.

Their recommendations have been remarkably consistent. Indeed, they have all said essentially the same thing: broaden the tax base and reduce tax rates. In other words, general policy should be to ensure as far as possible that income, however derived or received, should be subject to income tax; at the same time, the rates to which it is subject should be as low as possible consistent with equity and the need to generate revenue to meet expenditure.

In fact, there has already been a good deal of progress in implementing this policy. Nineteen eighty seven was a year when, by common consent, no income tax reliefs at all were possible because of the state of the public finances. Since then, however, income tax policy has made substantial progress on three fronts; the low paid, and especially those with family responsibilities, have been helped by means of substantial increases in the exemption limits and the introduction of a child addition to them; the standard and top rates of tax have been cut; and the standard band has been significantly extended.

Income tax improvements since 1987 have been carried out or a basis consistent with the objectives set out in the Programme for National Recovery and the Programme for Economic and Social Progress, and, indeed, they played no small part both in assisting the negotiation of these programmes and in securing their continuing acceptance. They have thus contributed significantly to the wage moderation which has been so important to our economic development in recent years in improving competitiveness and enhancing prospects for employment.

Last October's review of the Programme for the Government indicated that there would be a continuation and an intensification of this process with a view to making further improvements to our income tax system. The first few sections of the Bill show the fruits of this renewed commitment to reform: the general and age exemption limits have been increased by £100 for a single person and £200 for a married couple, and the marginal relief rate, which applies where income does not greatly exceed the relevant limit, has been reduced from 52 per cent to 48 per cent; the standard tax rate has been reduced from 29 per cent to 27 per cent; the top rate has been reduced from 52 per cent to 48 per cent; and the standard band has been extended by £775 for a single person and £1,550 for a married couple.

What this means in brief is that since 1987, we have substantially increased the exemption limits, particularly for low paid taxpayers with families; we have cut the top tax rate by 10 per cent and the standard tax rate by 8 per cent; and we have extended the standard tax band by £2,775 for a single person and £5,550 for a married couple, or nearly 60 per cent. These are very substanital improvements, especially when one reflects that radical improvements in the public finances were effected over the same period.

Section 3 of the Bill provides for the renewal of the £286 PRSI allowance for the 1992-93 tax year. The remaining sections of Chapter I deal mainly with measures designed to broaden the income tax base. Since these have generated a certain amount of discussion, I would like to devote a few moments to the rationale for broadening the tax base by introducing measures like these.

The purpose of broadening the tax base is simply stated. It is to ensure that, in line with the Government's general policy, income however received is, as far as possible, subject to income tax. Treating one sort of income differently from another is difficult to justify in terms of equity; it also tends to produce economic distortions because one sort of income becomes more valuable than another, and it favours the making of decisions for tax reasons rather than for commercial ones. By contrast, broadening the tax base is aimed at ensuring as far as possible that everyone pays his share of tax according to the size of his income, at reducing economic distortions, and at having decisions made essentially for commercial reasons. Broadening the tax base also releases funds to help reduce tax rates and widen the standard band; or, looking at the question the other way around, a narrow tax base means that tax rates are higher than they need be and that those paying tax on all their income have to pay more than they would if all income were subject to tax. This argument must be kept very much in mind in considering the remainder of Chapter I.

The first element of base broadening in the Bill is in section 4 and will surprise no one. The income tax relief on life assurance premiums has been steadily reduced since 1989, and last year stood at one-eighth of the eligible premium. Section 4 abolishes this last portion of relief with effect from 6 April 1992.

I announced in my budget speech that the rate of tax charged on refunds of pension contributions was being increased from 10 per cent to 25 per cent with effect from budget day. The increase was intended to recoup, in some measure, the tax relief already given when the contributions were made. Section 6 of the Bill confirms the increase but provides, however, that it will not apply where an application for a refund was made before budget day.

The Bill contains two provisions relating to company cars. Section 8 increases the cash equivalent used for taxing the benefit-in-kind enjoyed by a person who has available for private use a car supplied by his or her employer. The additional yield from the increase in the benefit-in-kind on company cars is partially offset by the cost to the Exchequer of the increases from £7,000 to £10,000, provided for in section 21, in the threshold for capital allowances and for allowable running expenses in respect of cars used for business purposes.

The old benefit-in-kind rates, that is, 20 per cent of the original market value where all the costs were met by the employer but falling to 12.5 per cent where the car only is provided, were very lenient when compared with the cost of private ownership. When this sliding scale was introduced in 1982, it was intended that these rates would be doubled to 40 per cent and 25 per cent for 1983-84 and subsequent years but this increase never took place. The increase in the benefit-in-kind rate to 30 per cent announced in the budget, is seen as being fair and reasonable having regard to the annual cost for an individual of providing a car at his or her own expense and the benefit derived from private use of an employer-provided car.

Equally the Government consider that the curtailment of tapering relief announced in the budget is justified. Tapering relief is available to employees with high business mileage and reduces the benefit-in-kind charge by varying amounts linked to the business miles driven. This tapering relief will in future only come into reckoning when business mileage exceeds 15,000 miles; at present the figure is 10,000 miles. Furthermore, I announced in the budget that tapering relief will not permit the benefit-in-kind charge to be reduced below a minimum 25 per cent of the basic amount irrespective of the level of business mileage.

While satisfied that the benefit-in-kind increases announced in the budget are fully justified compared with the cost of private motoring, I made certain changes which will reduce the impact of the increases on employees, such as company representatives and commercial travellers, who drive very high business mileage. The Bill provides for the phasing-in over five years of the minimum 25 per cent charge allowable under tapering relief. This concession will mean that the minimum charge will be 5 per cent in 1992-93, 10 per cent in 1993-94, increasing by equal amounts to 25 per cent in 1996-97. The new tapering relief tables are set out in the First Schedule to the Bill.

Section 12 abolishes the concessionary tax treatment of share options granted under approved share option schemes. These schemes, introduced in 1986, meant essentially that the recipient of share options was liable only to capital gains tax, a charge which arose only on his eventual sale of the shares. Abolition of this concessionary regime means that an income tax charge will now apply on the difference between the option price and the market price of the shares when the option holder acquires them: the charge will arise at date of acquisition. this is in line with the recommendation of the Commission on Taxation. On his eventual sale of the shares, the option holder will be liable to capital gains tax on the difference between the market price at date of acquisition and the sale price. The capital gains tax charge will, of course, be subject to the indexation and small gains exemption provisions in the tax.

Section 13 confirms the budget day measure abolishing the tax relief on dividends from 10 per cent companies as part of the tax reform programme contained in the budget. In the case of close companies, where the shareholders were also the directors, this relief gave scope for partially taxed dividends to be substituted for fully taxable remuneration, which loophole was never intended.

Section 14 deals with the income tax relief available on interest on loans to acquire shares in a quoted company. The section eliminates the relief in respect of such loans applied on or after budget day or, if later, the date on which the company becomes quoted, and phases out the relief in respect of loans applied before such date. The date on which the phasing out begins is determined by the age of the loan: 6 April 1992, where the loan was applied on or before 5 April 1989; 6 April 1993, where the loan was applied in the 1989-90 tax year; and 6 April 1994, where the loan was applied on or after 6 April 1990. If later than the relevant one of these dates, the phasing out will begin on 6 April of the second next tax year after the company becomes quoted. Section 14 also introduces a general anti-avoidance provision into the relief on interest to purchase shares, to ensure that it is confined to interest on loans for bona fide commercial purposes and not for tax avoidance ones.

Section 15 is an enabling provision to provide for the treatment as income for tax purpose of disability benefit, including occupational injuries benefit and unemployment benefit, and pay-related benefit. The section provides that they will be treated as emoluments for the purpose of PAYE. A commencement order or orders will be needed to bring the section into effect and such an order will require a positive resolution of Dáil Éireann before being brought into effect.

Treating disability benefit as income for tax purposes presents substantial practical problems because of the potential interaction between employers, the Revenue Commissioners, the Department of Social Welfare and large numbers of benefit claimants. My aim will be to keep this interaction to a minimum. Briefly, the solution being considered at present by the Departments concerned would involve potential claimants' tax free allowances being notified by Revenue to the Department of Social Welfare and that Department using the weekly rate of allowance when making disability payments. Any excess of the payment over the tax-free allowance would be subjected by that Department to tax in the normal way at the taxpayer's marginal tax rate. Where the tax-free allowance exceeded the benefit payment, the intention would be that the excess would be available to the employer for use against any occupational sick pay payments to the employee. The net effect would be that disability benefit would be taken into account in determining income for tax purposes.

Taxation under this system, and indeed taxation of longer term disability benefit and disability benefit paid to claimants without an employer, cannot be introduced until 1993. However, it may be possible later this year to introduce some limited form of taxation of disability benefit for those in employment, by having employers reduce the tax-free allowance of benefit claimants in employment by the amount of the disability benefit being paid to them by the Department of Social Welfare. The net effect would be to curtail availability of tax refunds to employees who are claiming disability benefit, thus meeting a core objective of introducing taxation of disability benefit. However, much work remains to be done both in this area and in regard to the longer term arrangements for taxation, and I am not yet in a position to announce an implementation date.

The operational requirements for taxing unemployment benefit also continue to be examined. It is still the Government's intention that taxation should begin in 1993.

I would emphasise that there will be no change in the present tax status of any of these benefits until the commencement date for taxation; I hope to be able to announce a date for this in the reasonably near future as far as disability benefit is concerned. I would also emphasise that what will be done will be to treat these benefits as income for tax purposes; the extent, if any, to which taxation will arise in a given case will essentially depend on the amount of other income the recipient has in the same tax year.

Chapter II of the Bill deals with income tax, corporation tax and capital gains tax. The first section, section 16, provides for foreign adoptions to be recognised for the purposes of these taxes on the same basis as they are recognised for the purposes of the general law under the Adoption Act, 1991. There are similar provisions later as regards stamp duty, capital acquisitions tax and residential property tax.

Section 17 reduces, for 1992-93 and subsequent years, the limit on the annual value of shares an employee may receive under approved profit sharing schemes. The limit is being reduced from £5,000 to £2,000. In addition, to cater for the situation where an employee received less than £2,000 worth of shares in the 1991-92 tax year, he will be able to receive an additional allocation in 1992-93 so as to make up the deficit. The additional allocation will be deemed to have been made on 5 April 1992, that is, in the 1991-92 tax year.

Senators will be aware that the original budget provision was to eliminate the profit sharing relief entirely. In continuing the relief, but with the £2,000 ceiling, I have been conscious of the views expressed by both sides of industry — that is, the Confederation of Irish Industry and the Federation of Irish Employers on the one hand and the Irish Congress of Trade Unions on the other — and by the Irish Profit-Sharing Association, as well as by others, that the scheme can play a valuable role in improving industrial relations and employee motivation. The £2,000 ceiling will cover the share allocations made to the vast bulk of scheme participants and will continue to provide a generous incentive for companies to introduce and maintain such schemes.

Section 19 deals with the tax exemption which applies to patent royalities and to dividends paid by companies out of exempt income derived from such royalties. The section as originally introduced preserved the exemption for companies, in order to help foster research and development, but phased out the exemption for individuals. On Committee Stage in the other House the argument was put to me that the exemption had a significant place in our industrial policy in that it encouraged inventors and invention and so helped to expand our industrial base without much cost to the Exchequer. The point was also made that the exemption should be continued for the original investor who often invests much time, money and brains in producing an invention and should be both rewarded for his efforts when he succeeds and encouraged to try again where he failed.

The present section responds to these arguments. It retains the exemption for companies, for inventors, as respects royalties and dividends relating to their own inventions and for dividends paid to holders of ordinary shares but it phases out the exemption otherwise. One-third of patent royalities or dividends paid by companies out of exempt income derived from such royalties will be taxable in the period from 24 April 1992 to 5 April 1993, and two-thirds in the 1993-94 tax year, with the full amount being taxable in 1994-94 and subsequent tax years.

The section is aimed at meeting the industrial policy argument for the patent income exemption as far as companies, inventors and ordinary shareholders are concerned and I trust it will be operated in that spirit and not exploited for abuse purposes. If it is I will, of course, be forced to look at the exemption provisions again. However, I trust that this will not be necessary and that instead research and development, both by companies and individuals will flourish, will enhance our economic development and will produce much needed employment.

In order to avoid clawback of stock relief, farmers are allowed a two-year period to rebuild herds which have been depopulated due to disease eradication measures. Section 20 extends this period by a further year.

Sections 22 and 230 of the Bill provide for the new arrangements for the taxation of interest income following the removal of the remaining exchange controls. The remaining controls mainly involve the prohibition on Irish residents, both companies and individuals, opening and maintaining bank accounts abroad. There is little doubt that unless I took action in this Bill serious problems would have arisen following the abolition of the remaining controls. There are clear indications that the Irish financial institutions were planning to offer their customers investment opportunities abroad which would have avoided both DIRT and any other taxation. The resulting capital outflows would have put upward pressure on interest rates and consequently would have had deterimental effects on the whole economy.

Therefore, a radical approach to the taxation of interest income was necessary. The Bill provides for a combination of special low tax accounts and new reporting arrangements. These aim to prevent foreign accounts from being used for tax evasion purposes while at the same time they seek to maintain the maximum possible tax revenue from interest income.

A number of people have criticised the changes proposed on the grounds that they will have a detrimental effect on the equities market and on the life assurance industry. I would like to remind them that, as I have already explained, the alternative was not to leave things as they are. The correct comparison is not between 10 per cent on special savings accounts and the existing 27 per cent tax but rather between 10 per cent and no taxation in a foreign account.

On the position of equities, I understand that the major players on the equities market are the financial institutions. This can be seen from the fact that the average transaction size in 1991 was £20,150. Pension funds are the most important financial institutions involved and they will benefit from the changes. A meeting has been arranged between my officials and the life assurance comapnies to discuss the effects of the changes on them.

Section 23 ring fences the losses arising from limited partnerships to the trade of the partnership. A similar restriction is being introduced under section 25 for the capital allowances on holiday cottages. The captial allowances were being increasingly used as a tax shelter, which was in some respects better than the relief for rental residential accommodation in that the investor could put the construction costs of the cottage against all his income not just his rental income. At the end of the ten year qualifying period, the investor would own a holiday home in respect of which the Exchequer would have contributed a large part of the cost. In response to representations, I introduced amendments to these sections in the Dáil which give transitional relief for holiday cottage projects in the course of development where certain conditions are fulfilled.

Section 26 introduces the new wear and tear capital allowances regime for plant and machinery which I announced in the budget. This consists of a seven year write-off period on a straight line basis for all new or secondhand plant and machinery acquired on or after 1 April. The new system both simplifies and is a major improvement on the old wear and tear regime which had three different depreciation rates and where the tax write-off period was much longer because it applied on a reducing balance basis.

Section 22 contains a technical measure relating to the double rent deduction available to lessees in the urban renewal designated areas. It closes a loophole whereby the deduction could be claimed in respect of an existing industrial building in such areas without any qualifying expenditure being incurred by the lessor on refurbishment. This was never the intention of the existing legislation and the section makes the requirement explicit.

Section 29 introduces a restriction of the accelerated capital allowances which can be claimed upfront in the final year of the time extension for the Custom House docks area. This is intended to encourage as much development as possible in the preceding period of designation. In the other designated areas, the practical effect of the one-year extension is that "new build" developments must have their foundations fully laid before 1 June 1993 in order to qualify for the urban renewal tax incentives. This restriction will serve to bring forward projects in the pipeline, which now have a full year's notice of the measure.

Sections 29 and 30 provide for the final time extensions to the duration of the urban renewal designated areas, which I introduced on Committee Stage in the Dáil. For the Custom House docks area, a four-year extension will apply, terminating on 25 January 1997 and for the other designated areas a one-year extension is being given to terminate at end May 1994.

Section 31 extends up until end May, 1994, in parallel with the urban renewal reliefs, the relief known as "section 4" which gives income tax relief to owner-occupiers for the renovation of historic or architecturally significant houses in the designated areas.

In section 34, time limits are established for the relief, popularly known as "section 23", which is given on the construction of residential property, and for related conversion and refurbishment. "Section 23" will be available on the same basis as the urban renewal reliefs which I have just outlined for sections 29 and 30. Finally, section 34 provides for the four-month extension I announced in the budget for "section 23" construction projects which had their foundations fully laid before budget day.

Section 35 abolishes the tax exemption for dividends which are distributed out of profits which were exempted from corporation tax as a result of export sales relief or the Shannon relief. Partial relief on these dividends will apply until 6 April 1994, when the full tax charge comes into effect.

Section 38 is concerned with the Irish income tax liability on dividends distributed by Irish resident companies to their foreign shareholders. A de facto tax exemption has existed for many years in regard to such payments and the section now brings the legal position into line with this. This will remove uncertainty for foreign investors and thereby facilitate foreign investment.

Section 40 restricts domestic-sourced section 84 loans in accordance with the measures announced by me on 20 December last. This restriction is in line with the subsequent recommendation made by the Culliton report in this connection. As provided in the last two Finance Acts, section 84 loans will still be available to those projects specified on two lists of approved manufacturing projects.

Section 42 gets rid of a tax anomaly which had existed for many years in the case of banks and general insurance companies which trade in the State on a branch basis. Prior to the budget these branches were able to obtain tax free profits from their holdings of Government securities on the grounds that they were non-resident. The section also restricts the entitlement of these branches to loss relief arising from this exemption and an amendment was introduced in the Dáil which extends the scope of the section to cover securities of State-sponsored bodies and local authorities.

Section 44 deals with the corporation tax arrangements for life assurance companies. The section remedies two defects in the existing arrangements which had resulted in the companies avoiding or postponing tax. First, the expenses incurred by a life company in acquiring new business will in future have to be spread over a seven year period instead of being fully offset in year one. This change is being phased in from 1 April last and will take full effect on and from 1 January 1994. Second, there is to be a new annual charge on the unrealised capital gains accruing to a life company on their holdings in unit trusts or other tax exempt investment vehicles. This charge will commence on and from 1 January 1993 with indexation relief applying to both the gains and losses involved which will be spread over seven years.

Sections 45 and 200 bring in the new arrangements for the bank levy which I announced in the budget. Section 200 continues the bank levy at its 1991 level of £36 million for the three years 1992 to 1994. Section 45 provides that where a bank increases its annual corporation tax liability by a sufficiently large amount so that it exceeds a specified threshold, the bank will be entitled to offset some or all of its annual bank levy against its excess corporation tax over that threshold. This threshold will be the higher of the bank's advance corporation tax payment for that year or a level of corporation tax arrived at by indexing the bank's corporation tax as prescribed in the section. These new arrangements have been devised as a result of the discussions of a working group on which the banks were represented and the arrangements will be reviewed in three years time.

Section 46 provides that, where a company incurs losses from an activity chargeable at the 10 per cent rate of corporation tax, such losses can no longer be offset against the profits of that company chargeable at 40 per cent. I introduced a transitional relief in the Dáil on Report Stage to cater for certain manufacturing projects affected by this section.

The measures concerned with the taxation of co-ops are contained in sections 47 and 48. The position of Bord Bainne is catered for in paragraph (c) of section 47 by ensuring that the 10 per cent rate of corporation tax will apply to its sales of processed products purchased from its members, both co-ops and non-co-ops alike. That paragraph also provides that a co-op which supplies milk to a processor engaged wholly or mainly in the manufacture of specified milk products will also be given the 10 per cent rate. The termination of the co-op tax exemption is contained in section 48, which provides for a phasing-in of the tax charge. This phasing relates to co-op activities taxable at the 40 per cent standard rate; where a manufacturing process is involved, the 10 per cent rate applies. The exemption will still apply to two-thirds of relevant profits in 1992, and to one-third in 1993. Losses incurred by a co-op up until 1 April 1992, while the exemption was in existence, can be used as a set off against profits arising after that date.

The Enterprise Trust Limited is a body established by the main employer bodies, in the context of chapter VII of the Programme for Economic and Social Progress, to foster a community based response in combating long term unemployment. Section 56 provides tax relief on corporate donations to the trust.

The relief for investment in films, known as "section 35", is renewed for a further period, up until end-March 1995 in section 58.

Section 55 deals with the late submission of tax returns by companies. Though companies have until nine months after the end of the tax year to send in their tax returns, the compliance rate is most unsatisfactory being only about 60 per cent according to the most recent estimate by the Revenue Commissioners. In order to improve this situation, the section provides that where a company fails to send in its tax return on time, it will not be entitled to use particular tax reliefs in the way intended for the tax year in question. These reliefs are not, however, lost but are carried forward for use in the next tax year. Though this is not an extreme penalty, the section has been criticised in an over-the-top fashion. However, because there might be some continuing adverse effect in the case of a very small minority of cases, I amended the section on the Report Stage in the Dáil so as to reduce by 50 per cent instead of 100 per cent the use by the company of the tax reliefs involved for the tax year in question.

Sections 59 and 60 provide for the reforms of capital taxation which were introduced in the budget. Section 59 reduces the annual small gains exemption to £1,000 for a single person and £2,000 for a married couple. These exemptions were formerly £2,000 and £4,000, respectively. Section 60 confirms the single 40 per cent of capital gains tax. Sections 61 and 62 close loopholes in the capital gains tax code. Section 61 confines the capital gains tax relief which is currently allowed when a trader transfers assets into a company to cases where the transfer is carried out for bona fide commercial reasons.

Section 62, which was introduced on Committee Stage in the Dáil, counters an avoidance practice which centres on section 9 of the Capital Gains Tax Act, 1975. Section 9 concerns situations where an asset can be regarded as having been acquired at market value, even though it was actually acquired at less than market value. The Bill confines the application of section 9 to cases where the acquisition in question involves a corresponding disposal. In general, this will confine the operation of section 9 to gifts, which is what was originally intended.

Section 63 was also introduced on Committee Stage. It provides for a number of changes in the tax treatment of options. First, it provides that quoted options should have the same favourable tax treatment which currently applies to options on business assets. This is to ensure that taxation does not act as a barrier to the development of a quoted options market in Ireland. Second, the section moves to close a loophole. It provides that the abandonment of an option will now be regarded as a disposal for capital gains tax purposes. However, except in the case of quoted options and options on business assets, abandonment of an option will not be allowed to give rise to an allowable loss.

Sections 224 and 225 extend the tax base for discretionary trust tax. At present, a charge arises when the youngest principal beneficiary is 25 years of age. These sections reduce that age to 21.

Sections 64 to 74 in Chapter V deal with the implementation of an EC Directive on mergers, divisions, transfers of assets and share exchanges between companies in different member states. This is a rather technical matter involving both company law and tax law. The main change being implemented by Part V is the deferral of capital gains tax where a company in one EC member state transfers some or all of its trading assets to a company resident in another member state.

Chapter VI of the Bill sets out a definitive tax regime for oil and gas activities in Ireland's offshore areas, other than the Marathon acreage, and is specifically intended to secure Ireland's position in competing for oil and gas exploration. It includes provisions from the 1985 Petroleum Taxation Bill, which was never enacted, and which have been updated to reflect policy decisions taken since then. The significant feature is the availability of a special incentive rate of corporation tax of 25 per cent to apply to income arising under petroleum production leases granted by the Minister for Energy before certain specified dates. In essence, these dates are related to the particular problems likely to be encountered in discovering and developing commercial finds in the various offshore areas. The exploration licences granted for those areas will also reflect their nature, with longer licences being granted for exploration of more difficult waters.

From now, I shall indicate some of the more significant sections in the chapter. The 25 per cent incentive rate of corporation tax is contained in section 77. Section 78 and 79 apply ring-fence provisions for relief for losses and capital allowances and for group relief purposes with the exception of allowing losses incurred in an onshore mining trade to be set off against petroleum profits.

Section 83 to 85 deal with the treatment of the various allowances for expenditure incurred on production and development and on exploration, both abortive and successful. Section 86 gives an allowance for abandonment, which is important in protecting our marine environment. Section 87 provides for the valuation at market value of petroleum which, for example, is being sold by a production company to an associated refining company. There will be an opportunity on Committee Stage to deal with the sections in this Chapter in more detail.

Part II of the Bill deals with Customs and Excise. Apart from confirming the various budget rate changes, provision is made for implementing the other initiatives which were announced, with a few modifications. The Bill also provides for the transposition into national law of the EC Council directive adopted last February for control and movement of excisable goods in the Internal Market.

Section 89 to 102 provide a framework for the levying of excise duty on beer on the finished product instead of at the "worts" (pre-fermentation) stage as at present. The new system will come into operation on a date to be specified. The draft EC directive on a new Internal Market structures for the taxation of beer and alcoholic drinks generally envisages of course a 1 January, 1993 start. The actual rate of duty to be applied will be determined in the light of budgetary circumstances and Single Market constraints then prevailing.

Sections 103 to 119 set out the revised legal arrangements that must apply to the control and movement of excisable goods between member states from 1 January next. They will replace the existing border controls in the intra-EC movement of tobacco products, mineral oils and alcoholic beverages. In the case of commercial transactions, excise duty will continue to be payable to the member state in which the goods are consumed and at the rates charged by that state. Personal purchases of alcohol and tobacco products in other member states will not be liable to any further tax when brought into the state in which the goods are to be consumed. The Revenue Commissioners have had discussions with trade interests on the new arrangements and these contacts will continue in the run-up to the implementation date.

Section 120 to 129 detail the arrangements for charging an annual excise duty of £100 on amusement machines. The duty will apply for instance, to, video-based games, skills machines and certain kinds of poker machines which do not return cash winnings or redeemable credits. It will not apply to the likes of kiddie rides, juke boxes or to pool tables. In response to the representations made about the need to take account of the seasonal nature of this business in certain locations, I have provided for a concessionary high season rate of £30 which will apply for the three-month period up to 15 September in each year.

Sections 130 to 144 introduce the arrangements for a new system of registration of motor vehicles by the Revenue Commissioners and the imposition of a charge on registration as a replacement for the existing excise duty which is being abolished as a result of EC Single Market requirements.

Briefly, the registration tax will be the responsibility of the Revenue Commissioners so as to protect the large Exchequer revenue involved — VAT as well as excise. That office will have total responsibility for the registration of vehicles, as well as for the assessment, collection and control of the new tax. It will be collected, in the main, through dealers under Revenue control, and will be administered and controlled through the network of Revenue offices around the country. This will ensure a local service to dealers and members of the public, as well as helping to absorb a sizeable number of surplus Customs and Excise staff in the various locations.

The role of the Garda in relation to the enforcement of road tax will be supplemented by an enhanced resource of Revenue officials as part of Revenue's enforcement of the new registration tax. Of course, road tax itself, both initial and renewals, will continue to be administered by the local authorities.

While the actual rates of vehicle registration tax to apply will be set out in the autumn Finance Bill, I can say that my objective is to broadly maintain existing revenues from this source.

The remaining sections in this part of the Bill confirm changes announced in the budget with a few modifications: the abolition of the duties on televisions and video players from budget night and on table waters from 1 November 1992; the reduction in the duties on petrol, effective from 1 May 1992, and on non-automotive liquid petroleum gas, from 1 July next; the increases in annual road tax, cigarettes and other tobacco products and cider and perry; the restructuring of the duty on motor vehicles involving the reduction of duty on most cars, the elimination of the duty on a wide range of commercial vehicles and the increase in the duty on vans derived from cars and jeeps. However, following representations received concerning certain small commercial vans which had been included in the car and jeep-derived van category, I have modified my proposal to remove these vehicles from that category with effect from the enactment of this Bill.

The present licence fee arrangement for public houses, whereby each premises irrespective of size or location, pays the same annual charge of £100, is, in itself, inequitable and any increase in the flat rate would accentuate that aspect. That is why, in my Budget Statement, I announced that I intended to replace the current charge for publicans and hotel liquor licences with one based on the rateable valuation of the individual premises concerned. However, following representations and contacts with the trade I have modified my proposal. I now propose to relate the duty chargeable for spirits retailers on licences for pubs and hotels to their turnover. Section 155 provides for the basic provisions for the duty.

The licence charge which will apply equally to public houses and to the bar turnover of hotels is set at £200 where turnover is less than £150,000 annually; on the best information available to me, up to three-quarters of premises could be liable at this minimum rate. A sliding scale of increased charges will then apply subject to a maximum of £3,000 for those premises with turnover of more than £1 million a year. Provision is made for the exclusion of non-pub turnover from the basis of the charge.

In drawing up the detailed provisions for the new system, I sought to ensure that, as far as possible, all holders of liquor licences would be treated fairly and equitably, having regard to the different nature, conditions and scope of the various types of licences involved. Hence, the rates of duty on other categories of liquor licences are also being increased.

Provision is also being made for the duties on other excise licences, for example, on bookmakers, gaming, exemption orders etc. to be increased.

Section 156 amends the Finance (1909-10) Act, 1910, to require applicants for liquor licences to produce a tax clearance certificate. Section 242 defines what tax clearance means and to whom it shall apply. Under the Bill individuals, companies or partnerships seeking or renewing a licence will have to meet all their obligations in respect of income tax, VAT, corporation tax, PAYE/PRSI and capital gains tax as a condition of getting their licences. The Bill also provides for an appeal against refusal of a tax clearance certificate. In the event of an appeal against the refusal of a tax clearance certificate, the Bill provides that if a licence is already in existence that licence will continue in force and in the case of a new application a temporary licence will issue pending the final determination of the appeal.

Part III of the Bill provides for VAT changes. These comprise confirmation of the rate changes announced on budget day; the transposition into national law of the new EC rules on the levying, collection and control of VAT after 1 January 1993; the upgrading of Revenue's control and enforcement powers for VAT purposes; and a number of base-broadening and general tidying-up measures.

The vast bulk of the VAT changes relate to the new regime which will apply within the Community from 1 January next when tax borders are abolished. After that date movements of tradeable goods between member states will no longer be controlled for tax purposes at point of entry to the State. The free movement of goods within the new Single Market requires a whole set of new rules and these have been set down in an EC Council directive. Basically, VAT on intra-community sales will accrue to member states in which the goods are consumed. This taxation at destination systems is intended to apply for a transitional period until the end of 1996; a changeover is then envisaged to a regime based on payment of tax in the country of purchase.

The Single Market should make life easier for businesses involved in crossborder trade since formalities at borders will be removed. The lodging of official documentation for imports and exports and the physical checking of goods will cease. Compliance will be based essentially on ex-post audit supported by traders' records.

Private individuals also should gain considerably from this freeing-up of trade since they will be able to buy most goods tax-paid in the member state of their choice. However, special rules will ensure that it is the country of consumption who collect the tax on sales of new vehicles and mail-order sales. The operational rules for all these arrangements are included in the Bill.

The dismantling of frontier customs controls for tax purposes will substantially weaken Revenue's present control over VAT collection. To counteract this potential risk, the Bill provides for enhanced powers for VAT officials to enable them to combat effectively the new forms of fraud that will undoubtedly occur as a result of the abolition of frontier controls. Essentially what is involved is the transfer of customs powers currently exercised at the frontier to authorised VAT staff. The main powers involved are those of search, arrest, and the right to seize goods in limited specified circumstances. To enhance the security of the tax I am also proposing the introduction of a new monthly control document on which firms will record their sales to other traders thereby facilitating cross-checking of sales and purchases by VAT inspectors. The Bill also gives Revenue the power to require security in the case of serious non-compliance. These additional anti-fraud measures pose no threat to legitimate traders; they are aimed at those who would seek to evade their responsibility, in terms of tax compliance, to the community at large.

The Bill provides in Part IV for the stamp duty changes announced in the budget. The Bill also confirms the Stamp Duty (Variation) Order which came into effect on 1 November 1991. This Order exempts many instruments used in the financial service industry from stamp duty.

With the increasing need to audit the returns of taxpayers within self-assessment, it has become clear that the existing Revenue powers to examine trading records and other documents with a bearing on tax liability are inadequate. The provisions in Part VII dealing with the inspection by authorised oficers of various records address this difficulty. Before going into the details I would like to put the record straight in one regard.

There has been some confusion in the media about changes I have made in the provisions in the Bill regarding Revenue powers. I want to make it quite clear here that there has been no watering down, or general deferral, of the powers set out in the Bill as published some weeks ago. There have been some refinement of the provisions, but I am fully satisfied that these powers are necessary to enable the Revenue Commissioners to carry out their functions efficiently and to ensure that they have the necessary powers to combat tax evasion.

Sections 226 to 228 of the Bill relate to the obligation by third parties to make certain returns of information to inspectors of taxes and the inspectors' rights to audit this information. The first returns under the new procedures will be due, in the case of companies, on 6 January 1994 and, in the case of individuals, on 31 January 1994. Section 231 deals with record keeping for tax purposes and extends the meaning of records to include documents relating to sources of income and linking documents prepared in the course of making of business accounts.

Section 232 extends the powers of authorised officers to enter premises to inspect documents and records. It permits officers to search premises for records where these are not produced. It provides that an officer may enter a private residence only at the invitation of the occupant or on foot of a warrant issued by the District Court.

Sections 233 and 235 contain provisions for the supervision of the PAYE system and the construction industry tax scheme broadly similar to those contained in section 232. The Bill also provides for the extension of the construction tax scheme to forestry and meat processing operations. Section 236 provides that Revenue officers, in carrying out their powers of inspection under sections 232, 233 and 235 of the Bill, may be accompanied by a member of the Garda Síochána who is given the power of arrest in the event of obstruction. The Revenue officer concerned has no power of arrest nor can he instruct a garda to carry out an arrest.

Section 239 empowers an inspector to require the submission of a statement of affairs — assets and liabilities — where no return of income is filed, or where he is dissatisfied with the return submitted.

Section 241 extends the Revenue Commissioners' powers to attach amounts owed by a third party to a taxpayer who has defaulted in paying tax.

Sections 244 and 245 provide for a further development of the self-assessment system in that PAYE directors and their spouses will now be obliged to make returns of income without being served with notices to do so. Also these returns may be subject to audit by an inspector of taxes and to the imposition of the 10 per cent surcharge for late filing. Directors of shelf companies, and directors of certain dormant companies, will not, however, be required to file returns unless, of course, they receive a notice from an inspector of taxes to do so.

Sections 246 and 247 provide that details of paper-for-paper transactions must, in future, be supplied in tax returns. Section 248 increases penalties under the Tax Acts.

Finally, regarding the extension of Revenue powers, I would stress that these powers are necessary to ensure that the Revenue Commissioners can tackle tax evasion effectively, and that they are, in any event, circumscribed in the legislation. Moreover, the Board of the Revenue Commissioners has emphasised that the officers concerned will receive appropriate training and guidance in the use of these powers, particularly as regards entry to, and searches of, premises and that the use of the powers will be closely monitored by the board. I would emphasise that the compliant taxpayer has no grounds for concern. On the contrary, it is in the interest of the general body of taxpayers that the authorities should be able to ensure that those who fail to pay taxes properly due can be detected and successfully prosecuted, and that avoidance practices can be addressed promptly.

The Bill, as usual, contains a number of miscellaneous provisions. Section 249 contains the usual provision relating to the capital services redemption account. Section 252 requires the Voluntary Health Insurance Board to pay a levy of £3 million into the Central Fund on or before 30 June 1992.

Before concluding I would like to draw attention to the Government's plans for further legislative provisions in the fiscal area during 1992. A second Finance Bill, to be introduced in the autumn, will complete the programme of fiscal legislation required by the Internal Market, covering those areas where the relevant EC Directives have still to be adopted. This will also provide for the domestic measures needed to offset the adverse cash-flow implications for the Exchequer in 1993 of the ending of VAT at point-of-entry on goods sourced in other EC member states. Finally, this second Finance Bill will contain the legislative provisions for a new fringe benefits tax as announced in the budget as a means of ensuring the effective taxation of such forms of remuneration and of broadening the tax base, and which is to come into operation from 6 April 1993.

In this opening address I have outlined for Senators the Government's approach to general economic issues as well as detailing the more significent elements of this Bill. I look foward to the opportunity on Committee Stage to discuss in more detail the individual sections of the Bill.

I commend the Bill to the Seanad.

At the outset of this debate I also take the opportunity to thank the House for the use of this Chamber last week. It was a suggestion from the two major Opposition parties that we would use an alternative location to the Dáil and in discussions——

They did not "suggest". Do not be disingenuous——

Manners are a great thing.

Do not be disingenuous.

The Minister, without interruption, please.

I must be allowed to finish a sentence. Two people can operate that system. I can do it, too, throughout this debate.

No problem.

I always listen to the Seanad carefully. I was about to say it was a suggestion that was put forward during the discussion on the Appropriation Bill in the Dáil that we would look for another location. In the discussions that took place afterwards with all concerned, it was felt the most suitable arrangement would be to seek to use this House. On the completion of Second Stage of the Bill in the Dáil, I thanked the Seanad for the use of the facilities. It was made known to me afterwards that the Seanad had not agreed that we would have these facilities. The Government Whip promptly apologised to the Seanad for any confusion in that regard.

The use of this Chamber was deeply appreciated by all 15 Members of the Committee. We apologised as I did in writing immediately, for any inconvenience caused. I apologise personally to the Leader of the Seanad and to the Whips. I want to apologise for the confusion, which was not of my making but since it was my Bill, I felt obliged to do that. It is not my function to organise the allocation of the different rooms in Leinster House or any part of it, whether it be the Dáil or the Seanad. I want to thank all sides of the House for the opportunity to have a Committee Stage debate here, which doubled the number of hours we normally would have had. It worked extremely well. That would not have been possible without the use of this Chamber. In no way would I be disingenuous. I immediately left the other House to meet the Cathaoirleach to make sure there was no confusion. I want to thank all the Members for their co-operation.

I commend the Bill to the House.

We fully accept the Minister's apologies for the confusion and the displacement of the work in this House that occurred when it was used for Committee Stage. I do not think any of us has an objection to this House being used when we are not in session, or when we do not intend to go into session. I am all for making maximum use of State facilities of any kind. There are excellent facilities in the Chamber. The point to which we all objected rather vigorously was that we were displaced from our normal working schedule. When I referred to the possibility of the Minister being disingenuous, I was referring to what he said in his opening comment on this issue when he suggested that the two main Opposition parties were the ones which guided the hand towards the use of the Seanad. I accept it when the Minister says they did suggest the idea of a Special Committee which would work parallel with the Dáil in another premises. I fully accept what the Minister says. We all agree that maximum use should be made of this House but not in such a way as to displace us and our work schedule here, which is very important. I welcome comments made by the Taoiseach during the week in relation to his views on the Seanad. They should be noted on the record of this House. They are very welcome.

As we discuss this Bill we have got to bear in mind that a second Finance Bill is due in the autumn. The Minister in his speech this morning said that we must complete the programme of fiscal legislation required by the Internal Market. That sentence immediately caught my attention. One of the disaster areas of this Finance Bill has to be the extension in the number of VAT rates to six. The Minister may deal with this when replying on Second Stage. How will we get from six VAT rates to two VAT rates by the autumn when the second Finance Bill is implemented? If what he says is true, we will complete the programme of fiscal legislation required by the Internal Market. My understanding was that we were ending up with two VAT rates and that there was to be harmonisation of VAT rates throughout the Community. The Minister's statement and what is expected of us by Brussels do not tally. I would appreciate advice from the Minister as to how between now, May 1992, and the autumn when we will discuss the second Finance Bill, we will go from six VAT rates to two VAT rates.

Notwithstanding the Minister's eloquence — and I thank him for his time, detail and patience with us here this morning on this Finance Bill — I have got to ask the only real question — what is this Bill all about? It is anti-work. It discourages risk. It promotes a DIRT of 10 per cent versus income tax rates of 27 per cent and 48 per cent. We have six rates of VAT for the business sector to contend with. Where now is the eloquence of the Minister for Education in loudly promoting the enterprise culture in our schools and in the curriculum of the future?

The balance is now in favour of deposit accounts, away from equity investment. The Minister has reduced capital gains relief tax by half. He has also a single rate of 40 per cent capital gains tax, abolishing the 30 per cent and 35 per cent rates. Surely all of this is moving away from investing in job creating industries of our publicly quoted companies. Where will small investors put their money now? Gilts and Government bonds are out of reach so, with capital gains tax relief halved, how are we going to see all small investors' money in the new special deposit accounts?

I accept the Minister's explanation. He valiantly tried to defend the present system by saying the comparison is not with 27 per cent but with no Revenue take at all, if all the money leaves the country. The reality will be that small investors — and perhaps the not so small investors — will go for the safe haven of the special deposit account, which will only attract a 10 per cent DIRT take. Why would they invest in risk-taking manufacturing businesses? Why would they invest in any new start-ups where there is, naturally, greater risk? They will shy away from all equity investment. At a time when we are looking at 300,000 people unemployed — perhaps by the end of this year, given the increase in unemployment from budget day to date — how can we justify a Finance Bill that is totally anti-work, anti-productive investment and which does nothing for the unemployment crisis?

In the Minister's Dáil speech — and I notice he did not say it here today but he may give it to us on Second Stage — he mentioned there would be no requirement to make any return on the special deposit accounts interest to the Revenue Commissioners. Has the Minister changed his mind on that or is that still the state of play? Will the source of the money being deposited in these new accounts ever be questioned once the 10 per cent DIRT has been paid? Are they to be a haven for hot money, both in and outside this country? Perhaps the Minister and the Department of Finance are trying to do something, the purpose of which escapes me. Perhaps they wish to attract hot money back to this country by saying "we will not look beyond the name on the account provided the 10 per cent DIRT is returned by the financial institution to the Revenue Commissioners."

What is behind these accounts apart from trying to keep as much money as possible, which we can understand, when all exchange rules are removed? Are they to be safe havens for hot money, laundered money and questionable money in any account in this country from now on? Despite what the Minister said this morning we have got to come back to the treatment of earned income at the 27 per cent and 48 per cent rates. While we welcome the reduction in the tax rate, it still compares very unfavourably with the treatment of unearned income in these special deposit accounts as now proposed by the Minister.

The Minister rightly pointed out the difficulties that will occur once all exchange controls are gone. We must reduce the present 33 per cent rate of DIRT to stop the outflow. If one takes this, together with the restrictions for investment in manufacturing industry, the fact that the manufacturing dividend relief has gone, the reduction in the capital gains tax relief which the Minister is now proposing as well, the changes in the share options and in the workers' profit sharing schemes in this Bill, I am afraid that the balance tilts entirely in favour of the special deposit account. This is totally anti-work and anti-investment in productive enterprise.

In a word, this Bill is anti-job creation. To that scenario, we have to add the other proposals — the increase in the publicans' licences, the new co-operative tax, tax on company cars and the six VAT rates which I have already referred to instead of making progress towards the two rates that are required for us by the Internal Market. I challenge the Minister to point to one proposal in this Bill that is specifically geared towards job creation. I say to the Minister: give me one proposal and I will debate it with you. Even the further reduction in marginal tax rates, while welcome, will not produce an extra job. The reduction from 35 per cent to 27 per cent in our tax rate only saw the number of unemployed increase dramatically. There was a massive hike in those unemployed with the reductions we have already had in our tax rates. Why should the reduction now from 27 per cent to 25 per cent make any difference to job creation?

The ESRI medium-term review from 1991 to 1996 points out the urgent need — and I use their words — for a critical examination of what policy and behaviour changes are needed to prevent a continuing crisis in employment and a return to emigration rates of 40,000 per annum by the year 2000. They are forecasting that the true figure of unemployed will be masked again by the year 2000 by an enormous increase of emigration to 40,000 per annum in six to eight years' time.

We need a radical review of policy and radical thinking from this Government in the whole area of job creation. I will underline a concept that is gaining immense credence through the country. I am sure it has been brought to the Minister's attention. In fact, Brendan Logue of the IDA in his personal capacity has put a tremendous amount of thought into this issue, and I would like the Minister to consider the creation of district service companies — and I bring this specifically to his attention. There is a document available which outlines in detail the proposals in this concept. I quote:

The general concept proposes the establishment of a network of Private Limited Companies' under the indirect control of the State which would employ certain unemployed persons (UPs) willing to work. The UP would apply to become an employee of the DSC and would sign over his social welfare (SW) entitlement to the DSC on being accepted. This would be returned to him, whether he works or not, in the form of a basic wage providing he fulfilled the company's rules.

The DSC would then sell the labour of the employee in the form of a service to the open marketplace as with any other service activity. Payment for the service would be made by the customer directly to the DSC which would return a proportion of it, less a progressively rising clawback, to the employee. The employee would be permitted to earn a set amount over his existing SW entitlement before clawback would commence. The clawback would then rise progressively until an effective cap on total earnings is achieved equal, say, to the average industrial wage.

The clawback would be refunded to the Department of Social Welfare less the direct non-staff operating costs of the DSC.

Staffing of DSCs would be achieved by using existing Public Sector Employees or the UPs themselves.

Special incentives would be applied to potential employees in the private and public sectors.

VAT would be charged at the 10% rate to customers.

We all know, particularly those of us running households and small businesses, the difficulty in getting services of one kind or another. There is no general register of services available to the public, particularly if you have small once-off jobs, be they plumbing, engineering, house maintenance, gardening maintenance, any skilled or non-skilled type. It is very hard to find someone to do the once off small jobs. It we could organise the enormous talent and skills in these areas that are now on our dole queues into district service companies, I think there would be a tremendous spinoff and reduction in the number of those unemployed. This idea has been mooted before; I do not claim credit for it, but from day one it really took me as something that we need and that the unemployed people deserve to have fully investigated, and I specifically put it before the Minister.

I ask the Minister to add to the concept of district service companies, the Fine Gael proposal in our policy document "The Jobs Economy" to introduce on a phased basis a tax break on labour intensive home delivered services, like child care, nursing care, home repair and home help. If those using the skills that would be gathered together in the district service company for child care, nursing care, home repair, and other areas I have mentioned, could get a tax break for moneys expended in this area, there would be a greater encouragement to ensure that services provided in the home, or in the household generally, would not continue to be part of the black economy. You would get the services declared and it would become a part of the regular white economy and thereby creating more jobs in the home area.

I have felt aggrieved for a long time that my husband in running his business can get tax relief on any wages or salaries he may pay on the farm, or wherever else, to the help he gets to allow him to complete his business commitments but I, and other people like me, particularly working mothers, are not entitled to any tax relief for any salary or wages we may have to expend in home help to allow us to carry on our jobs. I wonder in this day of equity and equal treatment of both genders, whether that can be tolerated any longer.

There is a lot of work in the household, on the small farm and in the small business generally, that could be taken out of the black economy if the concept of a district service company and the concept of the tax break on labour intensive home delivered services could be implemented in a future Finance Bill, and quickly, before we see those on the dole queues go over the 300,000 mark. Those are two new and radical policy changes and the type of thing we need.

This Bill is more of the same, it is anti-work, it is tagging on to already bad policy ideas bits of changes here, there and elsewhere to try to close some tax loopholes, fiddling around with existing provisions instead of a radical change which is now called for, given the critical economic and social issue facing this country today — the enormous number of unemployed. If you add to that the huge numbers that will come on to the labour market out of our schools, training colleges and universities in the next few years, you can see the situation demands that immediately the Oireachtas must put their heads together and deliver radical changes and radical proposals for job creation.

It is with great regret that I recognise in this Finance Bill the Minister's continued refusal to widen tax bands and to take more people on low incomes out of the tax net altogether. In fact, I think more productive use of resources would have been made if the Minister had made a start in this direction rather than reducing the top rate by the two or three per cent, welcome as that is to those to whom it may apply. Has the Minister ever considered an introductory rate of tax between 10 and 20 per cent, as has recently been implemented in the UK?

The greatest tragedy in terms of getting people to work and creating an incentive to accept work, even when it is available, is that particularly for single people they reach the taxation level at far too early a tranche of income and come into the tax net at 25 per cent. That position has improved but they reach the taxable income stage far too early — the band just is not wide enough to provide an incentive for young people to get out and try to earn an income for themselves. I suggest the introduction of a new tax rate of between 10 and 20 per cent for the first tranche of income. Has the Minister given this any consideration? I would love to know his views on it and why he feels we could not incorporate it in our taxation code. Surely a greater priority than reducing the top tax rate at this stage would be to widen the tax bands and, indeed, it would benefit us all, even those at the higher income level because initially they would not be caught as quickly as they are now. I think more of a case could be made in that regard.

We will now discuss a few specifics of the Bill. I welcome the major improvement the Minister implemented on Report Stage in the Dáil. The battle continued to Report Stage before the Minister saw wisdom in relation to his treatment of Bord Bainne in section 47. I suspect that his colleague, the Minister for Agriculture and Food had a word in his ear, if that is not putting it too gently. There was a lot of pressure for the Minister to see the light, given the importance of the service Bord Bainne provides both nationally and internationally in the promotion of Irish goods and the Irish trademark on what is best in Ireland. I thank him for finally seeing the light, albeit as late as Report Stage which was only in the last couple of days.

Given the way we structure the debate in the Seanad — and I am not criticising the Fianna Fáil Whip or the Leader of the Fianna Fáil Party for this — there is so very little time between the completion of the debate in the Dáil and its introduction in the Seanad; it was only ten minutes before we came in to hear the Order of Business this morning that we got copies of the Finance Bill as passed by the Dáil.

The Minister has introduced a new section dealing with vehicle registration and there were other important amendments introduced on Report Stage. If we want to table amendments in this House — and Committee Stage starts this evening — it is unacceptable that we only get the Bill ten minutes before the commencement of the debate.

I make that point not particularly to the Minister and I am not making a criticism of those who printed the Bill — they had an impossible job to do between the completion of Report Stage and the commencement of our Second Stage this morning — but we should order our business in such a way that we are not precluded from giving detailed attention to an important Bill like this and precluded from making important amendments we might want to circulate because of not having the correct references in the Bill we only got today.

In relation to the point I was making on the co-operative tax treatment, I know many small co-ops are still very unhappy. The Department of Finance are trying to trap the plcs. Maybe they do not intend to catch the co-ops but the legal definition of catching one lot in the net and not catching the other appears to have eluded them. I wonder if we could look again and see if there is any way of not trying to catch the small developmental co-ops that have been the backbone of many rural communities? I know many of the major co-ops and the big plcs who are big players in the European market started as truly Horace Plunkett-type small co-ops down in the towns and villages of rural Ireland where there was a co-operative effort to market the produce at the local area. There are still many of those and there is room for a secondary tier of co-ops if they do not feel they will be taxed out of existence before they get on their feet.

The Kerry group had £24 million profit last year. They paid between £600,000 and £700,000 tax and it is reasonable of any Government to ask them to give a little bit more to the national Exchequer. Bringing in 10 per cent for the Kerry group on last year's figures would mean they would now be paying £2.4 million instead of £600,000. None of us like being asked to pay more tax but a case can be made that it is still reasonable. However, it is not reasonable to expect the small development co-ops to be treated in the same way. Co-ops are distinct from the multinational players and the plcs. I ask the Minister to look at that again to make sure he is not restricting development in our rural towns and villages or any of our cities because of the imposition of this new co-operative tax.

I will not say much more about the six bands of VAT — zero, 2.7, refund of VAT to the unregistered farmers, 10 per cent, 12.5, 16 per cent and 21 per cent. Where are we in relation to two bands of VAT and harmonisation goals in the Single Market? How will we achieve them by the autumn Finance Bill? I accept that the abolition of VAT at the point of entry will cause a loss of £200 million, once off, to the Exchequer. That will be dealt with in the autumn. I would like the Minister to give us an outline of his thoughts in relation to that matter in his response on Second Stage.

There has been an outcry about the anti-avoidance measures introduced in the Bill and the increase in the powers of the Revenue Commissioners. The opposition has mainly come from the professionals. I am not inclined to buy all their arguments, providing the implementation and the extra powers are used as they should be when there is reasonable cause for doubting true returns have been made or for believing that some funny business is going on in a business or with an individual. If self-assessment is ever to be established as a fair method of assessment for the self-employed we have got to be open for reasonable Revenue inspection. We should not be comparing with the lack of similar powers in the UK where they do not have self-assessment, we should be looking at the USA if we want a comparison. I would hate to think we would get to the stage where, as I read recently, one businessman crossed the road every time he saw the local Revenue official. They have engendered such terror in small businesses and individuals over there that it has gone too far. However, with the Irish mentality of trying to avoid all we can avoid and trying to ensure that legislation is just for the Statute Book and not to be enforced, we need a reasonable line to say we mean business.

If self-assessment is to work it has got to be seen to work. The Revenue Commissioners have to be seen to have the powers. After all, Customs and Excise officials have always had these powers of stop, search and investigation without any warrant. We are really extending what has already been the powers of Customs and Excise officials to the Revenue Commissioners and, provided it works as it should, it will be an important compliance weapon. We will be the first to come back if there is any maverick behaviour by any section of those enforcing the law. I am sure the Minister would be open to discuss that but, given the spirit in which the Minister intends it, we should support it if it is to have the credibility we would like it to have.

As we have heard in the media this morning and last night, it would appear the Common Agricultural Policy reform talks are coming to a conclusion. There is one aspect that is not highlighted either by the leaders of the farming organisations, the Minister for Agriculture and Food or any other group that has the interest of the farming community at heart. That is because the Common Agricultural Policy is no longer common, and if these reforms are agreed it will certainly not be common. Larger member states are in a position to subvent their farmers by national aids to compensate them for the reforms of the Common Agricultural Policy to a far greater extent than the Irish Government could ever look after our farmers. It is said European compensatory measures will be made permanent. I do not know what "permanent" means because any budget can change them. I do not know how they can be tied down forever.

Apart from that nonsense which is being peddled by all and sundry, the farm leaders are taking comfort in trying to convince their farmers that it is "permanent" compensation we are talking about. I feel the retail aids in Germany, France and other countries will be able to compensate their farmers and buy the peace of their farmers in acceptance of the reform proposals to an extent that the Irish Government never will. That means our farmers and our farm produce will not be playing on a level field. We talk about 340 million consumers in the Single Market which is to be saviour of us all in barrier-free Europe after next January. Do I have the Minister's assurance that if nothing else happens in the Common Agricultural Policy reform talks he will get assurances from his former colleague, Commissioner MacSharry, and the Competition Commissioner, that Irish farmers will not be at a competitive disadvantage because of extra national aids being offered to other farmers by their Governments?

What progress is being made in resolving what is for me one of the greatest enigmas and dilemmas of the present discussions on an issue That gets no prominence? In about a year's time we will understand why the French farmers, and maybe the Italian and English farmers, acquiesced and accepted what we might consider unacceptable proposals in the various agricultural enterprises because the difference in what they are getting and what the Common Agricultural Policy is proposing will be made up by their own national governments. We cannot do that so where is the Irish agricultural sector going? Are we to be the Cinderella of the farmers in Europe and will it be a level playing field? If is is not, we must agree to nothing.

Recently we heard a great outcry at the cost of policing the concert at Slane. Some 45,000 young people gathered for a day's entertainment. We heard a junior Minister indicate that very soon there would be legislation providing that promoters of such events would have to pay a contribution towards the policing costs. I want to pose a question as to why young people enjoying their choice of music, in their venue, should be penalised? Why not insist that in the case of Derby Day at the Curragh, which incurs an enormous amount of security and extra policing, a contribution has to be made by the racing authority? What about the Carrolls Irish Open and the extra security and policing that incurs? What about Croke Park on All-Ireland day? What is the thinking on this area? We must be sure. I have been asked by young people why it is that they will have to pay for the cost of policing their events, Their recreation, their social occasion, when adults do not have to do the same. Could we have an explanation from the Minister of the legislation proposed in this area and an assurance that it will be applied in an even-handed way?

The Minister mentioned the requirement that we must be approaching a debt/GNP ratio of 60 per cent rather than achieving a debt/GNP ratio of 60 per cent by 1996 or thereabouts to be considered eligible for the single currency club in Europe. The ESRI view is that we will only be at 70 per cent at best by the year 2000. Does the Minister seriously believe that the efforts we are making are sufficient to be considered worthy to join the single currency? I am a great supporter of this but we do not quite understand some of the details of its operation as yet, whether the Irish currency will become obsolete or if we will have a coin with ECU on one side and the £ on the other, or how the logistics will work. Perhaps the Minister will inform us what the thinking on this is because many people are interested. The average citizen is very interested when we talk about single currency and what it will mean to them and what it will look like. Does the Minister think we will be considered eligible to adopt the single currency and that the progress we are making with our debt/GNP ratio will be acceptable to the authorities in Brussels?

Chapter IV relates to vehicle registration — and we saw that in print for the first time at 10.20 a.m. today. I welcome the details the Minister has given us in this area. Am I right in assuming that the main vehicle registration and taxation office will be in Wexford? I thank the Minister for that; it is extremely welcome. There are almost 40 Customs and Excise officials who are now surplus to requirements — to use the official expression — given the completion of the Internal Market by 1 January and I understand that they will have first call on extra jobs being created by this office. For the last two or three years, Customs and Excise officials have been very concerned about their future in the public service. Even though we got an answer to the problem in Rosslare late in the day, it is very welcome.

There is a down side to the Maastricht Treaty, we must be prepared to admit that and to face the problem fairly, rather than give the impression that all will be a bed of roses. There is no doubt but that we must have a "yes" vote on 18 June. The balance lies massively in favour of being equal partners in the European Union proposed at Maastricht last December, but let us be honest about areas that will have problems. I am concerned that as the west of Ireland has greater difficulties in many ways than the rest of the country at the moment, in the European Union, as conceived, Ireland could become the west of Europe in the same way that the west of Ireland is relative to the rest of the country. Whatever Government are in power, all our efforts must go to ensure that Cohesion Funds, convergence and subsidies and all the marvellous Euro-speak that means nothing to anyone except people in this House, become a reality and that we do not create a State on the western fringe of Europe that has a relationship to the main European Community similar to the relationship of the west of Ireland to the rest of Ireland.

Let us be vigilant and honest with the public. If we are honest with them about the problems, they will believe us when we say that the issues are economic and political union and the no Protocol or Solemn Declaration should be allowed to divert us from what the Treaty is supposed to be about. Homespun problems must be dealt with at home and, I put the Minister on notice, must be resolved at home as well.

This Bill is the pup of the mismatch of ideologies of the present Coalition partners. One can see what the Progressive Democrats were trying to achieve and that Fianna Fáil would not give in, so we get a hotchpotch. Throughout the Bill one can see difficulties. Taxation reform how are you? We have heard so much about it, it is not credible to talk about it any more. There is no coherent strategy; it is just a hotchpotch of badly constructed, anti-work, anti-enterprise measures that leaves us further from compliance with Single Market requirements, and this at a time when the unemployment figures in this country are tragicially reaching the 300,000 mark.

I welcome the Minister to the House. At all times he has accorded this House and the Members of this House the respect they deserve.

Under the Programme for Government, it was generally agreed that the tax rates were far too high. They set us an objective to reduce those tax rates and there was a commitment to examine all the tax shelters throughout the system and any money that would accrue from that would be used to reduce tax rates. In successive budgets this has happened. Unfortunately, there will always be winners and losers. In my view, the Government have rightly decided to leave aside the relief on mortgage interest which costs the Exchequer £220 million and the VHI which costs £50 million. That is a correct decision, given that many home owners entered into an agreement and into an contract on the basis that this was already the position, that this was something they were entitled to and to remove it would have major repercussions for the family budget in the home. Given their commitment to lowering taxation, the Government had to look at other areas, particularly at exemptions and reliefs, and ask themselves: "Is this justified? Does it add anything to economic activity?" This is the basis of the major changes which have taken place in one of the most comprehensive Finance Bills ever placed before the Oireacthas.

Let us not forget that in the budget the Minister has given relief to the hard pressed PAYE earner. He has reduced the standard rate from 29p to 27p and the higher rate from 52p to 48p, while the income tax band has been increased for a single person from £6,700 to £7,475 and for the married person from £13,400 to £14,950. It would be nice to be able to continue to widen the bands further as there is a lot more to do, but any Government will be restricted by the amount of resources that are available. Therefore, the Minister, quite rightly, looked at the other side of the coin where money could be directed to the Exchequer and he made the tax system less beneficial to what we call the Mercs and perks brigade. Effectively, that is what the Minister has done in this Bill; indeed, that is what many Members on all sides of the House have been calling for over a sustained period.

In broad terms the Finance Bill can be seen as benefiting the small and the middle income earner by increasing the burden on the better off, the business and corporate sector. Rightly or wrongly, there is the perception out there that the business sector and the high earners were not paying their fair share of tax. People who held this view felt that certain benefits, reliefs and loopholes were only available to those how had sufficient resources to pay people to operate them for their own benefit. While such a perception might be very simplistic, the measures taken in the Finance Bill will go along way towards ensuring that the tax burden is more fairly distributed. In effect, those who are in a position to pay more will now be seen to be paying more.

One group of personal taxpayers who may be unhappy with the Finance Bill are those who have company cars and preferential loans. Any advantage which those people may have had in the past has been reduced. The Finance Bill provisions are a move towards equality of treatment with those taxpayers who are not in a position to avail of those perks. How many of us have heard of people who must drive 20, 30 and, sometimes, 40 miles per day to their place of employment? No such perk is available to those people and they feel hard done by, and quite rightly so. At the end of the day, however, it can still be argued that those with the perks are still better off than if they had to use their own resources to provide the same items.

Tax-free dividends which have been available to shareholders in certain companies have been abolished. Some anomalies between capital gains tax and corporation tax have also been removed. The financial sector, in particular life assurance companies and building societies, will contribute more tax to the Exchequer. I wonder how many people will quibble with that. All these changes help to spread the tax burden. They enable greater numbers of taxpayers to avail of the lower rates and the wider tax band exemptions than ever before.

Section 54 of the Bill deals with the withdrawal of co-operative exemptions. The effect of this exemption was to exclude from corporation tax certain profits of agriculture and fisheries societies who have registered as industrial and provident societies. It is interesting to note those areas which were exempted: profits in the processing of produce supplied by members, that is milk, butter etc.; profits on the sales to members of inputs such as feed and fertilisers; and profits on services such as artificial insemination, auctioneering of animals and fish.

This obviously meant that the bulk of the profits of many of the co-ops were exempt from tax. Where such profits were not required as retain reserves they could be distributed to members, not by reference to shareholding but by reference to the volume of turnover transacted with the co-ops. In effect, the profits were passed back to members and they were assessed in those members' hands. Whether any tax was payable on such profits depended therefore on the tax position of the individual member.

This exemption from tax may have been appropriate many years ago when the farmers themselves were outside the tax net and when the co-ops arguably were a logical extension of the trade of each individual farmer or fisherman. In recent times we have seen that the co-ops have developed a business identity of their own and have progressed into activities further removed from the farm gate itself. It is right therefore that they be treated in the same way as any other business and that the benefits accrue to the consumer of their products in urban areas as well as to the producers in the rural areas. It must be remembered also that bringing the co-ops into the tax net is not unduly onerous as many of their activities will be liable at the 10 per cent rate of corporation tax, such as the milk area, and those elements of their income taxable at 40 per cent, are in themselves subject to a phasing-in provision.

The main area of concern has been compliance, returns, anti-evasion and anti-avoidance. I would like to spend a little time on that particular section. I must compliment Senator Doyle on her approach to it, because methinks they do protest too much. The Minister would not be looking at this area unless the Revenue Commissioners, indeed the Minister, were unhappy that the loopholes were there, that avoidance was going on and that it was about time this whole area was looked at.

Part VII deals with anti-avoidance and anti-evasion. Throughout the Bill many other parts deal with returns, time limits, appeals and penalties. Nobody can condone a person evading their responsibilities to their fellow citizens, and indeed to the State. It has to be recognised that a system of self-assessment introduced in the past few years requires certain returns being placed on the self-assessment basis which heretofore were requested by notice from a tax inspector.

The Bill strengthens the Revenue powers in many areas and indeed some say that the powers are greater than those given to the Garda Síochána. Obviously all of us would make the suggestion that these powers should be exercised with great care and that they should not be in the hands of over-zealous taxmen who could jeopardise job creation and enterprise. I am pleased that the Minister said in his speech that the board of the Revenue Commissioners will emphasise the training and guidance of people in that area.

When we are talking about levelling playing pitches, may I refer to one area that is of interest, and it is coming down on the side of the self-employed. Special allowances totalling £1,086 were introduced some years ago for the benefit of the PAYE earner on the top rate of PRSI because he was perceived to be at a disadvantage compared to the self-employed taxpayer at that time. Since then there has been the introduction of the current year base of assessment, preliminary tax requirements, PRSI for the self-employed and withholding tax on professional fees. That in itself has eliminated many of the anomalies that existed at that time.

Three elements of the Finance Bill will further eliminate any remaining anomalies. They are specifically in the area of extending the list of accountable persons for withholding tax on professional fees, changing the basis for VAT liability from cash receipts to an invoice basis for persons engaged in the supply of taxable services and the extension of self-assessment to all company directors and their spouses even if their tax is fully discharged under PAYE. Perhaps the Minister, in line with what I would term his commendable policy of equality of treatment and as a form of quid pro quo, would look at this sector to see if the situation could be equated.

We are all well aware of the situation as it applies to the EC implications and particularly the entry into Community trade which will see the abolition of VAT at the point of entry. This will have a dramatic effect on the VAT revenue, given that it brought in something like £1.2 billion last year. Any Minister would be very anxious to ensure that this revenue would be made secure. It is incumbent on the Minister to strengthen the powers of the Revenue Commissioners to ensure against any loss. Indeed, the major scandals of last year also give cause for concern as the Revenue people have had experience of self-assessment over the last few years and they became aware of the weakness in their powers.

The proposed changes in the Bill amending tax treatment of deposit interest will significantly reduce the income tax payable by individuals in respect of deposit interest. Deposit interest is currently subject to income tax at the taxpayer's marginal income tax rate. Under the new provisions it will be subject to 10 per cent, provided it is put into a special savings account. I would differ with Senator Doyle on this because I think it is extremely important for us to ensure that deposits are kept at home. Any enticement and encouragement we can given must be worth while and the Minister is quite right in ensuring that this special savings account is put in place. Furthermore, deposit interest on these accounts will no longer be subject to PRSI, youth employment levy or health contributions. These provisions will come into force under ministerial order. Again, I would say that they significantly increase the after tax return on deposit interest earned by individuals and will constitute a very strong incentive for Irish residents to retain funds in this country, notwithstanding the imminent abolition of exchange control.

There are a number of other very positive things in the Finance Bill that obviously have not been mentioned because they are not controversial. The first is the capital gains tax on the sale of development land which has been reduced to 40 per cent. It will now be possible for companies to transfer development land within a group of companies without giving rise to a capital gains charge. This surely will help to persuade land owners to sell off development land and thereby stimulate growth in the construction industry.

It is also important to mention the stamp duty amnesty. It has been introduced in the Bill and will give one an opportunity to have old unstamped documents stamped without paying any interest penalties. This is a very humanitarian gesture by the Minister and will give property owners an opportunity to put their affairs in order.

I also welcome the provision on foreign adoptions. For tax purposes the definition of the child has been extended to a child whose adoption is a foreign adoption and is recognised under the Adoption Act, 1991. Many parents in this country will be extremely happy with this provision.

It is also worthy of note that the capital value used in determining restriction of a tax deduction for car expenses and capital allowances for cars has been increased from £7,000 to £10,000. It is important that we stress the positive aspects of this Bill.

I would like to refer to one or two points made by Senator Doyle regarding concerts and the payment of security at those concerts. It would be unfair to let that pass without mentioning specifically that both GAA and the Football Association of Ireland have to pay for their own security. Therefore it seems very strange and illogical that people who are making good returns from concerts would not be levied in the same way to help defray the inordinate cost of security on such occasions.

I would like to refer to the DIRT tax and the fact that it has been stated that this is an anti-job creation Finance Bill. One of the things we have looked at from 1987 and have paraded is that if you contain public borrowing, ensure there is low inflation and bring down interest rates, this will generate economic activity. In that regard I would like to make a particular point to the Minister. It is significant that the Minister for Labour happens to be in the House at this time.

He is not paying attention to you.

I know that, but he may now. I refer to training courses.

It must be a precedent that Senators can address two Ministers at once.

It is what you could call a golden opportunity.

It is an indication of our high respect for the Seanad.

Training courses have been by and large geared by FÁS to the unemployed. I make specific mention of the enterprise allowance scheme. How logical is it to expect that people who have been unemployed on a fairly long term basis would generate economic activity, would generate jobs and be successful in setting up enterprises? Is it not reasonable to assume that many of these individuals do not possess that expertise? Is it too much to expect that they could make massive inroads into the unemployment sector?

I would like the Minister to look instead at the major expertise we have in industry here. I am thinking of the qualified chemists, engineers and food technologists. These are specialists in their own areas and they have a knowledge and an expertise in research and development. Would it be worth our while looking at courses in entrepreneurship for individuals in these sectors so that, if I may use a loose phrase, we would suck them out to suck them in and so create industry in the sub-supply, assembly sector or within various other niches?

It is fair to say that many of these people will have expertise relative to their own area, but what many of them will lack is managerial expertise and entrepreneurship. Should we not, therefore, be putting a far greater emphasis on making available training courses, perhaps at off duty times and at weekends, and make it worthwhile for these people to come forward, to encourage them to come up with ideas for job creation and for R & D and to put together a management structure that will help us to make use of that available expertise and convert it into useful employment projects? I would recommend to the Minister that it is worth seriously considering. There are many Senators wishing to speak and I do not wish to delay the House. As a result of the provisions of this Bill, the disposable income of most individual taxpayers will increase and to fund that increase there have to be a number of unfavourable tax provisions. Thankfully, they are in the sector that can best afford them.

I take great pleasure in commending the Bill to the House.

Is beag suim atá ag muintir an iarthair, go bunúsach, sa Bhille seo agus ní gan fáth é seo. An dóigh a bhfuil cúrsaí gnó, eacnamaíochta agus cúrsaí cultúrtha dulta chun donais san iarthar le tamall de bhlianta anuas, tá sé deacair ag cuid againn, atá ag feidhmiú thiar, a fháil amach cén chiall ata ag an mBille Airgeadais seo i gcomhthéacs saol mhuintir an iarthair. Tá an dífhostaíocht chomh forleathan agus an infheistíocht chomh lag san iarthar go gceapaim gur beag an mhaith bheith ag caint faoi Bhille Airgeadais, 1992, ó thaobh ghnáthphobal an iarthair de.

Is beag an bhaint atá ag an chuid is mó de na moltaí agus na rialacha atá idir an dá chlúdach seo le saol eacnamúil an iarthair. Má chíoraimíd cuspóirí an Bhille Airgeadais i gcomhthéacs leasa don iarthar ní léir dom go bhfuil aon dóchas ann, ábhar bróid nó sásaimh maidir le caitheachas agus foinsí airgid, agus is amhlaidh an scéal i gcás na fostaíochta. Ag labhairt anseo dúinn tá sé sin intuigthe go mbeadh ár n-aire dírithe ar na ceisteanna móra náisiúnta, ach, ar deireadh thiar, tá ar chuile dhuine freisin aire faoi leith a thabhairt do cheantar ar leith agus an reachtaíocht a mheas dá réir. Mar sin ní fheictear dom go bhfuil an Bill Airgeadais ag dul a dhéanamh mórán maitheasa don iarthar i leith fostaíochta. An t-airgead a bhaileofar de bharr an Bhille seo, chun an tír a reachtáil, ní fheictear domsa go bhfuil sé ag dul a dhéanamh mórán maitheasa do mhuintir na hÉireann.

Ba mhaith liom cúpla focal a rá i dtaobh an Bhille seo agus an meon atá léirithe ag an Stát i leith chúrsaí eacnamaíochta an iarthair, mar is é bunchúram lucht airgeadais airgead a bhailiú, agus díol agus ceannach atá taobh thiar de chúrsaí airgeadais, nó chúrsaí eacnamaíochta, chun maoin a chruthú. Chuir an Rialtas rompu, trí thuarascáil Culliton agus shaothar a thascfhórsa, cúnamh agus poist a chur ar fáil. Ní léir domsa go mbeidh aon toradh sásúil ar fhorálacha an Bhille seo maidir le gnáthdhaoine san iarthar leas a bhaint astu. Is í aidhm an Bhille ná freastal ar an tír uilig ach i gcás an iarthair, tá an taobh sin tíre agus an daonra scoite amach ón chuid eile den tír agus nuair a chuireann tú san áireamh an bhochtaineacht, a laghad deiseanna fostaíochta atá ann, an saol geilleagrach, sóisialta, cultúrtha ag dul in ísle bhrí, bliain i ndiaidh a chéile, ní fheictear dúinn conas mar is féidir mórán dul chun cinn a bheith ann.

Níl fágtha ag na créatúir bhochta seo ach an dole, cheal deiseanna fostaíochta. Is cuimhin liom sna seascaidí toscaireacht againn ag dul go dtí Roinn an Gaeltachta i mBaile Átha Cliath chun a impí ar an Aire faoiseamh éigin a thabhairt do lucht an dole, tríd an Bhuiséad nó Bhille Airgeadais; go mbeadh cead acu roinnt oibre a dhéanamh gan sin ag cur isteach ar a gcuid dole. Anois, 30 bliain ina dhiaidh sin, níl dul chun cinn ar bith déanta. Is ag dul in olcas atáimid, dar liomsa. Cad é an réiteach atá ag an Rialtas maidir le gnáthchúrsaí na tíre a reachtáil? Cuireann siad tascfhórsa ar bun le poist a sholáthar, de réir mholtaí thuarascáil Culliton, ach cuireann sé alltacht orm nuair a fheicim cuid de na moltaí a bhaineann leis an iarthar.

Moltar sa tuarascáil seo, mar shampla, gan aon chúnamh de bhreis ar an chabhair atá le fáil ar an gcósta thoir a thabhairt don té a bheadh ag iarraidh monarcha a bhunú laistiar den tSionainn. Is ionann sin agus a rá, má thagann duine chun na tíre seo agus fonn air monarcha a chur ar bun, caolseans go rachadh sé go dtí an t-iarthar má fheictear dó nach mbeidh aon chúnamh breise le fáil. B'ionann an deontas a gheobhadh sé ar an gcósta thoir agus a gheobhadh sé ar an gcósta thiar. Sin an rud atá molta ag DKM consultants sa Culliton report. Is ionann sin agus a rá nach mbeidh aon dul chun cinn ann ó thaobh eacnamaíochta de san iarthar. B'fhéidir go n-abrófar liom nach bhfuil aon bhaint ag an Culliton report leis an ábhar atá faoi chaibidil, ach tá mé cinnte de go bhfuil, mar is é bun agus barr an Bhille Airgeadais seo ná airgead a chur ar fáil chun tacaíocht a thabhairt don tuarascáil agus a bhfuil ann a chur i gcrích.

Debate adjourned.
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