Dáil Éireann - Volume 487 - 18 February, 1998
Finance Bill, 1998: Second Stage (Resumed).
Question again proposed: “That the Bill be now read a Second Time.”
Mr. Rabbitte Mr. Rabbitte
Mr. Rabbitte: Last night I dealt with the contributions of Fianna Fáil Deputies who had contributed to the debate. Specifically I dealt with the fact that they seem aggrieved because of the unanimous description of the budget and the Finance Bill outside the House as favouring the rich. It is suggested that it has blatantly skewed the tax code in favour of the better off. To support that point of view, I quoted the conclusions of the Conference of Religious in Ireland who set out their basis for alleging that this has been the most divisive budget introduced in recent years and it has exacerbated the gap between the well off and those on lower to middle incomes. Some Fianna Fáil Deputies evinced a great deal of heartache that the Finance Bill should be described in that fashion. The Finance Bill faithfully reflects the measures outlined on budget day. It includes additional measures to which the Minister has drawn attention — he indicated a number of important areas where he wishes to bring forward amendment on Committee Stage.
It is extraordinary that, having moved the date forward for the budget, the Minister told the House on Second Stage that, in respect of major parts of the Bill, it is his intention to put forward on Committee Stage significant amendments which the Opposition spokespersons will then see for the first time. The Finance Bill is notorious for being the subject of lobbying. It is inevitable that vested interest groups will seek to influence the terms of the Finance Bill from those announced on budget day. It is entirely unacceptable that at the last minute the Minister should come into the House with a new raft of highly complex amendments and the Opposition spokespersons are expected, on the hoof, to respond to them. As recently as 1994 the Taoiseach, then Minister for Finance, brought in an amendment at the end of four days on Committee Stage to change the residential requirements for tax exiles.
Mr. McCreevy Mr. McCreevy
Mr. McCreevy: Similar action was taken in 1995, 1996 and 1997 when the Deputy was in Government.
Mr. Rabbitte Mr. Rabbitte
 Mr. Rabbitte: Regardless of what Government takes such action, I do not defend the practice. Amendments introduced during the period I was in Government did not have the dubious connotations of the provision in respect of tax exiles.
In general the Finance Bill flies in the face of the pre-budget consensus that tax relief ought to be targeted at lower to middle income earners and should continue to facilitate the recent impetus to ease the transition from welfare to work. The decision by the Minister, Deputy McCreevy, to skew the tax measures for the benefit of high and super earners was further exacerbated by his completely unexpected and as yet inadequately explained decision to halve capital gains tax. That decision has rubbed salt in the wounds of the hundreds of thousands of workers who have borne the brunt of the income tax burden in the past two decades and who reasonably expected to be the focus of significant relief on this occasion, given the propitious public finances position inherited by the Minister from the previous Government.
The Minister then decided to add insult to injury by mounting an unprecedented assault on small savers in credit unions and refusing to take tangible action to cope with the flood of tax evasion scandals alleged in connection with certain financial institutions. The Minister's decision to narrow or limit certain tax avoidance shelters is presented as tackling those scandals, but it does nothing of the kind. The credit union debacle is most revealing in that it betrays the mindset of the Government. After eight short months it has apparently grown remote from ordinary people, is shown to know little about small savers and to care less.
I accept the logic of those who argue that the attack on the credit union movement is perfectly consistent with the track record of the Minister, Deputy McCreevy, as the author of the infamous dirty dozen cuts in social welfare. That, however, does not explain why he was permitted by Government to take a sledge hammer to the credit union movement. The vain attempt by the Taoiseach to resile from complicity in this petty deed is entirely lacking in credibility, given that the Finance Bill was approved by the Cabinet. It is an extraordinary commentary on this whole affair that not a single member of the Cabinet has supported the decision of the Minister for Finance. The Taoiseach sought, in his only public comment, to resile from the decision taken. That gives the impression to the public, which is presumably the purpose, that the assault on the credit union movement and the small saver was either a Progressive Democrats manoeuvre or a solo run by the Minister.
The public ought to be told and to understand that Finance Bills cannot come before the House without being approved by Cabinet. I am sure a sub-committee of Ministers dealt with the detail of the Finance Bill before it was introduced. It is wrong for spin doctors to insinuate that the Department of Finance is the  author of this decision. This was a political decision taken at the Cabinet table by a Government that is out of touch, in the full knowledge of the provisions of the Finance Bill, and the Taoiseach and each Minister is as culpable as is the Minister, Deputy McCreevy. It is wrong to imply that the move came from the Department of Finance in Merrion Street. This matter came to light at the time I introduced the Credit Union Act, 1997. I am aware of what transpired on that occasion — I had an informal agreement with the Department of Finance. That Department cannot be blamed for this measure. It was a political decision, from which the Minister had to climb down.
It is regrettable, after eight months in office, the party of the plain people does not have a single representative at the Cabinet table who is in touch with ordinary people. It seems the Taoiseach will be obliged to find a place in Cabinet for Deputy Healy-Rae rather than permit him to continue to determine Government policy from outside. Deputy Healy-Rae is the humane face of the Government, and long may he thrive. The disturbing question remains, however, would the climb-down on credit unions have come about were there not two critical by-elections in prospect?
The sheer panic of the Government in the face of the uprising of the credit union movement is evident from three developments: the attempt by the Taoiseach to repudiate complicity, the unprecedented publication by the Minister, Deputy McCreevy, of private correspondence from the league and the emergence of Deputy O'Malley to protest that “this was not a PD decision” and to seek to leave the impression that the first port of call of the average Progressive Democrats member is the local credit union. None of those panic responses is credible and they do not reflect credit on the Government parties.
That was a bridge too far for ordinary people who, in the main, are not experts on the workings of the Stock Exchange but understand perfectly well when, for example, four company directors benefit in a single transaction, to the tune of almost £1 million, from the slashing of capital gains tax. Ordinary people understand that, but they cannot understand why the few bob on which they have already paid tax ought to be subject to the punitive measures suggested by the Minister and that pensioners and older people who were in the habit of saving throughout their lives ought to be required, for the first time in the history of financial institutions, to reveal their dividend earnings to the Revenue Commissioners. This measure does not apply to any other financial institution in the State notwithstanding what has been revealed about some financial institutions recently. No other financial institution has had such an obligation imposed on it. This Government chose to make a start with the credit union movement.
It suited Fianna Fáil and the Progressive Democrats when the Progressive Democrats were  claimed to have been the authors of the particularly harsh and regressive tax measures in the recent budget. That was good for what remained of the Progressive Democrats macho image but, as they fight in the heartland of the party founder's constituency in the by-election, they are determined not to accept blame for the credit union debacle. Faster than one could produce a phoney opinion poll, the Progressive Democrats set out to drop the Minister in the mire. There is no doubt that the disgust publicly expressed by the secretary of the Minister's own comhairle ceantar is typical, not only of the reaction of most voters, but of the response of ordinary Fianna Fáil members. It would have suited Fianna Fáil to let the Progressive Democrats take the blame for that but Deputy O'Malley is determined that should not happen.
Following his announcement in the House yesterday, the Minister, Deputy McCreevy, has been routed by the plain people of Ireland in a manner reminiscent of the rout at Vinegar Hill in 1798, at least until after the by-elections and for the rest of 1998. The Minister, for all his protestations, does not understand the mutual self-help philosophy of the credit unions or the fact that the 1997 Credit Union Act will accelerate the rate of reinvestment in local communities. That is a critical point. Allied Irish Banks today announced profits in the region of £580 million which amounts to more that £10 million profit per week. In Single Market conditions, it is important that our banking institutions, such as they are, have a certain critical mass. I am not commenting one way or another on that although there are many points which could be made about it on another occasion. One of the major features of the new Credit Union Act is that it enables the credit union movement to reinvest shareholders' money for productive purposes in local communities.
It is extremely regrettable that the Minister has attempted to halt the growth of the credit union movement and to halt that mutually beneficial, community based, self-help ethos which has driven the credit union movement to the pinnacle lauded by some 40 Fianna Fáil Deputies when they attempted to talk the Bill, which I introduced, into the lifetime of this Government prior to the general election. Each of the Deputies came into this House and made roughly the same speech, produced by the press office, with the names of their own local credit unions inserted at the relevant points. I am not questioning the commitment of Fianna Fáil backbenchers to the credit union movement or their ultimate support for the Bill as it passed through the House, but where were those Fianna Fáil backbenchers when the Minister took the knife to the credit union movement? That is a question which must be asked and it is one I notice has not been addressed by the Fianna Fáil Deputies who have spoken on this issue.
Mr. Jacob Mr. Jacob
 Mr. Jacob: All other aspects of the Bill must meet with the Deputy's approval as this seems to be the only one he wishes to address.
Mr. Rabbitte Mr. Rabbitte
Mr. Rabbitte: I wish to address a number of issues and, having been prodded by the Minister, I would now like to address the issue of capital gains tax. The unprecedented slashing of capital gains tax from 40 to 20 per cent is extraordinary. Has the Ceann Comhairle, as the longest serving Member of the House, ever witnessed a tax being slashed in half? Has there ever been a situation where a tax has been reduced from 40 to 20 per cent? The Minister argues that this measure is in the interests of the economy. It may well be in the interests of some very wealthy party supporters of certain Members of the House but it is certainly not in the interests of the economy. This type of decision is the last thing this economy needs at this time.
I want to deal with one particular aspect of this issue. Last week a woman who lives quite near Deputy Ardagh attended one of my local clinics and informed me that she was completely bemused by her local authority's decision not to sanction the sale of her tenant-purchased house. The woman, who wished to move back to the country, purchased the house ten or 15 years ago and, as she understood it, had successfully sold it. When I contacted the local authority I was informed it had indeed vetoed the sale and refused to sanction it. I inquired why this had happened and was informed that the purchaser of the house, unknown to the local authority, had already purchased several houses in the same area. Houses are being bought up by corporate and individual investors and young married couples seeking to put together the wherewithal to buy their first home cannot compete with them. The first impact of the Government's decision to slash capital gains is that it is driving an already spiralling house market out of control and beyond the reach of young people who would normally aspire to achieve ownership of their own house on a 25 year mortgage. That is now being put beyond their reach and as a result these people end up on the housing list. That is one of the reasons the housing list is growing. Normally, two working people would expect to be able to get a mortgage commensurate with the purchase of a modest house. However, as a result of this measure, they are being prevented from doing so and it seems the Minister's changes in capital gains tax have only served to fuel this vicious spiral to the detriment of young people trying to buy their own homes.
The question I believe must be asked when examining these changes is qui bono? Who benefits from these changes? Who asked the Minister to make them? I defy any Member of this House to find anything on record which reveals that a Deputy on either side ever asked a Minister to slash capital gains tax in half, by way of parliamentary question, adjournment matter or even throwaway remark? I do not believe there is any  such record. The members of the credit union movement certainly did not ask the Minister to make these changes.
The tax changes to be implemented through the Finance Bill are designed to give the greatest benefit to high and super high earners. Instead of focusing the available £500 million on low and middle income earners, the Minister opted for the Progressive Democrats' demand to reduce the rates. Two months after the Budget Statement it is interesting to study the data being made available by way of replies to parliamentary questions. The Minister's projection on budget day that the capital gains tax changes would cost £20 million has already increased to £40 million. Similarly, and despite protestations to the contrary, the 37 per cent of the working population paying tax at the higher rate in the 1997-98 tax year will increase to 38.2 per cent in the tax year 1998-99.
The issue for those middle income earners was never a reduction from 48 per cent to 46 per cent but to have a greater proportion of their income liable to taxation at the standard rate. At the lower end of the scale, the issue was, first, how many people would be removed from the tax net and, second, to keep thousands of workers on middle incomes clear of the marginal rate through the use of a combination of personal allowances and widening the tax bands. The demands of tax equity required no less. Above all, the changes I advocate would have made it worthwhile for more people to take up employment in the lower paid sectors. The Government does not understand this critical point.
I have respect for the Minister for Social, Community and Family Affairs, Deputy Dermot Ahern. However, he comes from the same Fianna Fáil stable as the Minister for Finance, Deputy McCreevy. Given the best will in the world to both, which I have, they ought not have those portfolios. The Minister for Social, Community and Family Affairs, Deputy Ahern, does not understand the interaction of the social welfare code with the tax code. The policy thrust of recent years was to assist progress from welfare to work. We hear a great deal of whinging about the number of jobs being advertised in shop windows in Grafton Street. In truth, many of these jobs are lower paid and there is a substantial problem of low pay in certain sectors. However, to facilitate the progress of people from welfare to work in those low paid sectors, it was necessary to continue the thrust of the improvements initiated by the previous Government. That is one of the major casualties of the Minister's decision to concentrate the bulk of the £500 million on tax rates for top earners.
Middle income earners have borne the brunt of financing the public services of the State for many years. They might reasonably have expected in the current propitious circumstances to be given the bulk of the relief. That did not happen. It is not a question of reducing one's tax from 48 per cent to 46 per cent and I cannot explain why this point is not understood. The issue is how much of  one's income one is paying at the standard rate, whether it be 26, 25 or 24 per cent. The Minister had that decision in his gift. The important taxation issues are: how soon does one become liable for tax, for how long does one pay tax at the marginal rate and at what level of income does one enter the marginal rate. That is the test the Minister failed.
I welcome the decision regarding VAT on magazines. The Minister should consider asking the Competition Authority to carry out a study on whether there is real competition, if the consumer is getting the benefit of the decision to reduce VAT and if there is real competition vis-à-vis the exchange rates and the consequent benefits being passed on to the consumer.
I am also concerned about how the Minister phrased his remarks on corporation profits tax. Is he saying there is still doubt about reinforcing the decision of the previous Government with regard to corporation profits tax? I also seek clarification with regard to changing the ten year rule on VAT to six years. The Minister said that for reasons of equity the reduced time limit will also apply to VAT assessments by the Revenue Commissioners. Does he mean there are VAT assessments outstanding for longer than six years? Do some date back to ten years and, if so, why and what are the implications of changing the rule from ten to six years?
Mr. Ardagh Mr. Ardagh
Mr. Ardagh: I wish to share my time with Deputy Cullen.
An Ceann Comhairle Séamus Pattison
An Ceann Comhairle: Is that agreed? Agreed.
Mr. Ardagh Mr. Ardagh
Mr. Ardagh: Deputy Rabbitte did not refer to the increase of £5 in the old age pension. In my constituency, Dublin South-Central, an excellent and hard working colleague of Deputy Rabbitte did not succeed in the last election. I believe that in spite of the tremendous efforts of that former Deputy his defeat was caused by the actions of the leader of Democratic Left who, as Minister for Social Welfare for two years, did not offer pensioners the increase provided by the Minister this year.
I must reply to Deputy Rabbitte's outrageous and ill-informed comments concerning the credit unions. I visited a credit union with a large number of members in Deputy Rabbitte's constituency. I asked how many people would be affected by the proposed imposition of DIRT. The reply was “none”. I further asked how many people would be affected by the reporting of £500 dividends. Again, the reply was “none”. I suspect that in both Deputy Rabbitte's and my constituencies the total number of people who would have been affected by the proposals which have now been dropped could be counted on the fingers of one hand. The proposals were an attack on large savers who are abusing the taxation exemptions of the credit union movement. All abuses, whether they are facilitated by off-shore bank accounts,  Ansbacher accounts or credit unions, should be dealt with properly.
The publication of the Finance Bill, 1998, is an important step in the implementation of the Action Programme for the Millennium. The Bill addresses many of the points set out in that programme under the seven key concerns of the people. The reduction in the basic rate of income tax from 26 per cent to 24 per cent and in the higher rate of tax from 48 per cent to 46 per cent gives confidence to taxpayers that the Government will reduce the basic rate of income tax to 20 per cent and the higher rate to 42 per cent over its four year term. The Finance Bill sets the course for this to become a reality.
I am particularly impressed by the provisions which encourage the long-term unemployed to take up employment. I hope increased personal allowances claimable by the long-term unemployed person and the double deduction allowance claimable by the employer will be incentives to both employers and the long-term unemployed to work together to reduce the numbers on the dole queues.
Under section 13 there is provision for a relief from tax for donations made to or for the benefit of designated schools. I am concerned that the managers of and parents of children attending schools in areas such as Crumlin, Drimnagh, Dolphin's Barn and Fatima Mansions, which I represent and where there is substantial disadvantage, will be unable to attract the type of donations which schools in other more affluent areas might be able to attract. In this regard, I ask the Minister to consider establishing an independent trust which would, on the basis of need, allocate funds to schools. Donations to the trust should be tax allowable. If donations were made to the trust instead of to individual schools the result would be a fairer allocation of its resources.
Every Member recognises that the sacrifices, taxes and efforts of our older citizens helped to create the economic prosperity we now enjoy. I am delighted with the increase of £5 per week in the old age pension. Section 17 of the Bill which grants capital allowances in respect of capital expenditure on the construction, extension or refurbishment of buildings used as private registered nursing homes is a welcome proposal. There is a great need for more nursing homes to be available at a reasonable cost. This section which allows for capital allowances for building nursing homes will enable us to create more spaces which will help us to care for and assist old people.
In my maiden speech to Dáil Éireann, I pointed out the ways in which wealthy people were getting wealthier by avoiding tax. I am delighted that steps have now been taken to reduce the potential to avoid tax, particularly in relation to capital allowances.
Section 24 limits the amount an individual can set off against his non-rental income to £25,000 in any tax year. This restriction should result in higher income earners being unable to use tax  avoidance schemes to minimise the amount of tax they would otherwise have to pay. Prior to the implementation of section 24 advantageous incentives were available to investors to provide hotels in Dublin, Galway and other areas where they would increase in value and have high occupancy rates. Hotels in these areas will now be built on the basis of commerciality. This section also provides an incentive to build hotels in areas where they are still needed, in Counties Cavan, Donegal, Leitrim, Mayo, Monaghan, Roscommon and Sligo. This is good as it will help to spread the business of tourism throughout the country.
There are huge complications in explaining tax dates to taxpayers. For example, the 1996-7 return was to be submitted by 31 January 1998, preliminary tax for 1998-9 is due for payment on 1 November 1998 and the 1997-8 tax return is due on 31 January 1999. The change in the date for filing tax returns from 31 January to the previous 30 November will help to bring taxpayers and their taxation affairs more up to date, which is preferred by taxpayers and Revenue.
Linking the date for payment for preliminary tax to the filing date for tax returns on 30 November is also welcome. Tax practitioners are reluctant to accept the change because of holidays and examination timetables. These problems will have to be overcome as it is in the best interests of the clients of these practitioners to go ahead with the changes.
The Minister's suggestion to put the tax year on a calendar year basis will radically simplify matters for taxpayers. Taxpayers are the clients of the Revenue Commissioners and every effort should be made to make the system easier to operate and more transparent.
Section 787 of the Principal Act allows some latitude in the payment of retirement annuity premiums. At present, payments can be made, in respect of a tax year, up to 31 January following. The new section 38 will limit this to some extent, as it brings the date forward to 30 November following. This means that some people will have to catch up on two months retirement annuity premium payments if they are making payments on a monthly basis. Perhaps the Minister may consider a transitional arrangement which would in some measure limit the inconvenience this change will cause to some taxpayers.
I welcome the reduction in the rate of corporation tax from 36 per cent to 32 per cent for the standard rate. I particularly welcome the reduction to 25 per cent for the first £50,000 of a company's income. Most small companies have an income of less than £50,000 and this will encourage the owners of small companies to reinvest the profits in the business. It is a problem that many small companies are under-capitalised and as a result of this initiative the capitalisation of companies in Ireland will improve.
Section 47 provides a new scheme to allow tax deduction to companies for certain company  donations to eligible charities. I am concerned about the provision in the section which states that the charity would need to have been granted exemption from tax for three years prior to its application for authorisation. In my constituency, the Templeogue House Development Committee Limited is anxious to improve and renovate Templeogue Castle. This excellent cause will cost the local community £100,000 to £200,000, which can only be raised through sponsorship and company donations. The committee was formed in July 1995 and did not apply to the Revenue Commissioners for charitable status exemption, as it is only with the advent of this new scheme that the need arises. I ask the Minister to consider an amendment to take this kind of worthwhile development into account.
Section 48 provides for new relief for corporate investment in renewable energy projects. This scheme allows corporate investors to invest up to £10 million per annum. Rules similar to the BES rules apply and corporate investors need to hold shares for at least five years to ensure that the relief is not withdrawn. I note the Minister is giving a period of three years for these investments to be made. I wish the concept and all of the projects which result from this section every success.
We realise the cost of cars is very high in Ireland and I welcome the reduction in the vehicle registration tax announced in the Bill. It is interesting that under section 64, if a vehicle is converted from that with an engine capacity less than 2,500cc to that with an engine capacity greater than 2,500cc extra vehicle registration tax is payable. If one is found to be in possession of a vehicle which has been converted from a lower to a higher vehicle registration tax category, that offence may result in the forfeiture of the vehicle. This section also applies to the conversion of a car van to a car.
Section 66 amends an 1860 Act which states “…no licence to sell foreign wine by retail to be consumed on the premises shall be granted for any refreshment house which, with the premises belonging thereto and occupied herewith, shall be under the value of eight pounds a year…” This outdated terminology is still in our legislation and highlights the need to modernise and update our tax laws. I am delighted the rate of VAT imposed on magazines and periodicals will be reduced to 12.5 per cent.
It is interesting to note from section 97 that the reason banks say it is cheaper to use a standing order or direct debit rather than a cheque or a bank draft is not because the banks are making it cheaper but because the stamp duty is less. There is no stamp duty on standing orders or direct debits while on cheques and bank drafts it is 7 pence.
I welcome the change in the capital acquisitions tax in relation to the inheritance of a house by an elderly person from a deceased brother or sister. There has been a marked improvement in the exemption level. I ask the Minister to consider further extending the relief where the inheritor of  a house is a close friend of the deceased owner and both have been living in the house for at least ten years prior to the date of the inheritance.
The question of solicitors and counsel having tax clearance certificates arose recently at the Committee of Public Accounts in relation to their work for the criminal legal aid scheme. I commend the Minister for introducing section 108 which requires, where appropriate, solicitors and counsel to hold a tax clearance certificate from the Collector General.
I welcome the fact that the decisions of the appeals commissioners will now be published in those cases which are considered appropriate. Generally, this will be where the tax matter in question is of interest to tax practitioners and taxpayers.
I am always amazed at the provision in section 112 that all taxes and duties imposed by this Act are hereby placed under the care and management of the Revenue Commissioners. This effectively means that even though we pass all of these Acts, if it suits, the Revenue Commissioners can, in individual cases, decide to change all of them.
Minister of State at the Department of Finance (Mr. Cullen) Minister of State at the Department of Finance (Mr. Cullen)
Minister of State at the Department of Finance (Mr. Cullen): I am delighted to speak on the Finance Bill which gives effect to, among other things, the budget tax cuts. The Bill confirms, in legislative form, the reduction in the tax rates for 1 million taxpayers by 2 percentage points, resulting in substantial increases in take home pay for ordinary PAYE workers from 6 April.
The Bill also provides for a greater degree of effective tax equity by cutting back on tax shelters such as the BES and certain capital investment reliefs. It gives a boost to productive enterprise and endeavour through the reductions in the corporation tax and capital gains tax rates and new reliefs for nursing homes, the whitefish fishing fleet and renewable energy projects, to name but a few. The Bill also contains many technical and other changes to our tax law.
I will deal with the main features of the Bill. The first part of it deals with income tax, corporation tax and capital gains tax. The changes in tax rates, bands and allowances, income tax exemption limits and the increased widowed bereavement allowance announced in the budget are dealt with in the first few sections. These provide substantial increases in take home pay for PAYE workers, all the more so when combined with Partnership 2000 pay increases. A single person on £5,000 per annum will gain nearly 6 per cent more in take home pay with an assumed 2.25 per cent pay increase under Partnership 2000. A single person on £12,000 per annum will receive 5 per cent in take home pay on the same basis. A married couple with one earner and two children on £12,000 per annum will be better off by more than 6 per cent after the Partnership 2000 and 1998 budget pay and tax package. The same married couple on £24,000 per annum will see their net income increase by nearly 5 per cent.
Over two years the gain as a percentage of net  income, taking the 1997 and 1998 budgets in association with the basic pay increases of the first and second phases of Partnership 2000, will range from 9.5 per cent to 11.5 per cent for single full rate PRSI contributors and from 8.5 per cent to 12.5 per cent for the married couple referred to above. These are substantial gains by any standard, yet the Opposition is trying to run them down. I presume it realises its failure to deal significantly with the tax system while it was in Government. There was only a 1 per cent reduction in overall tax rates during its period in office.
There are cutbacks on certain well used tax shelters to ensure a fairer distribution of the tax burden. This is hardly the action of a Government portrayed by some Members opposite as cutting capital gains tax simply to enrich the better off. I have been given examples of high earners on £300,000 per annum who could, using the tax shelters we have acted on in the budget, reduce their taxable income to under £25,000 and pay tax of about £7,000. A total of £7,000 tax on an income of £300,000 is some going. Tax reliefs have a role to play and I support them when they are well focused, but they can be abused and misused.
I support the tax relief provided for in section 18 on investment in the renewal, improvement or reinstatement of vessels in the whitefish fishing fleet. This will help many fishing communities around the coast. This relief will not only renew the boats but make them safer. It will also play its part as a focused scheme of rural renewal, given the location of most of the main fishing ports. This is an innovative measure and demonstrates how one can be focused when introducing tax measures aimed specifically at a vibrant and important working community, but disadvantaged in many respects because of its location around our coast.
Section 37 proposes changes to the self-assessment system that will align the pay and file dates at 30 November each year, starting with 30 November 1999. The current arrangements for the payment of tax and the filing of returns are extremely complicated with a multiplicity of dates. I know that a body of tax practitioners are concerned at this change. I know also that other practitioners support this change. However, in recognition of the possibility of some difficulties arising with these new arrangements, the Minister has agreed to make the section subject to a commencement order to give taxpayers time to sort out matters and allow a fuller impact assessment to be made before proceeding. This should satisfy the concerns that have been expressed.
The changes to self-assessment are accompanied by reductions in the rate of interest charged by Revenue on overdue tax and by provision for publication of appeal commissioners' decisions. Also as part of the package, Revenue are prepared to cut down on the number and volume of documents, certificates, returns and other paperwork required to be filed with the annual  accounts. I am sure that when all these changes are taken in the round, the fears of accountants and practitioners will be put to rest. The amount of paperwork involved in filing accounts has been a cause of concern for many, particularly small traders. The Government is determined to reduce as far as practicable the level and volume of paperwork involved in filing tax returns and other correspondence with the Revenue Commissioners.
Another important feature in the Bill is the technical measures in section 39 and Schedule 2 which deal with the proposed introduction of the euro from 1 January 1999. The Government has decided to set out these changes well in advance of the euro date so that firms and their advisers will be clear on where they stand. This is consistent with the clear and organised euro campaign which we have undertaken to prepare the ground for the change-over. Companies and individuals are now more aware of the advancing date for the euro and the fact that we will be a participant. It is important, therefore, that all companies avail of the vast amount of information that is available in various guises in the public domain and plan their requirements consistently with the commencement of the euro in January l999.
Sections 43 to 48 deal with corporation tax. These give effect to the reduction in corporation tax from 36 per cent to 32 per cent and from 28 per cent to 25 per cent in respect of the first £50,000 of the company profits announced in the budget with effect from 1 January 1998. There are also new reliefs for company donations to charities and investment by companies in certain renewable energy projects. The latter relief must be cleared with the EU prior to its coming into effect. There are a number of other reliefs proposed in the Bill that require notification to, or State aid approval by, the EU Commission. The Commission has shown that it is receptive to these tax initiatives and we hope to get the necessary clearances.
Deputy Noonan may have misheard or misread what the Minister said yesterday on the single low rate of corporation tax. He made it clear that the single low rate of corporation tax is agreed with the Commission. What is being discussed with the Commission is the planned timetable for achieving that low rate. This had not been put to bed by the previous Administration. The Minister clearly said “single low rate” not a single lower rate, as Deputy Noonan alleged and from which he seemed to imply some change in what had been previously announced by the Minister.
The Minister stated:
In regard to the single rate of corporation tax, discussions are continuing with the Commission to secure their final sign up on the planned timetable for achieving that single low rate.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: What about the Government's commitment, when in Opposition, to a 10 per  cent rate? We always indicated the rate would be 12.5 per cent.
Mr. Cullen Mr. Cullen
Mr. Cullen: As the Deputy is aware, the previous Government was in discussion with the Commission on this matter.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: The Minister of State has just confirmed what it agreed.
Mr. Cullen Mr. Cullen
Mr. Cullen: I am trying to clarify a specific point raised by Deputy Noonan last night. The Minister did not say “lower rate”, he said “single low rate”.
On CGT, a lot has been made of the reduction in the rate to 20 per cent. This, it is claimed, is a sop to the wealthy. Interestingly, new Labour in the UK seems to be considering CGT reductions, but we will have to wait until 17 March, its budget day, to see if it will follow our lead. What does the Opposition want? Does it want wealth tied up generating very little or wealth released to reinvest, generate more productive activity and ultimately jobs? I know what the public prefers in this regard.
Looking at indirect taxation sections 92 and 93 contain important new provisions on the assessment and refund of VAT. We have seen increased activity by tax planners both here and in other member states seeking to exploit the opportunities in EU VAT law for new interpretations of VAT provisions. The yield from VAT is considerable — about £4 billion per annum.
Successful VAT planning could be costly to the Exchequer. We must, therefore, reduce the exposure of the Exchequer to claims for VAT refund by reducing the time limit within which a VAT refund may be claimed from ten years to six years. For reasons of equity, section 93 also applies the reduced time limit to VAT assessments by the Revenue Commissioners. The new period will correspond with the existing general legal requirement for traders to keep books and records for six years.
Section 92 clarifies the rules designed to avoid windfall gains which may occur with VAT repayments. These rules are usually referred to as “unjust enrichment” rules and are designed to ensure that VAT refunds do not simply end up in traders' pockets with no benefit to the consumer who ultimately pays VAT.
On the taxation of credit union savings I am pleased the issue was resolved but a number of important points should be made. Credit union interest and dividends are subject to income tax at the recipient's marginal rate. This income should be reported by the person receiving it. I note, for example, a correspondent in yesterday's edition of The Irish Times from Tramore who stated that he returned his dividend and interest to the Revenue and was charged at the full rate. He felt it not only fair but his duty to do so. That letter is worth reading for the observations it makes on the issue of reporting taxable income generally. The proposals in the Bill would not  have imposed new taxation. Their removal as announced yesterday does not lift tax off credit unions as some reports say. It is a matter of going back largely to the status quo. The Bill still exempts credit unions from corporation tax which is worth at least £15 million per annum to them in total. I have great regard for the credit union but taxation has to be applied fairly. I am sure the working group to be set up will take a broad view in reconciling credit union concerns with the wider issues involved.
The changes in tax on savings income are on hold and the working group will explore these taxation issues, bearing in mind the special nature of the credit union movement and its contribution to society. I commend the Minister for these proposals which offer a reasonable basis for addressing the issue of credit union taxation.
There are many welcome and positive features in this Bill, some of which I have referred to. This is well balanced legislation which confirms the easing of the tax burden on the PAYE sector while restricting tax breaks for the better off. It provides a sound basis for the continued success of our economy and I give it my full and wholehearted support.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: With your permission I wish to share time with my colleague Deputy Bradford.
Acting Chairman (Mrs. Barnes) Acting Chairman (Mrs. Barnes)
Acting Chairman (Mrs. Barnes): Is that agreed? Agreed.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: Listening to the Minister of State, Deputy Cullen, claim credit for the tax reliefs delivered in the budget makes me smile. The Minister of State being a fair minded person would not totally accept that and no doubt is just making a political statement. In his budget last year the Minister delivered in excess of £400 million to taxpayers but directed the benefits towards the lower paid to widen the tax wedge between those who opt for social welfare or work. I would much prefer a continuation of that policy in this budget and Finance Bill than what has transpired.
On “Prime Time” last night I saw the Minister for Finance, Deputy McCreevy try to defend his action on taxation of credit union savings and his U-turn. He mentioned that he had delivered £500 million to taxpayers. That is gross hypocrisy when one considers that he was operating off the previous budget, the previous Estimates and the previous Finance Bill. From June to November when the Minister introduced his budget he had managed the economy based on what the previous Government had done. The tax breaks before us have been delivered because of the revenue buoyancy from the previous Government. In my budget contribution I drew the analogy between the Minister taking over such a buoyant economy and a manager taking over a football team such as Manchester United or the All Blacks who had come to our shores at that time——
Mr. Cullen Mr. Cullen
 Mr. Cullen: We did not take over Manchester United.
A Deputy A Deputy
A Deputy: The Government was trying to take over the GAA.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: ——and were regarded as the best All Blacks team ever to come here. It is similar to the Minister, Deputy McCreevy, taking over the economy as presented to him. I notice with Manchester United that a few chinks are appearing. Similarities could be drawn between the slice kick of Schmeichel and the gap made by the Minister for Finance, Deputy McCreevy, as regards the credit union proposal. I do not want to dwell on it here but it is the greatest U-turn I have ever witnessed since coming into this House. The Minister has been embarrassed and has got no support from his colleagues. I note that none of his colleagues has come out in defence of the way he handled it. Certainly the Minister will think in future before he shoots from the hip as he is accustomed to do.
The Minister of State, Deputy Cullen, was selective as was the Minister, Deputy McCreevy, yesterday, in identifying people who will benefit under the present arrangements. I will briefly look at the effect the tax changes will have on several sectors of the community. The Government has failed to recognise the role played by the lower paid in creating revenue buoyancy by attracting foreign investment interested in providing some low paid jobs. People work in retail outlets and in the tourism industry in many provincial towns and are creating revenue buoyancy throughout the economy. These are the people who should have benefited from the tax changes in the budget. Research carried out by the Conference of Religious in Ireland shows that single people on £40,000 will benefit three times more than a single person on £10,000. It is interesting that there are only 4,198 single people in the £40,000 to £50,000 gross income bracket while the number of single people in the £10,000 to £12,500 is 84,000. The same research shows that married taxpayers in the £40,000 to £50,000 income bracket benefit twice as much as married taxpayers in the £20,000 to £25,000 bracket.
There are 36,253 in the higher bracket compared to 78,375 in the lower bracket. It is obvious, therefore, that a relatively small number of wealthy individuals will benefit disproportionately from the main personal tax reductions.
Mr. Cullen Mr. Cullen
Mr. Cullen: If one pays three or four times more in tax, one will benefit proportionately. That is logical.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: The Minister of State is spouting the philosophy of the Progressive Democrats, the party from which he ran. It is obvious that he has much influence. The bottom line is that those in low paid jobs will not benefit to the same extent as those in high paid jobs. Therein lies the problem. The question is whether they will make  a decision to stay on social welfare or to work. The only way they can receive more from employers is through the taxation system. The strategy proposed by the rainbow Government before the election of expanding tax bands and improving personal allowances would be much more beneficial to the vast majority of taxpayers.
A number of people, not all of them accountants, have been in contact with me regarding the proposal in section 37 to bring forward the date by which the self-employed must file their tax returns. The self-employed, including sole traders and farmers, must file their tax returns by 31 January. The work of completing accounts and preparing returns is traditionally undertaken by businesses and their tax advisers in the months September to January. This change, if implemented, will cut the time available for this important work by 40 per cent. According to the Institute of Chartered Accountants in Ireland, this may result in chaos in the administration of the taxation system and delays in the collection of taxes. The president of the institute, Mr. Tom Griffin, said the proposed change has not been thought through. The Minister should allay its concerns on Committee Stage. The findings of a survey of its members on this issue conducted in 1997 showed that 87 per cent were opposed to this proposal.
The current practice of filing tax returns by the end of January is a tried and trusted system which has worked well over the years. The proposed change is unworkable and likely to lead to hastily prepared returns which may be less reliable and inevitably lead to more correspondence with the Revenue Commissioners. According to the ICAI — I have no reason to disagree with it — the Revenue Commissioners rely heavily on the co-operation and assistance of accountants for the effective administration of the taxation system. This proposal will damage that co-operation and assistance. It will not bring in one penny more in extra taxation; if anything, it will lead to more correspondence and delays in finalising the tax affairs of the self-employed. It should, therefore, be looked at again.
The Minister referred to the new pilot relief scheme in defined rural areas, which I welcome, and the new urban renewal scheme. When Minister of State at the Department of Agriculture and Food with responsibility for rural development I established an advisory group which, in page 54 of its report, strongly recommended the introduction of a pilot relief scheme because of the outflow of funds from rural areas. Farmers, shopkeepers and others in rural areas are investing in designated areas in the larger towns and cities as well as the designated tourist resorts. If there was an incentive to invest in their own areas, they would do so.
I understand the scheme will be confined to the upper Shannon basin. Shannon Development has made a thorough submission to the Department of Finance relating to the lower Shannon basin.  The Shannon Estuary Development Company was established before the previous Government left office. The submission recommends the introduction of a pilot tax scheme to enable Shannon Development to raise private capital to develop its underdeveloped industrial land banks. The money would be used to fund site preparation and key infrastructure necessary to attract foreign industrial investment to the region. It is suggested that the scheme should be introduced initially at the largest greenfield site at Ballylongford, County Kerry. If successful, it should be extended to the two remaining sites at Askeaton, County Limerick and Kilrush, County Clare.
This is a futuristic proposal. I will table amendments on Committee Stage to ensure it is implemented and to put pressure on the Fianna Fáil members who represent the area affected to test their commitment. The proposal should have a beneficial economic impact and result in the creation of a large number of jobs. The land bank at Ballylongford which encompasses 925 acres of public land has remained underdeveloped for the past 15 to 20 years. High expectations were raised in the past. This proposal would provide the necessary kick-start to ensure it is developed.
As regards the new urban renewal scheme, the Minister is being unfair to smaller provincial towns in setting a population threshold of 6,000. Listowel, which has a population of 4,000, and Caherciveen, the home town of the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, would benefit greatly from such a scheme. Tralee and Killarney have already benefited. They are buoyant and vibrant towns. I hope the Minister will not only review the 6,000 population threshold but will make exceptions to it provided a good plan is proposed by the towns involved. In that event provision should be made for their inclusion in the scheme which is an important vehicle for local development.
I wish to refer briefly to section 21. I thank the Minister for extending the termination date of the seaside resort scheme to June 1999, but the changes he and the previous Minister introduced are making the scheme less attractive. I accept in some instances the scheme was not used for the purposes for which it was put in place. Nevertheless, in a seaside resort like Ballybunion where the scheme is just beginning to take effect, removing some of the incentives will render it less effective. I would like the Minister to consider exceptional cases, such as Ballybunion where there is a proposal to build a large hotel, to ensure the benefits and attractions of the scheme, which will be extended under the Finance Bill, will be availed of and decisions to build that type of development in those resorts will not be reversed.
Section 55, which affords capital gains tax roll over relief in respect of the disposal of financial assets by certain sporting bodies, is very welcome. Section 57 extends to greyhound racing tracks roll over relief on the disposal of development land where the proceeds are reinvested in race track  facilities. No doubt that refers to Cork greyhound track. I was involved in initiating the provision of the new track for Cork although I notice the Minister for Agriculture and Food is slow to acknowledge that whenever he refers to it in articles reported in The Examiner. I hope when Deputy Dennehy speaks to my friend in Cork he will remind him that it was I who suggested there should be a new greyhound racing track in Cork. I was delighted the university bought the land of the old track because it needed it for development.
Mr. Dennehy Mr. Dennehy
Mr. Dennehy: That was an example of the usual helpful Kerry approach to Cork's problem.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: Absolutely. I am delighted roll over relief will be extended to it and it will not be taxed in this regard. Regarding the track in Harold's Cross which involves crucial development land, it is important that the revenue that will accrue from the sale of some of that site should go towards developing the remaining tracks in the country. I am pleased about those provisions.
Deputy Noonan and I will table an amendment to one of the sections in Part IV on stamp duty for first time buyers. We will propose that it be reduced to nil or by £6,000 whichever is the lower. That would cover the stamp duty cost of a reasonable first time home at £100,000 or less. It is proposed that relief should be given where a person shows to the satisfaction of the Revenue Commissioners that he or she did not previously own or have a beneficial interest in a house or an apartment. That is an important provision because many people cannot afford to buy a house at present and that provision would help in that regard. If the Minister has not made provision for that measure, I hope he will accept the amendment we will table. I am grateful to have had this opportunity to contribute to the debate and I wish to share the remainder of my time with Deputy Bradford.
Acting Chairman Acting Chairman
Acting Chairman: Deputy Bradford has until 12.15 p.m.
Mr. Bradford Mr. Bradford
Mr. Bradford: That time is slightly disproportionate to the wider aspects of the Finance Bill with which I wish to deal.
Mr. Cullen Mr. Cullen
Mr. Cullen: It is hard to stop a Kerry man in full flight. It recognises the Munster balance.
Mr. Bradford Mr. Bradford
Mr. Bradford: Deputy Deenihan in full flight was always quite a fearsome political animal. I am delighted to have this opportunity to speak on the Finance Bill. It is the first occasion on which the debate on the Finance Bill has taken place some months after the announcement of the budget. Prior to this the budget was introduced in January, the debate on it ran into late February and sometimes up to early March and the Finance Bill was very much a rehash of what was debated a week or a month previously. However, on this  occasion we have had some time to pause and that gives people a better opportunity to reflect more fully and in a more detailed fashion on the Government's economic and social policy. The Finance Bill outlines the Government's fiscal policy for the year and gives us the political opportunity to reflect on what the Government is proposing for the economy and what type of society it is trying to build. There are many welcome aspects about this Finance Bill as there are about any Finance Bill, but it is our role in Opposition to question the provisions included in it, to highlight those that are not included in it and to use this occasion to put forward alternative proposals which we consider necessary.
It would be remiss of me not to comment on the position regarding the credit unions. I know that most previous speakers have spoken at length on the matter and I do not have anything particularly new to add to that. It was a major debating point last week and, regardless of what solution or interim settlement the Minister, Deputy McCreevy, reached yesterday with the credit union movement, we cannot ignore the fact that he produced certain proposals last week which appeared to be extremely detrimental not only to the credit union movement but to the wider social consensus. It presented a view of Government which showed Government policy to be skewed against those people on the lower end of the scale which is unhelpful when we are trying to maintain social partnership. Social partnership has worked very well over the past ten years or so and has played a major role in developing our so called Celtic tiger. The budget did not help in this regard, but there are signs that social partnership is beginning to be questioned by people in the trade union movement and it will be bad for the economy if social partnership breaks down.
Any signals or policy changes put in place by Government which hinder social partnership must be opposed and what was proposed in relation to the credit union movement was a big negative in that regard. I welcome the climbdown by the Minister. A solution was not reached yesterday, rather a decision was taken to remove what was proposed last week. The Minister will enter into further discussion with the League of Credit Unions and I will be interested to see what will come out of the melting pot. That will be important not only from the point of view of the credit union movement but from a wider social perspective because it is necessary to reach a positive and reasonable solution with the credit union movement.
A major mistake was made last week and the Minister must learn from it. He indicated on a television programme last night that he had learned from his mistake, but the public also learned something. They learned that perhaps the Government is not looking as carefully and as sympathetically on people on the lower income scale as on those in other sectors of our society.  We must be careful about any wrong signals we send in that regard.
We all welcome tax reductions and everybody hopes to pay less taxes. The Minister had a choice in the budget last December and the decisions he took are now being put into effect. I wonder, however, what the long-term effects of the Government's decisions will be. Significant moneys were available for tax reductions, yet political and economic decisions were taken to favour the better off. The Minister quoted certain figures to present a case whereby people on higher incomes would end up paying more taxes, but the less well off did not benefit from the budget to the extent that they could or should have done.
A front page editorial in a daily newspaper on polling day last year said it was payback time, but whose payback does this Finance Bill represent? It is not a payback for all the people on lower income levels who have contributed enormously towards creating the Celtic tiger; neither is it a big payback for people on unemployment assistance or benefit. It is not a big payback for those on a gross income of £8,000 to £20,000. It is payback time, however, for people with gross salaries of £30,000 to £60,000. It is a payback for big business which will gain significantly from the reduction in capital gains tax.
A Government comprising a combination of parties is politically entitled to do what it wishes with the resources available but the resources in the budget and the Finance Bill could have been put to more constructive social use. The fact that we are giving the greatest share of what is available to those who have most is not good economics or social politics and I fear its long-term effects on the social consensus.
The Fianna Fáil-Progressive Democrats Government appears to be ideologically driven by people within the Progressive Democrats Party and the right wing of the Fianna Fáil Party. They are entitled to adopt such a political approach, but it is one which had negative connotations in the United Kingdom in recent years. We should have looked twice before taking the route along which the budget and the Finance Bill are taking us. I seriously wonder whether it will work.
There was no great public outcry to extend opening hours for betting offices. The proposal has not been welcomed by betting office staff who will have to work unsocial hours late into the evenings, including Sundays. It will not be of tremendous benefit to the racing industry or employment associated with it. The proposal is not a good one and I hope the Minister will reexamine it. I am not sure of the concept or ethos behind the Minister's proposal. While he is a well known racing and betting man, on this occasion he may have got it wrong. I hope he will reconsider the proposal.
In last week's Irish Field I read that the Irish Thoroughbred Breeders' Association had made a  submission to the Minister for Finance in relation to certain amendments it wished to see to the Finance Bill. These amendments, which would be worthwhile from the point of view of the horse breeding industry, are not included in the Finance Bill. When the Minister replies to the debate, will he indicate whether he has considered these proposals? Will he consider an amendment to introduce them on Committee Stage? Unlike the proposals for the betting industry, these would benefit the horse breeding industry and would ensure that more people would be employed in it. It would also ensure the thoroughbred breeding industry retains its important position in the European bloodstock industry.
Mr. Dennehy Mr. Dennehy
Mr. Dennehy: I wish to share my time with Deputy Pat Carey.
Acting Chairman Acting Chairman
Acting Chairman: Is that agreed? Agreed.
Mr. Dennehy Mr. Dennehy
Mr. Dennehy: If we were to use a popular cliché, we could say the budget and the Finance Bill will make the Celtic tiger purr. It is important for everybody, including Opposition spokespersons, to see this as the first component of a four year process. We must judge the budget and the Finance Bill against the appalling failure of the rainbow Government to reduce the standard and top rates of income tax over three years. It was an appalling record and it was essential to grant relief to working families.
Both inside and outside this House I have spoken of my personal experience, with a large family, of working in a semi-State company and paying 60 per cent of my income in stoppages. There was no other earner in the household. It was almost criminal and it had to change. I consider myself one of the ordinary people, to whom Deputy Rabbitte and others referred.
The combination of income tax reductions with the welcome changes in corporation tax and capital gains tax, will maintain strong economic growth in the years ahead. We must plan ahead and I am anxious to see the process of reducing rates and taxes in general continue until our tax rates can truly be regarded as pro family and pro work.
Small and medium sized enterprises, which everyone agrees are the lifeblood of a thriving economy, will be particularly encouraged by the process of a phased reduction in corporation tax. This is further evidence of the Government's pro-enterprise approach. In this context, the reduction in capital gains tax is also welcome and should prove to be self-financing. This is because many assets which appreciated in value in recent years were not sold due to the high rate of capital gains tax that prevailed up to now. The Minister has introduced specific conditions in hard hitting areas and I welcome that.
As a Deputy for a constituency with a considerable variation in economic conditions, I am acutely aware that changes in capital gains tax and  corporation tax are much removed from the lives of many people, yet they represent an important area of the economy. I am glad the budget emphasised the need for measures to boost social inclusion. Over £200 million has been set aside for this purpose and I know it will be money well spent. Many people involved in community activities are aware of the projects that are supported by this money. They represent an important aspect of the life of the general community.
All social welfare increases have been above the rate of inflation and the £5 weekly increase in the basic State pension will be of particular benefit. This contrasts sharply with the shameful record of the previous Minister for Finance.
I welcome the decision to maintain the personal exemption limit for capital gains tax at £1,000 per person, which will assist small investors. I would prefer if the ability of persons to use their spouses' unused allowance was maintained. We must encourage small investors. We keep paying lip service to them, saying how important small businesses are, but when anything is done to help them the usual left wing rhetoric is trotted out. This a positive budget overall which is financially prudent, which promotes social inclusion, which rewards work and initiative and keeps the country on course for EMU.
EMU is the single most important issue facing the country and one of the most important decisions we have ever had to make. It is an unparalleled event in our history. It is incredible, therefore, that there has been no contribution on it other than the broken record on the rate of entry. The Opposition spokespersons on finance have ignored the issue of EMU with that one exception. In defence of the Minister for Finance, he has been totally consistent in his approach, both in Opposition and as Minister. He said in Opposition that any Minister for Finance should adopt the buttoned lip approach to this issue. He has repeatedly said his only interest is getting the best possible benefit for the country and that there are so many variables he will make no announcement until the middle of May when the decision must be made. It is amazing and seems to be no more than morbid curiosity at this stage, especially for Deputy Noonan, to demand that this should be announced before that date. So many variables exist and there are so many matters over which we have no control, it is incredible he keeps asking for the rate to be announced. He should concentrate on other issues related to EMU, such as the liberalisation of services, such as the postal and transport services, for example. These are important items which should be raised in this House but are being ignored.
It indicates a lot about the Opposition, both Democratic Left and Fine Gael, that most of their contributions concerned one item only — the changes proposed for the credit unions. I found Deputy Noonan's personal approach in his reply to the Minister regrettable. I could not understand why he was not worried about Structural Funds and Cohesion Funds, for example.
 However, like Deputy Deenihan, I also watched “Prime Time” last night on which all was revealed. Deputy Noonan was not concerned about the future of this country or EMU, but about a vacant seat in Limerick East.
If the rest of his contribution on finance is as accurate as his description last week of Fianna Fáil canvassers in Limerick, he is very much wanting. He stated every canvasser was asked at every door about the issue of credit unions. I had the privilege of canvassing all day Saturday. I covered 268 houses in Limerick East and the issue was raised three times. I made one phone call at 7.30 p.m. after finishing because there was a private query in one of the houses.
One matter consistently raised on the doorsteps was the excellent candidate, Sandra Marsh. Admittedly I was canvassing in the area where her mother was born, but we covered many other areas across Limerick, and it was the one consistent issue. Her excellent qualities, how she could articulate people's cases, how she had made the breakthrough in the normally male dominated sphere of the GAA, were all raised.
Deputy Rabbitte seemed to complain that correspondence was released and available on the credit union issue. The matter must be clarified quickly. In the co-op movement, there have been situations where the leadership lost touch with the subscribers and contributors to the co-op. In this case, an approach was made by the executive of the Irish League of Credit Unions last November and a letter was issued by it in December asking the Minister to do three specific things. The Minister put it on record last night that he informed the league before the November meeting he had no intention of referring to credit unions in the Finance Bill, yet they were mentioned. I learned from people I work with in my area that three or four credit unions have reached a stage where they are out of touch with the rest because they are so big. By coincidence, they all seem to be involved in the State, semi-State or commercial areas; they are not ordinary community credit unions. If they have a problem with income tax, they should be open about it. I suggest the board of every credit union be asked if an approach was made, if they were aware of the approach, what it involved and who would have benefited from it. The issue must be put to bed. In the meantime, we will continue to work in Limerick East on the basis of our record and for the future of this country.
Credit unions have improved the financial situation of hundreds of thousands of people. They certainly improved it in the case of thousands of people who were in debt to moneylenders and others. Deputy Woods, who was then the relevant Minister, initiated the measure whereby credit unions would go guarantor for people in difficulties and would negotiate with moneylenders and others. We fully supported that.
Other issues which probably should be discussed are methods of tax relief. They can take three forms: tax rates, tax bands or tax shelters.  The Minister, Deputy McCreevy, has taken steps to close down the last one. Of all the complaints I have heard over the years, most have been about tax shelters for the well off. He has taken steps to close them down. The change in corporation tax was justified by the Minister when he pointed out it was about continuing to prime the economic pump. However, tax shelters are a different issue and he has dealt with them speedily, unlike the Government of the past three and a half years. I was not in the Dáil between 1992 and 1997, but I know Fianna Fáil was not in Government all that time, so why was action not taken on the prisons and other problems? I find it hard to understand the new lease of life these matters have gained in the past weeks and in the approach to the two by-elections.
I deeply resented having to pay high tax rates as an ordinary working man with seven children. There were nine to feed, yet I had to pay that kind of tax. I had to work overtime to pay my way. I do not mind referring to my personal circumstances. The rates had to change and we can look back at Fianna Fáil's record in that regard. The first tax rate reduction was made by a Fianna Fáil Government. We are continuing that trend and I encourage it. The tax bands must change, but they must be linked to a four year programme of cutting rates. Tax rates were penal, everyone admitted it, but people still wanted to play games with the issue in this House. The rates and the bands must be re-examined and I am sure that will be the next step.
I welcome the Minister's promise of an urban renewal scheme. There has been criticism of this. Before he announced it, there was criticism it was not included. Now there is criticism the final details are not included. I welcome the time extension for other schemes as they will be of assistance.
I agree with Deputy Deenihan and others that there is a need to assist the first-time buyer of a house. We must deal with problems as they arise, and if a change in policy is needed, so be it, but it should be done quickly.
The Minister is to be lauded for his efforts at reconciling the times for tax returns and finance matters in general. Those of us not involved in the financial area but involved with voluntary groups and such like, with responsibility for making returns and ensuring the group's financial affairs are in order, found it crazy that there were three or four operative dates. I laud the Minister for coming to grips with that. As a former Minister for Finance, he is aware of the problems that can arise. The question of taxpayers moving on to the higher rate of tax too quickly has been raised. Obviously the rates need to be cut, but some contributors have totally disregarded the fact that the rates have been cut. The amount of money benefiting taxpayers in this regard is huge.
On the question of the entry rate for EMU, I am worried that the pressure being applied, by Deputy Noonan in particular, might damage financial  structures. Will he accept what is being said on a whole range of issues, from the value of sterling to what the Bundesbank will do? In the interests of our economy we should wait until the last possible moment to debate the best possible entry rate. Speculators are already waiting to take us apart if they can, and they have the money to do it. In the interests of the country, people should support the Minister's approach.
The question of measures to root out the black economy and tax evasion was also raised. Tax evasion and the black economy are illegal. However, on the legal side, tax shelters had to be tackled so that everybody would get a fair crack of the whip. Last night Deputy McDowell said that they — I presume he meant the Labour Party — do not now use the language of class envy. That is an amazing statement, given their reaction to the budget. They have tried to stir up class envy. When somebody sets up a business and does well, there is a degree of envy in the approach of some of the people who contributed to this debate. That is a pity because the opportunity afforded by this debate could have been better used.
Deputy Rabbitte mentioned that Fianna Fáil was the party of the plain people of Ireland. That is great praise coming from that direction, even if it was a backhanded compliment and an attempt to be cynical. However, we welcome the compliment, because we recognise ourselves as the party of the plain people of Ireland. He praised Deputy Healy-Rae whom he ridiculed four or five years ago when he was a Fianna Fáil activist. We can do without that kind of thing here.
This Finance Bill is excellent, following on a very good budget. It is financially prudent, promotes social inclusion, rewards work and initiative on all sides, and keeps the country on course for economic and monetary union. I am delighted to support it.
Mr. P. Carey Mr. P. Carey
Mr. P. Carey: Deputy Deenihan referred to the revisiting of the credit union issue as the greatest political U-turn he can recall. I wonder what he thinks of the IAVI statement issued this morning dealing with the Fine Gael proposals on stamp duty. I would regard it as equivalent to a political somersault. I hope any amendments the Deputy proposes are consistent with Fine Gael's policy in Government which was to consistently increase the level of stamp duty.
The Finance Bill is a measured approach to the country's affairs. It is significant that the first few sections include measures promoting social inclusion. I greatly welcome the provisions to encourage the long-term unemployed to return to work. There is no doubt that there are pockets of high unemployment, and we need measures like those in the Finance Bill to encourage people to enter into mainstream employment. I am glad that, as a mechanism to get people to return to work, certain courses and certain work are not now regarded as inhibitions to eligibility to unemployment benefit.
 I welcome section 13 whereby certain schools designated as disadvantaged by the Minister for Education and Science will be able to attract funding which will be eligible for tax relief. I have long argued that the capacity of schools in disadvantaged areas to raise their own finance has been a seriously inhibiting factor in alleviating high levels of disadvantage. Some schools are not able to get their own computers or take on additional teachers for subjects like music, sport etc. This provision will assist that type of initiative. I mentioned at the Committee on Education and Science and in my contribution on Second Stage of the Education (No. 2) Bill that in deciding on criteria for designating a school as disadvantaged, the Minister for Finance and the Minister for Education and Science should consider the situation of parents who live in disadvantaged areas and send their children to a school just outside that disadvantaged area which does not qualify for resource and remedial teachers, home school liaison officers or increased capitation grants. There is pressure to look again at the criteria used to measure levels of disadvantage and how schools on the periphery of disadvantaged areas can qualify for tax relief so that the playing pitch can be levelled in the context of fundraising.
The Minister should also look at section 19 in relation to tax relief for enterprise areas in the Cherry Orchard-Gallanstown, Finglas and Rosslare Harbour areas. I do not pretend to be an expert on these matters, but I see that the date for qualification for tax relief is being changed from 30 June 2000 to 31 December 1999. Will the Minister revisit that provision, because the Ballymun area is in the course of rejuvenation at the moment, and the Finglas Technology Campus, which is located in Ballymun, is preparing a master plan involving the construction of 2,800 houses and the development of industrial sites and other facilities and, with the best will in the world, it will be very difficult for them to conclude that master plan in time to qualify for the new deadline? The same will apply in the Cherry Orchard-Gallanstown area.
There is a further provision in section 36, in relation to other approved third level education institutions qualifying for capital allowances. That obviously applies to some of the private colleges. At a time when there is increased participation in third level education — this is being encouraged through various mechanisms — it is correct that private third level colleges should be included in the scheme of tax relief for capital allowances.
I ask the Minister to examine the new area of further education. While this is a burgeoning sector of education, it is neither second nor third level education and is not properly regulated. A substantial number of students are pursuing further education courses which will ultimately be certified by Teastas or the NCEA. I am aware of approximately six colleges in the Dublin area and I have no doubt there are many such colleges in other areas dedicated to further education. However, many of them need new equipment and  upgrading. This matter must be taken on board by the Minister.
Deputy Bradford referred to a matter which is also of concern to me, the opening hours of betting shops. I have only ever attended one race meeting and have never been inside a betting shop so I cannot claim to be an expert on this matter. However, workers in these shops have raised with me their concerns about extended opening hours. Many of these workers are women, while many of the shops are located in areas where income levels are not very high. By extending the opening hours of betting shops we may be providing a further temptation for people to spend their limited incomes.
I welcome section 73 which deals with the taxation of alcoholic lemonades. While restrictions were recently placed on this scourge, the introduction of any measure which makes it less attractive from a financial point of view the better. I also welcome section 81 which deals with the sale of unstamped tobacco products. Up to six or eight months ago one would see people selling smuggled cigarettes on Mary Street and Henry Street. I pay tribute to the Minister for Justice, Equality and Law Reform and the Garda for the vigorous way they have enforced the regulations governing this matter. The sale of these products on the streets has decreased significantly in recent months.
Section 69 deals with the licensing of gaming machines. People in Dublin and other areas fought a long battle to have gaming machines prohibited. We should tread warily when dealing with this issue so that we do not provide further opportunities for people to engage in legal or illegal gambling.
Mr. Ring Mr. Ring
Mr. Ring: I wish to share my time with Deputy Boylan. Deputy Carey is a man after my own heart in terms of many of the issues to which he referred. For example, I agree with his points about betting shops. Some people are addicted to betting and they will now be able to stay in betting shops until 10 p.m. squandering money they can ill afford.
In this context, it is time the Government dealt with the issue of Sunday trading, a practice I have opposed in Government and Opposition. There is no longer any difference between Sunday and a weekday. Sunday should be a day of rest when people spend time with their families, go to a football match or relax. I am not talking about the small corner shop which has always opened on a Sunday. In most cases these shops survived on the money they made on a Sunday. However, they have now lost this business to Tesco and other major supermarkets.
I am glad the Minister for Agriculture and Food, Deputy Walsh, met representatives of Tesco to discuss the ban on the sale of Irish beef in its supermarkets in Britain. This supermarket chain took over an Irish business worth approximately £700 million, yet it has erected signs in its supermarkets in Britain telling customers that it  does not sell cheap Irish beef. Our beef is the best in the world and this action is an effort to pacify British farmers. This is wrong and I am glad the Minister and his Minister of State have taken up the issue. If this action continues then we may have to make certain calls, which I will not be afraid to make. If Tesco wants to continue to trade in Ireland it must remember that it is operating in the EU Single Market and cannot continue to take action which affects Irish farmers. We are not responsible for what is happening in the British economy and cannot be blamed for the strength of sterling or the weakness of the punt. When the boot was on the other foot Irish farmers had to put up with the situation.
I see nothing wrong with a Minister making a U-turn on a daft, ridiculous and stupid proposal. He knows he made a mistake and I am glad he has corrected it. The credit union, particularly in rural areas, was the working man's bank and gave many people assistance at a time when the bank would not. Successive Governments advised people to join credit unions rather than borrow money from moneylenders. Deputy Dennehy said he called to 200 houses over the weekend. At my clinic in north Mayo on Saturday many people blamed not only the Government but also the Opposition for the proposal in relation to credit unions.
The Government is worried about the by-elections.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
Mr. Ring Mr. Ring
Mr. Ring: There are worries about a general election which might not be far off, but we will fight it when the times comes. I agree with the comments made on Sunday trading and betting shops.
Both in and out of Government I have raised the difficulties faced by young couples buying their first house. Tax breaks are for the rich. They do not help those on average and low incomes and have pushed the price of houses beyond the reach of ordinary people. While there is nothing wrong with tax breaks designed to attract industry and improve tourism facilities future Governments should not be allowed to introduce tax breaks for housing. The Minister for the Environment and Local Government has established a committee to examine this problem. It should report immediately to the House.
Many people who own property in Westport, Ballina and north Mayo are not from the area. Few local people own property because they cannot afford it. Some people have five and six houses while a young couple cannot buy a house in my town and must move further from the town to buy a cheaper house. I am glad Fine Gael is proposing that first time buyers should be exempt from stamp duty on secondhand houses. It is wrong that people have to pay stamp duty on a  first house. I hope the Government will do something about this crisis in the housing market.
For a single person earning £15,000 or a husband and wife on £30,000, the first time buyers grant should be increased to £7,000 or £8,000. Tax breaks are there for the rich but there is nothing for the middle class or the poor. This was why people responded so bitterly to the announcement on credit unions. It was seen as another attack on the middle class and the poor.
Ten years ago a scheme was introduced to allow people buy local authority houses for £9,000 or £10,000 and many people availed of it. However some of these houses now need new doors and windows. People are repaying loans and so they cannot afford to carry out renovations. There is no grant available for them. Three grants are available, one for disabled persons, one as special aid for the elderly and another for essential repairs for people over 60, but there is no grant for young couples whose houses need new doors, windows or roofs.
The last grant scheme was faulty because it was available to everyone, including the rich. Doctors and solicitors used State grants to repair roofs. This scheme should be reintroduced as a means tested scheme so that a single person earning more than £17,000 or a couple earning more than £25,000 would not qualify. What I suggested must be done to help people to keep existing homes and buy new homes. Tax designation has destroyed the housing market.
I wish the Minister of State Deputy Moffatt would assist me on the tax designation for Knock airport. I was disappointed by Deputy Harney's comments yesterday on jobs for the west of Ireland. There was not much commitment from any Government on this issue.
Mr. Kelleher Mr. Kelleher
Mr. Kelleher: The Deputy should ask Deputy Kenny about that.
Mr. Ring Mr. Ring
Mr. Ring: At least he introduced the Act which includes reference to qualifying trading conditions. Activities such as cargo handling, distribution and other related airport activities should be included in the tax designation. If we attract freight and service companies to our airports they will bring the industry needed in rural Ireland. This will assist Knock, Shannon and Cork. Deputy Moffatt is Minister of State with responsibility for the west and is committed to the region. He should raise this matter with his colleagues and the Department of Finance so that an amendment to the Finance Bill is tabled. I hope Fine Gael will table that amendment and that it will be supported by the Government. It will assist the board of Knock Airport to attract industry to the west. It looks like Deputy Harney has thrown in the towel so we will have to table such an amendment. I know Deputy Moffatt and the Government will support me on this matter. The Government always emphasises its commitment to the west. We are not asking for much. This would be a small amendment. The scheme will only run  until 1999. We need this amendment to entice industry to the west. Deputy Harney is correct that it is difficult to attract companies to the region. However, there are major companies such as Allergan in Westport, Baxter in Castlebar and Hollister in Ballina. Allergan's European headquarters in Westport employs more than 1,000 people. We have proven that people in the west can do as good a job as those in Galway, Dublin or Cork.
There have been many job announcements over the past three or four years and I cannot see why jobs could not have been brought to the west. We are capable of providing the employees. Many people from the west who work all over Ireland and beyond would be delighted to return home to raise their families. Ever since entering politics I have been approached by civil servants from the west working in Departments in Dublin who would love to return to the west to live and raise their children. They have been forced to live in Dublin which suffers from traffic problems and overstretched services. I do not understand why some Government agencies and jobs are not brought to the west where there is a major problem with emigration and people leaving the land.
As the Minister of State at the Department of Health and Children, Deputy Moffatt, knows, there were nine parliamentary seats in Mayo where now there are only five. This speaks for itself and is an indictment of all Governments and their neglect of the west. Nobody is doing anything about it. The people are becoming mobilised and will be putting pressure on political parties, something I welcome. They are saying enough is enough and I welcome their support. I know the Minister is committed to this issue and I ask him to talk to the Minister for Finance regarding Knock airport and the small changes we are recommending to the Finance Bill which will assist the board of the airport, and the west in general, to bring in freight companies and service industries which will facilitate other major industries in the Knock area. I do not think the Minister for Finance should refuse to make these changes and I am pleading with the Minister of State at the Department of Health and Children, Deputy Moffatt, whom I know will support me, to do something about it.
Deputy Moffatt has a special responsibility for the elderly and I wish to raise two projects which I have been promoting for many years, namely, the need for an old folks home for Achill and Ballinrobe. I know the Minister will not let me down and that both projects are close to his heart. As a doctor he will understand what I am saying. Achill is now on line — there is no problem — but I am putting pressure on him to deliver in Ballinrobe, as I know he will.
Last week I read in the local paper that Deputy Cooper-Flynn congratulated the Minister for Social, Community and Family Affairs in relation to the money saved by that Department. I too congratulate the Minister in his action against people who defraud the State. I would never support  such fraud. I raised this issue when Fine Gael was in Government and I brought the Minister to the west when attacks were being made on rural Ireland. I could never support those who defraud the social welfare system or the State in any manner. The fraud is of taxpayers' money and taking £1 from A results in £1 being taken from B.
When the announcement was made by the Department of Social, Community and Family Affairs regarding anti-fraud measures, I made the point that those singled out would be small farmers and those in the west. I was right. I was at clinics in Belmullet on Saturday and met many people, half of whom were small farmers. One man with six children and 13 or 14 acres of land told me that the Department took £10 off his social welfare allowance. Another person with 2.3 acres was deducted a few pounds because he had cattle. This is a disgrace and I call on the Minister to take on those who defraud the system, namely, those who are working and drawing social welfare at the same time. However, it is wrong to be attacking small farmers and small people with two or three children. The first man I mentioned had one child attending the Regional Technical College in Letterkenny and another attending the Regional Technical College in Galway. He had to collect them in Ballina and it was costing him £28 per week. Despite this his social welfare income was reduced.
Acting Chairman (Mr. Foley) Acting Chairman (Mr. Foley)
Acting Chairman (Mr. Foley): I think the Deputy is discussing the Social Welfare Bill.
Mr. Ring Mr. Ring
Mr. Ring: I have been elected to the Dáil and will say what I must on behalf of the people I represent. That is what I am elected for. I listened to people who were hurt, upset and distraught crying in my clinic on Saturday because the Department of Social, Community and Family Affairs was attacking them. These people read about Deputy Cooper-Flynn's stance now that Fianna Fáil is in Government which differs from her tune when the party was in Opposition. I have had the same tune when our party was in Government as when in Opposition. I do not like to see attacks being made on people receiving social welfare. It is not right that the number of chickens, geese, turkeys which people have on their land are counted. Whatever people have on their land it is very little. It is not possible to rear a pig on the land in north Mayo.
I came across another case in north Mayo of somebody receiving a small pension from England and the balance from Ireland. Last week I was told the Department calculated the English pension in punts. The recipient said the Department did not assist her when the punt was strong and social welfare was weak. This is double standards and I do not think the Department should take money off people when sterling is strong while doing nothing for them when sterling is weak.
Unless widows and widowers are eligible in their own right, they do not benefit from free  schemes, including ESB and fuel allowances, when a spouse dies. They should continue to benefit for at least six months to allow a period of readjustment.
People who finish FÁS courses retain their stamps but lose their free schemes including their bonus at Christmas. This is another attack on ordinary people and I am asking that the situation be addressed.
The question of Knock airport is a serious one on which we all agree. This is not about politics but about the survival of the west and helping to bring industry to Mayo and the west, something successive Governments have failed to do. I ask the Minister of State at the Department of Health and Children to meet the Minister for Finance, Deputy McCreevy, with a view to introducing the necessary amendment to include freight, cargo and the other necessary services. I and my colleagues will support such a move.
People on low incomes are disillusioned by successive Governments which, they feel, are there for the rich and to reduce the status of those on middle incomes. In particular there is a feeling that those on social welfare are being attacked from all sides.
Housing is a serious problem and I was disappointed at the allocation of council houses, particularly in Mayo, by the Minister of State at the Department of the Environment and Local Government, Deputy Molloy. The allocation was down five on last year and 20 on the previous year. People are now returning from England and elsewhere to live in rural Ireland and we are encouraging them to do so. However, they have nowhere to live. Husbands, wives and children will not be able to stay if there is nothing for them. I call on the Minister and the Government to provide a decent allocation for housing in rural areas. There is a major problem. Many people would buy their own house but for the tax designations. I listened to the representative of the Irish Permanent shed crocodile tears, saying he was sorry that the Government had not dealt with this problem. However, such institutions, including the banks and the financial institutions, are the cause of the problem as they are giving funds to those who already have plenty while those on middle incomes have to fight hard to get a loan for a house. Those with money are getting funds to buy a second, third and fourth house. All these people care about is profit. The Irish Permanent made £55 million this year. The Government should assist local authorities by means of grants to buy land which can then be sold cheaply as sites to young couples.
I know the Minister of State at the Department of Health and Children, Deputy Moffatt, will assist me on the matters relating to Knock airport and that he will bring it to the attention of the Minister for Finance, Deputy McCreevy. Do not mind the civil servants — they have all the answers. However, they do not stand before the people. We represent the people and I want to  see provision for the airport included in amendments to the Bill next week.
Mr. Boylan Mr. Boylan
Mr. Boylan: I thank Deputy Ring for sharing time with me. Where would we be without Knock airport?
In framing the budget the Government inherited a booming economy. The Government is enjoying good times which are the result of the prudent management over two and a half years which turned the economy around. Investment from abroad came in at an unexpected rate. Under previous Administrations investors were dubious about coming here, but that position changed when confidence was restored in the Government.
Since this budget was framed in good times it was expected that the wealth of the nation would be spread across all sectors of the economy, but that did not happen. At one end of the spectrum capital gains tax was slashed while at the other end there was an attack on credit unions. The rich will get richer and people on low income will remain in that position. That is unfair and unacceptable. One would expect a Government which includes the Fianna Fáil Party, which receives much support from the lower to middle income group, to give those people a fair deal, but it did not do so.
There was an opportunity in the budget to improve the position of lower income people on PAYE, but the improvements are minimal and will not be noticed on 1 April. At the same time there are massive benefits for people on higher income. That will create disillusionment and anger and will force young people starting work, people at the lower end of the income scale, to vote for parties which they believe will serve their purpose better. That is not good for democracy. For that reason I am disappointed with the budget.
In regard to credit unions — I welcome the about-turn on this occasion — the Minister, Deputy McCreevy has been magnanimous in accepting responsibility for the decision to introduce this tax, but that was a Government decision, into which each member of the Government had an input. I admire the Minister, Deputy McCreevy, for taking the criticism and realising that a major blunder was made by the Government. Given that the Government makes such mistakes in good times, I am fearful of what will happen when pressure is put to bear, because good times do not last forever. When times are good we should ensure we look after as many people as possible.
Credit unions play a major role in terms of small investors and people wishing to take out small borrowings, and for that reason they must be supported. I am aware from involvement with credit unions in my county of Cavan — one of the finest credit unions is situated in Ballyconnell and the Telecom credit union is led by a Cavan man, Michael Reilly from Redhills — that when the Credit Union Bill was discussed in the Dáil,  banking institutions put pressure on the then Government not to grant certain facilities to credit unions, but the Government resisted that pressure. It was a shock, therefore, to hear that credit unions were to be brought into the realm of taxation. Much voluntary work is done by people under the umbrella of the credit union. Their role is to advise low income families, encourage them to make savings and be prudent in taking out borrowings, and I salute them for that.
In regard to housing, assistance could have been given to young people seeking to purchase houses. In other European countries it is acceptable to rent accommodation, but house ownership is traditional in this country. People should be encouraged to buy houses, but given that the average family home costs more than £80,000, it is almost impossible for young people starting out in life to buy a house. There is concern that lending institutions dole out money liberally to young couples without doing their sums and finding out whether income will sustain borrowings. The Government must assist people in those circumstances.
I salute my party on the abolition of stamp duty for first time purchasers of secondhand houses. That was a step in the right direction which will help young couples in purchasing houses. The £3,000 grant for first time house purchasers is totally unrealistic. It should be increased to a minimum of £10,000 and should be income related. Rather than provide the grant across the board, including people earning £50,000 or more, it should be made available only to low income families. A grant of £10,000 would help relieve some of the burden placed on those people.
As a result of slashing capital gains tax, business people are purchasing property with a view to selling it in two or three years at an enormous profit. Only people who have the money or the wherewithal to get borrowings from lending institutions can make such investments. That matter should be considered by the Government.
In regard to urban renewal, there is no incentive to develop small towns and villages in the Border region and the west. Under the Bill urban renewal is available only to towns with a population in excess of 6,000. Those towns benefit from the upsurge in the economy and are succeeding, but smaller towns need assistance. Not one town in County Cavan qualifies for urban renewal status. If the Minister does not agree to change the population provision, perhaps he will consider grouping towns together — for example, Virginia and Ballyjamesduff or Bailieborough and Cootehill which, when grouped together, would have a population of at least 6,000. Those towns could work together in making improvements. The urban renewal scheme is of great benefit, but it is particularly needed in towns with smaller populations.
Mr. M. Moynihan Mr. M. Moynihan
Mr. M. Moynihan: I wish to share my time with Deputy Fleming.
Acting Chairman Acting Chairman
Acting Chairman: Is that agreed? Agreed.
Mr. M. Moynihan Mr. M. Moynihan
 Mr. M. Moynihan: I represent the constituency of Cork North-West and I will deal with the Finance Bill in light of the benefits to that area. Like the constituency represented by Deputy Ring, Cork North-West is a rural constituency, with a population in the largest town of about 3,000. These areas appear to be under threat and in decline under successive Governments. Unless rural areas receive priority treatment, their populations will die out.
My constituents reacted angrily to the credit union taxation proposals as they feared further legislation in this area would eventually mean that all credit unions interests and dividends would be taxed. Nora Herlihy, the founder of the credit union movement, came from Ballydesmond, a small village in Cork North-West, which is only a mile and a half away from my own home. Accordingly, people in my constituency are very proud of the credit union movement and all it represents. It is imperative that we protect the small saver, be it a child saving his or her communion or confirmation money or a young adult saving to buy his or her first car. We must create an environment where everybody can prosper and grow and where the good things in life can be afforded by all, not just those at the top of the income scale.
One of the proposals put forward in the recent budget, and due to be introduced in the Finance Bill on Committee Stage, related to a pilot programme for the upper Shannon region. That is a very welcome development and we await the details of the programme with interest. I have no doubt that all areas in rural Ireland will seek the extension of this pilot scheme as it is one which could encourage investment in rural communities. For far too long, we have seen large urban areas benefiting from the effects of the Celtic tiger economy. The Celtic tiger certainly has not come to rural Ireland although its effects can be seen in the construction industry there.
Family farms are under severe threat. People on viable holdings are retiring from farming but their children are not taking them over as they do not see life in rural communities as an option due to the lack of available services. Last Sunday, a community development meeting was held in my home village of Kiskeam. Many young people who had just finished college and some who were in their first jobs attended the meeting. They were asked what would be required to encourage them to return to live in a rural community such as Kiskeam instead of living and working in Cork or Dublin. They said there was nothing in rural communities for them apart from the GAA. Were it not for the GAA, rural communities would have no source of entertainment or diversity at all. Rural communities must be positively discriminated against if young people are to be attracted back to rural Ireland.
A report was published in recent months which suggested that school transport charges should be introduced. Such a measure would constitute a further attack on rural communities and must be  fought by all parties to ensure free school transport continues to be provided.
To keep rural areas alive, we must retain and further develop facilities therein to accommodate a wider spectrum of the community. Following the visit of a delegation from Mallow hospital to the Minister for Health and Children last year, the Department has seen fit to visit the hospital and possibly upgrade it. This is a small acute general hospital located 20 miles from Cork city and just outside my constituency. Instead of people having to drive 40 or 50 miles to the city, they can avail of facilities in Mallow hospital. Small hospitals such as this must be kept open. We are also lucky in having very good district hospitals in my local area. I congratulate the health board and the Minister for agreeing to provide an extension in Kanturk hospital for day-care and psychiatric patients, in addition to long-term patients.
We must encourage young people to set up home in rural Ireland by increasing the first time buyers' grant or by encouraging people to renovate derelict houses or cottages. Appropriate measures to achieve this must be included in the White Paper being prepared by the Minister of State with responsibility for rural development, Deputy Davern. If young people are encouraged to locate in rural communities, they will live near their parents and it is probable that less strain would be placed on the financial resources of the State if their parents did not have to be institutionalised when they became elderly.
Those of us who come from rural communities will be aware that the social mix of young, middle aged and old people in one community creates a great deal of respect between the age groups. In urban Ireland, new housing estates are being populated solely by young people. Rural Ireland can boast a greater integration of age groups which creates many benefits.
We must encourage the location of more industry in rural communities. The argument we have been given in my constituency is that we are too isolated and too far removed from regional airports or ports for industry to locate there. Given the traffic levels which prevail in Dublin, a lorry carrying goods on a ten or 15 mile journey may take up to an hour and a half to reach its destination. One could cover 50 or 60 miles in a rural area in that time. A company located on the western side of our constituency employs almost 1,000 people, supplies windows and doors throughout the country and is now exporting to the UK. People leave Duhallow every morning to travel to Galway, Mayo and the midlands. Produce is being transported from the factory at night and is being exported through Belfast Harbour or Dublin Port. The company is an indigenous one but we must ensure that rural Ireland is not discriminated against in the location of new industry. If work is not available in rural areas, people will naturally gravitate to areas where employment is available.
 Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
Dáil Éireann 487 Finance Bill, 1998: Second Stage (Resumed).