Dáil Éireann - Volume 418 - 29 April, 1992
Finance Bill, 1992: Second Stage (Resumed).
Question again proposed: “That the Bill be now read a second Time.”
Mr. Quinn Mr. Quinn
Mr. Quinn: I had commenced my contribution at approximately 6.50 p.m. yesterday before the House adjourned this debate. I had made the observation that the Minister's long and comprehensive Second Stage opening speech was a document that had been written in three parts. The first part was a fairly reasonable and objective assessment of the Irish economy's performance to date and its prospects for the next year. The second part was the rhetorical exposition of the Government's position policy in relation to the question of employment. The third part, which was a substantive part of a long speech, was a description in detail of the Finance Bill. There is little or no connection between the three parts of the Minister's speech and I intend to explain why. Yesterday I quoted from the Minister's speech as follows:
But in the final analysis, there is only so much that any Government can do. They can make a key contribution by ensuring that their broad policy stance is conducive to employment growth. We have done so. They should ensure  that, in its detail, Government policy minimises any disincentive effects on private effort and enterprise. We are doing so, not least through the substantial tax reforms in this and recent budgets. They should provide leadership on growth oriented policies. Again, we have done so. But in the final analysis our progress will be determined by how well the private sector uses the opportunity so created. In the part, it has shown that, given the right conditions, it can create a significant number of new jobs. For example, between April 1987 and April 1991, net non-agricultural employment in the private sector rose by over 70,000.
At the outset, I want to say the Labour Party do not share the philosophical view articulated so clearly by the Government in the Minister's speech in the paragraph I have just quoted. If this country needed evidence of the capability of the Irish private sector to create the level of employment necessary to deal with the highest level of unemployment in the entire European Community then, surely that evidence is all around us. Good as many components of the Irish private sector are, and good as is the managerial ability of many companies and their professional staff to perform well in a highly competitive international market, it simply is not good enough. That is no reflection on the private sector in general or, indeed, on some of the outstanding companies within it.
For any Government, but particularly for a Fianna Fáil Government, to rely so exclusively now on the private sector to create the level of economic activity and growth which in turn will consequently lead to employment creation, is very naive. I cannot but wonder at the continued wagging of the dog by the tail of the Progressive Democrats in relation to this particular area of economic policy.
I said on a previous occasion there is now broad economic and political consensus inside and outside this House on the need for us to operate within a very tight fiscal environment where budget deficits, borrowing and recourse to easy  spending are no longer an option that is available to the body politic in Ireland. There may from time to time, be temptations on all sides in relation to that. We have learned, however, the cruel lessons of profligate spending which started in 1977 and which of necessity had to be slowed down through the eighties with a great degree of both physical and political pain. I do not think any practising politician inside this House or any person charged with involvement in the social partnership outside this House, particularly through organisations such as ICTU, FIE, CII or the IFA, want to go back down that road because we have all learned the costly lessons from the past.
To simply throw our hats at the economy and say, as a Government or as a Legislature, there is little or nothing we can do other than to create the right conditions for the private sector, is an abrogation of what this country is capable of doing and what this Government should be doing.
At the outset I want to say clearly that I do not agree with the Government's opening thesis. However, we are in Opposition, and confronting the Minister with a counter philosophy would be of little benefit to constructive debate because the Minister or his Government would disagree.
What I propose to do is to take the Minister's own terms of reference, the Minister's own starting point which is not unreasonable, and test this Bill against the standards he claims he has set and which he asserts are being met by the measures in the Bill. I can find nothing in this long Bill that will create one additional job. I hope the Minister will come back to that on Second Stage or, more productively, on Committee Stage because I do not believe he is not interested in job creation. I believe he is passionately committed to creating jobs but perhaps he is a prisoner of a Cabinet that will not let him do it the way his instincts would want him to. I am, therefore, open to challenge in the claims I will make about this Bill.
Let me quote the Minister's assertions written by the Department of Finance  and authorised by the Minister that the climate for enterprise is being created within this Bill. He said, “It should ensure that in its detail Government policy minimises any disincentive effects on private effort and enterprise.” Let us look at what the Government have done in respect of the DIRT and the provisions for the special savings accounts. There is little or no alternative economic activity at present that will guarantee a gross 10 per cent return after tax to the establishment of the special savings account proposed by the Government. There was a time when unearned income attracted a higher level of taxation because it was unearned and did not produce employment for other people but, of necessity, the Minister has brought in a mechanism which is excessively cautious and will not meet the requirements in the paragraph I quoted.
I could accept the argument that caution must prevail as we move through the uncharted waters of 1993 to protect the Irish banking system which has not yet suffered the rigours of international competition in the same way as other areas of the Irish economy, if the Minister recognised that this would not improve the climate for investment, for risk taking and for enterprise and did certain other things in the Finance Bill to encourage people to use the tax system in a way that would enable them to take risks and to invest. That would be a fairly reasonable approach within the philosophical framework that the Minister has set for himself. However he has not done that. On the contrary, every tax shelter that was established over a period of time to encourage people to invest some of their income to produce additional jobs has been systematically eliminated.
Yesterday Deputy Noonan estimated that approximately £37 million had been saved by the elimination of these tax shelters. Many of them cost the Exchequer very little. Their elimination from the Finance Bill speaks volumes about this Government's desire to eliminate any incentive for investment and any encouragement to take risks. It is, therefore, totally at variance with the Minister's  philosophical assertion when he set out the ideology upon which the Government's policy is based.
It is necessary to give specific details. The Minister has rowed back in one area, but with a miserable and mean attitude which defies explanation. Perhaps he will take note of my concern and offer a reason in due course. I had a priority question to the Minister in relation to the employee share option scheme where there were about 80,000 beneficiaries, not necessarily 80,000 individuals because in some cases there was evidence to indicate that the same person had bought on a number of occasions. The Minister did not cover this provision in his budget speech and he has now decided to bring it back but at a reduced level from £5,000 to £2,000.
I do not understand why this limit has been cut from £5,000 to £2,000. Either it was right to leave it out or it was right to leave it in, but reducing it by approximately 60 per cent is the argument of Solomon in reverse; it is maintaining face for somebody in some Department who wanted to eliminate it and responding to the considerable lobby that came at the Minister from all sides, some of them quoting the words from the booklet that was issued last summer. A compromise was reached. The limit is now £2,000 instead of £5,000.
Is this some kind of internal debate within the Department of Finance? Did an official or the Minister feel he had to assuage certain lobbies? Why reduce it from £5,000 to £2,000? Why not take it out altogether or leave as it was? What would be the savings? Why alter the regime? Perhaps the Minister will respond to that.
I welcome the other changes the Minister made in regard to employees although I would have preferred if he had left the limit at £5,000. The second change the Minister made relates to benefit-in-kind on cars for sales representatives. We will have to deal with that matter in some detail on Committee Stage as the “autophobia” of the Civil  Service, as someone described it, will have to be teased out once and for all.
The changes the Minister made in relation to public houses have a certain degree of rationality about them that is infinitely preferable to the arbitrary valuation base originally proposed in the budget. However, I would like the Minister to explain the reason he decided to impose an additional once-off cost on the more substantial pubs without phasing it in or giving advance notice. If a public house is at the top of the range — many Dublin pubs would be at the top of the range with a turnover of £1 million — it will have to pay an extra £60 per week given that the cost of a licence is to be increased from £100 to £3,000, a substantial increase. Given the sum the Minister is likely to collect — from memory, approximately £2 million — if we phase it in over two to three years the pubs which are not doing well at present will be able to respond more easily and readily.
Mr. B. Ahern Mr. B. Ahern
Mr. B. Ahern: It will be allowable as an expense.
Mr. Quinn Mr. Quinn
Mr. Quinn: I presume it will be, as the previous fee was an allowable expense.
Mr. B. Ahern Mr. B. Ahern
Mr. B. Ahern: We will see what the cost is.
Mr. Quinn Mr. Quinn
Mr. Quinn: That makes more sense. Depending on the way their accounts go the revenue raised should be looked at. While I welcome the Minister's intervention I would like to see the Government systematically analysing the revenue that could be generated from all the licenses we offer for trading purposes in our economy. They are instruments which have a high value if we take, for example, the exchange value of taxi licences. We may find that this is new sources of revenue for the Exchequer but it should be collected in such a manner that we do not disrupt the existing pattern of trade. The changes should be introduced in such a way that the market can absorb them without distortion and transitional difficulties.
I welcome the changes and modifications  the Minister made in response to the suggestions in the budget debate and it would be churlish of me not to recognise them. I recognise also that the preparation of the legislation to deal with the new regime post-1993 will impose enormous pressures on the Revenue Commissioners and the Department of Finance. Therefore, I will be as sympathetic as I possibly can. I do not think any of us expect the Minister to get it 100 per cent right in year one; we are entering unchartered waters and if this does not work next year, we must reconsider it. Our society is too small, our governmental system is too compact and the constraints on the public service are too severe to allow us the luxury of indulging in false debate and antagonism as we are about to enter a period of prospective prosperity but which nevertheless will be fraught with difficulties. That point has to be made not only to the Minister but to those behind him who put in place the Finance Bill.
Let me return to the philosophy of enterprise the Minister claims underpins many of the Bills provisions. I cannot find any measure that will create a single job. The Minister deleted provisions which would encourage investment such as the tax shelters which were available in the past. Tax shelters can produce loopholes which are exploited to the point where the system is abused but this cannot be used as a philosophical argument against providing incentives. It is a very good argument in favour of closing off loopholes in the first place as the human condition will legally exploit any possibility in order to maximise its own private return. That is the way most societies operate. We should not be surprised therefore if people perform and operate in this manner.
Another incentive arbitrarily removed in the Bill was the tax concession for holiday homes. The Government are attempting to promote the tourism industry and are boasting about the amount of money they are likely to get under the cohesion package and the Structural Funds. They state that much of this money will be used to underpin tourism  infrastructure which in turn should lead to the creation of employment. Of necessity, most of the projects the Government are investing in are large scale infrastructural projects to attract tourists from continental Europe. Those tourists will use and pay for facilities which, in the main, will be run by private operators. It makes no sense therefore for the Government to have a policy of investment in tourism infrastructure if it is not matched by one of investment by the private sector in tourist facilities.
Section 24 was one of the few remaining provisions which encouraged such private sector investment in holiday homes and facilities to upgrade privately run operations around the country. One project in County Wicklow is about to come to a standstill. In deference to the conventions of this House it would not be proper to mention the names of those involved or give the details but I can cite the case as an example. Perhaps the Minister will indicate if our interpretation is correct. The project in question involves the construction of an equestrian centre, with residential accommodation, at an approximate cost of £3 million. They received the necessary certification from the Revenue Commissioners and Bord Fáilte of their eligibility for tax concessions which, in part, will be abolished following the passing of section 24.
Two problems arise. First, section 24 is a mistake because it will kill off new projects which have not yet reached the stage of certification and are the subject of negotiations with Bord Fáilte or the Revenue Commissioners. There is a real problem in that the people who gave an undertaking to invest approximately £3 million, £1 million of which has already been spent, now find that any costs incurred after 24 April will not be eligible for tax deductions. There is nothing in the section to indicate that this section will only apply in the case of new projects and not to projects in the course of construction.
There is a clear and well established precedent in this House, as part and parcel of the culture of our democracy, that you cannot have retrospective legislation,  that people who enter into activities which are legal on a particular day and in good faith undertake investment decisions and commitments contractually in relation to expenditure in the belief that a certain tax regime, among other things, prevails at that time cannot, subsequently and retrospectively, have the regime under which they made certain critical economic decisions whipped from under their feet, removing the logic of the investment decision in the first place. Will the Minister confirm that the operation of section 24 will apply only to projects contemplated after 24 April and that projects currently on site, which have been properly certified and stamped by the relevant authority, will not be affected? Because this matter has been brought to my attention I feel obliged to mention it because my understanding is that the 20 or 30 workers on site will be given protective notice from next Friday, 1 May. Perhaps somebody in the Minister's office would clarify this matter for me?
There are many other such projects contemplated or being looked at and many will not go any further because the economics of tourism relative to the cost of money and the cost of the provision of the standard of services required will not stand up given the scale and length of our tourism season unless there is some degree of either grant or tax incentive, in other words, unless there is something which promotes private effort and enterprise. This is a clear disincentive to private efforts and enterprise, notwithstanding what the Minister asserted in his speech.
In the Bill which was circulated the Minister did not refer to the extension of the deadline for either the completion of the designated areas or the financial services. I am happy that in his speech the Minister did so. I appreciate the time constraints under which the Department were working — it is not a criticism — but I had prepared notes prior to the Minister's speech in this respect. I note that the final date for designated areas is May 1984 and I think a different date  applies to the Custom House Docks site. Whatever about that development which is sui generis and which, in addition to the broad array of incentives open to it similar to the designated areas, it also has very attractive financial incentives of a different kind and an executive promotional authority in the form of the Custom House Docks Development Authority promoting it, which should be allowed to go its own way, I earnestly request the Minister to think again about the final deadline he has given in relation to the timetable. The benefits of the designated urban areas tax regime can come into play when the building is complete. The gestation period for any building of the scale which would operate there — a small, mixed commercial and residential or a separate side by side operation — is nothing like 12 or 15 months. Between planning permission and planning appeals the norm for most proposals needing planning permission in the Dublin inner city area is much longer than the people in the Department of the Environment or the Department of Finance fully appreciate and understand. I speak unashamedly about the area I know best but I am sure this is true in relation to the larger urban areas in Cork, Limerick and Waterford and, to a lesser extend, in Galway. An extension to May 1994 is not enough if it is to be the final deadline. We have had the designated areas concept now since 1986 and it should be extended to 1995 or 1996 at which time we could examine a whole new set of incentives. At that time whatever will be developed under that tax regime will have been built and we should then do away with those kind of interventionist mechanisms and think afresh in the light of the experience and knowledge which we would have acquired.
The Minister is familiar with the committee on the economy of Dublin which met in the Mansion House under the chairmanship of the Lord Mayor which Alderman Michael Donnelly of Fianna Fáil, the previous chairman of the committee, attended. The officials from Dublin Corporation indicated that they had made submissions in the first instance  to the Department of the Environment about extending the deadline. Anyone in the construction industry will confirm that the deadline for the final operation of the regime of tax incentives for the urban designated areas in May 1994 is too tight. There is an attitude within some official thinking that if we keep the deadline tight we will bring forward investment now and that, of necessity, next year we will announce that we will add another year. That has a certain logical appeal to people who do not know the process fully. There is uncertainty in the market and an oversupply of retail and commercial office space which has been well documented. The lead-in time is too short, nothing will be gained and no significant investment will be made in the urban areas by virtue of threatening to have the cut-off point in 1994 instead of 1995 or 1996. The Minister should seriously consider nominating 1996 as the deadline which would mean that the system would have been in place for ten years. At that stage there could be a whole new package based on the experience of how the old regime had functioned. The acquisition and assembly time of sites is very time consuming as there could be three or four different ownership interests in relation to one building. It is quite different from the normal green field type operation. I know there are very good people in the Department of the Environment and Dublin Corporation who have had experience in these matters. However, the construction industry have a fair view regarding constraints and difficulties and they should be consulted.
Mr. B. Ahern Mr. B. Ahern
Mr. B. Ahern: I agree with the Deputy, but he should remember that planning permission has been granted for many sites on which nothing has been built since 1986.
Mr. Quinn Mr. Quinn
Mr. Quinn: I welcome the Minister's intervention and I know he is right. When George Redmond was the very effective assistant city manager in charge of planning — he is now retired — at any one time, before designation was introduced,  there was always far more by way of planning permission documents in existence than there was economic activity. I do not know the reason but that was the case. People get planning permission — they do not necessarily pay their architects the fees due — and then hold it for some reason or another, not exclusively economic or related to market conditions; there can be other factors. The argument that many planning permissions of the designated areas status are not moving at present and therefore an extension of the deadline from 1994 to 1996 will cause delay is not necessarily true. First of all, the designated status and the tax concessions that it conveys will not of themselves make an uneconomic proposition viable——
Mr. B. Ahern Mr. B. Ahern
Mr. B. Ahern: No, but when they are economic.
Mr. Quinn Mr. Quinn
Mr. Quinn: ——but they will assist those that are marginal.
Mr. B. Ahern Mr. B. Ahern
Mr. B. Ahern: Yes.
Mr. Quinn Mr. Quinn
Mr. Quinn: As the Institute of Taxation stated in a detailed paper published about three months ago, that will also bring forward investment. It does have the incentive impact that the Minister talks about. It will not transform the market demand, because the market demand is absolute and outside of that kind of consideration, but it will distort its location and the timetable of its delivery. In reply to the Minister's assertion that the Bill is an incentive to effort and enterprise, I argue that to simply impose May 1994 as the final cut-off date will not have the desired effect. For that reason, I strongly urge that the matter be reconsidered. The Labour Party may table an amendment in this regard on Committee Stage, but I am giving the Minister, through the Chair, the benefit of time for consideration in advance of Committee Stage in that the constraints of time may not allow us to go into the issue in great detail on Committee Stage.
I now turn to the taxation of co-operatives as another area of incentive and  enterprise in private growth. I have to confess that there are not too many agricultural co-operatives in the constituency of Dublin South-East. Indeed, our last few allotments were terminated fairly recently. I therefore speak on this subject with less direct experience than on the previous one. It is obvious that as the co-operatives become more involved in the agribusiness sector of the economy they will have a bigger productive role to play in the creation of wealth and the harnessing of private investment. By and large, the performance of co-operatives in the Irish agricultural economy in terms of job creation and job consolidation and in longevity in terms of their contribution to Irish society is in marked contrast to that of the beef barons. The added value in food processing that the large, publicly quoted agricultural co-operatives have made is dramatically different from that which the beef barons can point to.
The changes within the EC that will occur in the Common Agricultural Policy and the changes in world agricultural pricing that will result from the Uruguay Round of the GATT negotiations will of themselves put severe pressures on agricultural co-operatives. I should have thought, therefore, that introducing the co-operatives — and, as has been said, they are not all large — into a full frontal taxation regime of 40 per cent would be done more sensitively and with more caution. We know the Irish farming culture and that farmers' attitudes to grants and to the payment of taxes are diametrically opposed: grants should be received and tax should not be paid. It will take time to change that culture, but it is slowly changing and that change should be encouraged. For the benefit of the additional revenue that the Exchequer will gain, I cannot reconcile the way in which the regime is proposed and the reason that it is proposed, against the Minister's assertion, contained in his speech, that private effort and enterprise should be encouraged.
The change proposed to wear and tear allowances has been welcomed by people in the business of leasing equipment,  mostly to small businesses who find it difficult enough to get equity capital and find it very difficult to get loans from banks at reasonable rates and on reasonable conditions and who therefore avail of leasing opportunities on good terms from various leasing companies to get the basic equipment to run their operations, the industrial equipment to carry out processing, the vehicles necessary to distribute goods and the office equipment for administrative work. The shift in the regime to 15 per cent on a straight line over seven years with the final year at 10 per cent has been welcomed in the sense that it is a regime more easily understood and computed. However, the seven year period of leasing as set out in the wear and tear allowances does not fit in with the market practice operated by standard leasing companies in terms of the duration of leases in that the market conditions for leasing hire suggest a period of between three and five years, with a five-year maximum. I hope that the Minister will respond to this point. For the life of me, I cannot understand the way in which a Government so committed to the ideology of the market and a Department so versed in the knowledge and the intricacies, if not the mystical attractions, of the market have not decided to fit a taxation regime in terms of a time limit to the lease period that normally operates in the same market.
Again within the philosophical framework that the Minister set for himself in his speech, perhaps he will say whether in the course of reviewing the wear and tear allowance the Department considered what the market was actually doing and the way in which a tight fit and an economic fit could be achieved between those who are offering leasehold finance and those who are trying to run the system, that is, the Department of Finance and the Revenue Commissioners. The view expressed to me by specialists and professionals in this area is that the benefits to small companies of leasing as against purchase or hire purchase that did exist have now been eroded and people will be enticed or encouraged to question why they should  lease when they could buy at nearly similar prices. That might appear to be a good thing on the surface, but, in fact, for many people it will tie scarce capital into the buying of equipment when they could lease and hire the same equipment at a time when they need to focus their capital on other areas. The wear and tear allowances provision does not seem to have been properly handled by the Minister within the objectives set for the Finance Bill as an incentive to employment.
I wish to speak briefly about banks and financial institutions. The change in the bank levy and the proposal to make it dynamically interactive with corporation tax is a good measure. It introduces a degree of relationship between banking performance and the levy that might perhaps have been absent previously. There is an incentive for banks when they make profits and pay tax on them to offset those profits against the bank levy. Now that the banks have extracted their pound of flesh from the IBOA, perhaps they will be in a position to make the kind of profits here that they could be and should be making and which most of their small business customers believe they are making, in a way that would work positively with the bank levy in the manner set out in this Bill. There is a good deal of merit in the change that has been made, linking in a dynamic way the bank levy and corporation tax.
With regard to benefit in kind taxation, I suggested that there seems to be in the minds of some public officials a kind of auto-phobia, that benefit in kind in relation to access to motor cars is something that should be rigorously attacked. That is not the only type of benefit-in-kind. If we are to move towards a regime which will tax benefit-in-kind and fringe benefits, everything must be on the table. I note that the Minister is committed to introducing a provision in the second Finance Bill for 1992 to deal with the complex area of fringe benefits. Some of us have read some of the complex documentation to which the Minister referred, particularly that relating to Australia and New Zealand.
Leaving aside my ministerial pension,  my biggest benefit-in-kind as a result of being a Member of this House is my pension. My index linked pension on top of the public pay escalator is something one could not buy on the open commercial market. Three BMWs given free over my 46 years working — if I continue here for another 19 years — would not equate to the value of the benefit-in-kind any Deputy would acquire here after eight years service.
Mr. B. Ahern Mr. B. Ahern
Mr. B. Ahern: It depends on how long one lives on pension.
Mr. Quinn Mr. Quinn
Mr. Quinn: It does. The public pay salary bill will go up by at least 8 per cent this year. Lest anyone think I am attacking civil servants, we too are part of the public sector. Many people in the social partnership have their salaries and conditions linked to the public sector and they, too, are in this area.
Benefit-in-kind associated with conditions of employment in a particular area affects everyone. The apprentice working in a butcher shop can come home with sirloin beef without paying the full market price. Somebody working in the travel agent business will have access to cheaper holidays and people working in clothing shops get a chance to buy seconds. Every employment has a fringe benefit depending on the nature of the job. Politicians and civil servants have fringe benefits with regard to pensions. The provision does no just relate to cars, unless one is a Minister.
The public sector pay bill, including our salaries, increased by 8 per cent in 1990, by 9 per cent in 1991 and it will increase by 9 per cent in 1992 while inflation on average was from 3 to 3.3 per cent. If we are to go after benefit-in-kind and fringe benefits, we must be prepared to go all the way and look at the imputed cost of pension entitlements for public servants. The taxation system already does that with regard to bank officials and others who have access to subsidised mortgages and loans. If somebody gets a subsidised loan at 3 per cent, he is assesed as having benefit in kind of 7 per cent, bringing it up to 10 per cent. There is a  proposal in this Bill to increase this to 11 per cent.
The Minister is no doubt aware that in relation to the Programme for Economic and Social Progress negotiations and the attitude to public sector pay and conditions there is a growing feeling in the exposed market sector that attention is being focused on only some aspects of benefit-in-kind. If we want to promote enterprise, effort and incentive, why do we have to hammer only benefit-in-kind associated with somebody only getting a 1.6 litre or a 1.8 litre motor car as part of their remuneration package? The sentiments expressed by the sales representatives on the question of benefit-in-kind go deep. The Minister should take note of what I am saying because this problem will only surface in the second Finance Bill when we look at the question of fringe benefits.
This is all predicated on the view that if one taxes all fringe benefits as income we will get a more equitable base. That is correct in theory but by introducing this measure, we may not get the desired economic effect of effort, enterprise and employment creation which in turn underpins the idea of tax reduction for personal income. The ideology of the Progressive Democrats is that if you reduce personal income tax it will release monetary energy into the economy, which will have a big employment impact, that anything that would enable us to reduce personal income tax is to be encouraged and that, therefore, no holds should be barred in the scrutiny of benefits-in-kind and fringe benefits. That seems to be the intellectual pyramid of the arguments. The base on which that pyramid stands has not been proved.
We now have lower levels of personal taxation than we had for a long time and we have continually rising unemployment. Britain, the nearest market we can look to in terms of a political economy we can evaluate, went down that road and produced a situation in which many people had a lot of cash but the spending of that money did not result in the creation of significant extra  employment within that society. If the object of the exercise is the reduction of personal income tax resulting in more jobs being created, then there is no objective evidence available to me that proves that case. That is not to say that everyone of us would like to have to pay less personal income tax; of course we would. I am not saying that I am against the reduction of personal income tax but I am not arguing for its reduction on the basis that that would create more jobs because there is nothing to suggest that would be the case. Therefore, we must separate those two points.
On the question of benefit-in-kind and taxation, it is essential that the Government realise that if the object of the exercise is to promote effort and enterprise, getting people committed to their jobs and the maximisation of employment vis-à-vis their jobs, seeking markets abroad, this aspect is indeed important. For example, I can foresee a possibility that benefit-in-kind would focus on some of the fringe benefits attached to travel.
I will give an example. Most of us who have had to travel and be away from home from time to time — as part and parcel of our work abroad — have telephoned home, spoken to our wives and families, on occasions reassuring our parents; in other words just maintaining contact. Maintaining that level of personal communication harmony in our private lives is a desirable objective but it is essential if a long distance sales person is to be of a frame of mind that will enable him or her to undertake a committed day's work the following day.
That poses the question: is such a private telephone call to the wife, husband or mother deemed to be a benefit-in-kind, to be taxed, or will it be deemed to be a legitimate cost associated with the commercial activities of a long distance sales person? I suspect there is a very austere view that would separate one from the other, at which point one begins to lose the argument. Certainly one will begin to lose people's enthusiasm, those who want to go abroad to promote/sell goods and services for our economy. I use that example to illustrate a point that  overall fringe benefits and their role as a motivation to perform above the odds is much more than the crude calculation of external income brought onto the pitch so that it can be quantified, given equivalent monetary value and, consequently, taxed. If the Minister's objectives are to promote private effort and enterprise, then the psychological/factual role of those fringe benefits in encouraging people toward private effort and enterprise should be assessed before the baby is thrown out with the bath water.
I welcome the changes introduced in the patent income sphere because, from my knowledge, I understand there has been a small amount of abuse in this area particularly on the part of people in the unique position of being able to control both the ownership of the patent and the distribution of the product, those who could engage in transfer pricing. The proposal to limit such activity to the coffers of the company but not enable it spill into the pockets of the individual is a good one.
However, I would warn the Minister that, in abolishing a benefit that has been exploited to the point of abuse — I use my words advisedly — albeit on the part of a very small number of people, because only a very small number are capable of manipulating the price of the value of the patent to the point at which they can actually extract in any meaningful sense — illustrates that it is a devise that clearly did not work in promoting innovation and enterprise since it has been in existence since the mid-seventies with little or no impact, but its concept theory is not necessarily wrong.
I should have thought a contravailing measure would have been inserted elsewhere in this Bill to cover that aspect. I know the Minister has not entirely abolished it and that it remains in the case of companies but, if private enterprise and effort are to be the engine that characterises the privisions of this Bill, I contend the Minister has simply knocked another element designed to promote private enterprise and it has not been substituted by anything else. Therefore,  it can be clearly seen that the baby has been thrown out with the bath water.
At this moment the Government have consultants examining the possibility of constructing a science park in the greater Dublin area that would tap into the intellectual energy and creativity of people in our third level institutions, that is those in TCD, UCD and the Dublin Institute of Technology. As the House will be aware the concept of a science park is that of an industrial estate with brains, which is probably the best way one could describe it, attached to a university; that is not to assert ipso facto that always one will find brains in a university. The idea is to harness the intellectual energy of pure research into its practical application in a manner that might result in creative products that could be exploited commercially for the benefit of all.
Some of the greatest exponents of the science park concept have been the Israelis who have harnessed the intellectual energies of their universities into very productive spheres in science parks visibly associated with their universities. For example, we have one in Limerick, in Plessey, associated with Limerick University, a very progressive go ahead one. Among all the other requirements of those science parks to get up and running there will be the need for some replacement of the patent income, some incentive for the individual scientist, lecturer or researcher to pursue his or her field of study above and beyond the norm, perhaps that of a particular idea or theory that can be turned into a manufacturing success. If the Minister is committed to private enterprise and effort I contend he has closed one door but I do not see that he has opened another anywhere else. I would invite him to consider that in the context of the philosophical objective.
I have not gone into the question of petroleum taxation in any great detail because of its complexity and because there was a time constraint not merely on the Government in the production of this Bill but also on the Opposition in their endeavour to digest it. There is something extraordinary about petroleum exploration here, the fascination  it has both for politicians and punters, if I may use that phrase, Sir, conscious of your occasional weaknesses in that area. One stockbroker told me that in the early eighties the Irish stock market, a very small one, was able to raise something of the order of £100 million of speculative money for oil shares. Probably they would have been better off compiling a syndicate for the national lottery; certainly they would have had better times had they gone to Cheltenham for three days or up to Leopardstown.
If one examines the figures for the various quoted shares and sees the “highs” of £6, £7 and in some cases, £10, one will realise the money was there but now the share prices are down to single figures, in pennies, and that market has disappeared. Perhaps it smacks of the national lottery syndrome. Perhaps it is associated with so much of the literature of the western world — the “get rich and strike it rich”, in Klondike, in Alaskan or Californian terms.
There is no doubt but that there is this perception that there is a golden bonanza out there. We have endeavoured on different occasions in this House to devise a tax regime to promote oil exploration and investment in addition to the clear indication that there is an investment market out there that would regard oil shares with the degree of fairy-like belief that transcends all market probability, which nevertheless rushes ahead to invest. We still do not have a taxation regime that works to the point that we achieve significant levels of exploration that would reduce our dependency on imported oil and produce on-shore oil here.
Since there is at present no tax revenue or yield from this activity, I am prepared to suspend judgment on the operation of the petroleum taxation regime and the changes being proposed in this Bill because, in fairness, the previous regime did not produce any kind of activity. Therefore, any change which would result in any such activity should be carefully examined. We will have to come back to the point either on Committee  Stage or at a later stage when we have seen how it functions and operates.
I wish to refer to the proposed income and capital tax changes. Contrary to most people's beliefs, expectations or hopes, income tax will increase this year in real terms and the level of tax paid by most people — there will always be exceptions — will increase. Whatever about the mandarins in the Revenue Commissioners, the Department of Social Welfare and the Department of Finance, most people regard PRSI and income tax as two similar inter-connected taxes. There is little if any distinction now made — there is certainly none made in the minds of ordinary citizens — between PRSI and tax. Our analysis indicates — this figure may be verified by the Minister in his reply — that the total revenue take for the year 1991-92, including PRSI, will increase by approximately 7 per cent at a time when inflation will be 3.5 per cent. In broad terms, the Minister is taking more rather than less tax. Consequently, the framework set out by the Minister in page 7 of his speech about giving encouragement to private effort in enterprise will not be brought about as a result of this tax proposal.
Having made that broad general point on a macro scale, I wish to focus on the aspects of the personal income tax and capital gains tax proposals. With regard to personal income tax, it is clear, and will become clear when the employment committee are up and running, that there is a severe threshold barrier for people who are currently on social welfare and who have the possibility of getting employment for a wage of between £120 and £180 per week, depending on their personal circumstances, in that the taxation barrier at the point of shifting from social welfare income to employment, albeit at low wages, is too high and the associated penalties in transferring from dependency to employment make it impossible for a large number of people to cross that barrier. For example, there will be loss of entitlement in relation to the benefits-in-kind associated with people on social welfare — access to reduced rents if you are a local authority  tenant, access to medical card entitlement, etc. It would appear that the taxation system is preoccupied with people at the top end of the scale who are paying a lot of tax. The Progressive Democrats tail is not wagging the Fianna Fáil dog at this stage but lacerating it. However, when one looks at the official figures given for people paying the top level of tax this number is minuscule. Nevertheless, the concern still seems to be with them rather than with the people who pay low levels of tax. It is not sufficient for the Minister to say, as he can legitimately do in his reply, that as a result of this year's taxation provisions in the Finance Bill so many people will be taken out of the net altogether. This precisely reinforces the very point I am trying to make.
I believe we are trying to create a culture where the maximum number of people possible can be at work, where everybody who is at work pays some tax and where the more you earn the more you pay. The idea that there is a very large gap or threshold between the payment and the non-payment of tax on your income depending on whether you are at work or on social welfare is a self-imposed internal impediment to employment creation in our society; it is the engine which is driving the black economy in our society. Everyone in this House, including no doubt the Acting Chairman, have tangible and direct anecdotal experience of these things. By virtue of our job and our obligation to mix, meet and listen to people the anecdotal experience of a politician is different from that of someone who happens to be in business or a particular area of employment. It is an experience which has great statistical validity and, therefore, should be listened to. I will criticise the Bill severely in this area.
Like many other thousands of organisations, the Labour Party made a pre-budget submission. I know that these have a certain status in the Department of Finance irrespective of who happens to be Minister for Finance. We have to find a way within our taxation regime not only to reduce the overall level of  personal income tax which is too high as a proportion of income, notwithstanding the alleged impact it might have on job creation, but to ease people back into paid employment and paying tax. We are not doing this at present. I am not sure I have an instant set of answers which I can offer the Minister. However, I have some ideas and the people working for the Labour Party on the research side have some ideas and suggestions about the introduction of a low level of tax. It could very well be argued that we had such a tax before. In fact, it was the Labour Party in Government who took it out. I think there was an introductory tier of 25 per cent. Perhaps in the light of our experience now — I have no hesitation about being open to learning from our experience, mistakes we have made or changes in conditions — we should be looking at such a rate of tax for the first £1,500 or £1,000 of earned income.
Unless we do something very dramatic, a young semi-skilled person in their mid-twenties with one or two dependent children is destined in the present climate to permanent unemployment in our society. Indeed these frightening figures are contained in the Minister's speech, which may not necessarily be the fault of the Government — it is too easy to lacerate them. Notwithstanding the job creation efforts of the private sector, due to the demography of our society on the one hand and the continual shedding of agricultural labour on the other we are going to have an extra expenditure of £25 million in this year's budget because of the increases in unemployment. Many of the people who will be laid off or become unemployed will be condemned to a period of long term permanent unemployment unless we change the entry point of taxation for them. Many of the jobs being created on the margins pay that level of salary and, therefore, will run into the threshold to which I have referred.
The other area of personal taxation which the Bill confines itself to is capital taxation. I am amazed at the way in which the Government, who have again asserted their commitment to the promotion  of private effort in enterprise as a key feature of this Bill, have seen fit to change the sliding scale of capital taxation from 60 per cent to 30 per cent, which was the original sliding scale as I understand it. There is now a flat rate of 40 per cent which means that in some cases the incentives are not as great. I am not sure if this change is based on the review of the Government's experience or the Revenue Commissioners' analysis of the performance of this tax.
I am not sure what philosophy brought about this change. Is it a mania for mere arithmetic simplicity? Certainly I could understand it coming from anybody with responsibility for running the Revenue Commissioners in that it would make everything simple and clear, would reduce the level of computations and so on, but if that is the explanation let us hear it. There was a dynamic in the idea that if you made a quick killing on a capital gain you paid 60 per cent tax but the longer you held the investment the greater the risks and, therefore, the higher should be the reward. In that case the tax was at the rate of 30 per cent.
There is a case to be made for that argument, which I can understand. It means that people will be prepared to make a capital investment for a period of time because there is an in-built incentive and it may take a number of years for a particular project to mature. By holding the investment for three, four or five years less tax is paid. Now the tax rate is 40 per cent on a 24 hour and on a four year investment. I do not understand the logic behind that. There may be a reason that is self-evident but it is not evident to me. Perhaps the Minister can reconcile that with the comments in his speech about private enterprise and effort, but there is no incentive to private effort and enterprise in that change.
Car registration tax is one that all of us reluctantly recognise as being necessary. The revenue base of society has to be protected. As a result of the open market from 1993 we will get some tangible benefits, but we will also have to pay some  costs. However, we cannot afford to pay all the costs at the one time. None of us likes to pay more than we need for certain things, but the ordinary citizen recognises that we must pay car tax. The Minister and politicians did not receive many representations in relation to this matter. That shows that people understand that this tax must be paid.
There are other points I would like to put on the record of the House. They have been highlighted by people who have assisted us in evaluating this long Bill. Many people who have watched Finance Bills progress through this House have come to the conclusion that one cannot understand the thinking behind many of the provisions unless, as it were, one understood the conditions of the labour ward at the time the Bill was born. It is true to say that the minds of the “parents” were elsewhere; there was much going on in the Fianna Fáil Party as to who was going to be leader and what would happen in that much troubled political party. We saw more evidence of that yesterday and this morning.
Professionals in the field of taxation and economic management put forward a view I invite the Minister to consider and respond to. This Bill can be characterised as a bookkeeping exercise. It has, by and large, been drafted by civil servants for civil servants because in their mind the eye was off the ball and the Minister's energies were elsewhere. Many technical complexities had to be included, some of which were referred to such as the DIRT and VAT changes. It is the largest Finance Bill we have had in a long time, if not the largest in the history of the State. Considering those factors this was an opportunity for the Revenue Commissioners and Finance officials to set the record straight and clean the slate of many minor provisions that took up much time, were an aggravation and, in some cases, a source of annoyance to some people in the public service. That view has been expressed and no doubt the Minister heard it from others. It is in the interests of this body politic that that view be refuted or responded to. Otherwise the credibility  of this House will be somewhat diminished. I invite the Minister to consider this matter and respond in due course.
Last year on Committee Stage of the Finance Bill I tabled an amendment to the capital acquisitions tax code to deal with anomalies in relation to people who are in second unions, those who are living as brother and sister and those who are living under favourable private arrangements under which if the owner of the property dies the consequences of the present capital acquisitions tax regime can be quite substantial. The Minister's predecessor gave an undertaking to consider this matter in the context of this year's Finance Bill, but I regret it has not been dealt with. I am not holding the Minister responsible for that. I recognise there are many pressures on him at this time, but I am giving notice that I will again put down an amendment on this matter on Committee Stage.
I will not delay the House much longer but I would like to outline my concern about this matter in which I have a personal interest because I am partly affected. My attention was drawn to the matter by virtue of a letter from a constituent who had been married, got an annulment from the Catholic Church and entered into what was for her a second, totally bona fide sacramental marriage. She had the good fortune to have a child and was living happily in Dublin 6. It was brought to her attention by her accountants that in the eyes of the State they were a man and woman living together but for the purposes of law, and capital acquisitions tax they were strangers. The house which they jointly held was not in joint ownership, a slightly different legal tenure and was, for ease of arithmetic, valued at £100,000.
This woman was told that if her husband died and left, as any husband would, the balance of his interest in the house to her she would be deemed to be in receipt of a gift to the value of £50,000 from a taxation stranger. These people are practising Catholics and to them it was more important that they were deemed married in the eyes of the Church than in the eyes of the law. Under the  existing taxation regime this woman is entitled to a gift of only £10,000 tax free and she must pay capital acquisitions tax on the remaining £40,000. Being employed in the public service on an income under £20,000 she would not be in a position to pay the tax and under the rules and regulations of the Revenue Commissioners, she would have no option but to sell the house. I do not think anybody in this House would argue that this is acceptable or should be the consequence of our law. It is a totally different case if a neighbour or somebody else dies and leaves you £50,000 in his or her will and you would then have to pay tax on £40,000 out of the £50,000 at the current rate of capital acquisitions tax. The validity of paying capital acquisitions tax in that case is totally different from people who, for all intents and purposes, are living as husband and wife. Yet the rigours of the law and the taxation system which currently prevails require the events that I have just described to come into play.
The previous Minister for Finance was very reasonable on this point because at this stage it is not a matter of philosophical dispute but the way of getting round the problem. I accept that it is a fair principle that our taxation law should reflect the legal basis of society and not try to lead it. I accept also that the law in relation to marital breakdown, separation and subsequent second unions is still in the process of being reformed. When we were discussing this very matter on Committee Stage last year, the then Minister for Finance could have reasonably anticipated that the White Paper on marital breakdown would be published shortly and this could have created a sufficient signal to enable the Minister for Finance to anticipate to a certain extent the implementation of the recommendations in the White Paper and consequently make changes in the law.
The White Paper has not yet been published and the indications are that it will be some time before it is published — I am not fishing for information — because the Minister has enough problems from the fundamentalists without driving them  mad altogether with proposals to introduce divorce. There would be a stampede of cumann members from the fundamentalist wing of the Republican Party. Quite understandably until the issues of the right to travel and the right to information are resolved, the right to divorce will not be put on the agenda by this Administration. One can reasonably expect that the White Paper will be delayed until after the Final Stages of this Bill.
I ask the Minister to give serious consideration to this question, because it is not going to go away. It is becoming increasingly relevant because of the nature of our aging society. Many people who entered into these unions are now reaching the stage in life when inevitably one of the partners may die of old age, and then the taxation factors will come into play. Apropos the whole question of marital breakdown and divorce — my own personal position is a matter of public record — the trigger that ultimately brought about change in divorce laws in Italy and Spain, both Catholic countries like ourselves, was the question of property and the inheritance of property by one generation from another. Indeed the divorce rate in those countries has stabilised and is very low compared with that in the US or in Britain.
I can give another example of a problem which will have to be resolved by the Minister for Finance because he has responsibility for the public service. Should a teacher of other public servant die, her husband could apply to the Department of Education for the widower's pension but in the case of the couple I mentioned where they are married in the sacramental sense but not in the eyes of the State, the Minister for Education could not award a widower's pension because it would have to be awarded to her first partner, even though her first partner could have long since gone. That is another component of the difficulties those in second relationships have to face.
I invite the Minister to examine this problem and deal with it as best he can. I  think he can act quite reasonably without breaking the convention that was understandably asserted last year by the then Minister for Finance that taxation should reflect social law rather than lead it. In this particular case for the reasons to which I have already referred it would be timely, and it would not necessarily be stepping outside the confines of our present position, if capital acquisitions tax could accommodate the circumstances I have referred to.
I now wish to raise some other points which have been brought to my attention. There are provisions to increase the powers of the Revenue Commissioners which were referred to briefly by Deputy Noonan, and I now wish to put on record my party's view on these charges. If two or three years ago a Minister for Finance had indicated that additional powers were to be given to the Revenue Commissioners there would have been an outcry. Depending on the party spokesperson, the outcry would have been hysterical, very loud or very strong, undoubtedly it would have been very loud. However, two things have happened in the meantime.
First, those who have no discretion in the amount of tax they pay have become increasingly incensed at the level of tax evasion they read about. They can read about the judgments against certain individuals for very substantial sums of money in the Sunday newspapers. Most people in business cannot understand how someone can run up a debt of between £50,000 to £200,000 to the Revenue Commissioners having regard to the regular inspections of their books and the VAT inspections they have to comply with.
Second — I made this point very briefly yesterday during Deputy Noonan's contribution — the revelations of taxation malpractice that have emerged from the various inquiries, the inquiry into the Greencore scandal, the Telecom inquiry and the Beef Tribunal, and the difficulties that officials acting on behalf of the Revenue Comissioners had in terms of access to information and documentation would not have been considered normal  but now they have been recorded. This has changed the mood and the attitude of the public and therefore the political climate has changed; this disposes public opinion to allow the Minister to give the Revenue Commissioners those powers on one very important understanding — that it is the other side of the element of trust implicit in moving towards a system of self-assessment taxation.
The vast bulk of citizens will pay tax on the nail in accordance with what they legitimately assess themselves to be liable for. There will always be some area of doubt or speculation because of the ambiguity of some activities. The vast bulk of citizens want to be law abiding, want to pay their tax and want to have their accounts up to date and correctly lodged with the relevant authorities. There will be a minority who will not do that and who will avail of every opportunity to evade tax. We have seen some evidence of that.
I am very conscious of what we are doing and I am sure the Minister for Finance is conscious of what he is asking us to do. As people responsible for the administration of power we are asked to give to the Minister for Finance, and in turn to the Revenue Commissioners, what can only be described as draconian powers to intrude into the privacy of individuals for the purpose of ensuring that they pay tax. So far as the Labour Party are concerned those powers are given in the knowledge that they are necessary, based on the level of tax evasion on the one hand and the degree of obstruction that has become more widespread. Therefore, they are legitimately being given to the Revenue Commissioners to counteract those abuses. If, however, the Revenue Commissioners do not handle those powers with utmost sensitivity and confine their application, in the final analysis, to people to whom all previous types of inquiries, admonitions or directives have so far failed then the climate of political acceptability in which the powers are being given will be changed. I have to say that the language used by the Revenue Commissioners in relation to their standard communication to ordinary  citizens is unbelievably heavy and abusive. In my own case I got a demand for a tax payment, the first time I had received the demand, and basically it was inviting me out to the O.K. Corral by High Noon on Friday, within about 48 hours, if I had not paid up. Subsequently I spoke to one of the officials in the Revenue Commissioners and I was given the explanation that the computer was programmed to write this type of thing. It must be the most ill-tempered computer in the world, programmed by the crankiest set of programmers one could imagine. Now that they are being given extra draconian powers, the necessity of which is not to suit them, they have to be countervailed by a recognition that the vast majority of people want to pay tax, want to pay it on time and do not want a tax liability hanging over them, particularly one they had not known about. There is a number of other points that could be raised more effectively on Committee Stage.
Mr. B. Ahern Mr. B. Ahern
Mr. B. Ahern: I take the point about training because that is a very important aspect. Often we expect people who have not been trained to interpret our legislation.
Mr. Quinn Mr. Quinn
Mr. Quinn: I thank the Minister for his intervention. In fact, I did not make reference to that point. It was an omission on my part. In the course of arguing for that point the Minister had indicated that training would be available.
I should like to make reference to slot machines and the tax of £100 on the various video machines which are being used increasingly throughout the country. Representations have been made to me that in the seasonal caravan park area, where these machines are used by way of a distraction for the rainy days, when the weather prevents children and parents from being out and about, the sum of £60 which is being proposed is too high. Revenue will not accrue because the machines will be taken out and in any event we are talking about a caravan season which is no longer than three months. One should make a distinction  between slot machines and those machines which are in permanent arcades of amusement, with which we are familiar, and those in holiday locations. The revenue will not be forthcoming because the machines will not be provided, thus reducing facilities in caravan parks. In terms of equity if you accept that the season is three months for a caravan park or a similar type facility the levy should be proportionate, should be 25 per cent of the total cost and as a consequence closer to £25 than £60 — £60 implies a 60 per cent tourism season.
I have spoken at some length on the Bill and I have confined myself to the objectives which the Government have set. In my view the Bill will not create any additional employment. From that point of view it is a major disappointment and we will be opposing it on Second Stage. Many of the measures which existed for employment creation have been taken out and have not been replaced by other measures of employment creation even if the original measures which were removed were ones which had become the instruments of abuse over time. I do not understand the thinking of the people who put this Bill together. I cannot see the correlation between this kind of economic thinking — it does reflect a form of economic thinking — and that epitomised in the Department of Industry and Commerce and which is contained in the recommendations of the Culliton report. Those components will have to be explored in some detail at another time. We are facing an employment crisis and this Bill will have to provide for the funding of additional unemployment to the tune of £25 million which is the estimate of the increase in the live register.
The two subsidy schemes to which the Minister referred are no substitute — within the terms of reference of the Government's own ideology and that of their junior partner — for economic activity that could be stimulated by a Finance Bill which would protect sources of revenue as we move into 1993 and which would promote incentives to create  additional areas in which the private sector could invest.
In the whole area of underpinning the commercial State sector by providing equity capital for companies such as Bord na Móna and providing a certain coherence in the expenditure of the State companies such as An Bord Gáis and the ESB, and in the area of incentives for the commercial sector generally of semi-State bodies to find new markets and to promote new activities, there is a poverty of thinking running through this Bill. I should like to give the Minister one example that could possibly be used. There is no reason £2 million could not be taken of the IDA allocation for current account support and reassigned to the Department of Foreign Affairs in order to enable that Department to open up new embassies in Budapest, Prague, along with the embassy in Warsaw, not simply for the purpose of preparing ourselves for the entry of the three countries concerned into the European Community, which event will probably take place by the end of the century, but also to enable us to vigorously pursue the market opportunities there at present in a way that the IDA cannot do because of the system they operate. There is a whole raft of areas for job creation and job consolidation that are crying out for equity participation directly by the State or indirectly through the banks, and there is nothing in the Finance Bill that encourages that or makes it possible. There is a naïve belief in the private sector to the exclusion of a viable commercial role for our public sector. On top of that, that naïve belief in the private sector is then contradicted by the removal of many of the incentives that are set out in this Bill.
The Labour Party will be introducing a substantial number of amendments on Committee Stage and I hope we will have an opportunity to debate them. However, I would have to express considerable disappointment at the lack of imagination running through this Bill, its failure to address the many problems we have and the lost opportunities that it undoubtedly represents.
Mr. Dennehy Mr. Dennehy
 Mr. Dennehy: I am glad to have a chance at long last to welcome this Finance Bill. It will do the job it is intended to do, which is to underpin and support the objectives of the budget. It will help to maintain the consistent growth rates achieved in the past number of years and will continue the positive trends in the other major sectors of our economy, that is, the control of our debt ratio, the control of rates of inflation and borrowing for public expenditure.
There were words of criticism yesterday at the length of the Minister's contribution on this extensive Bill. Having sat through three times that length today it is obvious that there are many issues involved. I would question whether two hours spent at the initial stage will be in any way helpful in teasing out the Bill.
It was widely forecast that this would be a large and complex Bill and extremely difficult to put together because there are and will be major changes throughout Europe and at home in the coming 12 months. What is important is that it helps to highlight the underlying objectives of the Government since 1987. Both Governments have had a consistent policy and those policies are being maintained throughout the Bill. A great deal of work had obviously been put into this Bill and I hope that, when Deputy Quinn states that it is the largest Bill ever, it is not as a criticism, because the Bill is proof of the amount of work that has gone into it. The Minister also pointed out that because of the monetary changes to take place and the technical aspects of currency control etc., it will be essential to have a second Bill.
I listened with great interest to the two previous speakers, Deputies Quinn and Noonan, and I thought Deputy Noonan's words sounded familiar, and on checking the record of the House for 23 April last year it seemed that the wordprocessor had jammed on a programme because Deputy Noonan had made the same dismal forecasts then as he did yesterday. He said that there would be no growth, that there was no control over our finances and he criticised the cutting of the rates of income tax paid by the PAYE  sector in particular. Both he and Deputy Quinn were consistent in that they both got it wrong last April. They forecast zero growth rate but the actual outturn was 2 per cent against a forecast of 2.5 per cent. We must look at their forecast for this year in the context of their previous forecasts.
I listened carefully to what they said should be done under a number of headings. Both of these Deputies were key personnel in the Government of the mid-eighties, so we can examine their achievements at the time. Backbench Deputies, like myself, did not have the experience of being able to change the course of events at national level and are not responsible. However both Deputies Quinn and Noonan were directly responsible for what happened in the mid-eighties. Our national debt did not start in 1982. Our national debt doubled and it was Deputy Noonan who supervised much of that aspect of our economy. His opinions now must be measured against his own previous record. There is a credibility gap. He has consistently forecast a zero growth rate over the past three years. He has consistently criticised the cutting of the tax rates to be paid by PAYE workers and other provisions that we have been implementing in a positive fashion.
Deputy Quinn stated that it has been impossible up to now to put a correct tax regime in place for the oil research and petroleum area. That is why the Minister has devoted so much of the Bill to getting that right. It is important for our energy requirements and our economic wellbeing that we should have a proper tax regime that would encourage exploration. I hope that the Whitegate refinery will gain from the new initiatives and that it will be refurbished and upgraded. Whitegate is not just an essential source of employment but the source of an essential commodity for the country. I hope what the Minister has done here will help to secure the future of Whitegate and that money is spent on a major development there.
The forecasts of Deputy Quinn and Noonan must be examined in the context of their previous forecasts. They have  consistently got it wrong and I have brought along a number of the records which show that. In nearly all cases the targets set by the Government were exceeded and on each occasion Deputies Quinn and Noonan got their forecasts wrong. Deputy Noonan in particular is prone to doing this; it seems he cannot get away from this negative approach and continues to harp. At least Deputy Quinn had one or two positive comments to make. While I accept it is their job to oppose — if I was on the other side of the House I, too, would probably be critical of the Bill — they should recognise that positive progress has been made. They should recognise also that good things have happened that changes have been made and bear in mind what the position was in 1987 when we took over. While that is a highly emotive issue and it is easy to claim that the national debt was doubled and the economy was in a shambles in 1987, there was no growth and we were moving backwards.
Like every other commentator, I accept that our primary task is to create employment and that all our energy should be devoted to achieving that objective. Deputy Quinn was extremely critical of the Minister and kept referring to what he had to say in his speech. In his speech the Minister pointed out that between April 1987 and April 1991 net non-agricultural employment in the private sector rose by over 70,000. When Deputy Quinn and others comment on the increased PAYE tax take they must consider this factor — an extra 70,000 people are now paying income tax. We welcome this. These jobs were created through hard work and after the Government had taken some initiatives.
There are many other initiatives which were ignored by previous speakers. For instance, the enterprise development scheme has been introduced on a pilot basis in 12 areas. Public agencies have got involved in this scheme and have made the necessary arrangements. People have made the point to me that this does not count, but it should be noted that £60 million is being set aside in 1992  for this scheme. This positive point should be highlighted on all sides of the House. I hope that during the year we will take some practical steps to improve the present position.
We must also ensure that those at work are treated fairly. That is the reason I strongly welcome the further reduction in the rates of income tax. It is incredible that Deputy Noonan criticised the cut of 10 per cent in the tax rates paid by PAYE workers made by both this and the previous Government. He also criticised the cuts in both the higher and standard rates. I wish to draw the attention of PAYE workers to the fact that Deputy Noonan has consistently criticised, during the past two years and again yesterday, cutting the rates of tax paid by them. He argued that the rates should not have been cut. I would like to know if this is the collective view of the Fine Gael Party or just the view of Deputy Noonan. Perhaps the next speaker will have something to say about this. Deputy Noonan said yesterday that this Bill will benefit no one and that the rates should not be cut.
I find Deputy Quinn's view on this issue fascinating. Both this and the previous Government have removed thousands of people from the tax net, I think the figure is approximately 180,000, but a short while ago Deputy Quinn stated that no one should be exempt — I understand that this is in conflict with the view of his own party — and that every person at work, regardless of income should pay tax. I find this view fascinating considering that we have consistently stated that so far as possible those in the lower income bracket should be exempt.
Deputy Noonan stated that the cuts will make no difference but this is not correct. The major package of income tax reliefs as outlined in the early sections of the Bill will cost the State £280 million in a full year and result in the marginal tax rates being reduced for over 700,000 taxpayers. Therefore it is not true to say that they will make no difference, and such a comment should not be made by a spokesperson on Finance.
Deputy Noonan was scathing in his  criticism of the way young people spend their hard earned cash. He mentioned that they spend their money on records. This amounts to gross interference and is something we could well do without. They have earned their money the hard way and they are entitled to spend it any way they wish. The last thing we need is that kind of Fascist approach to the way people spend their hard earned money.
Radical changes have been made in the tax regime, including self-assessment to which Deputy Quinn referred in his closing remarks. These changes are being implemented in a fair and positive fashion. However, the change to a self-assessment system has been criticised in particular by the tax inspectors' union representatives at their annual conference at which they trotted out figures which are incorrect. Last month when the chairman of the Revenue Commissioners attended the Committee of Accounts as a witness he informed the committee that under the old system the ratio in relation to errors was 3:1, and because decisions were made on the basis of assessments he accepted that the ratio would always be 3:1. This proved to be very demoralising for the public. Indeed, I have the figures here for last year which show the total amount of arrears and the amount that will be collected. As I said, the ratio in relation to errors under the old system was 3:1 and that was the reason we had to change over to the self-assessment system.
In an effort to police this system, certain changes had to be made. Like Deputy Quinn, I welcomed these changes. The Committee of Public Accounts were given an assurance by the Chairman of the Revenue Commissioners that they would help the compliant taxpayer — the 95 per cent of taxpayers who pay their taxes on time and who do not try to dodge or fiddle their taxes. He also stated that they would have to change their approach to the language used in demand notices, to privacy for those who wish to question their bills and to policing the dodgers rather than the compliant taxpayer. These changes are being made by the Government and they are more than welcome.  I want tax officials to spend their time chasing the small percentage of taxpayers who are fiddling the system, not the taxpayer who is complying with the law, and we have been given an assurance that this will happen.
Changes are needed in the structure which will allow checking of company records and various other matters. This is the big area in which fraud and tax avoidance took place and I welcome sections 210 to 226 which will provide major changes in this area and allow Revenue to chase rogues. I do not believe that innocent people will be affected because the Chairman of the Revenue Commissioners has assured us that the system will be operated in a humane and sensible fashion.
I welcome the Minister's announcement that proper training will be provided for the officials involved. The Minister is right in saying that, very often, legislation is brought in and expected to be implemented by people who have not been trained in its requirements. Things are changing very fast in the area of finance, particularly in regard to taxation. However, I welcome the changes, the cuts in the tax rate and the new approach to the “compliant” taxpayer.
I am worried by the suggestions from Deputies Noonan and Quinn that we should not cut the rate of taxation for the PAYE worker and that we should not exclude people because they do not earn enough money to pay tax. I disagree vehemently with those two suggestions. The question of public confidence in the taxation system, methods and offices is crucial because the person paying a bill legitimately should feel that everybody else is doing the same and that those who are not will be penalised.
Deputies who are Members of the Committee of Public Accounts had the opportunity to raise many of these issues with the Chairman of the Revenue Commissioners. I asked a question, which Deputy Quinn raised this morning: How can a company run up such large arrears? It was explained how quickly the figure can be arrived at in a large company because they may employ 100 people.  When you take into consideration their turnover, PRSI, taxation, VAT and so on, it is obvious that the figure can accumulate very rapidly. We must explain these facts to the public in a clear, concise fashion. If a company owe £100,000 or £200,000 we must establish the duration over which it is spread, how many people were employed and a breakdown of the figures. It is not enough to just give a gross figure because it is demoralising. We need a morale boost for the paying public, which can be done if we examine the situation properly. Most of the figures are trotted out by people who say that we need more jobs in an area, it is used as a lever to exert pressure for extra tax inspectors, etc. It is probably a fair strategy. The practice existed because of the old system of estimation but we have been getting away from that and we must pursue the new programme very vigorously. The scheme must be made as simple as possible for the taxpayer and we have had an assurance that this will be done.
Last year Deputy O'Dea — now a Minister of State — had proposals in relation to automatic returns for people on marginal rates of tax. I hope we will pursue these proposals and that it will be automatic for people who have dropped out of the system over a number of years to get marginal relief the following years, although I know that can be difficult to operate in a practical fashion. However, if the Revenue Commissioners are willing to simplify matters, it can be done. At least we are moving in the right direction but it is important for the public to know how much is owed and, more importantly, who owes it. Figures of that kind must be made available.
Deputy Quinn, while accepting the changes in sections 210 to 226, still described them as draconian powers. However, he said that his party would accept them while keeping an eye on the situation. We will all keep an eye on the situation and if anyone finds an abuse of the system it is their duty to point it out and to challenge it. The taxpayers, charter, which has been devised, should  be implemented in as positive a manner as possible which would give the taxpayer the right to all this information. They are the people who keep the State going and they have the right to know.
One of my hobby-horses is the disabled driver's scheme. When I came into this House I found that a person had to be almost totally incapacitated before he or she qualified for this scheme. Changes were made in legislation which included hand amputees, but then we discovered that a person had to have both hands amputated before qualifying. There are very few single hand amputees and I plead with the Minister to include them in the scheme because they are obviously disabled and must have their cars modified. It would not cost much to include that category.
Many Members referred to decentralisation of offices, a topic very dear to my heart at present following the Taoiseach's announcement last Saturday that the Central Statistics Office would be decentralised to my constituency, Cork South-Central, specifically Mahon, providing approximately 450 new jobs in the offices plus the ancillary support services. There will be an estimated income of £8 million extra in wages for the area each year. I welcome that unreservedly and I also support the principle of decentralisation generally.
In 1983 the Fine Gael Minister for Finance, Deputy Noonan, stated that he would save the public £1 million by scrapping the decentralisation programme which was then in place. In many cases sites had been purchased in various towns and cities throughout the country in preparation for decentralisation but the then Minister — or one of his colleagues — decided to scrap the programme for the sake of a saving of £1 million. Contrast that with the feelings of the people of Mahon last week. The news that a major enterprise was arriving in their area was both a morale boost and a commercial boost. That is the kind of progress the Government have been making. Despite the fact that a Fine Gael Deputy and former Minister  asked here about a month ago that the office go to Mahon, the reaction from one Cork Fine Gael Deputy at least was that the location of the office was a political scandal, that it was located on the wrong side of the city — another negative reaction. I welcome the CSO to Mahon in Cork and hope that the decentralisation programme will long continue to expand to other areas.
The designated areas scheme was mentioned yesterday. I am a little critical of that scheme because of its previous record. Tax concessions apply in areas identified under the scheme. Yesterday Deputy Noonan took full credit for the scheme; in fact, I seem to recall him saying that he introduced it. The scheme introduced by Deputy Noonan had the result in Cork in 1985 of an area being designated but not a penny being invested in the area afterwards. At the time of designation the area was known as “the golden triangle” because people were mystified that just two and a half miles from the city such designation could be decided. That political decision has not resulted in any investment in the area. It is only now that the designated area scheme is becoming popular in the Cork area because, for political reasons, the wrong locations were identified back in 1985.
To try to broaden the tax base, as recommended by the Taxation Commission and others, the Minister is suggesting various changes, including the abolition of tax shelters. It is interesting that both Deputies Quinn and Noonan spoke about this issue. I might add that they spoke about the issue in a very selective way. This morning Deputy Quinn talked about the Financial Services Centre in Dublin. Yesterday Deputy Noonan also spoke about the centre and concentrated his remarks in that regard on Shannon. He said that tax shelters were not always wrong and pointed to the example of Shannon. I ask Deputy Noonan to be a little consistent.
For a long time I have been worried about the tax shelter provided to Shannon, particularly because of the unfair disadvantage in competition faced by  other parts of the country. In the past couple of months we have heard much about Shannon airport, the question of its fly-over and so on, but we have not heard about the unfair tax shelter that allows Shannon, and SFADCo specifically, to compete against other airports. The revised figures for public services for 1992 cause me concern in relation to Shannon. For instance, under tourism and traffic development, £8.9 million will be made available to SFADCo mainly for promotion costs, staff costs and the general marketing of Shannon airport and related areas. I am led to believe that at least part of the money is being used to encourage the promoters of charter flights to fly into Shannon when they would normally have taken their chance on the open market and would have gone to the area they wanted to visit. Those people are being offered inducements to fly into Shannon and it is my understanding that the funding for the facilities made available is coming from the budget. I am concerned that the funding for promotional activities is being provided by means of a tax shelter. I ask Deputy Noonan why he considers that the tax shelter for Shannon is all right. Is it because Shannon is in his area? What about the fate of areas such as Cork which have had to struggle at a great disadvantage? In 1984, as Lord Mayor of Cork, I met the task force set up to try to compensate in some way for the loss of Fords, Dunlops and 37 other companies during 1982 and 1983. I then pointed out that Shannon enjoyed an unfair advantage in its marketing budget. Separate from the budget, the same area is benefiting from promotional activities. Representatives from Shannon are able to operate from offices very close to Bord Fáilte, the IDA and other promotional bodies throughout the UK and in countries such as Germany. It was initially envisaged that the promotional money would be used to encourage people from the United States to come to Ireland's main airport, Shannon. I subscribed to that view 20 years ago. I now say, to Deputy Noonan in particular, that the tax shelter for Shannon will have to be  examined very critically. Those who promote, work in and take business through Cork airport, for example, are not playing on the level pitch that we like to talk about. They are not playing on the level pitch to the extent of the £26 million available to SFADCo under industrial development and they are not playing on that pitch to the extent of the nearly £9 million provided under tourism and traffic development.
If a case were made that the money should be made available to promote the mid-west region I should examine that proposal and I should go along with it if it was good. However, I should have to question the possibility of duplication. I should also have to question provisions that would allow the description of expenditure, found in any company finance document, as “other”. I question the allocation of £5,293,000 under the category “other” a sum that is not explained in any way. At times the term “miscellaneous” is used to explaind such expenditure. I question such accounting and support of that kind.
As I said earlier, Deputy Quinn defended the tax shelter applying to the Financial Services Centre in Dublin. If there is to be a SFADCo there will have to be a similar regional development body for areas of this country that are suffering. There will have to be equality of opportunity, which does not exist at present. I am not hung up in the “Us versus Dublin” lobby, I accept that any capital city will have unfair advantages in that assistance will seep in under almost every category. That is the reason for my defence of this Government's decentralisation programme and my condemnation of the failure of the 1982-87 Government to do anything about that. I do have to consider aspects of tax shelter arrangements and I do question whether it is right to pick out a particular area and work on that area only.
I welcome the Minister's decision to change suggestions for the licensing of public houses. Previous speakers have spoken about a lobby on this matter, I consider that it was a very genuine lobby.  Those of us who considered the original proposals felt that they provided for a very crude mechanism to apply the Minister's intentions. I subscribe to the Minister's intentions. I recognise that he is trying to relate the value of a licence to the turnover of a premises. Those of us who come from rural areas and the provinces pointed out the difference between a public house in central Dublin and one down the country.
I support the Minister's proposal. The vintners in general do not have any qualms about doubling their licence fee. They are happy with what the Minister is doing. Some of them have expressed anxiety about a tax rates certificate and having to have their affairs in order before getting a licence. There should be a limit within which all of this has to be done but I totally support the principle which requires that everyone in business should have their tax affairs in order.
With regard to growth rates and so on, we only dropped by a quarter of a percentage point from our forecast last year. Exports held up and our general performance was excellent. Our prospects are better now. Those of us associated with the British-Irish Inter-Parliamentary tier were aware of the stagnation in Britain because of the impending election. The uncertainty affected investment and performance there. The British economy is getting back on line and the London index has shown a rapid recovery over the past week or two. We will benefit from that. The targets set out in this year's budget and incorporated in the Finance Bill will be met.
The changes in the DIRT regime are essential because of what will happen at the end of the year and the changes seem to be accepted by previous speakers. It is appropriate for Ministers to anticipate what will happen at the end of the year and deal with it at an early stage. We should not run around like headless chickens as we did in 1986 and 1987. Despite massive unemployment there is not the same feeling of despair as existed during those years. People know that  efforts have been made and continue to be made to improve employment.
Last year during the budget debate I suggested that we should reduce the unemployment figures significantly by, for instance, aiding the smallholder drawing social welfare to become an economic unit, so as not to have to rely on social welfare. It was suggested that if we did that we would just be massaging the figures. There are other ways in which we can reduce the numbers on the live register, for instance through job sharing, where there is potential for the creation of up to 30,000 jobs. The labour force survey showed that in the public and private sectors and in manufacturing industry 800,000 people are employed. A large number of those people are anxious to share jobs. There must be a programme supported with income tax incentives to encourage change. If we take someone off the live register we will save on social welfare and gain in PRSI contributions. Given that scenario we can spend a lot under the income tax heading to provide an incentive for job sharing. The potential in this area is massive. I am aware of several dozen people who would welcome an opportunity to job share. The Minister should look carefully at this proposal, because even if only 4 per cent of people in the workforce agreed to share a job it would create 16,000 jobs. People should not say that that would be just massaging the figures on the live register.
A retired colleague of mine spent a tremendous amount of time and effort working the proposals out. If people shared jobs they could save on expenses like transport, child minding costs and subsistence costs. That, coupled with an income tax incentive, would induce many people to job share. There is no reason for delay in implementing my proposals. These proposals could be discussed by the committee on employment, with or without certain groupings, and I hope it will lead to a positive outcome.
Our finances are related very much to the income from EC Structural Funds and so on over the past few years. Despite criticism with regard to these funds, I  assure the electorate that the money has been used extremely well. Opposition spokespeople in Cork South Central, and particularly in Cork North Central, have suggested that Cork did not get their share of funds and that the Government mismanaged funds which were being siphoned off into Dublin and so on. Over the past two months we saw changes in the thinking in the Cork area, because, for the first time, the local media have published figures relating to many projects being funded in Cork. They have come out with a figure of £300 million spent in the Cork area for roads, bridges and our proposed river crossing, giving the lie to suggestions from across the House that these funds have been mismanaged. I would request that a fairly simple guide to the various programmes being undertaken with regional funding be published for public consumption because there is a great deal of confusion abroad about them. I served on the monitoring committee representing the southwest region, representing Cork Corporation, when I discovered there was a massive amount of paperwork involved. The details of the programmes have been printed and have been adhered to since 1987. The public should be made aware of exactly what is taking place at present and what will happen in the future under the terms of these programmes in their respective areas. We should endeavour to produce some type of guidelines for each region.
Of course there is always a temptation for Members of the Opposition parties, perhaps not to tell lies but rather fiddle about somewhat with the truth. In turn, this leads to public morale being undermined or to people being disillusioned by the misuse of figures in this respect. Therefore it would be very worthwhile that a summary be produced and published of the actual spending on each programme in each area.
The two main elements of reform contained in the 1987 Finance Act were the phased reduction in the standard rate of corporation tax with a parallel reduction in the accelerated capital allowance for industrial buildings, plant and machinery.  As the House will be aware, the standard rate of 47 per cent was reduced to 43 per cent with effect from April 1988 and to 40 per cent from April 1989, with all of the other capital allowances and so on having being reduced under similar phases from 100 per cent to 75 per cent and then to 50 per cent. At the same time the corporation tax structure was simplified to ensure that two rates only would apply after 1990, that is the standard rate and the special 10 per cent rate for manufacturing and certain other activities to which I have referred.
Parallel with those reductions the actual income tax paid has been drastically reduced. Up to 1987 the electorate could never have visualised how the State could cut taxation rates since it had never happened previously in our history. While they have been reduced by ten to 12 percentage points, constituting the main thrust of taxation reform, these reductions have been criticised by Opposition spokespersons. That type of negative, critical approach must not be allowed to continue. Rather the Opposition will have to acknowledge that they got it wrong in 1987, 1988 and 1989 and perhaps the Government are right this time around. I congratulate the Minister on continuing that taxation reform-reduction.
I support the curtailment of tax relief in certain areas, such as tax shelters and so on. No doubt on Committee Stage we will have a greater opportunity to discuss economic indicators and the finer points on which the provisions of this Bill have been based. I look forward to that debate. I fully support this Bill, the production of which has entailed an enormous amount of work and I wish the Minister well in its implementation.
Mr. Finucane Mr. Finucane
Mr. Finucane: I have listened to the many contributions made so far on this Finance Bill. I want to pick up a few comments of Deputy Dennehy. In this respect it is regrettable that Members tend to engage in giving historic lessons, reverting to the past, because we can all revert to periods in our financial history  and point the finger at certain neglect. I prefer to be more positive and point the way forward.
Much of the theme of Deputy Dennehy's contribution was a criticism of the remarks of my party's spokesperson, Deputy Michael Noonan, in defence of whom I want to take issue with a number of points Deputy Dennehy made. For example, Deputy Dennehy accused Deputy Noonan of having an almost fascist-like approach to young people's indiscriminate purchase of records and so on. When Deputy Noonan made that point yesterday I think he was referring to much of the money leaving the country, not necessarily creating jobs here. It is important to put these matters into their proper perspective.
In relation to Shannon and the tax haven there it must be said that that has been a success story vis-á-vis the creation of jobs. In particular there has been the success story of Mr. Tony Ryan. We should built on such successes. In relation to the Shannon Free Airport Development Company there appears to be a certain amount of envy of its successes. I might point out to Deputy Dennehy that SFADCo is entirely dependent on Government funding. If the Government are really committed to regionalisation, the overall concept of subsidiarity, they should be building on the successes of SFADCo. Therefore, it ill behoves Deputy Dennehy to knock SFADCo. Incidentally I might point out that SFADCo is not in Deputy Noonan's constituency as he represents Limerick East. Indeed there was a clear indication of the feelings about SFADCo in the recent marches in Limerick when up to 30,000 people marched in favour of its status, its importance as an economic lifeline in the area being recognised. I would prefer to hail their successes. Rather than a Fianna Fáil spokesman such as Deputy Dennehy coming in and criticising SFADCo it would be much better if he endeavoured to build on their successes in his region in Cork. Indeed in relation to industrial policy they might well have a few lessons of benefit for the people of Cork.
In regard to decentralisation I have to  point out that I fully support its concept, that of locating people in various offices throughout the country, building up strong bases there vital for local economies and for cities such as Limerick and Cork. We look forward to the arrival of the Revenue personnel to Limerick in the near future, they have already moved in to Nenagh and Ennis, giving the local economies a great injection.
For example, Deputy Dennehy mentioned a certain Cork Fine Gael Deputy saying it was a scandal to locate in that region. In our local patches, whether they be in Cork North-Central, Cork South-Central, Limerick West or Limerick East, we all like to attract the best possible facilities. In that way it would have been most remiss of that Deputy not to have fought for his constituency. I am sure the Minister of State, Deputy Wallace, would have liked such location to have taken place in his constituency but, rather than engage in any triumphalism in such circumstances, we should all welcome such decentralisation no matter where it occurs.
Any analysis of this Finance Bill must demonstrate how complex and comprehensive are its provisions, many included to prepare us for the forthcoming EC internal market. In his introductory remarks the Minister said that his overall objective was to support the fight against unemployment. It is questionable whether this can be achieved under the provisions of this Bill. We are all aware that we now have in excess of 270,000 people unemployed with in excess of 30,000 people participating in various training courses, readily demonstrating how critical is the present position. For example, at the point at which we discussed last year's Finance Bill the unemployment figure stood at 246,000. When Deputy Dennehy referred to Deputy Michael Noonan having got stuck in gear, contending that his contribution was somewhat similar to that of last year, I might remind him that, having listened to his — that is Deputy Dennehy's contribution last year — I am afraid it was indeed similar to the contribution he made today in that it appeared to represent  merely a lesson in history vis-à-vis past excesses rather than point to the future in a positive fashion. We must acknowledge that the unemployment position has deteriorated since last year in that there were last year in the region of 246,000 whereas this year there are well over 270,000 people unemployed. Who could point to that as representing a success story? It cannot be claimed that the Government have been successful in this area.
Any analysis of this Finance Bill would demonstrate very few areas in which there are any incentives being given for the creation of additional employment. I am talking about permanent employment. I am not talking about temporary jobs, training courses which, in many cases, do not lead to jobs; I am not speaking of social employment schemes; I am talking about long-standing, permanent jobs that will withstand the test of time. Any analysis of the provisions of this Bill does not point to the creation of such jobs. Indeed some of the proposed taxation measures may well have the opposite effect, leading to loss of jobs.
While reducing tax rates is desirable there has been no serious effort at achieving real tax reform. Here again Deputy Dennehy got it wrong.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
Dáil Éireann 418 Finance Bill, 1992: Second Stage (Resumed).